Factors influencing membership of dairy cooperatives: Evidence from dairy farmers in Thailand
Introduction
Dairy production is an important segment of the livestock economy of the world accounting for about 30 % production from the livestock sector (Food & Agriculture Organization of the United Nations (FAO), 2016). Approximately 150 million households are associated with dairy production around the world (Food & Agriculture Organization of the United Nations (FAO), 2018). During the last decade, developing countries have expanded their shares in worldwide milk production. Smallholders are an essential part of milk production in most developing countries, and milk production contributes to household livelihoods, food security, and nutrition (Food & Agriculture Organization of the United Nations (FAO), 2018).
Like several developing countries, Thailand’s dairy industry has expanded as domestic milk consumption has increased rapidly since commercial dairy farming started in the early 1960s. The dairy industry has registered steady growth with about 16 % of livestock production (Food & Agriculture Organization of the United Nations (FAO), 2016). The milk production has increased by almost 1.5 times from 0.8 million tons in 2008 to 1.2 million tons in 2017 (Office of Agricultural Economics (OAE), 2017). In addition, the government has promoted new initiatives to strengthen the milk production by enhancing feed quality, milking technology, as well as proper collection and milk storage (Ministry of Agriculture & Cooperatives (MOAC), 2016). As a result, milk productivity has improved from 6 to 7 kg/cow/day in 1992 (Chungsiriwat & Panapol, 2007) to about 13 kg/cow/day in 2017 (Office of Agricultural Economics (OAE), 2017). The nationwide average cattle/farm has also enlarged from 24 cattle in 2008 to 34 cattle in 2017 (Department of Livestock Development (DLD), 2017).
Milk in Thailand is marketed through milk collecting centres (MCCs) that represent the link in the supply chain between dairy producers and milk processing plants. MCCs can reduce the time and transportation costs as well as guarantee the markets for farmers. They can also minimize the collection costs and time for the processing firms (Belmar, Villagra, Marianov, Cortés, & Bronfman, 2017; Demirbaş, Tosun, Çukur, & Gölge, 2009). MCCs in Thailand are classified into two groups, dairy cooperatives (DCs) and private organizations (POs). DCs control about 52 % of domestic raw milk production, while the remaining raw milk production (48 %) is handled by POs (Department of Livestock Development (DLD), 2017). These two milk organizations have considerably distinct management structures and strategies in supporting their members. Cooperatives are organizations that are owned and controlled by a group of people who use their products, supplies, marketing, and services. They do not aim at profit maximization, but their target is to create member benefits on the goods and services markets. They belong to farmers and are managed by the boards of elected farmers (Puusa, Hokkila, & Varis, 2016; Altman, 2016; Hooks, McCarthy, Power, & Macken-Walsh, 2017; Puusa, Monkkonen, & Varis, 2013). On the other hand, POs are owned, financed and controlled entirely by individual entrepreneurs. Profits, revenues, and growth are the organizing principles of POs aiming for economic efficiency (Chareonwongsak, 2017; Krishnan, 2016; Puusa et al., 2013). POs’ administrative structure is likely to be hierarchical; therefore, the decision-making process is controlled by a few individuals, in several instances by a single person. This makes the decision-making process substantially faster than in DCs that are dependent on the decisions of the boards (Koonawootrittriron, Elzo, Yeamkong, & Suwanasopee, 2012).
Commercial milk farming was introduced in Thailand in the 1960s based on a King’s initiative and organized in the form of cooperatives. The growing milk collecting business has attracted private investors resulting in the creation of POs in the dairy industry. As a consequence, DCs’ market share has steadily declined, and the farmers’ milk marketing channels have changed from DCs to POs over the past decade. The reason is that, in recent years, many new POs have emerged with heavy advertising campaigns. Their main advertising message being quick and higher levels of access to credit as well as low transportation costs persuaded many farmers to join these organizations. Furthermore, some DCs have certain requirements and restrictions to admit new members, such as guarantees by other members, maintaining a minimum daily production or a waiting period for rejoining the DCs, for those farmers who were previously members who had left to join POs, and want to return. For these reasons, it was difficult for farmers to be DCs members. At present, DCs contribute about 52 % to dairy production and marketing in Thailand compared with 63 % in 2007 (Department of Livestock Development (DLD), 2017). The DCs’ number and their members has steadily decreased from 109 cooperatives with 23,137 members in 2007 to 98 cooperatives with 18,299 members in 2017 (about 10 % decline in cooperatives’ number and 21 % decline in members) (Cooperative Promotion Department (CPD), 2017) whereas the POs’ number has considerably increased from 63 to 89 (41 % increase) during the same period (Department of Livestock Development (DLD), 2017). This indicates that DCs face stiff competition from alternative marketing channels like POs.
