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The issues of agricultural cooperatives and grain export in the united states

Purpose[ edit ] Cooperatives as a form of business organization are distinct from the more common investor-owned firms IOFs. Agricultural cooperatives are therefore created in situations where farmers cannot obtain essential services from IOFs because the provision of these services is judged to be unprofitable by the IOFsor when IOFs provide the services at disadvantageous terms to the farmers i. The former situations are characterized in economic theory as market failure or missing services motive.

The latter drive the creation of cooperatives as a competitive yardstick or as a means of allowing farmers to build countervailing market power to oppose the IOFs.

  • Supply cooperatives[ edit ] Agricultural supply cooperatives aggregate purchases, storage, and distribution of farm inputs for their members;
  • The number of machines for harvesting is also considered as another decision variable by some researchers;
  • Alternatively, the credit union can raise loans at better rates from commercial banks due to the cooperative having a larger associative size than an individual farmer;
  • Allen and Schuster 2004 balanced the risk of overinvestment with the risk of underproduction.

In many situations within agriculture, it is simply too expensive for farmers to manufacture products or undertake a service. Cooperatives provide a method for farmers to join together in an 'association', through which a group of farmers can acquire a better outcome, typically financial, than by going alone.

This approach is aligned to the concept of economies of scale and can also be related as a form of economic synergywhere "two or more agents working together to produce a result not obtainable by any of the agents independently". While it may seem reasonable to conclude that larger the cooperative the better, this is not necessarily true. Cooperatives exist across a broad membership base, with some cooperatives having fewer than 20 members while others can have over 10,000.

While the economic benefits are a strong driver in forming cooperatives, it is not the sole consideration.

In fact, it is possible for the economic benefits from a cooperative to be replicated in other organisational forms, such as an IOF. An important strength of a cooperative for the farmer is that they retain the governance of the association, thereby ensuring they have ultimate ownership and control. This ensures that the profit reimbursement either through the dividend payout or rebate is shared only amongst the farmer members, rather than shareholders as in an IOF. Hays Coop elevator and officesone of hundreds [5] of grain-oriented agricultural marketing coops in the U.

In agriculture, there are broadly three types of cooperatives: A family farm may be too small to justify the purchase of expensive farm machinery, which may be only used irregularly, say only during harvest; instead local farmers may get together to form a machinery pool that purchases the necessary equipment for all the members to use. A farm does not always have the means of transportation necessary for delivering its produce to the market, or else the small volume of its production may put it in an unfavorable negotiating position with respect to intermediaries and wholesalers; a cooperative will act as an integrator, collecting the output from members, sometimes undertaking manufacturing, and delivering it in large aggregated quantities downstream through the marketing channels.

Farmers, especially in developing countries, can be charged relatively high interest rates by commercial banks, or even not available for farmers to access.

When providing loans, these banks are often mindful of high transaction costs on small loans, or may be refused credit altogether due to lack of collateral — something very acute in developing countries. To provide a source of credit, farmers can group together funds that can be loaned out to members.

Alternatively, the credit union can raise loans at better rates from commercial banks due to the cooperative having a larger associative size than an individual farmer. Often members of a credit union will provide mutual or peer-pressure guarantees for repayment of loans. Such an approach allows farmers to have a more direct access to critical farm inputs, such as seeds and implements.

Agricultural Cooperative

Origins[ edit ] The first agricultural cooperatives were created in Europe in the seventeenth century in the Military Frontierwhere the wives and children of the border guards lived together in organized agricultural cooperatives next to a funfair and a public bath. They spread later to North America and the other continents. They have become one of the tools of agricultural development in emerging countries. Farmers also cooperated to form mutual farm insurance societies.

Also related are rural credit unions.

Agricultural cooperative

They were created in the same periods, with the initial purpose of offering farm loans. Supply cooperatives[ edit ] Agricultural supply cooperatives aggregate purchases, storage, and distribution of farm inputs for their members. By taking advantage of volume discounts and utilizing other economies of scale, supply cooperatives bring down the cost of the inputs that the members purchase from the cooperative compared with direct purchases from commercial suppliers.

Supply cooperatives provide inputs required for agricultural production including seeds, fertilizers, chemicals, fuel, and farm machinery.

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Some supply cooperatives operate machinery pools that provide mechanical field services e. This section needs expansion. You can help by adding to it.