Co-op conversions: extent of commitment to co-op values key factor in decisions to convert

Since the early decades of the 20th hundred agricultural cooperatives have been associated with particular values that have influenced their marketing strategies. The traditional vigor of cooperatives is that they help house producers by creating a reliable and fair buyer for their produces and enabling producers to command their destiny by providing a marketing channel that can stretch out from raw commodity to finished product

Co-op help establish orderly marketing channels and bring balance to markets where agriculturists would have minimal bargaining power in highly concentrated industries. Likewise, they provide a reliable and fairly priced source of production supplies. Co-op also help strengthen rural communities through keeping more dollars close to home

What happens to these values when cooperatives transmute to a publicly traded corporation? Will farmers suffer from narrower marketing choices and/or lower returns? If in like manner could this create fertile mould for new cooperatives? Does the decreasing number of agriculturists and changing market conditions diminish the need for cooperatives, or are they more vital than at any time due to increasing concentration in the diet processing and retailing industries?

Professor Michael prepare for the table of the University of Missouri says, "The new wave of demutualizations raises the question of whether the cooperative original can survive in an increasingly concentrated, deregulated, privatized and global business environment." This article focuses upon several recent co-op conversions (also called "demutualizations") and more [i]or[/i] less of the issues they raise for their former members, as well as a propos co-op conversion that was defeated.

For Diamond Walnut Growers, the touchstone for conversion was the cooperative brand and the desire to use it to attract large amounts of outside capital to "grow the brand" and penetrate fresh markets. For Ocean Spray Cooperative, possessor of a major consumer beverage brand, near-acquisition of its brand by dint of PepsiCo became an opportunity to reaffirm that the 76-year-old cooperative was to be held in trust for coming time generations of growers as a sustainable, value-added marketer of cranberries.

Within this increasingly concentrated, deregulated, privatized and global business environment, cooperatives have sometimes sought to become "just another business." This can become a self-fulfilling prophecy. Cooperative values, and the expanse to which producers hold them, may make the difference between conversion, acquisition or remaining beneath producer control.

Protecting farmers v building the brand

Traditionally, marketing cooperatives are frequently seen as a "competitive yardstick," providing competition to raise the prices received by the agency of producers. Formulated by economist Edwin Nourse, this part emphasized farmers' collective power or vigor in the marketplace. Cooperatives were the "small business Davids" that challenged the "Goliath of big business." Competition provided end cooperatives kept other firms in the marketplace fair or honorable Even when cooperatives had improved market conditions, Nourse still felt farmer vigilance was required. Cooperatives should maintain upon standby, ready to spring into action to shelter farmers as needed.

At the core of traditional attitudes is a belief that cooperatives are fundamentally different from investor-owned or publicly-traded firms, hence the ne for vigilance like that newly expressed by a manager of a large processing cooperative. Any entity that is not farmer be in possession ofed and controlled is a competitor that makes it difficult for farmers to struggle he said. "If a corn grower's harvest fails, the processing firm doesn't care as drawn out as they can continue to win corn from somewhere to make cornflakes."

Contemporary economic or strategic management discourse is, in contrast, highly optimistic, of the like kind that farmer victimization would have the appearance to be a thing of the past. "For greatest in quantity global businesses, the days of flat-out predatory competition are over" say Morgan and pursue (1994:20). The new rules of market competition call for networking, partnering and trust. In this setting, the farmer protection provided by means of cooperatives and even cooperatives themselves can have the appearance like an anachronism.

This market-oriented seminary of thought tries to minimize the difference between cooperatives and investor-owned firms by dint of examining how well cooperatives perform according to a certain quantity of of the commonly used standards of investor have a title toed firms (IOFs). These include:

* Mission clarity--a singleness of final cause such as a drive for profitability that motivates investor-owned firms;

* Global sourcing--buying raw materials wherever they are cheapest in order to lower manufacturing costs;

* Growth;

* Efficiency;

* Obtaining sufficient capital to survive and be augmented in an industrialized food system

In contrast, the values encouraged by means of the competitive yardstick are:

* protecting growers;