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Comparative performance of cooperatives and investor-owned firms in US food industries

Author

Listed:
  • Zvi Lerman

    (Department of Agricultural Economics and Management, Hebrew University, Rehovot, Israel)

  • Claudia Parliament

    (Department of Agricultural and Applied Economics, University of Minnesota, St. Paul, MN)

Abstract

The comparative financial performance of cooperatives and investor-owned firms (IOFs) in the fruit and vegetable processing and the dairy industries was analyzed for the years 1976 through 1987. Contrary to theoretical expectations, the cooperatives in both industries were found to perform as well as or better than the comparable IOFs by profitability, leverage, and interest coverage measures. No clear evidence was found of the hypothesized overinvestment in fixed assets or pronounced moral hazard behavior in cooperatives. The lack of significant differences in profitability between the two types of firms suggests that cooperatives may be following goals similar to IOFs.

Suggested Citation

  • Zvi Lerman & Claudia Parliament, 1990. "Comparative performance of cooperatives and investor-owned firms in US food industries," Agribusiness, John Wiley & Sons, Ltd., vol. 6(6), pages 527-540.
  • Handle: RePEc:wly:agribz:v:6:y:1990:i:6:p:527-540
    DOI: 10.1002/1520-6297(199011)6:6<527::AID-AGR2720060602>3.0.CO;2-R
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    References listed on IDEAS

    as
    1. Sexton, Richard J. & Wilson, Brooks M. & Wann, Joyce J., 1989. "Some Tests Of The Economic Theory Of Cooperatives: Methodology And Application To Cotton Ginning," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 0(Number 1), pages 1-11, July.
    2. Staatz, John M., 1989. "Farmer Cooperative Theory: Recent Developments," Research Reports 52017, United States Department of Agriculture, Rural Development Business and Cooperative Programs.
    3. Kwo-Shin Chen & Emerson M. Babb & Lee F. Schrader, 1985. "Growth of large cooperative and proprietary firms in the US food sector," Agribusiness, John Wiley & Sons, Ltd., vol. 1(2), pages 201-210.
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    Citations

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    Cited by:

    1. Elena MELIÁ MARTÍ & Ma Pía CARNICER ANDRÉS, 2015. "Organizational models for the major agri-food cooperative groups in the European Union," CIRIEC Working Papers 1506, CIRIEC - Université de Liège.
    2. Marco Fazzini & Antonella Russo, 2014. "Profitability in the Italian Wine Sector: An Empirical Analysis of Cooperatives and Investor-Owned Firms," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(3), pages 130-137, July.
    3. Evans, Lewis & Meade, Richard, 2005. "The Role and Significance of Cooperatives in New Zealand Agriculture, A Comparative Institutional Analysis," Working Paper Series 3847, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    4. Chaddad, Fabio Ribas, 2006. "Investment Constraints in Agricultural Cooperatives: Theory, Evidence and Solutions," 44th Congress, July 23-27, 2006, Fortaleza, Ceará, Brazil 143259, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).
    5. Ani L. Katchova & Sierra J. Enlow, 2013. "Financial performance of publicly-traded agribusinesses," Agricultural Finance Review, Emerald Group Publishing, vol. 73(1), pages 58-73, May.
    6. Lerman, Zvi & Parliament, Claudia, 1990. "Performance of U.S. Agricultural Cooperatives: Size and Industry Effects," Working Papers 232667, Hebrew University of Jerusalem, Center for Agricultural Economic Research.
    7. Lerman, Zvi & Parliament, Claudia, 1991. "Size and industry effects in the performance of agricultural cooperatives," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 6(1), October.
    8. A. M. Hind, 1994. "Cooperatives - Under Performers By Nature? An Exploratory Analysis Of Cooperative And Non-Cooperative Companies In The Agri-Business Sector," Journal of Agricultural Economics, Wiley Blackwell, vol. 45(2), pages 213-219.
    9. Elena MELIA-MARTI & Ana Maria MARTINEZ-GARCIA, 2015. "Characterization And Analysis Of Cooperative Mergers And Their Results," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 86(3), pages 479-504, September.
    10. Declerck, Francis & Viviani, Jean-Laurent, 2012. "Solvency and Performance of French Wineries in Times of Declining Sales: Co-operatives and Corporations," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 0(Number 2), pages 1-17, December.
    11. McKee, Gregory J. & Shaik, Saleem & Boland, Michael A., 2009. "Role of Financial Variables in Explaining the Profitability of North Dakota Farm Supply and Grain Marketing Cooperatives," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 0(Number 2), pages 1-12.
    12. Kyriakos Kyriakopoulos & Matthew Meulenberg & Jerker Nilsson, 2004. "The impact of cooperative structure and firm culture on market orientation and performance," Agribusiness, John Wiley & Sons, Ltd., vol. 20(4), pages 379-396.
    13. Lerman, Zvi & Parliament, Claudia, 1990. "Performance of U.S. Agricultural Cooperatives: Size and Industry Effects," Working Papers 232667, Hebrew University of Jerusalem, Center for Agricultural Economic Research.
    14. Zivkovic, Sanja & Hudson, Darren & Johnson, Phillip & Park, John, 2016. "A Study in Attitudes Shaping Cooperative Leadership," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 229588, Southern Agricultural Economics Association.
    15. Fabio R. Chaddad & Michael L. Cook & Thomas Heckelei, 2005. "Testing for the Presence of Financial Constraints in US Agricultural Cooperatives: An Investment Behaviour Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 56(3), pages 385-397.
    16. Hopp, Fredrick Neal, 1994. "A financial analysis of grain marketing and production supply cooperatives, 1985-1991," ISU General Staff Papers 1994010108000017637, Iowa State University, Department of Economics.
    17. Lerman, Zvi & Parliament, Claudia, 1990. "Size And Industry Effects In The Performance Of Agricultural Cooperatives," 1990 Annual meeting, August 5-8, Vancouver, Canada 271036, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    18. repec:ags:ifaamr:266454 is not listed on IDEAS

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