Research on Performance Evaluation of Farmers Specialized Cooperatives Selected From Hilly Area, Sichuan Province, China

8/14/2019 Research on Performance Evaluation of Farmers Specialized Cooperatives Selected From Hilly Area, Sichuan Provi

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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

COPY RIGHT 2011 Institute of Interdisciplinary Business Research 65

JULY 2011VOL 3,NO 3

Research on Performance Evaluation of Farmers' Specialized Cooperatives

Selected from Hilly Area, Sichuan Province, China1,

2

Based on Survey of Thirteen Farmers Specialized Cooperatives

Feng Changjian

Master, College of Economics and Management,

Sichuan Agricultural University, Chengdu, China (611130).

Fu Xinhong

Rural Development Research Center of Sichuan Province,

Professor, College of Economics and Management,

Sichuan Agricultural University, Chengdu, China.(611130).

Lv Chenzhong

Master, College of Economics and Management

Sichuan Agricultural University, Chengdu, China (611130)

Abstract

The performance evaluation on farmers' specialized cooperatives is one of the hot spot in research of

the agricultural economy in recent years. This article is based on the survey of thirteen cooperativesin the hilly region of Sichuan province. According to the performance appraisal system of Farmers'

Specialized Cooperatives, the standard coefficient method is used to analyse the 16 performance

indexs of the cooperatives. The results show that although the number of cooperatives increases

quickly in Sichuan province, the cooperative comprehensive performance of the hilly region is nothigh. Therefor, this article analyse the main reasons, provide some suggestions and hope it can help

the development of cooperatives in the hilly region of sichuan province, China.

Key Words: Farmers' specialized cooperatives, index of Performance evaluation , Standard

coefficient method, Hilly area in sichuan province, China

1. Introduction

Since the law on Farmers' Specialized Cooperatives has been issued and implemented in 2007,

Farmers' Specialized Cooperatives development is rapid in china. by the end of 2010, the number ofcooperatives in whole nation is more than 3.5 million, the growth exceeding 40% compared with the

end of 2009, increase of 10,000 per month; The farmers joined in cooperatives has about 28 million,

which accounts for about 10% of the national farmers[1]

. Farmers' Specialized Cooperatives involvesrural each industry like planting, breeding and farm machinery, the business activities involved in

processing, storage and sale and other link. The cooperatives play an important role in building new

socialist countryside, developing modern agriculture, promoting farmers' income increase. However,

the present situation of Farmers' Specialized Cooperatives is not well, like the scale is small, theservices is narrow, the comprehensive strength is not strong and so on.

1 This article is sponsored by the philosophy and social science fund of sichuan province, "Study on Governance

Mechanism and Performance of Farmers' Specialized Cooperatives in Sichuan Province (SC09E010)", Fu Xinhong is

the corresponding author.2This article was also sponsored by Sichuan Education Department Project, "Study on the Impact of Social Capital of

the Core Members to the Development of Crop Farming Cooperatives in Southwest".


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Sichuan province as a big province of agriculture, with the background of balancing urban and rural

development, cooperatives are developed quickly. By August,2010, the numbers of Farmers'

Specialized Cooperatives is developed to 1,3000 in the whole province, having the members of 1.6million, driving the farmers of 4.6 million. At present, the whole province has the accumulative of

pollution-free agricultural production bases is 22.896 million acre, 730 products obtained the right

to use "green food", and 195 products gained organic food certification[2]. The hilly region is animportant agricultural production in sichuan province, though the size area occupys only the 18% of

complete province, the cultivated land area accounts for 57.6%; the total population accounts for

59.9%, of which the rural population accounted for 62.3%; GDP accounted for 43%[3].

No matterfrom the proportion of the population, cultivated land and the total economy, the hilly region plays a

very important position in economic development of the whole province. But in general,caused by

infrastructure is relatively backward, the utilization rate of the factors of production is low, the

farmer organization degree is not high and other restriction factors, the sichuan hilly area's economicdevelopment foundation are weak.

