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Abstract

In response to low commodity prices and increasing production cost, agricultural producers have attempted to capture a portion of downstream market value of their products by organizing and investing in what are now called "New Generation Co-ops". These cooperative efforts often involve the construction of processing facilities (soybean crushing, corn processing, wheat milling) requiring an extensive capital commitment and a substantial financial risk for their members. An alternative strategy to the brick and mortar cooperatives are producer affiliations that involve the negotiation of contractual agreements with product users, providing protocols for maintaining quality standards, and collecting and sharing information. AgGuild of Illinois is an example of such a producer cooperative arrangement. The AgGuild, an alliance of some fifty central Illinois grain producers, attempts to capture a premium over the general commodity grain price by producing crops in viable quantities that meet the quality and attribute specifications desired by contracting users. To this point, the AgGuild has focused its efforts on producing non-genetically modified soybeans that have higher yields of isoflavones (a naturally occurring chemical compound in plants that are considered to provide a number of health benefits for consumers). The AgGuild attempts to capture a premium over the general commodity grain price by producing crops in viable quantities that meet the quality and attribute specifications desired by contracting users. To this point, the Guild has focused its efforts on producing non-genetically modified soybeans that have higher yields of isoflavones. This paper describes the operation of the AgGuild, assesses its current status and identifies some potential future challenges.

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