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Cooperative liquidation under competitive stress

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  • Robin M. Cross
  • Steven T. Buccola
  • Enrique A. Thomann

Abstract

Competitive environments encourage cooperatives to liquidate by distributing equity to their members, often by raising the transfer prices paid for member raw product. We provide a method of detecting when such liquidation activity begins. In the process, we derive the arbitrage-free price bounds of a broad class of forward contracts typical of seasonal and speciality agricultural markets. The bounds are illustrated for the failed Tri-Valley Growers, once the largest fruit/vegetable cooperative in the USA. We show that Tri-Valley began liquidation years before it was detectable through conventional means. Implications are drawn for the expanding competitive pressures accompanying EU enlargement. Oxford University Press and Foundation for the European Review of Agricultural Economics 2009; all rights reserved. For permissions, please email journals.permissions@oxfordjournals.org, Oxford University Press.

Suggested Citation

  • Robin M. Cross & Steven T. Buccola & Enrique A. Thomann, 2009. "Cooperative liquidation under competitive stress," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 36(3), pages 369-393, September.
  • Handle: RePEc:oup:erevae:v:36:y:2009:i:3:p:369-393
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    File URL: http://hdl.handle.net/10.1093/erae/jbp027
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    Cited by:

    1. Ermanno C. Tortia & Vladislav Valentinov & Constantine Iliopoulos, 2013. "Agricultural cooperatives," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 2(1), pages 23-36, May.
    2. Rousselière, Samira & Rousselière, Damien & Ramani, Shyama, 2016. "Innovation Led Alliances: Theory and application to the GM Plant Industry," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235711, Agricultural and Applied Economics Association.
    3. Vaida Stulpinienė & Vida Čiulevičienė, 2014. "Agricultural Support Influence On Farm Financial Stability," Economy & Business Journal, International Scientific Publications, Bulgaria, vol. 8(1), pages 936-946.
    4. Valentinov, Vladislav & Iliopoulos, Constantine, 2012. "Property Rights Problems in Agricultural Cooperatives: A Heterodox Institutionalist Perspective," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 61(3).
    5. Damien Rousselière, 2017. "A flexible approach to age dependence in organizational mortality. Comparing the life duration for cooperative and non-cooperative enterprises using a Bayesian Generalized Additive Discrete Time Survi," Working Papers SMART - LERECO 17-08, INRA UMR SMART-LERECO.
    6. Cadot, Julien & Alonso Ugaglia, Adeline, 2015. "Cooperative Strategy and Liquidation in the Bordeaux Wine Industry," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205743, Agricultural and Applied Economics Association;Western Agricultural Economics Association.

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