Therefore, analysis the performance of the Farmers' Specialized Cooperatives in hilly region of

Sichuan province, can help to find the existing problems of the cooperatives, promote thecooperative development, increases the farmers' income, improve the comprehensive strength of thecooperatives. At the same time, speeding up the hilly region's development of modern agriculture is

objective requirements that achieve the new span of Sichuan province's economy, speed up the

economic development in western, it's helpfull to promote the modernization of agticulture, improvethe competitiveness of the hilly area, balance urban and rural development, speed up the process of

integration of urban and rural areas.

2. Literature Review

By performance evaluation, means a comprehensive measure that is established in the further

advancement of the organization, with improving personal and organizational performance being abasic goal, as the basic index of the degree of organization functionality, the operational

effectiveness of organizational and satisfaction of the organization service object, play a role in

organizational operation effect and function (The research group of Zejiang province agriculturehall, 2008). Accordingly, FanYuan jiang (2011) identified performance evaluation of the Farmers'

Specialized Cooperatives with that, a comprehensive measure that is established in the further

advancement of the Farmers' Specialized Cooperatives, as the basic index of the operationaleffectiveness of the Farmers' Specialized Cooperatives, the functional degree of the organization ,

and the satisfaction of the cooperative members, play a role in the farmers' professional cooperative

operation effect and function.

In performance index system research, the research group of Zhejiang Province agriculture hall(2008), Xu Xuchu (2009, 2010) based on the performance evaluation system of Farmers'

Specialized Cooperatives with behavioral performance and productive performance, defined the fiveaspects of index in organization construction, operation activities, membership benefits,organization development and social impact, it's the most influential evaluation index system. Wang

Liping(2008), Zhao Jiarong (2010), thought the Farmers' Specialized Cooperatives as a enterprise of

membership community, it's performance evaluation in addition to economic performance and

social performance, still should include ecological performance. Dong Xiaobo (2010) discussed theinnovation of executives group impact on the business performance of the Farmers' Specialized

Cooperatives, considered between the cooperative innovation and the social and economic


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performance is the positive correlation relationship. Fan Yuanjiang, Yang Guizhong (2011)

synthesized opinions of above scholars, thought the cooperative performance indicators system

should be based on the valuation system of the research group of Zhejiang province agriculture hall,and add the ecological performance and innovation performance.

In empirical research on the cooperative performance evaluation, the western scholars more focusedon the economic efficiency of the cooperatives than the comprehensive performance, and more used

the financial analysis method, but there have been empty of empirical research with clear and fair onthe cooperative performance.The western scholars don't pay much attention to the performance of

the cooperatives, instead of paying more attention to revolution and innovation on the organization

system of the cooperatives in the new era (Xu Xuchu, 2010). At present, our country also have someexperts and scholars did empirical researches on the cooperative performance evaluation.Xu Xuchu,

Wu Bin(2010) based on the survey data of 526 cooperatives in Zhejiang province, using structural

equation modeling, researched the specific route and the relations between the cooperativegovernance mechanisms and the performance, considered the three factors, including the structure

of cooperative ownership, leading and the structure of council, has more influence on the

cooperative performance, a perfect governance mechanism is helpful to improve the farmers'professional cooperative performance. Liu Bin, Chen Chibo(2009) after put forward a performanceindicators, analysed the 22 cooperatives' comprehensive performance of Jiangxi province using the

efficacy coefficient method and the layered gathering method, thought cooperatives couldn't only

focus on quantity, and should adhere to value guidance of quality and amount pay equal attention to.Huang Shengzhong, Lin Jian (2008) using the survey data of 168 cooperatives in taizhou, wenzhou

and handan, based on the probability model method, concluded that cooperatives with the good

internal government mechanism, the performance is better.

In conclusion, the study of cooperative performance in China remains in the early stages, thoughthere has been some scholars make empirical research at present, but relatively less, and mainly

concentrated in the developed areas which in the eastern and central like ZhengJiang and Jiangxi

province, to west especially the hilly area, the farmers' professional cooperative performanceevaluation study also is even less.

3. Sample Selection and Data Sources

This paper takes the cooperatives that our country registers in industrial and commercial bureau

during July 12 007 to December 312 008 as research subject. In July 2009, we carried out

questionnaire investigation on thirteen cooperatives and its members from the nine counties of thehilly region like Xichong, Yingshan and so on. the interviewed target are mainly the chairman of the

cooperatives who have more comprehensive understanding to the whole situation of cooperatives,

so the questionnaire investigation have a high reliability.

