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Top1. Introduction
Good balance between endowment and utilization of natural, physical, financial, human and social capitals is considered essential for the sustainability of rural livelihoods (De Haan, 2000). De Haan asserts that with low endowments of physical assets and resources, and a relatively poor state of human resource development, poor and marginal people rely heavily on their stock of social capital in order to manage their living. Social capital is of particular importance for poor and marginalized people as it is one assured form of capital on which they can draw to mobilize other forms of capitals to lead a satisfactory livelihood (Mubangizi, 2003).
Smallholder farmers of developing countries have been confronting the various problems associated with market failures including difficulty in market access, unfavorable terms of trade imposed by upstream and downstream trading partners, high transaction costs, and inherently low resource endowment. These problems have been limiting the capability and incentive of such farmers to participate in product markets. To overcome these problems, smallholder farmers may band together to form an agricultural cooperative and involve in collective activities designed for mutual benefits (Markelova & Mwangi, 2010). Social capital is considered to be essential for the formation of a farmers’ cooperatives and its continued operation (Valentinov, 2004).
However, there seems a dearth of literature on how social capital is built and maintained within the framework of farmers’ cooperatives. Specifically, little is known about what prompts the building of social capital building and what affects its maintenance and sustained utilization. Taking the cases of four agriculture cooperatives operating in rural Nepal this paper aims to (1) shed light on impetus or factors that prompt the building of social capital in agriculture cooperatives, and (2) explore the factors that influence the maintenance of social capital.