Agricultural cooperative is being considered as one of the most efficient agricultural system. Awarding subsidy to these bodies is one of the most important government supportive policies. It is argued that through implementation of the targeted subsidy and elimination of production subsidy, farmers affiliated with agricultural co-operatives due to increase in their production costs, become disadvantaged. This study aims to identify the impacts of targeted subsidy upon increase in production costs of members of agricultural co-operative in Lenjan. The research method has descriptive-analytical nature. The statistical society is composed of active agricultural cooperatives in Lenjan with 2809 members. The sample size via Kokrans formula and stratified sampling technique amounted to be 180. SPSS software was applied as well. This study suggests that targeted subsidy policy increase production costs of farmer who is agricultural cooperative member. However, the implementation of this policy does not lead to the reduction of credit and financial resources of the members. Based on ANOVA test, income, level of literacy, and the age of members would not any impact upon the reduction of co-operative costs. However, the history of membership would have impact upon increases in costs.