Skip to main content
ARS Home » Plains Area » Mandan, North Dakota » Northern Great Plains Research Laboratory » Research » Publications at this Location » Publication #361477
Research Project: Sustainable Agricultural Systems for the Northern Great Plains

Location: Northern Great Plains Research Laboratory

Title: The impact of size and specialization on the financial performance of agricultural cooperatives

Author
item POKHAREL, KRISHNA - Federal Energy Regulatory Commission
item Archer, David
item FEATHERSTONE, ALLEN - Kansas State University

Submitted to: Journal of Co-operative Organization and Management
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: 3/20/2020
Publication Date: 8/4/2020
Citation: Pokharel, K.P., Archer, D.W., Featherstone, A.M. 2020. The impact of size and specialization on the financial performance of agricultural cooperatives. Journal of Co-operative Organization and Management. 8:100108. https://doi.org/10.1016/j.jcom.2020.100108.
DOI: https://doi.org/10.1016/j.jcom.2020.100108

Interpretive Summary: The agricultural cooperative sector has been undergoing through a transitional period due to 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 identifying the most effective ways to improve mean financial performance and reduce risk. 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 mean financial performance. Diversified cooperatives tended to have less variability in financial performance. This is important to managers of agricultural cooperatives in identifying themost effective ways to improve mean financial performance and reduce risk.

Technical Abstract: Agricultural cooperatives in the United States are increasing in size but decreasing in number due to consolidation. This study examines the impact of size and specialization on the mean and variability of financial performance of agricultural cooperatives using a system of equations (3SLS) approach. Profitability, risk, and size had the largest positive impact on mean financial performance. Size had a positive impact indicating that larger agricultural cooperatives are benefiting from economies of scale. Diversified cooperatives tended to have less variability in financial performance over the 2005-2014 period.