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Does Participation in Agricultural Cooperatives Affect Farm Sustainability? Empirical Evidence from Taiwan

Sustainability 2019, 11(18), 4987; https://0-doi-org.brum.beds.ac.uk/10.3390/su11184987

by Bo Wang¹, Po-Yuan Cheng², Brian Lee³, Lih-Chyun Sun⁴ and Hung-Hao Chang^3,*

Reviewer 1: Anonymous

Reviewer 2: Anonymous

Reviewer 3: Anonymous

Reviewer 4:

Landon Yoder

Sustainability 2019, 11(18), 4987; https://0-doi-org.brum.beds.ac.uk/10.3390/su11184987

Submission received: 21 July 2019 / Revised: 19 August 2019 / Accepted: 8 September 2019 / Published: 12 September 2019

(This article belongs to the Section Sustainable Agriculture)

Round 1

Reviewer 1 Report

Journal: Sustainability (ISSN 2071-1050)

Manuscript ID: sustainability-566659

Number of Pages: 22

Title: Does Participation in Agricultural Cooperatives Affect Farm Sustainability? Empirical Evidence Using the Causal Mediation Analysis

The study “Does Participation in Agricultural Cooperatives Affect Farm Sustainability? Empirical Evidence Using the Causal Mediation Analysis” focus on estimating the impact of agricultural cooperatives on farm profits in Taiwan. The authors exploit a nationally representative survey of farm households in Taiwan in 2013, and find that participating in cooperatives increases farm profits. The use of food labels accounts for approximately 15% to 28% of the total effect of cooperative participation on farm profits.

General comment –

In the past few years, previous studies solely focus on the magnitude of agricultural cooperatives on farm production and fail to explain the mechanism behind it. This study contributes to this gap by estimating the impact of agricultural cooperatives on farm profits. Although manuscript is not the first one to study farm profits under the conditions of agricultural cooperatives, it uses a novel solution to the causal mediation analysis in this topic. This is the main contribution of the manuscript.

The results presented in this paper will be of interest for a broad audience including both, researchers and practitioners. I enjoyed reading this paper, which has a number of noteworthy strengths. The current version of the paper is well prepared and only need few revisions for further improvements.

It is feasible to adjust for these suggestions below and emerge with an improved paper.

1. Introduction

Good

2. Background of the Agricultural Cooperatives and the Food Label Certification System in Taiwan

Good

3. Econometric Model

The authors need to give more information about these figures in Table 1. More importantly, include a paragraph of more variables expectation based on the literatures at the end of this section.

4. Discussion

P. 8 Compared the findings with other papers.

Author Response

Authors’ Responses to Reviewer 1’s Comments

General comment –

Authors’ Responses: Thank you for your kind words on our paper.

Good

Background of the Agricultural Cooperatives and the Food Label Certification System in Taiwan

Good

Econometric Model

The authors need to give more information about these figures in Table 1. More importantly, include a paragraph of more variables expectation based on the literatures at the end of this section.

Authors’ Responses: To accommodate your suggestion, we now add more discussions of the statistics reported in Table 1. In lines 172-182 on page 4, we write:

“Detailed definitions and sample statistics of all explanatory variables are presented in Table 1. As shown in Table 1, 3,853 (39%) farm operators are members of agricultural cooperatives. This number reflects the significance of farmers’ associations in Taiwan, as many farmers are smallholders who rely on these unions for vital agricultural and financial services. Summary statistics also suggest that farms participating in cooperatives are more profitable and more likely to use food labels. On average, farmers who engage with these associations observe farm profits of NTD $0.911 million and 32.2% of them use food labels. Non-participants have farm profits of NTD $0.536 million, and only 2.9% of them use food labels. Similarly, farmers that are members of cooperatives have larger farms. The average farm size of participants is 1.95 hectares, compared to their counterparts who cultivate 1.53 hectares of farmland. Participants also have a higher ratio of household members working on the farm and tend to produce fruit.”

Discussion 8 Compared the findings with other papers.

