This paper examines the determinants of compliance with rules and
imposing sanctions in Polish farmer cooperative organizations called
producer groups. The main task performed by these groups is to organize
joint sales of the output produced by individual farmers. Members of some
groups broke the group rules and sold their output independently of the
group without the group permission. The results show that the likelihood of
unpermitted sales outside the group is significantly negatively affected by
the price premium which members get for their output and positively
affected by the group size. The likelihood of imposing sanctions on the
farmers who broke the group rules is significantly negatively affected by the
price premium and positively affected by having a long-term contract by the
group. Price premium also negatively affects the severity of the imposed
sanctions
