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Financing of Growth in Agricultural Cooperatives

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  • Lerman, Zvi
  • Parliament, Claudia

Abstract

This study examines the hypothesis that cooperatives suffer from a shortage of equity capital because of ownership structure and nonmarketability of cooperative equity. The empirical findings indicate that agricultural cooperatives finance nearly half their growth with equity. Contrary to theoretical expectations, the equity financing proportion of cooperatives is found to be statistically indistinguishable from the national average of nonfinancial corporations for 1973-1983 and is higher than the national average since 1984. Cooperatives are observed to raise new debt mainly through short-term borrowing. This indicates that banks may be reluctant to lend long-term to cooperatives because of their "unorthodox" ownership structure.

Suggested Citation

  • Lerman, Zvi & Parliament, Claudia, 1992. "Financing of Growth in Agricultural Cooperatives," Working Papers 232672, Hebrew University of Jerusalem, Center for Agricultural Economic Research.
    • Handle: RePEc:ags:huaewp:232672
    DOI: 10.22004/ag.econ.232672
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    References listed on IDEAS

    as
    1. Staatz, John M., 1989. "Farmer Cooperative Theory: Recent Developments," Research Reports 52017, United States Department of Agriculture, Rural Development.
    2. Condon, Andrew M. & Cotterill, Ronald W. & Rhodes, V. James & Shaffer, James D. & Staatz, John M., 1987. "Cooperative Theory: New Approaches," Service Reports (SR) 280614, United States Department of Agriculture, Rural Development.
    3. Lerman, Zvi & Parliament, Claudia, 1990. "Comparative Performance of Food-Processing Cooperatives and Investor-Owned Firms in the U.S," Working Papers 232668, Hebrew University of Jerusalem, Center for Agricultural Economic Research.
    4. Cobia, David W. & Royer, Jeffrey S. & Wissman, Roger A. & Smith, Dennis Paul & Davidson, Donald R. & Lurya, Stephen D. & Mather, J. Warren & Brown, Phillip F. & Krueger, Kenneth P., 1982. "Equity Redemption: Issues and Alternatives for Farmer Cooperatives [This report is now at http://purl.umn.edu/180969]," Mimeographed Reports 56160, University of Minnesota, Department of Applied Economics.
    5. 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.
    6. Schrader, Lee F., 1989. "Equity Capital and Restructuring of Cooperatives as Investor-Oriented Firms," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 4, pages 1-13.
    7. Lerman, Zvi & Parliament, Claudia, 1990. "Comparative Performance Of Food-Processing Cooperatives And Investor-Owned Firms," Staff Papers 13455, University of Minnesota, Department of Applied Economics.
    8. Cobia, David W. & Royer, Jeffrey S. & Wissman, Roger A. & Smith, Dennis Paul & Davidson, Donald R. & Lurya, Stephen D. & Mather, J. Warren & Brown, Phillip F. & Krueger, Kenneth P., 1982. "Equity Redemption: Issues and Alternatives for Farmer Cooperatives," Research Reports 180969, United States Department of Agriculture, Rural Development.
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    Citations

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    Cited by:

    1. Evans, Lewis & Meade, Richard, 2005. "The Role and Significance of Cooperatives in New Zealand Agriculture, A Comparative Institutional Analysis," Working Paper Series 3847, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    2. Chaddad, Fabio Ribas & Heckelei, Thomas, 2003. "Access To Capital And Firm-Level Investment Behavior In Food Industries: A Comparison Of Cooperatives And Publicly Traded Firms," 2003 Annual meeting, July 27-30, Montreal, Canada 22205, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Meng-Fen Yen & Mario J. Miranda & Ani Katchova, 2020. "The effects of capital constraints on the growth of agricultural cooperatives," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 66(1), pages 27-33.
    4. Grashuis, Jasper & Cook, Michael, 2016. "Capital, Ownership, and Governance: Analyzing the Structure of U.S. Farmer Cooperatives," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235677, Agricultural and Applied Economics Association.
    5. Lin, Chaoying & He, Lerong, 2020. "Targeted monetary policy and agriculture business loans," The North American Journal of Economics and Finance, Elsevier, vol. 54(C).
    6. Li, Ziran & Jacobs, Keri L. & Artz, Georgeanne M., 2012. "The Relative Capital Structure of U.S. Agricultural Grain and Supply Cooperatives and Investor Owned Firms," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124755, Agricultural and Applied Economics Association.
    7. Evans, Lewis & Meade, Richard, 2005. "The Role and Significance of Cooperatives in New Zealand Agriculture, A Comparative Institutional Analysis," Working Paper Series 18942, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    8. Achilleas Kontogeorgos & Panagiota Sergaki & Anastasia Kosma & Vassiliki Semou, 2018. "Organizational Models for Agricultural Cooperatives: Empirical Evidence for their Performance," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(4), pages 1123-1137, December.
    9. 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.
    10. Franck Bailly & Karine Chapelle & Lionel Prouteau, 2017. "What are the determinants of the pay gap between conventional firms and cooperatives? Evidence from France," Working Papers hal-01455741, HAL.
    11. Li, Feng & Hendrikse, George W.J., 2009. "CEO Compensation in Cooperatives versus Publicly Listed Firms," 2009 Conference, August 16-22, 2009, Beijing, China 51619, International Association of Agricultural Economists.
    12. Cook, Michael L., 1994. "The Role of Management Behavior in Agricultural Cooperatives," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 9, pages 1-17.
    13. repec:vuw:vuwscr:18942 is not listed on IDEAS

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