Farmers’ Cooperatives’ Poverty- Reducing Roles in Agricultural Supply Chain Finance

Shen Yun (申云)1*, Li Qinghai (李庆海)2 and Yang Jing (杨晶)3
1 School of Economics, Sichuan Agricultural University, Chengdu, China
2 School of Economics, Nanjing University of Finance and Economics, Nanjing, China
3 Social Security Research Center, Wuhan University, Wuhan, China

Abstract: Agricultural supply chain finance (SCF) plays a vital role in reducing poverty and linking smallholders with broader markets. By creating a multi-dimensional poverty index (MPI) for farmer households with A-F binary boundary method, this paper employs the propensity score matching and difference-in-difference (PSM-DID) method to estimate how farmers’ cooperatives run by various entities affect farmer households’ multidimensional poverty status. Our findings suggest that: (i) Each percentage of increase in the probability of farmers’ access to SCF credit from their cooperatives makes it 8% and 10% more likely for farmers’ MPI and multi-dimensional poverty order to decrease with a significant poverty-reducing effect. (2) SCF credit from farmers’ cooperatives run by large farmers, agribusinesses and the village cadres are significantly poverty-reducing for fulltime poor farmers. (iii) The higher non-farm incomes as a share of farmers’ total income, the less poverty-reducing SCF credit from farmers’ cooperatives run by large farmers and villagers becomes, and the more poverty-reducing SCF credit for agribusiness everyone cooperatives becomes. These findings highlight the importance of policy guidance for farmers’ cooperatives to offer appropriate credit products and solutions according to local conditions, which is vital to maximizing the effects of targeted financial poverty reduction.

Keywords: farmers’ cooperatives, supply chain finance, poverty-reducing effect, multidimensional poverty, PSM-DID
JEL Classification Codes: Q14, G20
DOI: 1 0.19602/j .chinaeconomist.2020.05.06

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