The Driving Forces and Economic Impact of Co-operative Membership: Empirical Evidence from the Mexican Coffee Sector

We identify key factors influencing membership of co-operative organisations in Mexico's coffee sector. We also determine the impact of membership on the incomes that are derived from coffee cultivation. Factors at all levels are found to be relevant: individual factors, family characteristics, farm type and regional factors. Data come from a survey of 1,396 coffee farmers held in 2004 in eight major producer states in Mexico and complemented with information from the National Coffee Census. We apply regression models that control for selection bias and endogeneity to identify driving forces as well as the economic effects of co-operative membership. Co-operatives are typically joined by older male farmers, on medium sized farms, who have access to electricity and are located at higher altitudes and in larger municipalities. Private land ownership reduces the probability of co-operative membership. There is consistent evidence that participating in co-operatives has a positive effect on the individual coffee prices and per capita coffee income. This effect is mostly due to the additional coffee processing offered by co-operatives