Authors’ Responses: Per your suggestion, we now add discussions comparing our findings to the ones revealed in previous studies. In lines 344-354 on page 9, we write:

“Given these findings, our results suggest that policymakers should encourage agricultural cooperatives to continually reduce information asymmetries. For example, because farmers are often older and less educated, cooperatives can establish outreach activities to visit farms and provide them with relevant information. One example of a successful model includes the Almería Agricultural Cooperatives in Southwest Spain [28]. These cooperatives function as a market and non-market coordination mechanism for both individuals and local institutions, such as contributing to knowledge systems related to farm labor and employing agricultural technicians to reduce the usage of pesticides [28]. Similarly, many food certifications also require environmentally friendly production practices, such as organic farming. Agricultural cooperatives and policymakers can work in tandem to provide relevant information such as where to purchase seeds and which agronomic inputs should be used on farm production.”

Authors’ Responses: Thank you very much for this feedback. We have now added comparisons of our findings to those seen in prior studies. Please see the content in Section 5 (pages 6-9).

Reviewer 2 Report

1. Very well written grammatically
2. A little more information needed to the agrarian context in Taiwan: demographics, main crops, percentage of GDP of agriculture;
3. More detailed overview of the Taiwanese cooperative sector: number of rural societies, and by commodity e.g. rice, vegetables, fruit, livestock, and other crops;
4. Line 239 – should be ‘primary’ education instead of ‘primal’;
5. Perhaps a clearer statement on the benefits of the ‘co-operative effect’ – economies of scale of cooperation in fields such as input supplies and marketing (of which certification is part of) in the Introduction;
6. Bring in the ICA in terms of the importance of the cooperative model worldwide – just brief reference to their websites and statements or global membership base: https://www.ica.coop/en;
7. Conclusion – both western governments and those in the global south often pay lip service to promoting agricultural cooperatives but rather have a policy preference for Investor Owned Firms (IOFs). Politics, therefore, often blocks solid policy recommendations such as support of cooperatives (lines 313-316). This is the case in my country. Does the Taiwanese government have the political will to support these policy recommendations? Need a bit more detail here about the policy context.

Author Response

Very well written grammatically

Authors’ Response: Thank you very much for the kind words on our paper.

A little more information needed to the agrarian context in Taiwan: demographics, main crops, percentage of GDP of agriculture

Authors’ Response: We now include additional information and statistics pertaining to agriculture in Taiwan. In lines 111 to 117, we write:

“Agriculture is an important sector of the Taiwanese economy, with production totaling 6.9 million tons per year on roughly 799,000 hectares of arable land accounting for nearly 2% of GDP [16, 17]. The average yearly production of each agricultural commodity and their respective size of cultivation are rice: 732,000 tons, 271,000 hectares; coarse grain: 492,000 tons, 70,000 hectares; special crops: 601,000 tons, 32,000 hectares; fruits: 2.7 million tons, 185,000 hectares; vegetables: 2,823,000 tons, 146,000 hectares; floriculture: 2,923,000 tons, 146,000 hectares; and pasture grass: 944,000 tons, 15,000 hectares [16].”

Additionally, lines 182 to 192 now includes an expanded discussion of summary statistics that displays relevant information related to Taiwanese agriculture.

We also add details about the demographics of Taiwanese farmers when explaining our results. In lines 272 to 273, we write:

“This finding differs from Fischer and Qaim [10] and Mojo et al. [12], likely because older farmers in Taiwan are less educated than their younger counterparts.”

More detailed overview of the Taiwanese cooperative sector: number of rural societies, and by commodity e.g. rice, vegetables, fruit, livestock, and other crops;

We now include additional information about farmers’ associations in Taiwan in lines 124 to 126:

“Recent government official data from the National Farmers’ Association shows that farmers’ associations have 903,061 associated members and 2,191 companies producing an assortment of commodities such as rice, fruits, vegetables, and livestock [20].”

Line 239 – should be ‘primary’ education instead of ‘primal’

Authors’ Response: Thank you for noticing this, we have corrected this typo.

