An evaluation was made of the performance of agricultural marketing cooperatives within the context of rural development strategies in the Philippines and Indonesia. It was also recognized that cooperatives in LDC's could act as an important institutional mechanism for improving the coordination of the food systems in the two accounts. The study identified major shortcomings in operational efficiency, the equitable distribution of benefits to members and in the progressiveness of cooperatives in both countries. The policy conclusions and recommendations emphasize that (1) the role of the government in rural development programs should be redefined to emphasize a public service role while encouraging a "de-officialization" approach in cooperative development; (2) the cooperative marketing systems should be restructured to allow for a more decentralized system of local marketing cooperatives that can compete effectively with other private sector enterprises; and (3) a reconsideration of the basic foundation of the government promoted cooperatives be made to allow for a more participatory approach to rural development. Suggestions for improving the performance of Philippine and Indonesian cooperatives give priority to membership support, capital accumulation, adequate training and education, and organization and management of marketing cooperatives.