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Comparative performance of cooperatives and investor-owned firms in US food industries

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Listed:
  • Zvi Lerman

    (Department of Agricultural Economics and Management, Hebrew University, Rehovot, Israel)

  • Claudia Parliament

    (Department of Agricultural and Applied Economics, University of Minnesota, St. Paul, MN)

Abstract

The comparative financial performance of cooperatives and investor-owned firms (IOFs) in the fruit and vegetable processing and the dairy industries was analyzed for the years 1976 through 1987. Contrary to theoretical expectations, the cooperatives in both industries were found to perform as well as or better than the comparable IOFs by profitability, leverage, and interest coverage measures. No clear evidence was found of the hypothesized overinvestment in fixed assets or pronounced moral hazard behavior in cooperatives. The lack of significant differences in profitability between the two types of firms suggests that cooperatives may be following goals similar to IOFs.

Suggested Citation

  • Zvi Lerman & Claudia Parliament, 1990. "Comparative performance of cooperatives and investor-owned firms in US food industries," Agribusiness, John Wiley & Sons, Ltd., vol. 6(6), pages 527-540.
    • Handle: RePEc:wly:agribz:v:6:y:1990:i:6:p:527-540
    DOI: 10.1002/1520-6297(199011)6:6<527::AID-AGR2720060602>3.0.CO;2-R
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    References listed on IDEAS

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    1. Sexton, Richard J. & Wilson, Brooks M. & Wann, Joyce J., 1989. "Some Tests Of The Economic Theory Of Cooperatives: Methodology And Application To Cotton Ginning," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 14(1), pages 1-11, July.
    2. Staatz, John M., 1989. "Farmer Cooperative Theory: Recent Developments," Research Reports 52017, United States Department of Agriculture, Rural Development.
    3. Parliament, Claudia & Lerman, Zvi & Fulton, Joan R., 1990. "Performance of Cooperatives and Investor-Owned Firms in the Dairy Industry," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 5, pages 1-16.
    4. Kwo-Shin Chen & Emerson M. Babb & Lee F. Schrader, 1985. "Growth of large cooperative and proprietary firms in the US food sector," Agribusiness, John Wiley & Sons, Ltd., vol. 1(2), pages 201-210.
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