4. Performance Evaluation System

Because the investigated cooperatives are still in its infancy, the effect of environment andcollective innovation of cooperatives is still not apparent at present, there is also a greater difficulty

to collect data. So this paper based on the Farmers' Specialized Cooperatives' performance

evaluation system with behavioral indicators and productive indicators proposed by the researchgroup of Zejiang province agriculture hall, measure the performance situation from the fives aspects

of organization operation, operation activities, membership benefits, organization development andsocial impact. Of which, the organization operation and operation activities belong to behavioral


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indicators, others belong to productive indicators.

Table 1: Weight Allocation of Performance Indicators of Farmers' Specialized Cooperatives

First grade

indexes

Second grade

indexsThird grade indexes

(X1) The overall satisfaction level that members to cooperative

(point) (0.075)Organization

operation

(0.15) (X2) The ratio of restitution earning to members according to the

cooperative transaction volume(%) (0.075)

(X3) The ratio of agricultural input products through purchasing and

distribution for members by the cooperative (%) (0.05)

(X4) The ratio of main product by unifing brand and saling (%)

(0.05)

(X5) The times of unifing technical and training for members by the

cooperative (time) (0.05)

Operation

activities

(0.2)

(X6) The ratio of standardized production scale to total scale ofmembers(%) (0.05)

(X7) Per capita annual net income of members (ten thousand)

(0.075)

(X8) The ratio of per capita annual net income of members above

the local average income (%) (0.075)

Membership

benefits

(0.2)(X9) The ratio of volume of trade between members and their

cooperative to the cooperative operating income per year (%) (0.05)

(X10) Total number of the members (number) (0.1)

(X11) The annual income of the cooperative operating (ten

thousand) (0.1)

(X12) The annual pure surplus of the cooperative (ten thousand)

(0.05)

Organization

development

(0.3)

(X13) The brand degree of the main product (point) (0.05)

(X14) The numbers of non local members drove by cooperatives

(member) (0.06)

(X15) The cooperative annual sale volume for the non local

members of the same products (ten thousand) (0.045)

Cooperative

performance

(1.0)

Social

impacts

(0.15)(X16) The comprehensive influencing degree on the cooperative

development of economy and society of local (point) (0.045)

5. Research Methods and Data Processing

5.1 The Efficacy Coefficient Method

Firstly,we used "the efficacy coefficient method" to deal with the original data.The efficacy

coefficient method is according to the principle of multiple objective programming theory, confirma satisfaction value and a unallowable value of every evaluation index, use the satisfaction value as

the upper limit and the unallowable value as the lower limit, calculate the satisfactory degree of each

index and so as to determine the index scores, through the weighted average for comprehensive,thus evaluate the comprehensive conditions of the research objects.The efficacy coefficient method


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calculate and score the evaluation objects from different aspects, just meet the requirements of

multiple indicator comprehensive evaluation performance in performance evaluation system of

cooperatives. In addition, the efficacy coefficient method through the efficacy function change eachindex from the different metrics to the same metrics, it can reduce the error and reflect the

cooperative performance objectively under the circumstances that every index value of the

cooperatives is very different, it's purpose is to evaluat the cooperative performance accurately andfairly.

The calculation formula of the "efficacy coefficient method" is: 6040)/()( += isXihXisXiXid ,

id is the actual value of index, ihX is the highest value of the index, isX is the lowest value of the

index, the normalized data through processing is between 60~100. Insert table 2 here.

5.2 The Layered Gathering Method

Then using the layered gathering method to analysis the cooperative performance value, the formula

is iiijij xxx /)( = , ijx is the standardized value of the index, ijx is the practical value of index, ix is

the mathematical expectation of each index,i

is the standard deviation of each index. Insert table 3

here.

5.3 Ccomprehensive Evaluation Value

Finally, according to the predetermined weight of each indicator, calculate the comprehensive

evaluation value of the cooperatives, the formula is =16

1jiXiWjA

, jA means the performance evaluation

value of cooperative J, W is the weight of index i, jiX is the performance indicators standardization

of cooperative J. Through the calculation, we concluded the comprehensive evaluation value of

thirteen cooperatives performance.

