Minnesota Agricultural Economist 682

Farm Management, Labor and Human Capital,

The Effects of Cooperative Competition on Member Loyalty

Marketing, Agribusiness,

MANAGING YIELD RISK THROUGH A COOPERATIVE

Developing new risk management products for all agricultural commodities has increased in importance given recent legislation. Vegetables have been difficult to insure. This paper investigates the use of index contracts for growers belonging to a Kentucky vegetable cooperative. Index contracts should be significantly more efficient than current crop insurance alternatives.Agribusiness, Risk and Uncertainty,

Measuring the Local Economic Impact of Cooperatives

The ability to measure the economic importance of cooperatives to communities is not purely an academic question. Policy makers, cooperative organizations, and community development practitioners are increasingly asking for such information. The most commonly used methodology is input-output analysis. The limitations of input-output analysis when applied to cooperatives have not yet been comprehensively explained in the literature, although they significantly affect the application of the model as well as the interpretation of results. We discuss five issues that need to be addressed when using input-output models and suggest additional analysis that should be completed to gain an accurate assessment of the local economic impact of cooperatives.cooperatives, economic impact, community development, input-output models, Agribusiness,

Managerial Incentives, Moral Hazard, and Structural Change in Agricultural Cooperatives

The federated business structure exists in many sectors of the economy, but we know little about its comparative advantage. This paper explores theoretically and empirically the current dynamics of the federated cooperative system. Two hypotheses are tested: growth at the local co-op level has made the structure redundant and managerial incentives create disloyalty. We use a unique data set from a survey of local farm supply and grain marketing cooperatives in the Midwest.Agribusiness,

Cooperative and Area Yield Insurance: A Theoretical Analysis

The purpose of this paper it to theoretically investigate the potential benefits that arise from a cooperative selling a government subsidized area-yield contract (i.e., the Group Risk Plan). The indemnities in area-yield contracts are triggered by a geographically determined yield (e.g, a country-wide yield average) instead of the more conventional individual actual production history. Therefore, an area-yield contract would be appropriate for managing the cooperative's systemic throughput risk. The cooperative would also capture some of the substantial government subsidies that are normally given to a private insurance company. Our primary finding is that farmers should be indifferent when considering the decisions to purchase area-yield insurance from a private company or encompass that business in their cooperative. We derive this result from the specific case of costless insurance and assume a Pareto Optimal contract. Under these assumptions, the government subsidies that the cooperative would hope to capture are simply a net deduction in their premiums. In other words, the benefit they capture from the subsidies in the same when they purchase the insurance from an outside firm or internally.Risk and Uncertainty, Agribusiness,

The Future Viability of the Federated Structure

Agribusiness,

Cooperatives as a Community Development Strategy: Linking Theory and Practice

The evolution of community development theory has not yet generated a parallel advancement in implementation strategies. In this paper we introduce a strategy—cooperative development—that compliments contemporary community development paradigms (self-help, asset-based, and self-development theories); thus providing communities and practitioners with an effective (and perhaps unfamiliar) vehicle for development. Although cooperative leaders, cooperative developers, and cooperative scholars consider cooperatives an important vehicle for community development, most have stopped short of prescribing how cooperatives can be incorporated into community development paradigms. Our objective is to motivate community development scholars and practitioners to start thinking about cooperatives in new ways, as part of their theory and strategies