Discussion: the Role of Farmer Cooperatives in a Changing Agricultural Economy

Joseph D. Coffey a poor measure because many farmers hold My remarks will be divided into three parts. multiple memberships, sometimes even in the First, I will comment briefly on the nature of same cooperative. Furthermore, a cooperfarmer cooperatives. Secondly, I will briefly ative member may be an individual farmer or critique Christy's four main points. Third, I it may be a multi-million dollar local will discuss issues concerning the future of cooperative. farmer cooperatives. Second, Christy notes that the market share To make sure we are on the same footing, let of cooperatives has increased, at least for the me first define and explain the nature of farmfarm supply cooperatives and the marketing er cooperatives. Farmer cooperatives are cooperatives at the first-handler levels. farmer-owned and farmer-controlled busiChristy's data used to measure market share nesses where the earnings are returned to the are three or four years old, and there may have members according to their patronage. Conbeen substantial changes in the last two or trary to what many believe, cooperatives do three years, especially in the grain marketing not have a privileged position. Their success area. Farmer cooperatives have retrenched or failure depends upon their success or substantially from that grain marketing area. failure in the market place. Basically coopThird, Christy notes that the theory of the eratives, as with other businesses, must find firm and firm growth theory don't offer much out what farmers need and want and then sell insight into the growth of cooperatives. He it to them. I would submit that cooperatives notes that what little work is available supare different from non-cooperative businesses, ports Gibrat's Law of Proportionate Effect, not so much in function but in philosophy. I that is, big co-ops don't grow any faster than would further argue that not only are they difsmall ones. Despite the evidence Christy cites ferent, but farmers in fact view them as being in support of Gibrat's Law, I am not condifferent. Surveys suggest that farmers view vinced. My view is that in cooperatives, as cooperatives as more sensitive to their needs, with farmers, the large are getting larger and more reliable, and more willing to perform the small are getting out. Hence, I would services even though these services may not argue that large cooperatives, in fact, are be profitable. growing at a faster rate than smaller ones. Let me now turn to four key points made by Fourth, Christy mentions four potential Dr. Christy and my comments upon them. roles for farmer cooperatives: First, Christy observes that co-ops are get(a) As a competitive yardstick. ting larger and fewer and that volume has (b) To provide farmers access to market declined due to deflation. The decline in co-op information and provide management numbers is about the same as in farmers. I software services. concur with Christy's comments and certainly (c) To improve market coordination. the decline in farmer cooperatives would be (d) To aid community economic developeven greater if it were measured in terms of ment, especially among the rural poor. their net returns rather than dollar volume. I I agree with Christy that cooperatives can would caution, however, that measuring the serve as a competitive yardstick, and I have size of cooperatives in terms of membership is seen the impact that cooperatives have on not very meaningful. As you will note in the prices when they open and close facilities. But statistics Dr. Christy cited, the number of cocooperatives must be more than a yardstick. operative members in this country is roughly They must actually have some of the market double the number of farmers. Membership is share; otherwise, they can't continue. I would