Do members derive value from cooperative growth? Experimental evidence on farmers’ horizon and willingness to invest

Globalisation of food markets pressures agricultural cooperatives to seek growth strategies to safeguard competitiveness and the capacity to maintain services. Farmers as the owners of the cooperative are the principal party to provide investment capital. The availability of member financing is however undermined by structural changes in agriculture. The capital intensity of farming discourages voluntary contributions if farmers do not have incentives to commit capital to the cooperative. Choice experiment is employed to uncover preferences for investment attributes among Finnish milk producers. Results indicate that farmers prefer reserving control rights to members, but they could be incentivised to contribute capital on terms which include capital-based residual rights, low-risk return, and compensate for appreciation of firm value. Policy implications of the findings describe the need to redefine member capital instruments innovatively in growing producer cooperatives.

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 Record created 2017-04-01, last modified 2018-01-22

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