Does cooperative membership improve household welfare? Evidence from a panel data analysis of smallholder dairy farmers in Bihar, India

The promotion of cooperatives is widely viewed as the most important institutional arrangement for spurring dairy development in India and much of the success of the White Revolution in India is attributed to the cooperative framework of the country's dairy development strategies. However, empirical evidences on impact of dairy cooperatives based on sound econometric analysis are scarce. To bridge the gap in literature, this paper examines the impact of dairy cooperative membership on farm performance indicators, such as milk yield, net returns, and adoption of food safety measures (FSM) in milk production, using panel data from a survey of milk producers in 2007 and 2015 in Bihar, India. An endogenous switching regression model, which accounts for selection bias, is used in the analysis. The empirical analysis reveals that dairy cooperative membership has a positive and statistically significant impact on milk yield, net returns, and compliance with FSM. An analysis of data disaggregated by farm size also indicates that marginal farmers tend to benefit more from dairy cooperatives than small, medium, and large farmers.