Table 4: Sort for the Performance Comprehensive Evaluation Value

of Farmers' Specialized Cooperatives

code 8 9 13 6 1 2 4 10 12 11 7 3 5

comprehensive

evaluation

value

1.277 0.483 0.386 0.367 0.213 (0.050) (0.183) (0.204) (0.316) (0.321) (0.484) (0.557) (0.612)

Note:The parentheses value means negative value.Performance comprehensive evaluation value fluctuates around zero,

the value that greater than zero instructions above average , the value that less than zero instructions below the average

level.

6. Analysis Results

Through the empirical analysis of the Farmers' Specialized Cooperatives performance in hilly area

of sichuan province, the results are as follows:

Firstly, The cooperative performance comprehensive evaluation value is not high. Based on thescores, there only five cooperatives that the performance comprehensive evaluation value is greater

than zero, only 38.5% of the total. It shows that there have a big gap among the cooperatives, even if

a certain scale, the cooperatives are difficult to achieve balance between social benefit and economic

benefit. Through the investigation, there have a direct relationship between the development of thecooperative and the superintendents, but the superintendents are undereducated that mainly focus on


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the junior-high school and around the average age of 45 year old, the management level of them is

limited, that will influence the development of the cooperatives.

Secondly, The whole evaluation of the cooperatives in operation management and membershipbenefits is good. From the results, we can see that 62% of the cooperative operating activities and

54% of the cooperative income above average, 77% of the cooperative members have a highersatisfaction to cooperatives, this show that the cooperatives have a higher organization production

management and make a great contribution to increase farmers' income. The cooperatives obtainedthe good approvals, but still need to be constantly improved.

Thirdly, The cooperative organization development potential is not strong, social impact to be

further improved. The two aspects of the organization development and social impact are only 31%

that above the average level of cooperatives. The main reason is the product operation andmarketing channels are relatively single, mostly only through the agricultural products dealers and

wholesaling companies,and rely on the government departments to sell products, The cooperatives

need to pay attention to the intensification of production and the diversification of sales. As thecooperatives are still at the initial stage of the development, the society affect is not obvious and still

need further development.

7. Brief Comment and Suggestion

Results from the analysis results of the empirical this paper, on the one hand, cooperatives in

operation management and membership benefits are better relatively than other aspects, some of acertain scale cooperatives not only made a contribution to increasing farmers' income, but also

played the lead role in social influence. But on the other hand, the performance comprehensive

evaluation of the Farmers' Specialized Cooperatives in hilly region of Sichuan province, thecompetition ability is very weak and is still in the primary stage of the development. Farmers'

Specialized Cooperatives is important organization related to the farmers and the development of

agriculture, so, the development of cooperatives should have not only quantity, but also quality.

The author thinks that the Farmers' Specialized Cooperatives in hilly region of Sichuan provincewould work harder to enhance their comprehensive strength in future. At microscope, firstly, the

internal operation mechanism should be constantly perfected, and the cooperatives should fully

implement the democratic governance of "civilian have, civilian battalion, civilian enjoyed",strengthen the management level of managers continually, arouse the enthusiasm of all staff.

Secondly, the cooperatives should develop and operate characteristic project, create brand, widen

the product sales channel, and improve competitiveness in the market. Thirdly, the hilly area is the

most area rare in agricultural resource in sichuan province, the cooperatives should have thebreakthrough and the innovation in land management system, overcome the weaknesses of land

operation inefficient by small farmers, and construct the scale operation models of small groups but

large scale. Fourthly, Varieties of agricultural products and abundant amount in the hilly region of

Sichuan province, there are favorable conditions relatively to develop farm products processingindustry. It not only can develop the cooperatives themself, but can drive to develop the surrounding

farmers, when it can raise the cooperatives' economic benefits, it can also promote commondevelopment in the social benefit and the ecological benefits.

