Cooperatives are user owned businesses that are an important part of the U.S. economy and particularly prevalent in the agricultural sector. In 2009, cooperative businesses in the United States controlled over $3 trillion in assets, generated nearly $654 billion in revenue, employed over 2 million people and distributed nearly $79 billion in income to user/owners.
Agricultural marketing cooperatives generate nearly $130 billion in revenue and over 200,000 jobs (Deller et al.2009) Cooperatives operate under a business model that generates unique challenges in financial management, governance, strategy and communication. These unique challenges and the prevalence of cooperatives in U.S. agriculture have encouraged research and education efforts by agricultural economists since the early 1900’s.
Cooperatives were included as a part of the mission of the Cooperative Extension Service in 1926 and the USDA has maintained research and statistical staff focusing on cooperatives for over 50 years. A National Institute of Food and Agriculture (NIFA; formerly CSREES) Regional Research and Extension Committee for cooperatives has been active since 1993, making it one of the longest running such committees in the United States. Cooperatives, as an industry, are among the most generous supporters of departments of agricultural economics with more than $20 million invested in scholarships, faculty, and other endowments in at least 14 different departments. In addition, more than $150,000 of scholarships are awarded annually by cooperatives to undergraduate students in the United States and another $100,000 for graduate student research.
A review of academic archiving services yields thousands of citations with “cooperative” listed as a key word. Some of these studies have discussed the economic models that can be applied to a cooperative. Agricultural cooperatives have been analyzed as a form of vertical integration as; a unique form of firm; as a set of implicit and explicit contracts between farmer members, managers and employee; and as a coalition. Other studies have considered the cooperative’s role and impact in the market place. Firm level research has analyzed the structure and performance of the cooperative firm—including financial structure, taxation, marketing activities, strategy, and membership involvement.
The interest of agricultural economists in agricultural cooperatives is understandable and appropriate. The cooperative business model creates unique challenges and economic questions which agricultural economists are positioned to address. In addition, since agricultural cooperatives are owned by and designed to benefit producers, cooperative related research has the potential to benefit a large number of farmers. Almost 715,000 farmers are members of agricultural marketing cooperatives (Deller et al., 2009).
There have also been a number of efforts to identify challenges, critical issues and success factors for agricultural cooperatives. This Choices theme reports on the most recent effort. The objective of this series of articles is to summarize current challenges and needs within the cooperative community. The insights were gained from a panel of cooperative leaders (Table 1) and USDA and academic experts. Similar panels have been organized in every decade since the 1970s and have helped the academic community develop research and outreach programs. The panel met August 4, 2011 in Washington, D.C. and was organized by the Council on Food, Agriculture, and Resource Economics (C-FARE). The CHS Foundation sponsored the event. A diverse spectrum of business areas including raisins, oranges, grain, farm supply, dairy, bio-energy, farm credit and local foods were represented. The challenges and issues for cooperatives were identified through a two-stage modified Delphi survey process and a face-to-face focus panel discussion. A Delphi survey is a multi-stage expert survey in which the opinions and information from the first stage are used to refine the second and subsequent stages. In this case, the first stage was an open-ended survey in which the panel identified and described challenges and critical issues. In the second stage, the panel members rated the importance of the major issues identified in the first stage. Twenty-five cooperative leaders received the survey, 18 responded to the first stage and 19 responded to the second stage. The degree of response, particularly by members of the cooperative business industry—including CEOs of major cooperatives, suggests there is an important constituency that values research on agricultural cooperatives and is interested in engaging with the agricultural and applied economics profession.