Economic growth and structure of regional marketing cooperatives

Abstract

There are many policy issues regarding cooperatives and their immunities from antitrust proceedings. The purpose of this study was to document trends in the number and size of regional marketing cooperatives and to forecast growth. In addition, economic factors related to cooperative growth were determined. The results of this study may assist in policy issues concerning cooperatives. The study period encompassed fiscal years 1960-61 through 1973-74. Various structural variables of all regional marketing cooperatives and of regional marketing cooperatives by major commodity category were examined to determine trends. The structural variables included the number of cooperatives, average and total marketing sales, concentration among cooperatives and Herfindahl and diversification indices. Gibrat's law was used to test the relationship between cooperative size and growth. Markov chain analysis was employed to forecast cooperative size distribution and growth models to forecast numbers of cooperatives. Restricted least squares regression was utilized to determine the economic factors related to cooperative growth. Results indicated the total number of regional marketing cooperatives decreased, average and total sales increased, concentration significantly increased and there was no trend toward diversification. The analysis by commodity category indicated that, for the most part, the numbers of cooperatives in each commodity category decreased while total average sales generally increased. Concentration significantly increased for poultry, bean and pea, cotton, livestock and dairy significantly decreased for sugar and did not significantly change for grain, fruit and vegetable, tobacco, nut rice and wool and mohair cooperatives. Only poultry and grain cooperatives had any significant diversification. Cooperative size and growth rates were not independent. Small cooperatives had relatively higher growth rates than either medium or large cooperatives. The growth models and Markov chain analysis forecasted fewer but larger cooperatives over the next two decades...