Service Function,Interest Mechanism And Practical Selection Logic Of Farmers Professional Cooperatives

Since the enactment of Cooperative Law in 2007,Farmers Professional Cooperatives(FPCs)have been growing rapidly in China,resulting in a large increase in number and coverage.The actual development of cooperatives behind the rapid growth of FPCs is not satisfactory,which is mainly reflected in two aspects.First,the proportion of service function provided is low.Second,even if a service function is provided,there is no interest distribution mechanism in accordance with the classic system implemented by the return of the trading volume.Then,what is the development status of cooperatives in China?How to form three service functions(unified purchase of agricultural materials,unified sales of products and the collective investment with productivity)of cooperatives?Why cooperatives do not apply interest distribution mechanism in accordance with the classic system implemented by the return of the trading volume in reality?It means greatly to comprehend the development rules of cooperatives deeply and regularize the development of cooperatives in reality by offering clear answers to the above questions.As far as cooperatives are concerned,the provision of relevant service for their members is the prerequisite to attract farmers to join in the cooperatives and maintain the survival and development of the organizations.Based on the basic content and application of collective action theory,transaction cost theory and incentive theory,the study combines the relevant researches to construct the theoretical analysis framework and summarize the formation conditions of cooperation in general sense.Then,the study unfolds analysis with a focus on the product cooperatives,elaborating the formation mechanism of different service functions,such as technical service,unified purchase of agricultural materials,unified sales of products and the collective investment with productivity,and summarizing the influence factors.An empirical test of survey data collected from 500 cooperatives in 331 villages of Jiangsu,Jilin and Sichuan in 2014 has also been carried out,based on which the reasons for cooperatives’ not having interest distribution mechanism in accordance with the classic system implemented by the return of the trading volume are further explained.The systematic research facilitates the understanding of the mechanism and operation rules of the cooperatives’ service functions,so as to provide scientific basis for the future development of regularized cooperatives.The main conclusions are as follows:Firstly,the expansion of operation scale,the striving for greater negotiation potential and the perfection of quality supervision system of agricultural products will facilitate the formation of service function of unified purchase of agricultural materials to a large extent.Currently,the scale of agricultural production and operation in China is too small.We must further expand the operation scale to enhance the negotiation ability of unified purchase of agricultural materials.When the scale has been expanded,the cooperatives then have the motivation to explore higher purchasing channel of agricultural materials,striving for greater price difference,improving the present situation of the limitation in lowering production cost caused by the great competition in agricultural materials market.Meanwhile,we should improve the quality supervision system of agricultural products to avoid that the advantage of the unified purchase of agricultural materials is unable to show up due to the lack of recognition mechanism.By improving the recognition mechanism through various ways,the service function of unified purchase of agriculture material is formed in the end.Secondly,the improvement of capital-input capacity,quality supervision system and recognition system will facilitate forming the service function of unified sales of products to a large extent.Although the exclusive sales channel and investment processing capabilities can enhance product premium or reduce industry risk of the FPC,the measures of investing in the process,developing exclusive sales channels and operating high value-added agricultural products require high demand for the capital investment and social capital,which is difficult to meet due to the small scale of agricultural production and limited capacity of the general farmers in China.Thus,alternative measures to improve investment input capacity are urgent to be carried out.Meanwhile,the quality supervision system of food should be enhanced in order to prove that the asset specificity investment can improve the quality of products in the consumer market.Thirdly,the improvement of social capital returns and the construction of system,can promote the development of collective investment.Although financial funds can improve the service function and service level in the short term,constrained by the limited financial resources,it cannot support long-term collective investment projects with productivity for all FPCs.It would be a different story if financial support was shifted from pure material support to the construction of cooperative system.Fourthly,under the influence of the organization cost and the realistic interests,the FPCs choose a special interest distribution mechanism rather than the benefit allocation mechanism in the system arrangement implemented by the return of the trading volume,which needs higher organizational cost.Therefore,after the long-term competition between different members within the organization,the interest distribution mechanism corresponding to all kinds of service functions has evolved into another distribution arrangement by realistic choice,which saves a large amount of organization cost,achieving incentive compatibility between different cooperation subjects while enabling FPCs to better meet the needs of the current agricultural production and operation.It is expected that,FPCs,as the representative of new agricultural business entities,will play an important role in agricultural production and operation in the future.Although the influence of cooperatives on agricultural production is not as trivial as it has been pointed out in the literature,it is a long-lasting and arduous task to regularized a healthy and sustainable development of cooperatives and play their full roles in modern agriculture.Based on the above conclusions,the study believes that cooperatives can be regularized by making efforts in the following three aspects:step up the public investment and improve the external environment;adjust measures to local conditions and current situations;relocate the organization and make scientific assessment of the development of cooperatives.