The impact of cooperatives’ transportation services on farm income: Evidence from tobacco farmers in Guizhou, China

Abstract

In mountainous areas, access to markets and transportation services is particularly important for farmers. Following government initiatives, agricultural cooperatives in China have begun to offer transportation services as part of their service portfolio. This study estimated the impact of cooperatives’ transportation services on tobacco farmers’ farm income. Using survey data from 337 households in Guizhou Province, China, a two‐step control function was used to correct for selection bias. Results showed that access to transportation services increased yearly farm income by up to 4,636 RMB Yuan. The possible reasons for this large increase are discussed and conclusions were drawn for rural development policy. [EconLit citations: Q13, L23]

Effects of cooperative membership on financial performance of banana farmers in China: A heterogeneous analysis

“…There has been a consensus in the literature that the cooperative membership variable is endogenous because farmers select themselves to be cooperative members or non-members, depending on individual and household-level characteristics and social-economic conditions (Abebaw & Haile, 2013;Lin et al, 2020;Manda et al, 2020;Ortega et al, 2019). Thus, estimating the heterogeneous effects of cooperative membership on farm financial performance should address the endogeneity issue of the cooperative membership variable.…”

“…In the first stage, we estimate a cooperative membership function, and the results are used to generate predicted values for the cooperative membership variable. Following previous studies (e.g., Dohmwirth & Liu, 2020;Lin et al, 2020;Ma & Abdulai, 2017), we assume that farmers are rational, and they would choose to become cooperative members if the expected utility from joining an agricultural cooperative (𝑈 𝑀 ) exceeds the expected utility from not joining a cooperative (𝑈 𝑁 ), that is 𝐶 * 𝑖 = 𝑈 𝑀 − 𝑈 𝑁 > 0, with 𝐶 * 𝑖 indicating the utility difference. Althogh 𝐶 * 𝑖 is unobservable since it is subjective, it can be estimated by a latent variable function as follows:…”

“…Ortega et al (2019) investigated the specialty coffee sector in Rwanda and found that coffee productivity is positively and significantly correlated with cooperative membership. Lin et al (2020) showed that access to cooperatives' transportation services increases the net income of tobacco farmers in China.…”

“…In general, the aforementioned studies have assumed that there exist homogeneous impacts of cooperative membership, and members have equally benefited from agricultural cooperatives. For example, when farm income is employed as a farm performance indicator, previous studies tend to suggest that agricultural cooperatives have a homogeneous (the same) impact on highincome and low-income farmers (Ito et al, 2012;Lin et al, 2020;Liu et al, 2019;Ma & Abdulai, 2017). However, to a great extent, high-income and low-income farmers may be benefited from agricultural cooperatives unevenly.…”

Organization model, vertical integration, and farmers’ income growth: Empirical evidence from large-scale farmers in Lin’an, China

“…For example, a study of farming organization models finds that a cooperative economic organization can purchase production resources uniformly and provide standardized production technology to ensure the quantity and quality of agricultural product outputs, increasing farmers' incomes [12][13][14][15]. As an organizational form of scale operations, such organizations can promote specialized agricultural production and, through the principle of reciprocal cooperation, increase peasant household income through capacity building of their members and division of labor within the organization [16,17]. In addition, these organizations can reduce costs and increase negotiation and bargaining positions, which increase farmers' income [18].…”