Does trust influence crop and fish farmers' decision to join group membership in Uganda? An instrumental variable modelling of the associated welfare gains

Farmer groups have long been recognized as a mechanism for agricultural and rural transformation, particularly in Uganda, where their formation gained momentum in the 1990s. While membership in such groups is often associated with collective benefits such as reduced transaction costs, economies of scale, and improved market access, the role of trust in fostering group cohesion and its impact on welfare remains underexplored. This study investigates the effect of trust on group membership among crop and fish farmers in Uganda and assesses the impact of group membership on welfare, measured through income proxies such as sales value and product value. Using a multistage sampling procedure, data were collected from 508 fish farmers and 800 crop farmers across six districts. Descriptive statistics and a two-stage least squares instrumental variable approach were employed to analyze the data. Results reveal significant socioeconomic differences between group members and non-members, particularly in age, family labor, land size, household size, and income-related variables. Group membership itself did not significantly influence welfare outcomes, suggesting that the benefits of farmer associations may not directly translate into income gains. Instead, factors such as access to loans, household and hired labor, fish (as opposed to crop) farming, and education positively impacted income, while larger household sizes and regional disparities had negative effects. Trust was found to significantly influence the decision to join groups, highlighting its role in fostering collective action. The study concludes that interventions aimed at improving farmer welfare should prioritize access to resources, labor, and specific agricultural practices rather than focusing solely on group membership. These findings offer valuable insights for policymakers and stakeholders in designing targeted strategies to enhance smallholder farmer welfare within the broader context of agricultural and food systems.