An Examination of New Generation Cooperatives in the Upper Midwest: Successes, Failures, and Limitations

21 Pages Posted: 14 Nov 2018

See all articles by Jasper Grashuis

Jasper Grashuis

University of Missouri at Columbia

Michael L. Cook

University of Missouri at Columbia - Agricultural and Applied Economics

Date Written: December 2018

Abstract

A new organizational form, the new generation cooperative (NGC), emerged in the United States during the 1990s as farm producers came together to collectively add value to raw farm commodities. As compared to the traditional cooperative, the NGC facilitates a strong market orientation by defining membership and requiring high supply and equity capital commitments. Approximately 100 such value‐added ventures formed during a period called ‘cooperative fever’, but public and producer interest dissipated in the 2000s. With secondary data collected from print media publications, we conclude that many of the original NGCs exited by means of bankruptcy or liquidation because of challenges common to most business organizations. However, other failures and conversions of large, successful NGCs also indicate an inherent equity and liquidity constraint, suggesting a limited ability of the organizational form to drive complex and capital‐intensive value‐added ventures. We conclude by raising possible conditions for the future viability of producer‐owned business organizations in the value‐added agri‐food industry.

Keywords: New generation cooperative, cooperative fever, ownership structure, equity constraint

JEL Classification: Q13, M13, D23, L25

Suggested Citation

Grashuis, Jasper and Cook, Michael L., An Examination of New Generation Cooperatives in the Upper Midwest: Successes, Failures, and Limitations (December 2018). Annals of Public and Cooperative Economics, Vol. 89, Issue 4, pp. 623-644, 2018, Available at SSRN: https://ssrn.com/abstract=3283230 or http://dx.doi.org/10.1111/apce.12211

Jasper Grashuis (Contact Author)

University of Missouri at Columbia ( email )

332 Cornell Hall
Columbia, MO Columbia 65211
United States

Michael L. Cook

University of Missouri at Columbia - Agricultural and Applied Economics ( email )

Columbia, MO 65211
United States

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