Long-term Financing in US and European Agricultural Co-operatives: Emerging Methods for Ameliorating Investment Constraints

Type: Conference Paper
Year of publication: 2003
Source: AgEcon
Collected from: AGRIS
Subject:
cooperatives
agribusiness and cooperatives
policies
Description:During recent years, dramatic changes in the world food system have led to unprecedented competition between agribusiness firms. To compete in this environment, agricultural cooperatives should invest substantially in long-term activities such as R&D and advertisement. Co-operatives have a difficult problem in acquiring equity capital because the residual claimant (benefactor) is the patron of the firm, not the investor. This organizational design poses to cooperatives three investment constraints: a) the free rider problem, b) the horizon problem, and c) the portfolio problem. Empirical analysis utilizing a latent variable structural equation model and a large dual response survey suggests that in the U.S. member-patrons are more likely to invest in co-operatives which adopt well defined property rights policies and structures than traditional co-operatives characterized by vaguely-defined property right structures. Agribusiness co-operatives in the European Union are gradually adopting long-term financing methods that possess one or more of the characteristics found in successful U.S. 'New Generation Cooperatives.' However, it seems that they have paid less attention in designing their organizational structures (e.g., membership policies). This may inhibit their efforts to gain a competitive advantage over investor-owned firms.
 

Related Resources

“Agric[Part I: New Development of Agricultural Cooperatives: Theory and Evidence]: Agricultural Cooperatives.

Provider: 
Subject: 
policies
agricultural policies
economics
agricultural economics
cooperatives
agribusiness and cooperatives

Farmers' Cooperatives in the EU: Policies, Strategies, and Organization

Provider: 
Subject: 
policies
agricultural policies
cooperatives
agribusiness and cooperatives

Control rights, governance, and the costs of ownership in agricultural cooperatives

Provider: 
Subject: 
policies
legislation
agricultural economics
cooperatives
agribusiness and cooperatives
cooperative farming

THE ROLE OF COMMERCIAL BANKS IN THAI AGRICULTURE

Provider: 
Subject: 
cooperatives
agribusiness and cooperatives
agriculture
policies
Collected from: 

ECONOMIC CONTRIBUTION OF THE SUGARBEET INDUSTRY IN MINNESOTA, NORTH DAKOTA, AND EASTERN MINNESOTA

Provider: 
Subject: 
cooperatives
policies
Collected from: 

Women in agricultural cooperatives: constraints and limitation to full participation

Provider: 
Subject: 
agribusiness and cooperatives
cooperatives
Collected from: 

AGRERI Library

“Agric[Part I: New Development of Agricultural Cooperatives: Theory and Evidence]: Agricultural Cooperatives.

Provider: 
Subject: 
policies
agricultural policies
economics
agricultural economics
cooperatives
agribusiness and cooperatives

Farmers' Cooperatives in the EU: Policies, Strategies, and Organization

Provider: 
Subject: 
policies
agricultural policies
cooperatives
agribusiness and cooperatives

Control rights, governance, and the costs of ownership in agricultural cooperatives

Provider: 
Subject: 
policies
legislation
agricultural economics
cooperatives
agribusiness and cooperatives
cooperative farming

External Library

THE ROLE OF COMMERCIAL BANKS IN THAI AGRICULTURE

Provider: 
Subject: 
cooperatives
agribusiness and cooperatives
agriculture
policies
Collected from: 

ECONOMIC CONTRIBUTION OF THE SUGARBEET INDUSTRY IN MINNESOTA, NORTH DAKOTA, AND EASTERN MINNESOTA

Provider: 
Subject: 
cooperatives
policies
Collected from: 

Women in agricultural cooperatives: constraints and limitation to full participation

Provider: 
Subject: 
agribusiness and cooperatives
cooperatives
Collected from: