Willingness to Cooperate: Are farmers motivated enough to join agricultural cooperatives in Armenia?

After the breakdown of the Soviet Union, many productive resources and state organizations were privatized in the course of the market-oriented reforms in Armenia. Also the state collective farms were dissolved and privatized.... [ view full abstract ]

After the breakdown of the Soviet Union, many productive resources and state organizations were privatized in the course of the market-oriented reforms in Armenia. Also the state collective farms were dissolved and privatized. Armenia was one of the first former Soviet republics implementing egalitarian land reform. This land reform resulted in about 340,000 small family farms each having on average 1.4 hectares. Like in many transitional countries, a major problem in Armenia during the transition period was the breakdown of the relationships of farms with input suppliers and output markets. The result was that many farms and rural households faced serious limitations in accessing essential inputs and selling their output.

Many of the abovementioned problems are still apparent in Armenia after 24 years of independence. It is obvious that cooperation could be one viable way to addressing constraints to smallholder farming. By joining forces farmers could get an improved bargaining position, obtain better services, respond to unfavorable market conditions and strengthen their marketing.

Unfortunately, as in many other transition economies, such mobilization and cooperation among farmers did not evolve in Armenia to large extent. During last 20 years many international donor programs and measures were initiated to promote cooperative movement in Armenia and help farmers establish their cooperatives. However, because of the vague understanding of true cooperative identity and principles among farmers, lack of participation of farmers in economic activity of cooperatives, many cooperatives only exist on paper and rely on donor support.

One core reason preventing cooperative development is that Armenian farmers still confuse business type cooperative entities with Soviet “Kolkhozes” (state collective farms) and are for this reason very hesitant joining to cooperatives. Moreover, the existing cooperative laws did not provide clear explanation and definitions about cooperatives.

This paper assesses the determinants of farmer intentions of joining a cooperative. It aims at understanding the conditions under which farmers are willing to cooperate and joining to agricultural cooperatives. The theoretical framework of the paper follows the approach of Moellers et al. (2015). It is based on Ajzen’s Theory of Planned Behavior (1991) modeled by a PLS Structural Equation Model. Data has been collected during 2015 from several regions of Armenia. A total of 74 farmers having no experience in cooperative business and membership were surveyed. The paper analyses significant factors of the individual decision making process of cooperation and discusses relevant drivers of the farmer intention to cooperate.