Perhaps a clearer statement on the benefits of the ‘co-operative effect’ – economies of scale of cooperation in fields such as input supplies and marketing (of which certification is part of) in the introduction;

Authors’ Response: We now add an additional statement clarifying the benefits of cooperatives in line 33 to 35:

“Moreover, organized farm producers can access greater bargaining power and enjoy economies of scale in logistics and marketing by collectively pooling their resources [4].”

Bring in the ICA in terms of the importance of the cooperative model worldwide – just brief reference to their websites and statements or their global membership base: https://www.ica.coop/en

Authors’ Response: We have now done this in lines 341 to 343:

“For example, organizations such as the Ghana Cooperative Council (GCC) and the Indian Farmers Fertilizer Cooperative (IFFCO) which are members of the International Cooperatives Alliance are crucial for local and national agricultural development [31].”

Both western governments and those in the global south often pay lip service to promoting agricultural cooperatives but rather have a policy preference for Investor Owned Firms (IOFs). Politics, therefore, often blocks solid policy recommendations such as support of cooperatives (lines 313-316). This is the case in my country. Does the Taiwanese government have the political will to support these policy recommendations? Need a bit more detail here about the policy context.

Authors’ Response: Thank you very much for this feedback. To provide details about the policy context in Taiwan, we now add in lines 336 to 338 that:

“Agricultural authorities in industrialized countries have been increasingly concerned with decreasing farm profits due to the fluctuating price dynamics that are present in agriculture [30]. In Taiwan, the Council of Agriculture (COA) and the democratically-elected Legislative Yuan (parliament) are actively trying to increase farm profitability since nearly 5% of the labor force is employed in agriculture [17].”

Reviewer 3 Report

INTRODUCTION

The Introduction part analytically explains the role of Agricultural Cooperatives for national economy as well as for farm income. Moreover, the authors nicely explain why according to the literature review in some cases the role of cooperatives is catalytic for farm income while in other cases it is not. Additionally, the authors explain why they choose the specific tool (Causal Mediation Analysis) for their analysis, the basic finding of their research and their contribution. In my opinion, the introductory part needs no changes.

BACKGROUND OF THE AGRICULTURAL COOPERATIVES AND THE FOOD LABEL CERTIFICATION SYSTEM IN TAIWAN

This part briefly explains the role of agricultural cooperatives and the food label certification system, specific in Taiwan. According to my opinion, the could provide some more information about how many food label certificates exist in Taiwan as well as some statistical data about the kind of agricultural products or farm characteristics that usually use these labels.

DATA

This part is OK.

ECONOMETRIC MODEL

This part is OK.

EMPIRICAL RESULTS

In my opinion, this part needs revision. The authors mention which parameters are the most important, but they could explain in more details the significance of the results. For example, in lines 241-242 (p.9), the authors mention that… a one additional hectare increase in the size of farmland increases the propensity of engagement by 1.9… or in lines 233-235 …a one year increase in the age of the farm operator decreases the likelihood of participation in cooperatives by 0,5 percentage points… But what these numbers mean according to their experience? Are these percentages small or large? Please explain…. Similarly, in lines 246-248, the authors denote that … Farms in the west, east and southern portions of Taiwan are less likely to participate in cooperatives compared to those in the north by 12,6, 12,5 and 17.5 percentage points respectively..… But what this could mean for policy makers?

Moreover, it would be interesting for the readers to have the results of other researchers in order to compare these results.

DISCUSSION PART

It is well written. One small remark is that the authors could give some practical examples when they mention that the authorities should establish educational and technical assistance programs that ease the strain of obtaining food certifications and labels. Could you be more specific? Do you have examples from other countries? How agricultural cooperatives could cooperate with authorities towards this direction? I would recommend to the authors to improve the practical implications that they suggest to policy makers.

CONCLUSION PART

It is OK.

REFERENCES

Please double check this part as some references are not appropriate (e.x. in Francesconi, missing date).

As a general comment, the authors are dealing with a very interesting topic with a new methodology (causal mediation analysis). They managed to explain their methodology and why they have chosen this method. The authors have added a plethora of updated references. Some minor linguistic errors exist in the text. They could expand their practical implications in order to improve it.