The previous studies on the milk marketing of dairy farmers have focused on the analysis of determinants of cooperatives’ membership (Chagwiza, Muradian, & Ruben, 2016; Gupta & Roy, 2012; Kumar, Saroj, Joshi, & Takeshima, 2018). The majority of the existing studies used a small number of explanatory variables. This made it difficult to identify the most important factors influencing cooperative membership. Additionally, some studies specified the factors using descriptive statistics rather than econometric analysis, which could result in incorrect and biased outcomes due to ignoring relations between factors. Since cooperatives are a significant component of organized dairy markets in Thailand, which link smallholder milk producers with the markets, it is important to understand the membership of these cooperatives. To the best of our knowledge, there is no detailed study that examined the factors influencing farmers’ membership of dairy cooperatives in Thailand. Therefore, this study sought to answer the following question: What are the factors influencing farmers’ membership of dairy cooperatives? The study aims to address this research question from the perspectives of the two groups of farmers who are members of either DCs or POs.
Section snippets
Dairy cooperatives in Thailand
Dairy cooperatives (DCs) in Thailand have played a prominent role in improving the socio-economic conditions of dairy farmers in rural areas, bringing farmers a regular income, and decreasing the migration of workers to cities (Chungsiriwat & Panapol, 2007). DCs are a crucial component of organized dairy markets in Thailand. They buy milk from farmers at a guaranteed price, then refrigerate and sell the collected milk to processing plants or sometimes process the milk. The daily refrigeration
A brief exposition on the importance of cooperative membership
Cooperatives are crucial institutional vehicles to facilitate information sharing and to enhance collaboration, innovation, and market access for smallholder farmers (Reed & Hickey, 2016). They have played an increasingly essential role worldwide especially for smallholders in reinforcing economic growth, social development, and job creation (Ruostesaari & Troberg, 2016). There are many advantages of cooperative membership, such as market entry, strengthened farmers’ bargaining power,
Study area
The study was conducted in Provinces of Central (Saraburi and Lop Buri) and Northeastern (Nakhon Ratchasima) Regions of Thailand (Fig. 1). These three Provinces were selected because they represent the top three dairy production areas in Thailand in terms of the population of dairy farmers and dairy cattle. Additionally, these regions host a variety of farm types and operating scales produced within a highly competitive environment among DCs and POs, which was more appropriate for this study. A
Descriptive results
Data on the socio-economic characteristics, marketing and institutional factors of households collected using survey questionnaires are described and discussed in this section. Interviewed households were classified into DCs and POs members. Table 5 shows that 159 (41 %) of the farmers interviewed were DCs members whereas 226 (59 %) were POs members.
The results revealed that socio-economic characteristics of DCs and POs members appeared similar. There were no mean differences between age, the
Conclusions and recommendations
When Thailand’s dairy market has evolved from a niche market to nationwide business, more and more POs started to compete with DCs for a portion of multimillion-dollar businesses. Although DCs production is growing in volume and value, their milk market share has steadily reduced, and the milk marketing channels have shifted from DCs to POs over the past decade. Consequently, for a deeper understanding of dairy farmers’ decision on the milk marketing, this study investigated the factors
Author statement
The authors declare that there is no conflict of interest with respect to the publication of this manuscript.
Acknowledgements
This research was financially supported by the Government of Thailand, Ministry of Agriculture and Cooperatives and the Asian Institute of Technology, Thailand. The authors gratefully acknowledge the cooperation and support of the farmers and the MCCs during the data collection.
References (47)
- et al.
Agricultural marketing cooperatives with direct selling: A cooperative-non cooperative game
Journal of Economic Behavior & Organization
(2015) Is there a co-operative advantage? Experimental evidence on the economic and non-economic determinants of demand
Journal of Co-operative Organization and Management
(2016)- et al.
Cooperative membership and dairy performance among smallholders in Ethiopia
Food Policy
(2016) Enhancing board motivation for competitive performance of Thailand’s co-operatives
Journal of Co-operative Organization and Management
(2017)- et al.
Factors affecting the value added by agricultural cooperatives in Saint Lucia: An institutional analysis
Journal of Co-operative Organization and Management
(2017) - et al.
A co-operative business approach in a values-based supply chain: A case study of a beef co-operative
Journal of Co-operative Organization and Management
(2017) - et al.
Does cooperative membership improve household welfare? Evidence from a panel data analysis of smallholder dairy farmers in Bihar, India
Food Policy
(2018) - et al.
The determinants and economic impacts of membership in coffee farmer cooperatives: Recent evidence from rural Ethiopia
Journal of Rural Studies
(2017) - et al.
Individuality vs. communality – A new dual role of co-operatives?
Journal of Co-operative Organization and Management
(2016) - et al.
