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Potential for cooperative involvement in vertical coordination and value-added activities

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  • Jeffrey S. Royer

    (Department of Agricultural Economics, University of Nebraska-Lincoln, 102 H.C. Filley Hall, P.O. Box 830922, Lincoln, NE 68583-0922)

Abstract

This article analyzes the comparative advantages and disadvantages farmer cooperatives may have in coordinating the marketing of agricultural commodities through the market channel from the farm level to the processed product level. The distribution of risks among producers and integrators under contract integration is discussed, and factors related to the ownership, capitalization, and governance of cooperatives that may limit their vertical expansion are evaluated. Although contract integration by cooperatives may offer some advantages, efforts by cooperatives to limit their financial risks and the market risks of producers could significantly redefine the nature of these organizations and their relationships with members. © 1995 John Wiley & Sons, Inc.

Suggested Citation

  • Jeffrey S. Royer, 1995. "Potential for cooperative involvement in vertical coordination and value-added activities," Agribusiness, John Wiley & Sons, Ltd., vol. 11(5), pages 473-481.
    • Handle: RePEc:wly:agribz:v:11:y:1995:i:5:p:473-481
    DOI: 10.1002/1520-6297(199509/10)11:5<473::AID-AGR2720110510>3.0.CO;2-W
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    References listed on IDEAS

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    1. Rathbone, Robert C. & Wissman, Roger A., 1993. "Equity Redemption and Member Equity Allocation Practices of Agricultural Cooperatives," Research Reports 257202, United States Department of Agriculture, Rural Development.
    2. Thomas L. Sporleder, 1992. "Managerial Economics of Vertically Coordinated Agricultural Firms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(5), pages 1226-1231.
    3. Allen M. Featherstone & Bruce J. Sherrick, 1992. "Financing Vertically Coordinated Agricultural Firms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(5), pages 1232-1237.
    4. Emerson M. Babb, 1992. "Management and Financing of Vertical Coordination in Agriculture: Discussion," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(5), pages 1238-1239.
    5. Rogers, Richard T. & Marion, Bruce W., 1990. "Food Manufacturing Activities of the Largest Agricultural Cooperatives: Market Power and Strategic Behavior Implications," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 5, pages 1-15.
    6. John A. Jamison, 1960. "Coordination and Vertical Expansion in Marketing Cooperatives," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 42(3), pages 555-566.
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    Cited by:

    1. Borgen, Svein Ole, 2011. "Product differentiation and cooperative governance," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(3), pages 327-333, May.
    2. Imre Ferto & Gabor G. Szabo, 2002. "Vertical Co-ordanitaion in Transition Agriculture: a Hungarian Cooperative Case Study," CERS-IE WORKING PAPERS 0210, Institute of Economics, Centre for Economic and Regional Studies.
    3. Nguyen Hung Anh & Wolfgang Bokelmann & Ngo Thi Thuan & Do Thi Nga & Nguyen Van Minh, 2019. "Smallholders’ Preferences for Different Contract Farming Models: Empirical Evidence from Sustainable Certified Coffee Production in Vietnam," Sustainability, MDPI, vol. 11(14), pages 1-26, July.
    4. Hendrikse, G.W.J. & Veerman, C.P., 2000. "Marketing co-operatives," ERIM Report Series Research in Management ERS-2000-13-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    5. Ortmann, Gerald F. & King, Robert P., 2007. "Agricultural Cooperatives I: History, Theory and Problems," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 46(1), pages 1-29, March.
    6. Fraser McLeay & Tony Zwart, 1998. "Factors affecting choice of cash sales versus forward marketing contracts," Agribusiness, John Wiley & Sons, Ltd., vol. 14(4), pages 299-309.
    7. Theo Benos & Nikos Kalogeras & Frans J.H.M. Verhees & Panagiota Sergaki & Joost M.E. Pennings, 2016. "Cooperatives’ Organizational Restructuring, Strategic Attributes, and Performance: The Case of Agribusiness Cooperatives in Greece," Agribusiness, John Wiley & Sons, Ltd., vol. 32(1), pages 127-150, January.
    8. Sartorius, K & Kirsten, J, 2002. "Can Small-Scale Farmers Be Linked To Agribusiness? The Timber Experience," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 41(4).
    9. Rehber, Erkan, 2007. "A Global Overview of Contract Farming," Monographs: Applied Economics, AgEcon Search, number 259079, November.
    10. L. Tsourgiannis & M. Warren & A. Karasavvoglou & J. Eddison, 2012. "Marketing Strategies for the Primary Sector: An Empirical Study," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 147-178.
    11. Salavou, Helen E. & Sergaki, Panagiota, 2013. "Generic Business Strategies in Greece: Private Food Firms versus Agricultural Cooperatives," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 41(1), pages 1-17.
    12. Jieming Zhu & Yan Guo, 2015. "Rural development led by autonomous village land cooperatives: Its impact on sustainable China’s urbanisation in high-density regions," Urban Studies, Urban Studies Journal Limited, vol. 52(8), pages 1395-1413, June.
    13. Shen, Mingrui & Shen, Jianfa, 2018. "Evaluating the cooperative and family farm programs in China: A rural governance perspective," Land Use Policy, Elsevier, vol. 79(C), pages 240-250.
    14. Dan Yang & Zimin Liu, 2012. "Study on Chinese farmer cooperative economy organization and agricultural specialization," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 58(3), pages 135-146.
    15. George W. J. Hendrikse & Cees P. Veerman, 2001. "Marketing Co‐operatives: An Incomplete Contracting Perspective," Journal of Agricultural Economics, Wiley Blackwell, vol. 52(1), pages 53-64, January.
    16. Hanisch, Markus & Rommel, Jens & Mueller, Malte, 2012. "Variation In Farm Gate Milk Prices And The Cooperative Yardstick Revisited – Panel Evidence From The European Dairy Sectors," 52nd Annual Conference, Stuttgart, Germany, September 26-28, 2012 137138, German Association of Agricultural Economists (GEWISOLA).
    17. Jieming Zhu & Chen Chen & Lie You, 2022. "Engaging Smallholders in Flower Agribusiness for Inclusive Rural Development: The Case of Yunnan, China," Sustainability, MDPI, vol. 14(5), pages 1-15, February.

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