The American Native Beef project involved a failed attempt to establish a cow and bull slaughter operation in Southeast Oklahoma. The effort was initially organized as a new generation cooperative and raised over US$2.5M from area producers who retained their funds in escrow for over five years despite numerous opportunities to withdraw their investment. The business model was restructured several times to attract equity capital from outside investors. The case provides insights into the linkages between business strategy and business structure. It also raises the question as to whether the project could have been successful under the original business model.

On June 20, 2002, the members of the South Dakota Soybean Processors (SDSP) Cooperative approved the reorganization of the cooperative into a limited liability company. Between the vote of the SDSP board of directors to reorganize on October 12, 2001, and the majority vote of the membership to approve the reorganization, there was no public discussion about the issue in the major media. In the absence of any public opposition to the conversion, the vote by the members in favor of conversion would indicate that conversion was relatively uncontroversial. The lack of controversy about conversion would seem to render this issue a non-event not worthy of sociological examination. Even nonevents, however, merit examination, and in this case, the non-event of lack of opposition to conversion is the question to be explained, and the proposed answer to the question is that the hegemonic discourse of neo-classical economics did not permit the consideration of alternative arrangements by which the company would have retained a cooperative format. The contention of this paper is that the discourse of neoclassical economics has become a heuristic narrative in the way that it organizes common sense and hinders oppositional discourses. To that extent, neoclassical economics theories become self-fulfilling through institutional design, social norms, and language.

Bargaining in agriculture is collective because an agent represents multiple principals, the farmers, in contrast to an agent who negotiates on behalf of a single or corporate entity. Collective bargaining adds the complication of securing commitments from several individuals, each possibly having a slightly different reservation value for an acceptable agreement. A disadvantage for a collective bargaining agent may emerge when negotiating with an agent representing a single or corporate principal rather than another collective group of principals. Such asymmetry allows a single agent to exploit differences among heterogeneous principals when negotiating with a collective agent.

The Pedernales Electric Cooperative (PEC) is the largest rural electric cooperative in the US. In this case, readers learn about various principal-agent problems that occurred at PEC and the steps taken to correct such problems. Electric cooperatives are a vital part of the US electrical grid. Providing electricity to 40 million people in 47 states, these cooperatives serve 85% of the nation’s land mass. This case follows the experience of PEC’s former General Manager, Juan Garza. Also, benchmark financial and operating information are provided. At the conclusion, readers are asked questions about the selection method for a new general manager and also about how this cooperative might improve its efficiency.

This study examines the price competitiveness of marketing and production contracts depending on whether contracts are with cooperatives or investor-owned firms. A propensity score matching method is used to compare prices using contract data from a national farm-level survey. The results show that prices of agricultural contracts with cooperatives are not significantly different from those with investor-owned firms, which indicates that cooperatives are adhering to recommended business practices of offering market prices to their members.

This case study on the former Rice Growers Association (RGA) analyzes the effects of a variety of business decisions and market changes relative to the ongoing Farmers’ Rice Cooperative (FRC). Interview and survey findings reveal that many respondents felt RGA’s Board of Directors was passive and, despite its large size, lacked the necessary expertise to direct management and represent the best interest of the broader cooperative membership. In the midst of challenging market conditions, RGA’s management teams were accused of making a number of poor business decisions that led to significant financial stress and the eventual dissolution of the firm.

The objective of this research is an analysis of the firm-level factors that led to relatively longer survival for individual firms in the township mutual industry in Minnesota. Next, the trends in the data provide support for the claim that the shrinking number of farms in their market areas negatively impacts long-term survival. This consideration is even more significant to organizations that, as a result of their legal and historical legacies, have remained smaller than their commercial competitors. Moreover, the variable that was most significant in these analyses was surplus or profitability. While it is helpful to know that profitability is heavily correlated with long-term survival, this finding does not provide a basis on which a practitioner can realize this result.

