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Abstract

Since 1990, the farmer cooperative landscape has experienced a significant structural shift. Steep consolidation, elevated competition, and surging commodity prices have elevated the need for co-ops to be mindful of their cost structure and efficiencies. To test for this structural shift, this study estimated technical, allocative, scale, economic, and overall efficiencies for a set of grain marketing and farm supply cooperatives using a unique financial database. Chow test statistics for overall efficiency model show one structural shift in 2002 and 2003. Cooperatives are more likely to reduce costs by focusing on technical efficiency rather than adjusting the scale of operation. Nearly all efficiency trend lines, except for allocative, follows the business cycle patterns of the 1990s and 2000s. Our regression results shows capital constraint was one reason an average cooperative was off the technical frontier.

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