IDEAS home Printed from https://ideas.repec.org/a/wly/agribz/v35y2019i4p625-638.html
   My bibliography  Save this article

Examining U.S. grain marketing and farm supply cooperatives’ sustainable growth rates

Author

Listed:
  • Nathan Smart
  • Brian C. Briggeman
  • Jesse Tack
  • Edward Perry

Abstract

A challenge for many U.S. grain marketing and farm supply cooperatives is ensuring that exceptional growth rates are sustainable in the long run. Growing too rapidly can sacrifice financial soundness, causing a business to effectively grow broke. The objective of this study is to examine whether or not U.S. grain marketing and farm supply cooperatives are able to manage their recent growth. To do so, we apply the sustainable growth rate (SGR) and sustainable growth challenge (SGC) metrics to a unique panel data set of United States cooperatives. Examining the SGRs for these cooperatives suggests that positive net profit margins are key to positive growth. When actual growth exceeds sustainable growth, most cooperatives are able to rapidly alleviate this difference through increasing leverage or operational efficiency. However, some cooperatives face more persistent growth challenges and are thus the most at risk of growing broke. Large cooperatives and cooperatives more dependent on farm supply sales rely heavily on leverage for managing growth.

Suggested Citation

  • Nathan Smart & Brian C. Briggeman & Jesse Tack & Edward Perry, 2019. "Examining U.S. grain marketing and farm supply cooperatives’ sustainable growth rates," Agribusiness, John Wiley & Sons, Ltd., vol. 35(4), pages 625-638, October.
    • Handle: RePEc:wly:agribz:v:35:y:2019:i:4:p:625-638
    DOI: 10.1002/agr.21609
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/agr.21609
    Download Restriction: no
    File URL: https://libkey.io/10.1002/agr.21609?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Fulton, Murray E. & Hueth, Brent, 2009. "Cooperative Conversions, Failures and Restructurings: An Overview," Journal of Cooperatives, NCERA-210, vol. 23, pages 1-12.
    2. Richards, Timothy J. & Manfredo, Mark R., 2003. "Cooperative Mergers and Acquisitions: The Role of Capital Constraints," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(1), pages 1-17, April.
    3. Hailu, Getu & Goddard, Ellen W., 2009. "Sustainable Growth and Capital Constraints: The Demutualization of Lilydale Co-operative Ltd," Journal of Cooperatives, NCERA-210, vol. 23, pages 1-15.
    4. Bechdol, Elizabeth & Gray, Allan W. & Gloy, Brent A., 2010. "Forces Affecting Change In Crop Production Agriculture," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 25(4), pages 1-6.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Juan Juliá-Igual & Elena Meliá-Martí & Gabriel García-Martinez, 2012. "Strategies developed by leading EU agrifood cooperatives in their growth models," Service Business, Springer;Pan-Pacific Business Association, vol. 6(1), pages 27-46, March.
    2. Liyan Yu & Jerker Nilsson, 2019. "Social Capital and Financial Capital in Chinese Cooperatives," Sustainability, MDPI, vol. 11(8), pages 1-15, April.
    3. Jeremy G. Weber & Conor Wall & Jason Brown & Tom Hertz, 2015. "Crop Prices, Agricultural Revenues, and the Rural Economy," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 37(3), pages 459-476.
    4. Justine Valette & Paul Amadieu & Patrick Sentis, 2018. "Les coopératives résistent-elles mieux ? Une analyse de survie des coopératives agricoles françaises," Post-Print hal-01990418, HAL.
    5. Fulton, Murray & Larson, Kathy A., 2009. "Overconfidence and Hubris: The Demise of Agricultural Co-operatives in Western Canada," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 37(2), pages 1-35.
    6. Valérie Barraud-Didier & Marie-Christine Henninger & Pierre Triboulet, 2014. "La Participation des Adhérents Dans Leurs Coopératives Agricoles: Une Étude Exploratoire du Secteur Céréalier Français," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 62(1), pages 125-148, March.
    7. Jasper Grashuis, 2018. "An Exploratory Study of Cooperative Survival: Strategic Adaptation to External Developments," Sustainability, MDPI, vol. 10(3), pages 1-15, February.
    8. Jasper GRASHUIS & Ye SU, 2019. "A Review Of The Empirical Literature On Farmer Cooperatives: Performance, Ownership And Governance, Finance, And Member Attitude," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 90(1), pages 77-102, March.
    9. Tina L. Saitone & Richard J. Sexton, 2017. "Agri-food supply chain: evolution and performance with conflicting consumer and societal demands," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 44(4), pages 634-657.
    10. Constantine Iliopoulos & Vladislav Valentinov, 2018. "Member Heterogeneity in Agricultural Cooperatives: A Systems-Theoretic Perspective," Sustainability, MDPI, vol. 10(4), pages 1-22, April.
    11. MacDonald, James M. & Korb, Penni & Hoppe, Robert A., 2013. "Farm Size and the Organization of U.S. Crop Farming," Economic Research Report 262221, United States Department of Agriculture, Economic Research Service.
    12. Weber, Jeremy G. & Wall, Conor & Brown, Jason P. & Hertz, Tom, 2013. "Crop Prices, Agricultural Revenues, and the Local Economy of the U.S. Heartland," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150404, Agricultural and Applied Economics Association.
    13. Iliopoulos, Constantine & Valentinov, Vladislav, 2018. "Member heterogeneity in agricultural cooperatives: A systems-theoretic perspective," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 10(4), pages 1-22.
    14. Musson, Anne & Rousselière, Damien, 2020. "Identifying the impact of crisis on cooperative capital constraint. A short note on French craftsmen cooperatives," Finance Research Letters, Elsevier, vol. 35(C).
    15. Feng, L. & Hendrikse, G.W.J., 2011. "Chain Interdependencies, Measurement Problems, and Efficient Governance Structure: Cooperatives versus Publicly Listed Firms," ERIM Report Series Research in Management ERS-2011-001-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.
    16. Secor, William & Boland, Michael A., 2021. "Section 199 and Agribusiness Investment Decisions," 2021 Annual Meeting, August 1-3, Austin, Texas 313910, Agricultural and Applied Economics Association.
    17. Mimoza Berisha Thaçi, 2017. "Are We Ready to Pilot a New Test Format for English Language Matura Exam?," European Journal of Multidisciplinary Studies Articles, Revistia Research and Publishing, vol. 2, ejms_v2_i.
    18. Barraud-Didier, Valérie & Henninger, Marie-Christine & El Akremi, Assâad, 2012. "The Relationship Between Members’ Trust and Participation in the Governance of Cooperatives: The Role of Organizational Commitment," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 15(1), pages 1-24, February.
    19. Hendrikse, G.W.J. & Nillson, J., 2022. "Board Structure Variety in Cooperatives," ERIM Report Series Research in Management ERS-2022-006-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.
    20. White, T. Kirk & Hoppe, Robert A., 2012. "Changing Farm Structure and the Distribution of Farm Payments and Federal Crop Insurance," Economic Information Bulletin 120309, United States Department of Agriculture, Economic Research Service.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:agribz:v:35:y:2019:i:4:p:625-638. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.