Cooperatives have been used as examples of successful collective action activities. However, member free riding within cooperatives and other collective action groups continues to be a challenge. The board of directors and management of United Producers Inc. confronted the member free-riding issue when creating a restructuring plan after their Chapter 11 bankruptcy filing. The plan integrated three strategies that have been proposed to mitigate free-riding in large groups; coercion, a federated organizational structure, and selective incentives. This article compares Mancur Olson’s theoretical framework for addressing free-riding behavior with the United Producers Inc. restructuring plan.

This paper examines the market and organizational factors that led to the bankruptcy in July 2000 of Tri-Valley Growers (TVG), a California tomato- and fruit-processing cooperative owned by more than 500 growers. TVG’s bankruptcy was caused by a confluence of organizational and market-related factors, including low productivity of assets due to high inventory levels and obsolete facilities, high operating costs relative to the competition, high raw product transport costs due to the geographic mismatch of production and processing capacity, particularly in tomato operations, and a poor information system. TVG was also highly leveraged. Re-organization as a new-generation cooperative in 1996 failed to stabilize the equity base.

Lilydale Co-operative Ltd was one of Canada’s largest and most geographically diversified cooperative poultry processors. In 2005, Lilydale voted to end its 65-year existence as a cooperative and converted to an investor-owned firm (Lilydale Inc.). The motivations for Lilydale’s organizational change are examined, focusing on access to capital and using the sustainable growth model as the framework. For sustainable growth, a balance is required between increased actual sales and changes in financial management measures. For much of its history, Lilydale’s actual sales growth rate exceeded its sustainable growth rate. The firm may have been making financial decisions without considering all financial commitments, including increasing requirements to distribute equity to retiring members. Long-term debt was very high during the ten years prior to the decision to restructure the cooperative. Although the time period is short since conversion, Lilydale has had more reasonable growth rates.

In response to considerable structural changes in the fruit and vegetable industry over the last fifty years, Pro-Fac Cooperative, Inc. has undergone significant adjustments to retain its competitive position, and best represent farmer-member interests. Three distinct phases of operations are discussed that include various combinations of agricultural service, food processing, and product marketing activities. In particular, an ownership control rights framework is applied to the cooperative’s expansion into significant national branded product operations and then to the ultimate decision to seek an outside equity infusion to address growing financial, managerial, and operational constraints facing the cooperative and its members.

Agricultural cooperatives, like other cooperative firms, face a wide array of choices in how they distribute and retain profits. These choices impact the cooperative’s solvency, liquidity, and cash flow as well as each member’s cash flow and realized return from the cooperative. Taxation at both the firm and the patron level further complicates the picture. In recent years the availability of the Domestic Production Activities Deduction (DPAD) has impacted the profit distribution of many agricultural cooperatives (Barton, 2011). While cooperative CEOs and boards of directors appear to be astute in analyzing the tax and cash flow implications of profit distribution alternatives, it is not clear whether they understand the impacts on the members’ return from the cooperative. This paper explicitly examines that question using financial data from 10 case study grain and farm supply cooperatives in Oklahoma.

The Journal of Cooperatives (formally titled the Journal of Agricultural Cooperation) was published as a print journal from 1986 to 2003. The journal resumed publication as an electronic journal in 2007. This article provides a short history of the journal, analyzes trends in authorship, institution, content, research method, and intended audience, and considers issues relating to electronic publication. The journal’s historical and current mission statements are also discussed, and a future thrust for the journal is presented. Key Words: Cooperative, academic journal, electronic publishing

The decision discussed in this case is to examine the advantages and disadvantages of restructuring Dakota Growers Pasta. Cook’s life cycle taxonomy of cooperatives is used to explain how the cooperative moved throughout its life until it restructured as a closely-held organization. The organization does not appear to have changed greatly in its operation since the conversion.

The objective of this article is to describe the key elements of cooperative finance that have been found in the literature and illustrate how they relate to the function and structure of cooperatives.