Author Response

Authors’ Responses to Reviewer 2’s Comments

INTRODUCTION

BACKGROUND OF THE AGRICULTURAL COOPERATIVES AND THE FOOD LABEL CERTIFICATION SYSTEM IN TAIWAN

Authors’ Responses: Thank you very much. This is indeed a good suggestion. We now add official statistics of the use of food labels in Taiwan. In lines 132-138 on page 3, we write:

“The TGAP system is the most significant food traceability program in Taiwan. Accordingly, the Council of Agriculture (COA) developed the TGAP system to follow international standards such as the Global Food Safety Initiatives (GFSI), and has encouraged participation amongst producers [20]. Recent official statistics show that the number of certified TGAP entities (either individuals or groups) has increased from 1,100 in 2008 to 10,069 in 2019. Amongst these entities, they are categorized as agricultural (8,834), aquaculture (719), livestock (258), poultry (124), and processed products (134) producers [20].”

DATA

This part is OK.

ECONOMETRIC MODEL

This part is OK.

EMPIRICAL RESULTS

Authors’ Responses: We now provide an alternative way to measure the magnitude of these effects. In lines 278-287 on pages 7-8, we write:

“Differences in participation across farm types are also observable. Compared to livestock farms, producers growing rice, vegetables, and other crops are less likely to engage with cooperatives by 18.8, 6.2, and 5.1 percentage points, respectively. The magnitude of the effects are approximately equal to 49, 16, and 13 percent when these values are evaluated at the sample average of the participation rate in agricultural cooperatives (see Table 1). Finally, regional disparities are also found to impact cooperative membership. Farms in the west, east, and southern portions of Taiwan are less likely to participate in cooperatives compared to those in the north by 12.6, 12.5, and 17.5 percentage points, respectively. The magnitude of the effects are approximately equal to 32, 32, and 45 percent when these values are evaluated at the sample average of the participation rate in agricultural cooperatives.”

Moreover, it would be interesting for the readers to have the results of other researchers in order to compare these results.

Authors’ Responses: Yes, we now add comparisons of our findings to those revealed in previous studies. Please see the content in Section 5 (pages 6-9).

DISCUSSION PART

Authors’ Responses: We now add extensive discussions on policy implications, especially on the recommendation for policy implementation. In lines 344-354 on page 9, we write:

CONCLUSION PART

It is OK.

REFERENCES

Please double check this part as some references are not appropriate (e.x. in Francesconi, missing date).

Authors’ Responses: We have checked all of the references.

Reviewer 4 Report

Dear Editor,

Thank you for the opportunity to review the manuscript, “Does participation in agricultural cooperatives affect farm sustainability? Empirical evidence using the causal mediation analysis.” The paper’s novel contribution rests in its use of a large dataset across multiple sectors at a national scale and applying causal mediation analysis to distinguish between direct and indirect effects of agricultural cooperatives. The authors frame their study’s contribution as responding to the inconsistency of findings across the literature, which show both beneficial and harmful effects on members. The paper has some interesting findings and their methodology would appear to be valuable to other researchers in furthering an understanding of what aspects of cooperatives help to benefit their members. I believe the manuscript has potential for publication in Sustainability, but there are a few areas within the manuscript that would benefit from clarification.

A potentially small but critical change is the need to explain how the mediator variable was selected and identified. They note in line 318 that they were only able to find one mediator variable. I did not see an explanation of this process in the methods and am confused as to whether they looked at several and found only one or if they were interested in looking only at food labels, given their contextual explanation on its advantages in reducing information asymmetries and benefiting smallholders. On line 203, they included food labels as the mediator variable, but this appears to be the extent of explanation on selection. Is this the only variable they tried? Why? They provide some theoretical context for food labels, but a discussion of why this mediator versus others would be helpful. Moreover, finding only a single variable is not necessarily a limitation, as they describe it (line 318), but could be valuable to explain what they expected to find and then to comment on the implications of not finding it, if they did attempt the causal mediation with other variables. If they were only interested in this one variable, then they should so state for the purpose of transparency.

