Cooperatives are very important in that it aims to address the problem of small farm inefficiencies especially in the developing world. They help farmers to gain more bargaining power, lower transaction costs in getting loans and better access to information about its members. These small farms are inefficient due to relatively high input costs as compared to the profits. These small farms also often lack the financial resources such as credits and loans to make their farms profitable. As such establishing cooperatives especially where small farms are dominant help farmers to share capital and reduce input costs which in turn help increase production and income.