The Impact of Agricultural Cooperatives on Farmers' Agricultural Revenue: Evidence from Rural China

Farmer's incentive is a core issue in achieving sustainable agricultural development. In many developing countries, smallholder farming is predominant in agricultural production, potentially limiting improvements in agricultural sustainability. Promoting agricultural cooperatives is a widely adopted strategy to help resource-poor farmers obtain higher agricultural revenue. In China, these organizations have expanded rapidly since the early 21st century, reaching 2.22 million by September 2023 and providing services to nearly half of farming households. However, their effectiveness and impact on enhancing agricultural revenue remain subjects of ongoing debate. To provide more empirical evidence on this topic, this paper constructs an agricultural cooperatives database based on the national commercial registration enterprise dataset and matches it with the National Fixed Point Rural Survey (NFP). The findings reveal that the development of agricultural cooperatives in China significantly helps farmers enhance their production revenue, leading to an increase in household income. Furthermore, the paper identifies strong heterogeneity in the positive effects of cooperative development at both the village and household levels. In the mechanism analysis, it is shown that agricultural cooperatives in China facilitate increased investment in capital, intermediate inputs, and technology, optimizing the allocation of production factors in agricultural processes, thereby improving land productivity and ultimately increasing agricultural revenue.