Abstract: At present, Chinese farmers are facing some realistic restrictions including small-scale farms, the enlargement of the heterogeneity and the low human capital accumulation per capita. All these have led to the high transaction cost in developing the economic organization of agriculture cooperation. At the same time, because of the lack of the governmental system supply, the institutional innovation needs necessary external supports. These are the basic reasons why the development of the agricultural economic cooperative organization in China is lagging behind. The efficient way to solve this problem is to increase the institutional supply of government, which can reduce the transaction cost to develop the economic organization of agriculture cooperation.

Key words: agriculturecooperationeconomicorganization, transactioncost, governancestructure, institutionalsupply