Does agricultural cooperative membership help reduce the overuse of chemical fertilizers and pesticides? Evidence from rural China

Abstract

The overuse of chemical fertilizers and pesticides (CFPs) has negatively impacted the environment and human health. It is an urgent issue that should be addressed. In this study, we investigate whether agricultural cooperatives can serve as an institutional arrangement that helps reduce the consumption of CFPs, using the data of 2012 family farms from the Ministry of Agriculture and Rural Affairs of China. Various approaches, including instrumental variable-based two-stage residual inclusion approach (2SRI), endogenous switching probit (ESP) model, and endogenous switching regression (ESR) model, are utilized to help address the endogeneity issues of the cooperative membership variable. The results show that agricultural cooperative membership significantly increases the probability of reducing fertilizers and pesticides of the family farms and improves net return per yuan CFPs. The further analysis shows that agricultural cooperative production services reduced the usage of fertilizers and pesticides, while cooperatives marketing services only significantly lowered the use of pesticides. Our findings highlight the importance of promoting the development of agricultural cooperatives to support green agricultural production in China.

Keywords: Agricultural cooperative; China; Endogeneity; Family farm; Fertilizers; Pesticides.