Current trends in cooperative finance

Abstract

In recent years three important trends have become apparent among grain marketing and farm supply cooperatives. These farmer owned firms have been rapidly investing in infrastructure, reformulating profit distribution and equity strategies, and have pursued consolidation with other cooperatives. This manuscript explores the factors contributing to those trends, the implications for cooperatives leaders, and the impacts on farmer members. Abstract: In recent years three important trends have become apparent among grain marketing and farm supply cooperatives. These farmer owned firms have been rapidly investing in infrastructure, reformulating profit distribution and equity strategies, and have pursued consolidation with other cooperatives. This manuscript explores the factors contributing to those trends, the implications for cooperatives leaders, and the impacts on farmer members.

A Review of the Empirical Literature on Farmer Cooperatives: Performance, Ownership and Governance, Finance, and Member Attitude

“…Generally, the findings of the reviewed publications appear to conform to the recent assertions of Briggeman et al. (), who noted the ongoing consolidation in the US farmer cooperative sector is driven by the need to make necessary investments in scale and scope economies to improve competitiveness. The empirical literature thus implies relatively small cooperatives may fall prey to larger cooperatives who must pursue cost efficiency or product differentiation to be competitive in non‐local market environments.…”

“…), the capital constraint facilitates consolidation to allow net asset investments in scale and scope economies (Briggeman et al. ). Yet organizational growth is linked to increased heterogeneity in member attitudes and objectives (Hakelius and Hansson ), which relates negatively to various attributes and characteristics of the cooperative (Höhler and Kühl ).…”

“…However, there remain capital constraints in spite of innovation in member ownership and member control (Cook and Iliopoulos 2016). With increased competition at every stage of the agri-food value chain (Adjemian et al 2016), the capital constraint facilitates consolidation to allow net asset investments in scale and scope economies (Briggeman et al 2016). Yet organizational growth is linked to increased heterogeneity in member attitudes and objectives (Hakelius and Hansson 2016), which relates negatively to various attributes and characteristics of the cooperative (Höhler and Kühl 2017).…”

An Exploratory Study of Cooperative Survival: Strategic Adaptation to External Developments

“…Similarly, driven by the expansion of Wal-Mart and other big-box retailers, the CR4 in the food retail sector increased from 17% to 37% between 1992 and 2013 [8]. The ongoing consolidation across the agri-food value chain is pressuring farmer cooperatives to improve efficiency or to pursue product differentiation by becoming market-oriented as opposed to user-oriented [9][10][11]. However, as discussed in the introduction and the background, many farmer cooperatives lack financial flexibility and brand equity to do so.…”

“…Current developments in the agri-food industry expose their various weaknesses and limitations and may impact their survival. For example, with ongoing consolidation at every stage of the value chain [8], many farmer cooperatives must overcome equity constraints to make investments in scale and scope economies for greater efficiency and competitiveness [9]. Also, the segmentation of critical food consumers necessitates a strong market orientation [10], but most farmer cooperatives have an inherent upstream bias [11,12].…”