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Agricultural Cooperatives I: History, Theory and Problems

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  • Ortmann, Gerald F.
  • King, Robert P.

Abstract

This paper presents the principles of cooperation and briefly describes the history and development of agricultural cooperatives in developed and less-developed countries, with particular emphasis on South Africa. A new Cooperatives Act, based on international principles of cooperation, was promulgated in South Africa in August 2005. The theory of cooperatives, and new institutional economics theory (NIE) (including transaction cost economics, agency theory and property rights theory) and its applicability to the cooperative organizational form, are also presented, as are the inherent problems of conventional cooperatives, namely free-rider, horizon, portfolio, control and influence cost problems caused by vaguely defined property rights. An analysis of the future of cooperatives in general, based on a NIE approach, suggests a life cycle for cooperatives (formation, growth, reorganization or exit) as they adapt to a changing economic environment characterized by technological change, industrialization of agriculture and growing individualism.

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Bibliographic Info

Article provided by Agricultural Economics Association of South Africa (AEASA) in its journal Agrekon.

Volume (Year): 46 (2007)
Issue (Month): 1 (March)
Pages:

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Handle: RePEc:ags:agreko:10129

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Web page: http://www.aeasa.org.za/
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Keywords: Agribusiness;

References

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  1. Royer, Jeffrey S., 1994. "Economic Nature of the Cooperative Association: A Retrospective Appraisal," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 9.
  2. Staatz, John M., 1994. "A Comment on Phillips' "Economic Nature of the Cooperative Association"," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 9.
  3. Torgerson, Randall E. & Reynolds, Bruce J. & Gray, Thomas W., 1998. "Evolution of Cooperative Thought, Theory, and Purpose," Journal of Cooperatives, NCERA-210, vol. 13.
  4. Schrader, Lee F., 1989. "Equity Capital and Restructuring of Cooperatives as Investor-Oriented Firms," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 4.
  5. Sexton, Richard J. & Iskow, Julie, 1993. "What Do We Know About the Economic Efficiency of Cooperatives: An Evaluative Survey," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 8.
  6. Piesse, Jenifer & Doyer, Tobias & Thirtle, Colin & Vink, Nick, 2005. "The changing role of grain cooperatives in the transition to competitive markets in South Africa," Journal of Comparative Economics, Elsevier, vol. 33(1), pages 197-218, March.
  7. Oliver Hart & Sanford Grossman, 1985. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Working papers 372, Massachusetts Institute of Technology (MIT), Department of Economics.
  8. Harris, Andrea & Stefanson, Brenda & Fulton, Murray E., 1996. "New Generation Cooperatives and Cooperative Theory," Journal of Cooperatives, NCERA-210, vol. 11.
  9. Cheung, Steven N S, 1969. "Transaction Costs, Risk Aversion, and the Choice of Contractual Arrangements," Journal of Law and Economics, University of Chicago Press, vol. 12(1), pages 23-42, April.
  10. Armen A. Alchian & Harold Demsetz, 1971. "Production, Information Costs and Economic Organizations," UCLA Economics Working Papers 10A, UCLA Department of Economics.
  11. Sykuta, Michael E. & Chaddad, Fabio Ribas, 1999. "Putting Theories of the Firm in Their Place: A Supplemental Digest of the New Institutional Economics," Journal of Cooperatives, NCERA-210, vol. 14.
  12. Royer, Jeffrey S., 1999. "Cooperative Organizational Strategies: A Neo-Institutional Digest," Journal of Cooperatives, NCERA-210, vol. 14.
  13. Rhodes, V. James, 1995. "Cooperative Enterprise and Organization Theory: An Appraisal," Journal of Cooperatives, NCERA-210, vol. 10.
  14. Jacobson, Robert E., 1992. "Public Limited Companies and Cooperative Principles in Ireland's Dairy Sector," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 7.
  15. Jeffrey S. Royer, 1995. "Potential for cooperative involvement in vertical coordination and value-added activities," Agribusiness, John Wiley & Sons, Ltd., vol. 11(5), pages 473-481.
  16. Sexton, Richard J., 1995. "A Perspective on Helmberger and Hoos' Theory of Cooperatives," Journal of Cooperatives, NCERA-210, vol. 10.
  17. Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
  18. Porter, Philip K & Scully, Gerald W, 1987. "Economic Efficiency in Cooperatives," Journal of Law and Economics, University of Chicago Press, vol. 30(2), pages 489-512, October.
  19. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-25, June.
  20. Iliopoulos, Constantine & Cook, Michael L., 1999. "The Internal Organization of the Cooperative Firm: An Extension of a New Institutional Digest," Journal of Cooperatives, NCERA-210, vol. 14.
  21. Fulton, Joan R. & Popp, Michael P. & Gray, Carolyn, 1996. "Strategic Alliance and Joint Venture Agreements in Grain Marketing Cooperatives," Journal of Cooperatives, NCERA-210, vol. 11.
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Citations

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Cited by:
  1. Maxime Agbo & Damien Rousselière & Julien Salanié, 2013. "A Theory of Agricultural Marketing Cooperatives with Direct selling," Working Papers halshs-00906894, HAL.
  2. Mabuza, Majola Lawrence & Ortmann, Gerald F. & Wale, Edilegnaw Zegeye, 2012. "Collective action in commercial mushroom production: the role of social capital in the management of informal farmer groups in Swaziland," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126764, International Association of Agricultural Economists.
  3. Ortmann, Gerald F. & King, Robert P., 2007. "Agricultural cooperatives II: Can they facilitate access of small-scale farmers in South Africa to input and product markets?," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 46(2), June.
  4. Liang, Q.X. & Hendrikse, G.W.J., 2012. "Cooperative CEO Identity and Efficient Governance: Member or Outside CEO?," ERIM Report Series Research in Management ERS-2012-019-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
  5. Chibanda, M. & Ortmann, Gerald F. & Lyne, Michael C., 2009. "Institutional and governance factors influencing the performance of selected smallholder agricultural cooperatives in KwaZulu-Natal," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 48(3), September.
  6. Ševarlić, Miladin M. & Nikolić, Marija M., 2013. "Agricultural Cooperatives – Examples Of Good Practise In The World And Serbia," 50th Anniversary Seminar, Agriculture and Rural Development: Challenges of Transition and Integration Processes, September 27, 2013 161799, University of Belgrade, Department of Agricultural Economics, Faculty of Agriculture.
  7. Mujawamariya, Gaudiose & D’Haese, Marijke & Speelman, Stijn, 2013. "Exploring double side-selling in cooperatives, case study of four coffee cooperatives in Rwanda," Food Policy, Elsevier, vol. 39(C), pages 72-83.

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