This paper presents a dynamic model of a processing cooperative in which patronage refunds are taken into consideration by producers in making marketing decisions and by the cooperative in establishing pricing strategies. An adaptive expectations framework is used to represent the formation of producer expectations of patronage refunds. The model suggests that cooperatives can successfully distribute earnings to producers as patronage refunds while using prices as instruments for achieving and maintaining optimal output levels. This result challenges conventional ideas about cooperative market behavior and implies that public support for cooperatives should be based on empirical analysis rather than theoretical arguments alone.

This study examines the strategic issues and decisions of Producers Cooperative Oil Mill, a regional oilseed processing cooperative located in Oklahoma City, Oklahoma. The process of strategic planning and strategy implementation in agribusiness has been the topic of numerous research studies and case studies. While cooperative firms have been the subject of case studies focusing on strategic issues, the unique aspects of strategic decisions in a cooperative firm have not been highlighted. The formulation and implementation of strategy in cooperative organizations is impacted by their business structure. This case study provides unique examples of how strategy formulation and implementation is impacted by the unique structure and values of a cooperative firm. The article is formatted such that it can be used in educational programs as three interrelated mini-case studies. Questions for students are included.

The theory of the firm contained in most textbooks is inadequate for understanding the economic behavior of cooperatives because some assertions about firm behavior, such as profit maximization, may be inappropriate for cooperatives. This article provides an introduction to the neoclassical theory of cooperatives, which has been useful for generating insights into the behavior of cooperatives in various market structures, helping cooperatives develop business strategies consistent with their objectives, and informing public policy decisions concerning cooperatives. Part I of this article presents the basic elements of the neoclassical theory as it pertains to farm supply cooperatives.

This article provides an introduction to the neoclassical theory of cooperatives, which has been useful for generating insights into the behavior of cooperatives in various market structures, helping cooperatives develop business strategies consistent with their objectives, and informing public policy decisions concerning cooperatives. Part I of the article presented the basic elements of the neoclassical theory as it pertains to farm supply cooperatives. Part II focuses on the neoclassical theory as it applies to marketing cooperatives. Topics covered include strategies for raising member raw product prices, open- and restricted-membership policies, and the effects of cooperatives on economic welfare.

In 2005, North American Bison Cooperative formed a contractual alliance with North Dakota Natural Beef, LLC. The alliance was formed in order to enable the cooperative to enhance returns from its physical and managerial assets by entering the natural beef market. This case describes the resources shared by the cooperative and LLC, how the alliance was governed, the risk of opportunism by the CEO and associated trust-building and control mechanisms, and the benefits cooperative members received. Although the two companies operate under different business principles, cooperative members exercise indirect control over the resources they contribute to the venture.

The West Liberty Foods turkey cooperative was formed in 1996 to purchase the assets and assume operations of Louis Rich Foods. Based on field interviews with grower members and company management, we describe changes in the economic relationship between growers and the company that resulted from the purchase. We argue that many of the observed changes are consistent with a financial-contracting view of the cooperative firm where the bundling of input-supply and board activities generates a reduction in agency rents that compensates for the organizational deadweight loss traditionally associated with cooperative governance.

This supplement presents mathematical expressions of the models of the farm supply cooperative described in Part I and the marketing cooperative described in Part II. Price and output solutions are derived for firms that maximize profit, cooperatives that maxim-ize member returns, and cooperatives that handle whatever quantity of products members choose to purchase or deliver. Those solutions are then compared to the solutions for the maximization of economic welfare to determine the conditions under which profit-maximizing firms and cooperatives are efficient in an allocative sense.

