Cooperative Organizational Strategies: A Neo-Institutional Digest

This paper describes the neo-institutional approaches of transaction cost economics, agency theory, and property rights analysis and summarizes efforts by economists to apply these concepts to cooperatives. Several problems intrinsic to the cooperative organizational form and its property rights structure are reviewed. These problems have been hypothesized to affect the comparative economic efficiency of cooperative firms and have led to the development of life cycle models seeking to explain the formation, growth, and eventual decline of cooperatives as markets evolve. In this context, statistical analyses of the comparative efficiency of cooperatives and ex post studies of cooperative conversions are surveyed.Agribusiness,

A Comparative Financial Ratio Analysis of U.S. Farmer Cooperatives Using Nonparametric Statistics

A comparative ratio analysis using nonparametric statistical methods provides no evidence to support the hypothesis that U.S. farmer cooperatives generally are financially weaker than other firms. Although some cooperative groups had lower current ratios than industry standards, most of these groups consisted of marketing associations for which differences may be explained largely by the unique business relationships between the associations and their patrons. Comparisons of debt/equity ratios indicate that, except for regional grain and farm supply associations, cooperatives generally are less leveraged than other firms. The overall financial strength of cooperatives appears better than during the early 1980s.Agribusiness,

OPTIMAL STRATEGIES OF MARKETING COOPERATIVES REGARDING NONMEMBER BUSINESS

This paper analyzes the pricing and output decisions of a cooperative that purchases and processes an agricultural raw product from both member and nonmember producers. Because of the complexity of the optimality conditions, simulation analysis is used to demonstrate solutions for various scenarios under monopsony market structure.Agribusiness, Industrial Organization,

BACKWARD INTEGRATION BY COOPERATIVES IN IMPERFECTLY COMPETITIVE AGRICULTURAL RAW PRODUCT MARKETS

This paper models backward integration by processing cooperatives into raw product production. Our analysis demonstrates that a cooperative's incentive to acquire raw product production capacity depends on its ability to restrict member production to optimal levels and the relationship between members and nonmembers in the raw product market.Agribusiness, Marketing,

Evaluating the Competitive Yardstick Effect of Cooperatives on Imperfect Markets: A Simulation Analysis

Agribusiness,

Comparative Performance of Cooperative Equity Retirement Plans

This paper compares the performance of revolving fund, percentage-of-all-equities, and base capital plans, and special plans for redeeming equity held by estates or based on member age. It also examines how the performance of the base capital plan is affected by changes in the base period, relaxing the equity requirements for underinvested members, and a variable cash patronage refund program. The base capital plan performs better than other systematic plans but places financial burdens on young members. Two modifications can mitigate that problem with only a slight diminution in performance. Special plans benefit cooperatives operating revolving fund plans the most

Accelerating Equity Retirement in Rural Electric Cooperatives

Electric cooperatives serve an estimated 42 million people in the United States by providing power to 18.5 million businesses, homes, schools, churches, farms, irrigation systems, and other customers. They deliver 11 percent of the electric power sold in this country, operating in 47 states and 80 percent of all counties. Electric cooperatives serve their members through the generation, transmission, and distribution of electricity. Power supply cooperatives (also called generation and transmission or G&T cooperatives) are engaged in the generation or purchase of electricity and the transmission of wholesale electricity to distribution cooperatives, which carry electricity to retail customers. There are 840 distribution cooperatives and 65 power supply cooperatives in the United States, and they own combined assets of $140 billion

Factors Affecting the Coordination of Agricultural Production and Marketing

Agricultural markets depend considerably less on open market transactions than 40 years ago. Increasingly, the production and marketing of agricultural products have been coordinated by forward contracting, production and marketing contracts, and vertical integration. The degree to which these alternative marketing mechanisms have been employed varies across commodities and products. Production contracts, marketing contracts, and vertical integration dominate in several livestock markets, including broilers, turkeys, eggs and milk, and in most specialty crop markets, including fruits, vegetables and sugar beets. Market transactions have continued to be more important for field crops and the cattle and hog markets although contract production and marketing of livestock, particularly sheep, lambs and hogs, have increased during the late 1980s and the 1990s

Accelerating Equity Retirement in Rural Electric Cooperatives

Electric cooperatives serve an estimated 42 million people in the United States by providing power to 18.5 million businesses, homes, schools, churches, farms, irrigation systems, and other customers. They deliver 11 percent of the electric power sold in this country, operating in 47 states and 80 percent of all counties. Electric cooperatives serve their members through the generation, transmission, and distribution of electricity. Power supply cooperatives (also called generation and transmission or G&T cooperatives) are engaged in the generation or purchase of electricity and the transmission of wholesale electricity to distribution cooperatives, which carry electricity to retail customers. There are 840 distribution cooperatives and 65 power supply cooperatives in the United States, and they own combined assets of $140 billion

Measuring the Performance of Cooperative Equity Redemption Plans

Cooperatives differ from other businesses in that they are owned by their patrons and net margins are distributed to patrons on the basis of use instead of capital investment. For financing, cooperatives often rely on allocated equities from retained patronage refunds. Retained patronage refunds are noncash allocations of net margins reinvested in a cooperative by patrons. Under an ideal program of equity formation, equity is held by patrons in proportion to patronage. Each patron’s share of financing the cooperative is equal to the share of benefits received. Equities of former patrons are retired as active patrons take on more of the responsibility of financing the organization