The Evolution of Grain Trading Organizations in Australia: Applying the Cooperative Life Cycle

Cook’s (1995) life cycle theory of cooperatives predicts a rise and fall of cooperatives over time. He argues that cooperatives arise as a response, by producers or consumers, to some form of inefficiency in a market structure, for example an oligopoly. In such a market, the cooperative can thrive by replacing the ineffective firms until other firms or institutions or technology come along and deliver even better service. When this happens, the cooperative’s ownership and control features may hamper its ability to grow and compete. According to Cook, the cooperative will eventually need to change in order to accommodate investors, or it will be forced to exit the market. This article considers the case of Australia’s grain market within Cook’s framework to see if it has behaved as predicted and where it is heading in terms of responding to the needs of the agents in the market chain. In the 1980s Australia’s grain cooperatives and institutions faced challenges from deregulation and changing market structure that exposed extensive inefficiency in the traditional cooperative ownership arrangements. This article will review the origins, successes and eventual transformation of Australia’s major grain marketing institutions.