Mission lost? Dilemmatic dual nature of co-operatives
Journal of Co-operative Organization and Management
(2013)
Contrasting innovation networks in smallholder agricultural producer cooperatives: Insights from the Niayes Region of Senegal
Journal of Co-operative Organization and Management
Differences in social responsibility toward youth-A case study based comparison of cooperatives and corporations
Journal of Co-operative Organization and Management
Impact of projects initiating group marketing of smallholder farmers – A case study of pig producer marketing groups in Vietnam
Journal of Co-operative Organization and Management
Farmers’ self-reported value of cooperative membership: Evidence from heterogeneous business and organization structures
Agricultural and Food Economics
Compliance with GLOBALGAP standards among smallholder pineapple farmers in Akuapem-South, Ghana
Journal of Agribusiness in Developing and Emerging Economies
Market participation behaviour of smallholder dairy farmers in Uttarakhand: A disaggregated analysis
Agricultural Economics Research Review
The milk collection problem with blending and collection points
Computers and Electronics in Agriculture
Smallholder dairy production and marketing– Opportunities and constraints
Thailand: An industry shaped by government support
Cooperative statistics
Practices in milk collection centres for quality milk production: A case from the Aegean Region of Turkey
New Medit
Dairy information
Livestock primary production
Cited by (26)
Youth perceptions of, and willingness to join Irish dairy cooperatives and their governance
2022, Journal of Co-operative Organization and ManagementCitation Excerpt :The literature on the involvement of young farmers and cooperatives is limited, especially for the Irish dairy industry. There are two strands of research that exist on cooperative member involvement, those that focus on farmer perception or willingness to be an agricultural cooperative member (Cechin et al., 2013; Jitmun et al., 2020) and those that focus on the farmer’s willingness to join cooperative governance or boards or have trust in the board of directors (Morfi et al., 2021; Osterberg & Nilsson, 2009).1 According to Osterberg and Nilsson (2009) and Cechin et al. (2013), cooperative members assess their cooperatives in social terms after the economic considerations have been accounted for, which suggests the focus on human behavior or socio-psychological perspective as more appropriate for understanding member intentions or perceptions.
Horizontal collaborations and the competitiveness of dairy farmers in Brazil
2022, Journal of Co-operative Organization and ManagementCitation Excerpt :In an environment that demands constant adaptation, participation in farmers’ organizations, such as cooperatives and associations, can help farmers meet market and institutional requirements and increase competitiveness (Brito et al., 2015; L. P. dos Santos et al., 2020). Studies from several countries reported on the advantages of horizontal collaborations, such as reduced information asymmetry between farmers and processors (Brito, Bánkuti, Bánkuti, Ferreira, et al., 2015; Marcela Casali et al., 2020), increased dissemination and adoption of technologies that enhance productivity (Chagwiza, Muradian, & Ruben, 2016), higher net returns per liter of milk (Kumar, Saroj, Joshi, & Takeshima, 2018), and increased local development (Jitmun, Kuwornu, Datta, & Kumar, 2020). In this study, we aimed to analyze whether participation in farmers’ organizations increases competitiveness compared to non-participation.
Competitiveness and capability in the last large remaining Australian dairy cooperative
2022, Journal of Co-operative Organization and ManagementCitation Excerpt :As a consequence, dairy cooperatives have had an important influence in agricultural economics literature as a potential solution to instances of market failure and on improving the aggregate value of the commodities in which they trade (Susanty, Bakhtiar, Jie, & Muthi, 2017). Thus, a number of studies in the recent past have investigated the performance of both cooperatives and members using data collected from developing countries (Beber, Theuvsen, & Otter, 2018; Chagwiza, Muradian, & Ruben, 2016; Gava, Ardakani, Delalić, Azzi, & Bartolini, 2021; Holloway, Nicholson, Delgado, Staal, & Ehui, 2000; Jitmun, Kuwornu, Datta, & Anal, 2020; Kumar, Saroj, Joshi, & Takeshima, 2018; Liu, Ma, Renwick, & Fu, 2019; Ma & Abdulai, 2016, 2019; Manda et al., 2020; Ortega et al., 2019; Priscilla & Chauhan, 2019; Shumeta & D’Haese, 2016; Zhang, Sun, Ma, & Valentinov, 2020). On the other hand, more recently, very few studies have focused on dairy cooperatives in developed countries (Bijman & Hanisch, 2018; Henriques, McLaughlin, Sharp, Tsoukli, & Veddel, 2020; Juszczyk, Balina, & Juszczyk, 2020).
Exploring the socioeconomic drivers of deforestation in Bangladesh: The case of Teknaf Wildlife Sanctuary and its surrounding community
2022, Trees, Forests and PeopleCitation Excerpt :The binary logistic regression model is a feasible statistical method used when the outcome of a dependent variable is binary in nature (Cramer, 2003; Hosmer et al., 2000). The model is based on the concept of cumulative logistic probability and is commonly used to determine the relationship between a binary response variable and explanatory variables, with the relationship being either discrete or continuous (Jitmun et al., 2020; Kabir et al., 2021). Here, the households’ engagement in activities that functioned as drivers of deforestation was coded as a binary choice (yes = 1, no = 0) and used as a dependent variable.
Assessing the value of cooperative membership: A case of dairy marketing in the United States
2021, Journal of Co-operative Organization and Management