Modeling Effects of Agricultural Cooperatives on Transaction Costs and Household Income: An analysis based on a survey of apple-growing farmers in Shandong province

CAI Rong 1

School of Management, Zhejiang University, China
Abstract:

This paper presents an empirical analysis of the effect that participation in an agricultural cooperative has on the transaction costs and net income of apple-growing farmers in Shandong province. Compared with independent farming, agricultural cooperatives reduce transaction costs by 48 yuan/mu and increase farmers’ net income by 321 yuan/mu. Other factors found to influence transaction costs and farmers’ net income were farmer’s gender, educational attainment, farm size, the availability of market information, distance to market, and level of government support. Independent farmers’ most common explanations for not participating in agricultural cooperatives were that doing so would not reduce transaction costs significantly and that the cooperatives would impede the autonomy of their decision-making.

Key words: agricultural cooperative, transaction costs, net income, apple industry

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