Farmer Professional Cooperatives: Property Rights Structure And Organizational Efficiency

Since the law of farmers’ cooperatives was carried out, researchers pay much attention to the property right structure of “core- periphery ”, which includes not only the evaluation of efficiency, but also concerns the later adjustment of law regulation.Compared with traditional cooperatives, the property right structure of “coreperiphery ” cooperatives in China has been varied. Is it rational choice according to Chinese environment or just a change of property right structure based on organization efficiency ? Nowadays the existing documents shows different opinions of this issue.This article concludes that the property right structure is the key for efficiency of an economic organization. Farmers’ cooperative is a kind of mutual economic organization whose subject are mainly farmers. It has shorter history in Chinese development. Although the number of cooperatives increases quickly, its scale and profitability is still in weak stage, and moreover, heterogeneous membership of“core- periphery ” structure is obvious. Core members burden mostly the responsibility of investment, operation and management, how about periphery members? What’s relationship between periphery members and cooperatives? Is there mechanism for core members and periphery members to be interdependent and cooperate? Are there advantages of “core- periphery ” cooperatives in the fields of encouragement in specific investment and human resources? Therefore, the defects of property right institution can be conquered and efficiency can be showed.This article takes farmers’ cooperatives in Guangdong as example, especially take Chili, which is characteristic agricultural product in Guangdong as typical example. This research obeys the route of “ starting from theory and phenomenon---raising problems---analyzing problems---solving problems”, and choose different views to inspect and analyze characteristics and causes of present property right structure of “core- periphery ”, and then demonstrates the efficiency of farmers’ cooperatives based on the theoretical explanation and empirical analysis, at last proposes suggestion of optimizing efficiency from the view of change of property right structure. Based on the analysis instrument of Property Right Theory and Transaction Cost Theory in neoinstitutional economics, this article combines normative analysis and empirical analysis, qualitative analysis and quantitative analysis together, using different kinds of research methods to approach the following conclusions:1. The deep development of the market economy in rural areas leads farmers toorganize together voluntarily to trade agriculture products and purchase means of production, so that to save transaction fees and producing cost. In this circumstances,the members relationship is loose. The development of agricultural industrialization demands the platform function of farmers’ cooperative between farmers and leading enterprises. In this process the internention of government promoted rapidly the construction of “ enterprise + cooperative +farmer”, and simultaneously this makes farmers cooperatives “more official”, thus makes them lack of independency,therefore the dominant position of farmers was weakened, the farmers’ benefit does not have enough law insurance. The exertion of the law of farmers’ cooperatives ensures independent legal entity of farmers’ cooperatives, and admits that cooperatives have the right of independent operation and finance, With the above excitation of both farmers and government, cooperatives develop quickly with leading subject variety and members heterogeneity. That means that less members burdens the task of investment, operation and management, more members have less willing to sponsor and participation, in this way the characteristics of “core- periphery ”structure come into being.2. Farmers’ cooperatives have the function of “external internalization”. Based on the “public field ” in theory of property right, this research finds that one part of cooperative profit comes from the redefinition of public field in the transaction of agricultural products. The distribution scheme can distinguish traditional cooperatives from “core- periphery ” structure. Traditional cooperatives distribute according to transaction percentage, “core- periphery ” cooperatives distributes according to funds percentage( share ratio)3. There are 3 kinds of relationship between members and cooperatives in “coreperiphery ” structure. patronage relationship, patronage and owe relationship,patronage, owe and dominate relationship. Members who belong to the first relationship are qualified members, also called periphery members. Members who belong to the third relationship are investors and dominated members, also called core members. Members who belong to the second relationship are the middle-level.Furthermore, the special concentric zone in rural face-to-face society becomes the links of core members and periphery members, and trust in rural face-to-face society as well as property right encouragement improves the efficiency of cooperatives.Clear property ownership is not only the precise of market transaction, but also the important conditions of organization efficiency. Traditional cooperatives defines property right vaguely, which brings conflicts between residual right and decisioncontrol. The Hitch influences the activity of members investment and enterpriser operation. So that the efficiency is low. The way of improving it is to change the property right structure. Comparison of the income of members between traditional cooperatives and “core- periphery ” cooperatives shows that the structure of specific investment encourages more and have efficiency advantages. The benefit of core members and periphery members became differentiation. The core members faces great pressure of management, the level of price influences the benefit space. The periphery members loses the right of residual claim, and needn’t to burden the cost of specific investment. The level of the price is the decisive factor to affect transaction behavior for periphery members. The cost of necessary specific investment restricts the behavior of core members, and at the same time affects the activity of improving transaction price and controlling internal operation cost.As core members are the leaders of farmers’ cooperatives, mostly their benefit confronts with periphery members, sometimes they have shared benefit. Leaders will take different measures to control risks and encourage organization, which is the key factor of evaluating members efforts. For example, the result of members’ behavior such as the level of improving prices, scales of specific assets will be the evaluation index of cooperatives efficiency. By comparison of traditional cooperatives led by enterprises with “core- periphery ” cooperatives led by larger farmers crowd, the research finds that “core- periphery ”cooperatives have better accumulative mechanism in specific investment. The scale of specific property and quantity of members increase, management efficiency has also been improved, periphery members income increase obviously. Moreover, it can resist the risk of market fluctuations. On the contrary, in traditional cooperatives led by enterprises, there is no specific investment link between the members of farmers and enterprises. Their relationship belongs to Entrust and Surrogate Relationship, which is Reciprocity Alliance, not benefit shared unity.From traditional cooperatives to “core- periphery ”cooperatives, great changes have taken place in property right structure. During the process of change, it obeys the rule of change according to environments and periodicity as well as the principle of institutional efficiency reducing and innovation. All in all, property right structure decides the efficiency of cooperatives. From the birth to development to fading, the process of changes can not be avoid. Among which, the principle of efficiency is the precise. The property structure compatible with encouragement should be chosen,adjusted and innovated to make cooperative more vital. At present, “core-periphery ”cooperatives still be faced with many problems, such as how to solve the benefit conflict, how to improve prices, reduces risks of specific invest. The problems can be divided into the restriction of factor endowments of farmers management talents and external restriction of monopolistic power. In all, this article suggest that government should encourage the association and work division of farmers cooperatives to improve the environment of human resource, funds, technology and so on. This article also encourage cooperatives to adopt and probe share transferable institution. In addition, government should respect their self-governance and flexibility of cooperatives decision, strengthen training staff and construct gradually model cooperatives, then guide them to cultivate teamwork and enhance the trust between members.