Cooperatives as instruments of smallholder development: Evidence from banana, cocoa, coffee, and palm oil producers in Peru

Abstract

Collective action in the agricultural sector of Peru started in the form of agrarian production cooperatives around 1969. Following the collapse of the collectivisation program in the 1980s, external stakeholders helped to form marketing cooperatives in select sectors to discourage coca leaf production. Nowadays, cooperatives are only active in four sectors: banana, cocoa, coffee, and palm oil. Case study evidence of the performance of cooperatives in Peru is mixed, which raises the need for applied research to inform if cooperatives have been successful as instruments of smallholder development. We address the situation with empirical analysis of comprehensive survey data collected for the 2016-2019 period. Using multiple empirical techniques, we estimate the farm-level treatment effect of selling output to cooperatives. Generally, we find a positive effect of cooperatives on the price received and the quantity sold of their patrons. Palm oil cooperatives, which appear to have started in the recent past, form an exception. Implications of our findings are discussed.