Malaysia targets co-operatives sector to be the third engine of economic development in the 9th Malaysian plan and to increase its contribution from 1% of Malaysian GDP in 2008 to 5% in 2013. This study investigates factors that affect performance of agricultural co-operatives in Malaysia. Production function is used as a guide to measure how much input (farm size, share capital, labor and energy cost) is needed to produce goods and services (sales). The panel data analysis or random effect model in particular is used to measure economic effciency of agricultural co-operatives, using the secondary data obtained from annual fnancial report of Malaysian agro-based and farmers’ co-operative from 2004-2007. There are four variables (energy cost, share capital, workers salary and farm size) estimated to determine the sales of co-operative, however the result indicates that only workers salary is signifcant in determining sales of co-operatives.
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