The Upgrading and Transformation of Farmer Professional Cooperative in the Digital Age: Insights from China Digital Village Policy

Farmer professional cooperatives are important vehicles for agricultural modernisation. In the digital age, the development of cooperatives has followed two typical pathways: upgrading in scale and transformation in business operations. Existing research has focused on the impact of digitalisation on the former, while paying less attention to the issue of structural transformation within cooperatives. To investigate this issue, this study constructs a difference-in-differences model based on a sample of data from Chinese farmer professional cooperatives. By leveraging the quasi-natural experiment of the digital village policy to construct variables, this study examines the impact of rural digitalisation on cooperative upgrading and transformation and analyses the mechanisms driving the divergence of cooperative development pathways. The study indicates that: (1) The China Digital Village Policy has had a significant positive impact on both the transformation and upgrading of farmer professional cooperatives. (2) Conditional on observable variables, the China Digital Village Policy is positively associated with cooperative upgrading and transformation, with patterns consistent with potential pathways through information channel capability and technological innovation capability. (3) Under the same observable-variable constraints, market expansion capability and capital acquisition capability show conditional association patterns that are significantly positively associated with cooperative upgrading. For cooperative transformation, however, they show conditional suppression patterns. This indicates that agricultural digitalisation is closely linked to cooperative upgrading and transformation. The differentiated empirical patterns of digitalisation along the dimensions of information channels, technological innovation, market expansion and capital acquisition provide empirical evidence for understanding the pathways of cooperative differentiation.