A potentially larger change is to clarify the theoretical aims of the study. I am unconvinced about the claims of long-term sustainability (lines 34 and 296), primarily because the study uses cross-sectional data (line 145) and thus cannot really speak to this claim. The findings are still important and useful, but seem far more aimed toward equity, which is also an important sustainability concern. Longevity is a secondary concern but is given more weight in the introduction and conclusion. In addition, the literature they review doesn’t get into why smallholders sometimes do not benefit (lines 55-63). They use this as an important rationale for their study (line 64), but the findings contribute little to advancing our understanding of barriers to equity. Their findings on food labels as a mediator of profitability show that cooperatives are beneficial but may still exacerbate inequities, similar to other studies they cite. To the extent that the authors agree with this critique, some reframing in key areas may be sufficient to avoid claiming to tackle inequity concerns. Alternatively, they could dive further into explaining why larger farms benefit more from food labels in Taiwan than small or medium farms and how this could be rectified.

Minor Concerns

LN 239: Change “primal” to “primary”

In the abstract, the authors write: “Although the consensus from the literature suggests that participating in these organizations significantly affects farm production, there is inconclusive evidence on whether this effect is positive or negative.” Their literature review seems to indicate that cooperatives are mostly beneficial, but not necessarily equitable, which could be interpreted as being slightly different from negative outcomes, such as losing money.

Author Response

Dear Editor,

Authors’ Responses: We thank you very much for this comment and agree with your point on the mediation analysis. To accommodate your suggestion, we now add the following sentences in Section 4 to justify this decision (in lines 222-233, page 6):

“We use food label certifications as the mediator variable based on the literature examining the role of agricultural cooperatives in the adoption of voluntary standards, in addition to data considerations. Prior research has shown that cooperatives increase the probability of producers engaging in both specialty markets and certifications. For example, Wollni and Zeller [23] find that Costa Rican coffee cooperatives positively affect the likelihood that a farmer chooses to grow specialty coffee by 24% and received prices by USD $0.09/lb. Similarly, Pinto et al. [24] note that cooperatives and producer associations increase the accessibility of socioenvironmental certifications for small and medium coffee producers in Brazil, compared to individual certifications. Our analysis examines food label certifications because of the empirical evidence demonstrating that cooperatives reduce information asymmetries, as many producers are unable to apply these practices without this support [5]. Thus, using food label certifications as the mediator variable allows us to quantify one of the principal ways through which cooperatives can affect their members.”

Authors’ Responses: We respond to your comments in several places in this revision. Regarding the explanations of the distributional effects, we add discussions in lines 299-306 on page 8 and as follows.

“One particular reason for these findings is that larger farms are more likely and capable of adopting food label certifications due to their ability to create economies of scale. These production advantages are especially important for cooperative membership, as many of these organizations establish entry barriers such as minimum land and labor force requirements [7, 8, 25]. Additionally, larger farms usually receive more assistance from cooperative. For example, Snider et al. [5] note that cooperatives prefer to certify larger farms to maximize output while reducing the number of issued certifications. Therefore, the effect of agricultural cooperatives on farm profit is more pronounced amongst larger farms.”

Minor Concerns

LN 239: Change “primal” to “primary”

Authors’ Responses: Thanks a lot. We now fix this typo.

Authors’ Responses: Yes, we agree with your point. We now elaborate on this point in more detail throughout the paper.

Round 2

Reviewer 2 Report

I have read the revisions and am satisfied with them.

Reviewer 4 Report

Dear Editor,

Thank you for the opportunity to review this manuscript. The authors have responded thoroughly to the questions and suggestions that I provided in my initial review. I do not have further concerns with the manuscript and recommend it for publication.

Author Response

Dear reviewer: We are pleased to know that you are satisfied with the changes we made in our revision. Thank you very much again for your constructive comments and suggestions.

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Does Participation in Agricultural Cooperatives Affect Farm Sustainability? Empirical Evidence from Taiwan

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