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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS VOL 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)

JULY 2011

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 cooperatives in 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 not high. 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 of cooperatives 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 involves rural 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, the services 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. 2 This 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 1.6 million, 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 an important 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 matter from 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 economic development 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 the cooperative development, increases the farmers' income, improve the comprehensive strength of the cooperatives. 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, improve the 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 a basic 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 agriculture hall, 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 operational effectiveness 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 five aspects 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 the innovation 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 focused on 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 on the 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 some experts 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 cooperative governance 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 performance indicators, 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, though there 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 performance evaluation 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 the hilly 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 and collective 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 research group of Zejiang province agriculture hall, measure the performance situation from the fives aspects of organization operation, operation activities, membership benefits, organization development and social impact. Of which, the organization operation and operation activities belong to behavioral
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indicators, others belong to productive indicators.

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


First grade indexes Second grade indexs Organization operation (0.15) Third grade indexes (X1) The overall satisfaction level that members to cooperative (point) (0.075) (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) (X6) The ratio of standardized production scale to total scale of members(%) (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) (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) Organization development (0.3) (X11) The annual income of the cooperative operating (ten thousand) (0.1) (X12) The annual pure surplus of the cooperative (ten thousand) (0.05) (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) (X16) The comprehensive influencing degree on the cooperative development of economy and society of local (point) (0.045)

Operation activities (0.2)

Cooperative performance (1.0)

Membership benefits (0.2)

Social impacts (0.15)

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, confirm a 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 each index 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 and fairly. The calculation formula of the "efficacy coefficient method" is: d i
d i is
= ( X i X is ) /( X ih X is ) 40 + 60 ,

the actual value of index, X ih is the highest value of the index, X is 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 = ( xij xi ) / i , xij is the standardized value of the index, xij is the practical value of index, xi is is xij 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 A j = 16 Wi X ji , A j means the performance evaluation
1

value of cooperative J, W is the weight of index i, X ji 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 comprehensive evaluation value
8 9 13 6 1 2 4 10 12 11 7 3 5

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 the scores, 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 the cooperative 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 membership benefits 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 higher satisfaction to cooperatives, this show that the cooperatives have a higher organization production management and make a great contribution to increase farmers' income. The cooperatives obtained the 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 and marketing 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 the cooperatives 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 a certain 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, the competition 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 province would 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 the breakthrough 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 processing industry. 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 common development 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 environment should 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 companies that 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

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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: The Comprehensive Across from Traditional Agricultural Province to Strong Province of Sichuan. (2010). [Online] Available:http://www.sc.gov.cn/jrsc/201008/t20100831_1017030.shtml. (August 31, 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 Sichuan Province. 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 Zhejiang Province. 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, 6573. 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 Performance Evaluation System of Farmers' Specialized Cooperatives. Management and Administration on Rural Cooperative, No.10, 31-35. Xiaobo Dong. (2008). Empirical Research on the Relationship Between Executive Team Collective Innovation and Business Performance of Farmers' Professional Cooperative. Journal of Agrotechnical 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 1 2 3 4 5 6 7 8 9 10 11 12 13
X1 X2 X3 X4 X5 X6 X7 X8 X9 X10 X11 X12 X13

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X14

X15

X16

80 100 80 80 80 100 60 80 80 60 80 60 80

92 68 60 68 63 95 68 73 87 74 82 92 100

89 100 60 86 81 86 77 83 86 84 77 71 88

86 100 96 85 60 76 81 97 81 99 95 96 93

85 70 60 80 75 80 85 100 70 85 70 60 65

81 68 60 74 64 95 94 100 79 74 61 76 81

96 78 64 100 66 84 60 79 81 72 77 70 93

100 91 64 91 75 87 60 93 97 84 80 79 96

96 98 94 85 60 85 91 94 78 95 91 93 100

61 60 62 63 60 61 65 100 79 65 62 64 63

61 60 61 60 61 80 60 100 79 60 61 60 66

77 60 89 61 96 89 64 92 99 68 62 79 100

70 80 80 70 60 60 90 100 90 80 80 80 80

60 60 63 61 60 60 60 100 62 61 61 60 60

63 60 67 61 100 74 62 68 79 61 61 62 73

60 33 60 33 33 87 60 100 87 60 33 60 60

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Table 3: Analysis on Performance Indicators of Farmers' Specialized Cooperatives in Hilly Area of Sichuan Province

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X1 The mean Standard deviation Coefficient of variation 1 2 3 4 5 6 7 8 9 10 11 12 13


78.46

X2
78.71

X3
82.27

X4
88.08

X5
75.77

X6
77.38

X7
78.46

X8
84.31

X9
89.16

X10
66.51

X11
67.04

X12
79.68

X13
78.46

X14
63.71

X15
68.47

X16
58.97

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

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

0.12 1.68 0.12 0.12 0.12 1.68 (1.44) 0.12 0.12 (1.44) 0.12 (1.44) 0.12

0.99 (0.80) (1.40) (0.80) (1.16) 1.23 (0.80) (0.44) 0.63 (0.32) 0.28 0.99 1.59

0.74 1.81 (2.27) 0.41 (0.12) 0.41 (0.55) 0.09 0.41 0.20 (0.55) (1.20) 0.63

(0.20) 1.03 0.66 (0.27) (2.43) (1.07) (0.58) 0.78 (0.64) 0.97 0.60 0.72 0.41

0.80 (0.50) (1.37) 0.37 (0.07) 0.37 0.80 2.10 (0.50) 0.80 (0.50) (1.37) (0.93)

0.25 (0.76) (1.35) (0.30) (1.03) 1.39 1.26 1.76 0.16 (0.30) (1.26) (0.07) 0.25

1.44 (0.02) (1.19) 1.73 (1.00) 0.46 (1.48) 0.07 0.17 (0.51) (0.12) (0.70) 1.15

1.26 0.51 (1.63) 0.51 (0.77) 0.19 (1.95) 0.72 1.04 (0.02) (0.35) (0.45) 0.94

0.67 0.85 0.44 (0.43) (2.75) (0.43) 0.15 0.44 (1.01) 0.56 0.15 0.33 1.02

(0.50) (0.56) (0.40) (0.35) (0.58) (0.52) (0.15) 2.98 1.14 (0.13) (0.40) (0.22) (0.31)

(0.49) (0.54) (0.47) (0.58) (0.49) 1.06 (0.54) 2.72 1.01 (0.54) (0.49) (0.55) (0.10)

(0.20) (1.28) 0.64 (1.24) 1.05 0.64 (1.01) 0.78 1.26 (0.73) (1.17) (0.05) 1.32

(0.74) 0.13 0.13 (0.74) (1.61) (1.61) 1.01 1.88 1.01 0.13 0.13 0.13 0.13

(0.33) (0.34) (0.06) (0.26) (0.34) (0.32) (0.33) 3.32 (0.18) (0.28) (0.25) (0.30) (0.32)

(0.48) (0.76) (0.12) (0.65) 2.81 0.52 (0.59) (0.08) 0.90 (0.69) (0.65) (0.61) 0.38

0.05 (1.16) 0.05 (1.16) (1.16) 1.25 0.05 1.86 1.25 0.05 (1.16) 0.05 0.05

Note:The parentheses value means negative value.

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