In the macroscopic aspect, facing the status quo that the utilization rate of the agricultural

production is very low , rural infrastructure is still weak, the farmers' quality and education is poor,to want develop the Farmers' Specialized Cooperatives, the government should give various support.


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First, the government should fully gives cooperatives the policy support, including finance, tax,

financial, technical, personnel, education and training, protect agricultural products sales channel

smoothly, create the good external environment for the cooperatives. Second, external environmentshould be increasing the financial investment force, strengthen the infrastructure construction in

hilly region of sichuan, such as farmland irrigation construction, road construction,etc, provide the

external environment for cooperative development. Third, vigorously to attract leading companiesthat wide connection with the industry in hilly area and the impetus ability is strong, promote the

cooperation with scientific research institutes, provide strength and technical support for the

cooperatives.


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References

Jigang Zhang. (2011). Report on the Development Trend Research of Farmers' Specialized

Cooperatives in 2011. [Online] Available:http://www.zgxcfx.com/Article_Show.asp?ArticleID=31954. (February 16, 2011)

Sichuan Provincial People's Government. Ten Years of the Western Development in China: TheComprehensive Across from Traditional Agricultural Province to Strong Province of Sichuan.

(2010). [Online] Available:http://www.sc.gov.cn/jrsc/201008/t20100831_1017030.shtml. (August31, 2010 )

Xiaoming Guo. (2004). The Mainly Restricted, Breakthrough and Choice of Rural Economy

Development in Hilly AreaThe Empirical Analysis of the Sichuan Province. Reform of

Economic System, 4, 64-67.

Zhiqiang Wu. (2011).The Development of Modern Agricultural Research in Hilly Area of SichuanProvince. Southwestern University of Finance. Chengdu, China.

Yuanjiang Fan, & Guizhong Yang. (2007). Research Review on Performance Evaluation of

Farmers' Specialized Cooperatives.Economic Research Guide, 7, 67-68.

Xuchu Xu, & Bin Wu. (2010). The Influence of Governance Mechanism for Farmers' Specialized

Cooperatives' PerformanceEmpirical Analysis Based on 526 Cooperatives of ZhejiangProvince. Chinese Rural Economy, 5, 43-55.

Xuchu Xu. (2009). Performance Evaluation System of Farmers' Specialized Cooperatives and its

Verification.Journal of Agrotechnical Economics,No.4, 11-19.

Kequn Cheng, & Lingjie Meng. (2011). The Construction of Farmers' Specialized Cooperatives

index of Performance evaluation System.Inquiry into Economic Issues,No.3, 70-75.

Jinmin Dai. (2010). Analysis on Performance Evaluation of Professional Farmers Cooperatives.

Northwest Agriculture and Forestry University.

Shengzhong Huang, & Jian Lin, & Xuchu Xu. (2008). Empirical Analysis on Governance

Mechanism and Performance of Professional Farmers Cooperatives. Chinese Rural Economy, 3, 65-73.

Bin Liu, & Chibo Chen, & Hui Du.(2009). The Positive Analysis of Performance Evaluation on

Farmers Cooperatives: The Data from 22 Samples Farmers Cooperatives in Jiangxi Province. Issues

in Agriceltural Economy, No.2, 90-95.

The Research Group of Zejiang Province Agriculture Hall. (2008). Analysis on PerformanceEvaluation System of Farmers' Specialized Cooperatives.Management and Administration on Rural

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Innovation and Business Performance of Farmers' Professional Cooperative. Journal ofAgrotechnical Economics, 8, 117-122.


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Appendix:

