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Financing of Growth in Agricultural Cooperatives


  • Lerman, Zvi
  • Parliament, Claudia


This study examines the hypothesis that cooperatives suffer from a shortage of equity capital because of ownership structure and nonmarketability of cooperative equity. The empirical findings indicate that agricultural cooperatives finance nearly half their growth with equity. Contrary to theoretical expectations, the equity financing proportion of cooperatives is found to be statistically indistinguishable from the national average of nonfinancial corporations for 1973-1983 and is higher than the national average since 1984. Cooperatives are observed to raise new debt mainly through short-term borrowing. This indicates that banks may be reluctant to lend long-term to cooperatives because of their "unorthodox" ownership structure.

Suggested Citation

  • Lerman, Zvi & Parliament, Claudia, 1992. "Financing of Growth in Agricultural Cooperatives," Working Papers 232672, Hebrew University of Jerusalem, Center for Agricultural Economic Research.
  • Handle: RePEc:ags:huaewp:232672
    DOI: 10.22004/ag.econ.232672

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    References listed on IDEAS

    1. Cobia, David W. & Royer, Jeffrey S. & Wissman, Roger A. & Smith, Dennis Paul & Davidson, Donald R. & Lurya, Stephen D. & Mather, J. Warren & Brown, Phillip F. & Krueger, Kenneth P., 1982. "Equity Redemption: Issues and Alternatives for Farmer Cooperatives [This report is now at]," Mimeographed Reports 56160, University of Minnesota, Department of Applied Economics.
    2. Parliament, Claudia & Lerman, Zvi & Fulton, Joan R., 1990. "Performance of Cooperatives and Investor-Owned Firms in the Dairy Industry," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 5, pages 1-16.
    3. Staatz, John M., 1989. "Farmer Cooperative Theory: Recent Developments," Research Reports 52017, United States Department of Agriculture, Rural Development.
    4. Cobia, David W. & Royer, Jeffrey S. & Wissman, Roger A. & Smith, Dennis Paul & Davidson, Donald R. & Lurya, Stephen D. & Mather, J. Warren & Brown, Phillip F. & Krueger, Kenneth P., 1982. "Equity Redemption: Issues and Alternatives for Farmer Cooperatives," Research Reports 180969, United States Department of Agriculture, Rural Development.
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    Cited by:

    1. Franck Bailly & Karine Chapelle & Lionel Prouteau, 2017. "What are the determinants of the pay gap between conventional firms and cooperatives? Evidence from France," Working Papers hal-01455741, HAL.
    2. Li, Ziran & Jacobs, Keri L. & Artz, Georgeanne M., 2012. "The Relative Capital Structure of U.S. Agricultural Grain and Supply Cooperatives and Investor Owned Firms," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124755, Agricultural and Applied Economics Association.
    3. Grashuis, Jasper & Cook, Michael, 2016. "Capital, Ownership, and Governance: Analyzing the Structure of U.S. Farmer Cooperatives," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235677, Agricultural and Applied Economics Association.
    4. repec:spr:jknowl:v:9:y:2018:i:4:d:10.1007_s13132-016-0402-8 is not listed on IDEAS
    5. 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.

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