A REVIEW OF THE EMPIRICAL LITERATURE ON FARMER COOPERATIVES: PERFORMANCE,OWNERSHIP AND GOVERNANCE,FINANCE, AND MEMBER ATTITUDE

The empirical literature on farmer cooperatives is now fast emerging and developing in the areas of performance, ownership and governance, finance, and member attitude. We discuss 56 peer‐reviewed publications to illustrate the main findings and conclusions while outlining challenges and opportunities for future research. Generally, cooperative membership is found to positively impact price, yield, input adoption, income, and other indicators of member performance, yet there is growing evidence of an uneven distribution of benefits for small and large producers. In terms of structure, evidence of a causal relationship of ownership and governance to performance has been elusive, yet there are now many findings of inherent equity and long‐term debt constraints, often in the context of consolidation to drive scale and scope economies. Further inefficiency is observed to be driven by increased heterogeneity in member attitudes and objectives, in particular in terms of commitment and participation. Thus, overall, empirical work portrays farmer cooperatives as flawed and complex business organizations which nonetheless have a strong positive impact on its members. While applied research may progress in various directions, a general improvement in empirical methodologies is needed to allow robust analysis of mixed objectives in dynamic environments.     

REDISTRIBUTIVE POLITICS AND GOVERNMENT DEBT IN A BORROWING‐CONSTRAINED ECONOMY

We develop a two‐period, three‐class of income model where low‐income agents are borrowing constrained because of capital market imperfections, and where redistributive expenditure is financed by tax and government debt. When the degree of capital market imperfection is high, there is an ends‐against‐the‐middle equilibrium where the constrained low‐income and the unconstrained high‐income agents favour low levels of government debt and redistributive expenditure; these agents form a coalition against the middle. In this equilibrium, the levels of government debt and expenditure might be below the efficient levels, and the spread of income distribution results in a lower debt‐to‐GDP ratio.     

FARMERS’ WILLINGNESS TO INVEST IN NEW COOPERATIVE INSTRUMENTS: A CHOICE EXPERIMENT

Globalization of agricultural markets put pressures on producer cooperatives to invest in expansion and growth to safeguard their competitiveness. Availability of capital is limited if farmers do not have incentives to increase their capital contribution. Cooperative literature recognizes the residual rights, transferability, and the appreciation potential of the investment as the potential solutions for the problems that may impede cooperative investments. The objective of this study is to understand farmer preferences regarding investment attributes and the potential for attracting investment capital from members and non‐members. We employ a choice experiment method to test new cooperative investment instruments. The data consist of a questionnaire conducted with 406 Finnish dairy farmers. Random parameter latent class logit model is used in the estimation of the data. The results indicate that most of the respondents regard the new investment instruments positively. However, farmers prefer restricting ownership rights to members. Incentives for members to participate in financing cooperative growth could be designed with capital‐based residual rights, mechanisms for transferability and for the appreciation of firm value. Estimation that considered choice difficulty improved model fit, which highlights the need to address respondent burden also in future studies of hypothetical investments in order to produce unbiased estimates.     

COMPARATIVE EFFICIENCY OF AGRICULTURAL COOPERATIVES AND CONVENTIONAL FIRMS IN A SAMPLE OF QUASI‐TWIN COMPANIES

The resilience of cooperatives and their positive contribution to employment in times of crisis is well established. However, their overall economic performance relative to conventional firms is still controversial, casting doubt on the ability of this alternative organizational form to govern the fundamental drivers of productivity. To shed new light on the issue, we study the comparative technical efficiency of agricultural cooperatives (ACs) and conventional firms (CFs), drawing on a unique data set comprising all wine‐producing companies in Sardinia (Italy) from 2004 to 2009. Due to the similarity of the habitats in which the firms operate and the careful measurement of several key inputs, the observed units are ‘twins’ in all non‐organizational respects, providing an ideal setting for comparison. Having generated efficiency scores through Data Envelopment Analysis (DEA), we regressed the scores on external covariates and ownership type using a pooled truncated maximum likelihood formulation. Our findings, which survive correction for spatial correlations, indicate that cooperatives are less technically efficient than their capitalist counterparts and struggle more to adapt to extreme weather fluctuations. Both results are particularly worrying in light of the main challenges facing the wine industry in the near future: liberalization of EU planting rights and climate change.     

HOLDINGS OF NATIONAL AND LOCAL GOVERNMENTS IN COMPANIES IN FINLAND: PERSISTENCE AND CHANGE IN THE LONGER TERM

Applying an approach of neo‐institutional research, this article examines the history of company holdings of the national government and local governments in Finland in the longer term. The article examines the genealogy of the institutional forms of these holdings, the diffusion, adoption and adaptation of these forms, and the political legitimacy of new forms and the political de‐legitimation of earlier forms. For theory, the results indicate that the individual tailoring of institutional forms offers flexibility but increases complexity. For practice, the results suggest that the company form may too easily marginalize alternative institutional forms such as co‐operatives, associations, and foundations.