Why Nicaraguan Peasants Stay in Agricultural Production Cooperatives

Despite the official support for parcellation of agricultural production cooperatives created under the Sandinist land reform in Nicaragua, a substantial number of peasants have decided to continue membership. Whereas theory suggests that individual farms are more productive and more efficient, Nicaraguan cooperatives did not fully split up. We aim to identify the factors that govern the choice of Nicaraguan peasants between staying in a cooperative and exiting to start an individual farm. We used sample data from 475 landed households in four agroecological macro-regions to compare resources, incomes and productivity of peasants continuing in production cooperatives, former members of cooperatives who became independent farmers, and peasants who had always been engaged in independent farming. Low capital endowments of the new independent farmers adversely affect their standard of living. Better access to non-farm income encourages peasants to remain in the cooperative where they are less exposed to risk. Uncertainty associated with land ownership and difficulties with resolution of cooperative debt play a dominant role in keeping Nicaraguan peasants in cooperatives. Cooperative members still maintain a high degree of coordination of activities in order to capture the benefits of rural development programs.