Table 2: Performance Indicators Standardization

of Farmers' Specialized Cooperatives in Hilly Area of Sichuan Province

code X1 X2 X3 X4 X5 X6 X7 X8 X9 X10 X11 X12 X13 X14 X15 X16

1 80 92 89 86 85 81 96 100 96 61 61 77 70 60 63 60

2 100 68 100 100 70 68 78 91 98 60 60 60 80 60 60 33

3 80 60 60 96 60 60 64 64 94 62 61 89 80 63 67 60

4 80 68 86 85 80 74 100 91 85 63 60 61 70 61 61 33

5 80 63 81 60 75 64 66 75 60 60 61 96 60 60 100 33

6 100 95 86 76 80 95 84 87 85 61 80 89 60 60 74 87

7 60 68 77 81 85 94 60 60 91 65 60 64 90 60 62 60

8 80 73 83 97 100 100 79 93 94 100 100 92 100 100 68 100

9 80 87 86 81 70 79 81 97 78 79 79 99 90 62 79 87

10 60 74 84 99 85 74 72 84 95 65 60 68 80 61 61 60

11 80 82 77 95 70 61 77 80 91 62 61 62 80 61 61 33

12 60 92 71 96 60 76 70 79 93 64 60 79 80 60 62 60

13 80 100 88 93 65 81 93 96 100 63 66 100 80 60 73 60


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Table 3: Analysis on Performance Indicators

of Farmers' Specialized Cooperatives in Hilly Area of Sichuan Province

Note:The parentheses value means negative value.

X1 X2 X3 X4 X5 X6 X7 X8 X9 X10 X11 X12 X13 X14 X15 X16

The mean 78.46 78.71 82.27 88.08 75.77 77.38 78.46 84.31 89.16 66.51 67.04 79.68 78.46 63.71 68.47 58.97

Standarddeviation

12.81 13.39 9.80 11.56 11.52 12.86 12.45 12.47 10.61 11.22 12.12 15.35 11.44 10.94 11.20 22.09

Coefficient

ofvariation

0.16 0.17 0.12 0.13 0.15 0.17 0.16 0.15 0.12 0.17 0.18 0.19 0.15 0.17 0.16 0.37

1 0.12 0.99 0.74 (0.20) 0.80 0.25 1.44 1.26 0.67 (0.50) (0.49) (0.20) (0.74) (0.33) (0.48) 0.05

2 1.68 (0.80) 1.81 1.03 (0.50) (0.76) (0.02) 0.51 0.85 (0.56) (0.54) (1.28) 0.13 (0.34) (0.76) (1.16)

3 0.12 (1.40) (2.27) 0.66 (1.37) (1.35) (1.19) (1.63) 0.44 (0.40) (0.47) 0.64 0.13 (0.06) (0.12) 0.05

4 0.12 (0.80) 0.41 (0.27) 0.37 (0.30) 1.73 0.51 (0.43) (0.35) (0.58) (1.24) (0.74) (0.26) (0.65) (1.16)

5 0.12 (1.16) (0.12) (2.43) (0.07) (1.03) (1.00) (0.77) (2.75) (0.58) (0.49) 1.05 (1.61) (0.34) 2.81 (1.16)

6 1.68 1.23 0.41 (1.07) 0.37 1.39 0.46 0.19 (0.43) (0.52) 1.06 0.64 (1.61) (0.32) 0.52 1.25

7 (1.44) (0.80) (0.55) (0.58) 0.80 1.26 (1.48) (1.95) 0.15 (0.15) (0.54) (1.01) 1.01 (0.33) (0.59) 0.05

8 0.12 (0.44) 0.09 0.78 2.10 1.76 0.07 0.72 0.44 2.98 2.72 0.78 1.88 3.32 (0.08) 1.86

9 0.12 0.63 0.41 (0.64) (0.50) 0.16 0.17 1.04 (1.01) 1.14 1.01 1.26 1.01 (0.18) 0.90 1.25

10 (1.44) (0.32) 0.20 0.97 0.80 (0.30) (0.51) (0.02) 0.56 (0.13) (0.54) (0.73) 0.13 (0.28) (0.69) 0.05

11 0.12 0.28 (0.55) 0.60 (0.50) (1.26) (0.12) (0.35) 0.15 (0.40) (0.49) (1.17) 0.13 (0.25) (0.65) (1.16)

12 (1.44) 0.99 (1.20) 0.72 (1.37) (0.07) (0.70) (0.45) 0.33 (0.22) (0.55) (0.05) 0.13 (0.30) (0.61) 0.05

13 0.12 1.59 0.63 0.41 (0.93) 0.25 1.15 0.94 1.02 (0.31) (0.10) 1.32 0.13 (0.32) 0.38 0.05


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Research on Performance Evaluation of Farmers Specialized Cooperatives Selected From Hilly Area, Sichuan Province, China