Benefits, Costs, and Distributional Consequences of a Publicly Assisted Marketing Cooperative

Abstract

During the last two decades, public policy makers have recognized a need to enhance the earning capacity of low income rural residents. For the rural population now supplementing minimal incomes with income from agricultural production, current policy instruments are slow in effect. Designed primarily for long-run development of nonagricultural employment through industrialization and the enhancement of human capital through schooling, such policies largely ignore small farms as a transitional source of income and employment. An exception to this general tendency, Title III of the Economic Opportunity Act of 1964 planned to strengthen the income earning capacity of small farm households. Although larger farms have been served by organizing cooperatively, small, low income farms have appeared limited in their ability to organize cooperatively by inadequate investment capital. Title III sought to ease this perceived capital constraint with a program of grants and loans. The primary objectives were (a) to provide the opportunity for increased farm income through productive employment and (b) to direct this income enhancement opportunity toward otherwise low income households (U.S. Congress). Existing evaluations tend to stress more the need for changes in administrative procedures than careful consideration of project benefits and costs. Where income changes have been estimated, analytic methods are unclear and leave the significance and validity of such results in doubt. The role of Title III in en-