SIZE AND INDUSTRY EFFECTS IN THE PERFORMANCE OF AGRICULTURAL COOPERATIVES

The objective of this study is to determine if there are important size and industry effects on financial pertormance of agricultural cooperatives. The performance of 43 dairy, food, grain, and farm supply cooperatives in the US was analyzed over the period 1970-1987 using financial ratios derived from accounting data. The analysis revealed significant size and industry effects. Large regional cooperatives are more efficient in utilizing their assets to generate sales, while small regional cooperatives have higher profitability. The findings suggest that the emphasis on growth may not always produceĀ· beneficial results among agricultural cooperatives. Among the four industries studies, the dairy regional cooperatives appear to be the strongest performers, while the food marketing cooperatives are characterized by the lowest performance measures. Since both dairy and food cooperatives engage in value-added processing, this difference in performance makes it difficult to reach clear conclusions about possible advantages or disadvantages of. vertical integration relative to traditional cooperative activities. Trend analysis indicates that the profitability of the agricultural cooperatives in all industry and size categories declined in response to the downturn in US agriculture after 1980. While the decline in profitability was at similar rates for both large and small cooperatives, the variation of efficiency and leverage was in opposite directions. Large cooperatives may be expected to continue improving their asset utilization without relative improvement in profitability, and increasing the level of their debt in relation to equity.


Issue Date:
Aug 05 1990
Publication Type:
Conference Paper/ Presentation
Record Identifier:
http://ageconsearch.umn.edu/record/271036
Language:
English
Total Pages:
20




 Record created 2018-04-09, last modified 2018-04-09

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