Can Organizational Participation Enhance Farmers' Sales Bargaining Power? Empirical Evidence From a Major Kiwifruit Producing Region in China

Abstract

While numerous studies have demonstrated the positive effects of organizational participation on farmers' welfare, the existing literature has seldom addressed the role of such participation in promoting fairness within supply chain distribution mechanisms. To address this gap, this study utilizes micro-data from 1100 kiwifruit farmers in Shaanxi and Sichuan provinces, the primary producers of kiwifruit in China. Applying the bilateral stochastic frontier model, this study measures and analyzes the sales bargaining power of farmers within the kiwifruit trading market. Using a counterfactual framework based on the propensity score matching method, the study examines the impact of organizational participation on farmers' sales bargaining power and its underlying mechanisms. The findings reveal that the actual transaction price of kiwifruit is, on average, 2.11% lower than the benchmark price due to the bargaining power disparity between farmers and buyers. Moreover, the distribution of farmers' surplus, acquirers' surplus, and net surplus demonstrates significant heterogeneity across varying levels of education, cultivation sizes, and marketing channels. Organizational participation is found to enhance farmers' sales bargaining power by 0.017, with the results remaining robust after a series of validity tests. Furthermore, organizational participation can effectively mitigate information asymmetry among the hierarchical actors within the industry chain, reduce production costs, and broaden sales channels, thereby enhancing farmers' bargaining power in the marketplace.