False prosperity: Rethinking government support for farmers’ cooperatives in China

Abstract

The rapid development of farmers' cooperatives in rural China cannot be separated from government support. To ensure the growth of farmers' cooperatives, the Chinese government uses it as a key performance indicator for its local institutions. Superficially, rural China's cooperative population and membership size witnessed rapid growth during the first decade after the Farmers' Specialized Cooperatives Law was enacted in 2007; however, such government intervention also leads to non-standard phenomena due to market distortion.Using nationally representative survey data from 504 cooperatives in Jiangsu, Jilin, and Sichuan provinces, this paper provides a reliable estimate of the "shell cooperative" rate around 2014. The empirical study sheds further light on the role of government during the period of rapid but chaotic growth by a subset containing 241 marketing cooperatives. Results show that direct administrative intervention leads to the emergence of many shell cooperatives (approximately 37%). Further study also confirms that task-oriented policy support is only positively associated with the nominal coverage ratio but has no significant relationship with cooperatives' function. This study provides new insights into the formation of shell cooperatives and suggests that direct administrative intervention may not be a good strategy

Do Agricultural Reforms Increasing the Prosperity of Indonesian Farmers?

“…On the one hand, the reason for rethinking government support is contemporary affluence. Chen et al (2023) show that the distribution of subsidies distributed by the Chinese government in 3 provinces (Sichuan, Jiangsu, and Jilin) is fake. At first glance, this phenomenon is called "replica cooperatives" which is interpreted as a signal of chaotic growth.…”

Cooperative membership and farmers’ environment-friendly practices: Evidence from Fujian, China

“…According to Ref. [ 20 ], the Chinese government is highly involved in farmer cooperatives. Thus, the cooperatives probably adhere to the government's quest for more environment-friendly farming.…”

“…Ref. [ 20 ] state that Chinese “cooperatives received intensive governmental intervention”, further noting that no less than 46 % of the cooperatives are government-involved cooperatives. They can provide technology or information services to their members by fully using their social capital.” [ 20 ].…”

“…Cooperatives have a strong position in Chinese agriculture [ 19 ]. The agricultural cooperative business form (hereafter referred to as “farmer cooperatives” or “cooperatives”) has expanded dramatically in China after the law on cooperatives was introduced in 2007 [ 20 ]. By the end of March 2022, there were more than two million cooperatives registered in China, with nearly half of the country's farmers as members.…”

Social Network Analysis of Farmers after the Private Cooperatives’ “Intervention” in a Rural Area of China—A Case Study of the XiangX Cooperative in Shandong Province

“…Moreover, because smallholders will separate from agricultural production after farmland trusteeship, whether smallholders become isolated in rural social networks is full of uncertainty [32]. In addition, because villages have played important roles in organizing rural smallholders for a long time in China [33,34], whether private-owned cooperatives can perform better than an administrative village when organizing smallholders' social networks is a matter of concern. This paper raises the following questions:…”