Measuring the effect of agricultural cooperatives on household income using PSM-DID: a case study of a rice-producing cooperative in China

Hoken Hisatoshi and Su Qun

No 539, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: Agricultural cooperatives in China, known as Farmers' Professional Cooperatives (FPCs), are becoming popular and have been intensely promoted by the Chinese government to improve the economic welfare of small farmers. However, very few studies on Chinese agricultural cooperatives have measured the benefits to farmers who participate in FPCs after controlling for time-invariant attributes of farmers. This paper investigates the treatment effect of participation in a rice-producing cooperative in suburban China using propensity score matching (PSM) and difference-in-differences (DID) method. Estimated results show that no significant difference is observed between participants and non-participants of the cooperative in terms of net income from rice production when controlling for the difference in farmers' rice incomes before the treatment. In addition, there is no significant heterogeneity of the treatment effects between large and small farmers, although the probability of participation in the cooperative is significantly higher when the size of cultivated rice farmland is greater. These results indicate that the benefits of the cooperative appear to be overestimated considering the vigorous policy supports for FPCs from the Chinese government.

Keywords: China; Agricultural Cooperative; Agricultural Economies; Farm Household; Treatment Effect; PSM; DID (search for similar items in EconPapers)
JEL-codes: O13 Q12 Q13 (search for similar items in EconPapers)
Date: 2015-10-01
New Economics Papers: this item is included in nep-agr, nep-cna and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published in IDE Discussion Paper = IDE Discussion Paper, No. 539. 2015-10-01

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