ASSESSING THE VALUE OF AGRICULTURAL COOPERATIVE MEMBERSHIP: A CASE OF DAIRY MARKETING IN THE UNITED STATES
The existence of cooperative organizations in today’s business environment signifies their continued ability to provide value within saturated and competitive markets. Increased bargaining power, stable access to markets, and reduced transaction costs are defining features thought to bring the most value to member-owners. Despite the economic importance of agricultural cooperatives, research testing the quantitative worth of cooperative membership is limited. This study takes the abstract market dynamics of the dairy industry to define the current state of member ownership in dairy marketing cooperatives. Discrete choice analysis approaches are deployed to estimate preference through willingness-to-pay and marginal utility values surrounding cooperative membership and associated milk handler pricing structures. The inclusion of demographic filters allows for the analysis of preferences conditional to specific population subsets. A group of 218 farmers were presented with offers for their milk from hypothetical handlers. Within each offer, price level and handler characteristic attributes were randomly assigned to represent dynamics in the dairy industry. These attributes included premium offerings such as quality and volume, the structure of the handler (cooperative or independent), hauling deductions, and the gross handler pay price of milk1. Results suggest that dairy farmers, on aggregate, are willing to accept lower per hundredweight compensation to remain cooperative members. Furthermore, handler business type is an important factor in farmer level satisfaction with significant preference for the cooperative business level. Estimated partworth utilities also suggest dairy farmers actively consider the industry wide impacts within milk pricing related decisions. The inclusion of demographic markers highlights trends important to understanding heterogeneous interests across U.S. dairy farmers while informing improved cooperative governance strategies to address these trends.
Agriculture; Cooperative Membership; Dairy; Discrete Choice Analysis; Farmer; Milk Handler
Applied Economics and Management
M.S., Applied Economics and Management
Master of Science
dissertation or thesis