|FEATHERSTONE, ALLEN - Kansas State University|
Submitted to: Meeting Proceedings
Publication Type: Proceedings
Publication Acceptance Date: 6/20/2018
Publication Date: 6/20/2018
Citation: Pokharel, K.P., Archer, D.W., Featherstone, A.M. 2018. The impact of size and specialization on the financial performance of agricultural cooperatives. Meeting Proceedings. Proceedings of the Agricultural and Applied Economics Association (AAEA) Annual Meeting, Washington, D.C. August 5-7, 2018.
Interpretive Summary: The agricultural cooperative sector has been going through a transition period with tight profit margins, competition, changing commodity prices and consolidations. Recent consolidations have decreased the number of cooperatives; however, the average size of cooperatives has increased. Agricultural cooperatives in the United States were studied to determine how size, specialization, and financial ratios contribute to financial performance. Profitability, risk, and size had the largest impact on financial performance. Diversified cooperatives tended to have less risk. This is important to managers of agricultural cooperatives in identifying the most effectives ways to improve financial performance and reduce risk.
Technical Abstract: This study examines the impact of size and specialization on the mean and variability of financial performance of agricultural cooperatives in the United States, using a system of equations approach. Profitability, risk, and size had the largest impact on mean financial performance. Diversified cooperatives tended to have less variability in financial performance over the 2005-2014 period.