Truman Torgerson cast a big shadow over cooperatives in Minnesota and Wisconsin for over 40 years. As General Manager of Lake to Lake Dairy in Wisconsin, Truman’s name was linked to a broad range of activities. His son, Randy, has written about his father in a book entitled “Truman Torgerson: Leadership Straight from the Shoulder.” The book is a tribute to his dad as much as it is a history of cooperatives and the dairy industry in the upper Midwest. The book builds upon a previous book written by Truman entitled “Building Markets and People Cooperatively: The Lake to Lake Story.” The book contains many tributes by friends and colleagues of Truman. The book provides a combination of biography, history, and management.

"We have done a great deal of work, analysis, and even soul-searching over this proposal before you. We stand here as your board and very confidently tell you that this is an extremely good and fair offer. We are confident that it is in the best interests of Great Lakes Cooperative's members, employees, communities, and customers to approve this proposal." Board President, Great Lakes Cooperative

This study analyzes factors influencing farmer interest in marketing switchgrass through contracts and/or joining a cooperative that harvests, transports, stores, and markets their switchgrass. Data are from a survey of farmers in 12 southern states. Bivariate probit analysis is used to estimate the effects of farm characteristics, farmer demographics, and opinions about switchgrass on marketing alternative preferences. Interest in contracting and joining a cooperative is positively influenced by farm size, on-farm storage, moderate off-farm income, and heightened importance of job creation in the decision to produce switchgrass. Negative influences include concerns about planting/harvesting conflicts and the expectation of ceasing farming soon.

The Tax Cuts and Jobs Act of 2017 (TCJA) created a number of changes to the U.S. tax code. Three of these changes have significant ramifications for U.S. agricultural producers and U.S. agricultural cooperatives: (1) A reduction in the corporate tax rate from a maximum rate of 35% to a flat rate of 21%; (2) Elimination of the Domestic Production Activities Deduction (DPAD) or Section 199; and (3) Creation and subsequent revision of a new tax deduction labeled Section 199A.

Economists cannot explain why cooperative organizer and philosopher Edwin Nourse, unlike his contemporary Aaron Sapiro, did not encourage cooperatives to maximize their market share and influence. Text analysis, a subset of linguistic anthropology, reveals that Nourse’s famous competitive yardstick model is more than a model of cooperative organization and purpose. The yardstick is also a model of social change and conflict where a stable, even static, agrarian sector is confronted by dynamic, expansionist businesses threatening to upset the existing social order.

Deciding how to coordinate activities can be a challenge posed in any marketing chain. This case involves an agricultural cooperative that has focused entirely on marketing raw sugar cane for additional refinement. Recent dramatic shifts in the sector have caused the members of the cooperative to consider building a facility that will process the raw sugar cane. In so doing, the cooperative can consider using the spot market, using contracts, vertically coordinating, or vertically integrating. This case study of Louisiana Sugar Cane Products, Inc. is a unique, real-life case that can be widely used in marketing and cooperatives courses.

The objective of this research is to assess the financial performance of North Dakota farm supply and grain handling cooperatives between 2002 and 2006. Audited financial statements from 120 cooperatives were used. Various financial variables are tested as determinants of profitability. Financial ratio analysis is used to observe trends in liquidity, solvency, and efficiency. Comparisons in ratio trends are made based on relative profitability. No statistical relationship is found between business size and profitability. The most profitable North Dakota agricultural input supply and grain marketing cooperatives were observed to have financial ratio values distinct from less profitable ones.

Whether it is a cooperative or an IOF, the effectiveness of management determines the success or failure of any firm (Cobia 1989). A successful manager of a cooperative, besides the skills of an investor-oriented firm (IOF) business leader, needs to possess four additional qualifications (Cook 1994). First, managers need to be comfortable with vagueness, complexity, and conflict. Second, managers need to concentrate more planning efforts on developing entrepreneurial and operating abilities rather than portfolio-related objectives. Third, communication and leadership skills are important, and becoming a professional spokesperson for members is imperative. Finally, the cooperative leader must be comfortable with building coalitions, consensus, and inter-member loyalty--key components in developing group cohesiveness (Cook 1994).