Does smallholder market participation really increase transaction costs and decrease farm incomes? The role of agricultural cooperatives

18.11.2014 von 18:15 bis 20:15

Wanglin Ma, Ph.D Candidate in Department of Food Economics and Consumption Studies

Transaction costs are main factors influencing farmers’ participation in both inputs and outputs markets, and thus reduce farm incomes. Agricultural cooperatives have been argued as an important tool that enhance farmers’ market participation. However, rigorous assessment of cooperative membership effects on transaction costs have rarely been analyzed, due to difficulties of measuring transaction costs. We address these gaps by measuring transaction costs quantitatively and empirically analyzing the effects of cooperative membership on transaction costs and farm incomes using data collected from apple farmers in China. After controlling for selection bias based on treatment effects model, we find that cooperative organization contributes to significantly higher farm incomes and lower transaction costs among participants.

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