Impact of Agriculture Cooperatives on Smallholders’ Market Participation and Profits in India

Producer organizations (POs) have significant socio-economic consequences for smallholder members by connecting them to remunerative markets. However, empirical evidence on the impact of PO membership on marketing performance is scarce. This study explored the factors that determine smallholders’ decisions to join POs. It also focuses on how the PO membership influences smallholders’ marketing performance and profits. Cross-sectional data of 305 rice smallholders in India were used for the analysis. An endogenous treatment effects model was used to understand the major drivers behind smallholders’ decision to join the POs and their impact on smallholders. Results showed that age, education, access to credit, distance to the main market, ownership of mobile phones and marketing experience determined the smallholders’ membership in POs. The econometric analysis revealed that POs’ membership positively influenced market participation and profit realization. JEL Classification: Q10, Q13, Q18