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Do members derive value from cooperative growth? Experimental evidence on farmers’ horizon and willingness to invest

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  • Alho, Eeva Kristiina

Abstract

Globalisation of food markets pressures agricultural cooperatives to seek growth strategies to safeguard competitiveness and the capacity to maintain services. Farmers as the owners of the cooperative are the principal party to provide investment capital. The availability of member financing is however undermined by structural changes in agriculture. The capital intensity of farming discourages voluntary contributions if farmers do not have incentives to commit capital to the cooperative. Choice experiment is employed to uncover preferences for investment attributes among Finnish milk producers. Results indicate that farmers prefer reserving control rights to members, but they could be incentivised to contribute capital on terms which include capital-based residual rights, low-risk return, and compensate for appreciation of firm value. Policy implications of the findings describe the need to redefine member capital instruments innovatively in growing producer cooperatives.

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  • Alho, Eeva Kristiina, 2014. "Do members derive value from cooperative growth? Experimental evidence on farmers’ horizon and willingness to invest," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182923, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae14:182923
    DOI: 10.22004/ag.econ.182923
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    References listed on IDEAS

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    1. Michael L. Cook & Fabio R. Chaddad, 2004. "Redesigning Cooperative Boundaries: The Emergence of New Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(5), pages 1249-1253.
    2. Celine Michaud & Daniel Llerena & Iragael Joly, 2013. "Willingness to pay for environmental attributes of non-food agricultural products: a real choice experiment," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 40(2), pages 313-329, March.
    3. George Hendrikse & Jos Bijman, 2002. "Ownership Structure in Agrifood Chains: The Marketing Cooperative," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(1), pages 104-119.
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