Agricultural Cooperatives and Their Impact on Economic Performance of Farms in Slovakia

Abstract

Effects of membership in cooperative organizations was investigated in many studies, and their results were sometimes controversial. Presented paper contributes to discussion related to cooperative membership by comparing members and non-members, with elimination of self-selection bias, to identify motivation to become member and main effects coming from membership in producer organization. Panel data used in the presented analysis are from Ministry of Agriculture of Slovak Republic at farm level for period of years 2009-2016, which was the most recent available data. Propensity score matching approach was applied to eliminate self-selection bias and to create sample of members and corresponding non-member farms in each year. Difference between these two groups were evaluated by methods of statistical inference. In general, it can be concluded, that in presented period were members of producer organizations more profitable than non-members. Also difference in total revenue was significant in period of year 2010-2013, which means probably successful using of advantage from better bargaining position of producer organization, compared to non-members. Significant difference in profit disappeared in last three years 2014-2016, this could suggest, that membership in producer organization was less attractive to many farms which led to decrease in number of members. Membership in producer organization probably improved economic performance of farms in Slovakia in period 2009-2013, but this advantage disappeared in last years. This could be probably linked to support for producer organizations from European Union in period 2007-2013.