The impact of cooperative membership on family farms' income: evidence from China

Family farms and agricultural cooperatives play important roles in modern agriculture in many countries. Different from smallholder farms in scale, family farms have been designated as the predominant unit of farming in China in the recent decade. However, studies on the relationship between cooperatives and family farms' income have been less frequent. Using survey data of 769 planting family farms in China, and employing the endogenous switching regression model, we examine the impact of cooperative membership on family farms' operating income (including total and per capita income). The empirical results show that, after controlling for the selection bias, cooperative membership exerts a positive and significant impact on family farms' income. And the income increase of non-member family farms if they had participated in cooperatives is much higher than that of family farms who are already members of cooperatives. Moreover, family farms that are common members of cooperatives, obtaining more centralized services and engaging in grain crop farming, would benefit more from cooperative membership. Technology-related service, marketing and information are critical pathways via which cooperative membership would increase family farms' income.