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Cooperatives as Marketers of Branded Products

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  • Hardesty, Shermain D.

Abstract

Few agricultural marketing cooperatives have nationally prominent brand names. Instead, they tend to concentrate in commodity-oriented markets, which can be attributed to the cooperative principles - user-benefit, user-financed and user-control. However, these structural disadvantages can be overcome. Due to the user-benefit principle, cooperatives often have seasonal product availability and/or limited product lines; they also suffer from the horizon problem, lacking the structure to provide long-term returns to members who invest in brand building. The user-benefit principle can be converted into an advantage by using the cooperative identity as a marketing strategy, and the horizon problem can be remedied by implementing a delivery-rights system. Cooperatives' limited access to capital is attributable to the user-financed principle. Joint ventures, legislative reforms to expand cooperatives' sources of equity capital and preferred stock offerings can be used to overcome this constraint. The homogeneous nature of cooperative boards is attributable to the user-control principle; it gives rise to the principal-agent problem. Forming subsidiaries or joint ventures to market branded products can remedy this situation, with the boards composed of individuals with expertise in branded products.

Suggested Citation

  • Hardesty, Shermain D., 2005. "Cooperatives as Marketers of Branded Products," Journal of Food Distribution Research, Food Distribution Research Society, vol. 36(1), pages 1-6, March.
    • Handle: RePEc:ags:jlofdr:26774
    DOI: 10.22004/ag.econ.26774
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    References listed on IDEAS

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    1. Gruber, Jennifer E. & Rogers, Richard T. & Sexton, Richard J., 2000. "Do Agricultural Marketing Cooperatives Advertise Less Intensively Than Investor-Owned Food-Processing Firms?," Journal of Cooperatives, NCERA-210, vol. 15, pages 1-16.
    2. Rogers, Richard T., 1993. "Advertising Strategies by Agricultural Cooperatives in Branded Food Products, 1967 to 1987," Research Reports 25202, University of Connecticut, Food Marketing Policy Center.
    3. Combs, Robert P. & Marion, Bruce W., 1984. "Food Manufacturing Activities of 100 Large Agricultural Marketing Cooperatives," Working Papers 202998, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.
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    Cited by:

    1. Tanya Georgieva, 2020. "Vertical Coordination as an Opportunity for Market Risk Management in Agricultural Holdings in Bulgaria," Izvestia Journal of the Union of Scientists - Varna. Economic Sciences Series, Union of Scientists - Varna, Economic Sciences Section, vol. 9(3), pages 127-135, December.
    2. Julia Hohler & Rainer Kuhl, 2014. "Position and Performance of Farmer Cooperatives in the Food supply Chain of the EU-27," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 85(4), pages 579-595, December.
    3. Jasper Grashuis, 2019. "The impact of brand equity on the financial performance of marketing cooperatives," Agribusiness, John Wiley & Sons, Ltd., vol. 35(2), pages 234-248, April.
    4. Jasper Grashuis & Alexandre Magnier, 2018. "Product differentiation by marketing and processing cooperatives: A choice experiment with cheese and cereal products," Agribusiness, John Wiley & Sons, Ltd., vol. 34(4), pages 813-830, October.
    5. Jasper GRASHUIS & Michael COOK, 2018. "An Examination Of New Generation Cooperatives In The Upper Midwest: Successes, Failures, And Limitations," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(4), pages 623-644, December.
    6. Jasper Grashuis, 2018. "An Exploratory Study of Cooperative Survival: Strategic Adaptation to External Developments," Sustainability, MDPI, vol. 10(3), pages 1-15, February.
    7. Theo Benos & Nikos Kalogeras & Frans J.H.M. Verhees & Panagiota Sergaki & Joost M.E. Pennings, 2016. "Cooperatives’ Organizational Restructuring, Strategic Attributes, and Performance: The Case of Agribusiness Cooperatives in Greece," Agribusiness, John Wiley & Sons, Ltd., vol. 32(1), pages 127-150, January.
    8. Jasper Grashuis, 2018. "Joint ownership by farmers and investors in the agri-food industry: an exploratory study of the limited cooperative association," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 6(1), pages 1-14, December.
    9. Salavou, Helen E. & Sergaki, Panagiota, 2013. "Generic Business Strategies in Greece: Private Food Firms versus Agricultural Cooperatives," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 41(1), pages 1-17.

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    Keywords

    Agribusiness; Marketing;

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