Welfare effects of vegetable producers' inclusiveness in supply chain coordination: direct effects and spillovers

Abstract

PurposeThe purpose of this paper is to estimate the effect of vegetable producers' inclusiveness in supply chain coordination on vegetable production performance and potential spillover effect on farm and non-farm income.Design/methodology/approachA comprehensive dataset comprised of 410 paired vegetable producers in China is applied. Propensity score matching (PSM) estimation method is used to control for the selection bias problem.FindingsThe empirical results indicate that contracting farming does not have significant effect on yield or profit of vegetable production, but promote producers to obtain quality certification. In comparison, cooperative membership has positive effects on the yield, profit and quality certification of producers. Additionally, cooperatives generate positive spillover effects on members' farm and non-farm income, though the results are sensitive to unobserved factors. The inclusion of spillover effects helps to find out the potential unobserved effects which are neglected by most studies and design better policies to promote the development of agricultural companies and farmer cooperatives.Originality/valueFirst, empirical evidence is provided for theories regarding the roles of different supply chain coordination modes on producers. Second, the analysis on evaluating the effects of supply chain coordination also considers the spillover effect on the farming of other products and even non-farm work of involved producers. Third, a unique dataset comprised of 420 paired vegetable producers, based on an extensive survey is built.