ABSTRACT The economic nature of agricultural cooperatives is explained by means of a logical continuation of the organizational economics rationale for family farms. The traditional explanations of the importance of family farms is discussed, and embedded in a broader framework which considers their transaction cost-economizing effect and their limitations in terms of limited ability to scale up production and to reach adequate market power. We maintain that these disadvantages represent the major motives for the creation of agricultural cooperatives, whose role lies in enabling the realization of advantages of large scale organization in agriculture while avoiding its transaction costs.. This research work is designed to x-ray deeply into the importance of improving agricultural production in Nigeria using some selected cooperative societies in Mbaise L.G.A as a case study. The work is designed and arranged in a simple manner. It has five chapters. Chapter one introduces the work give us a title background of the topic states the problems that led us into the research and others. In chapter two the various literature consulted in the course of the research were reviewed. Chapter three highlights the methods used in data collections. Chapter four is where all the data collected in chapter three were presented analyzed and interpreted. Finally chapter five summarized conclude and give recommendations of the whole work.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study
Agricultural cooperativesTortia, E. C.; Valentinov, V.; Iliopoulos, C.24JEOD – Vol.2, Issue 1 (2013)1. IntroductionCooperatives play a prominent role in the agricultural sector, both in developed and developing countries. Historically, cooperatives have been the main institutional and organizational tool through which independent farmers were able to withstand the market power held by local and transnational retailers. ey also serve to shorten the supply chain by allowing producers to integrate most or all of the processing and marketing processes into one or few steps, thus allowing substantial savings on transaction and other intermediation costs. e agricultural sector accounts for 14.2% of total European Union manufacturing output, with 675 billion Euros worth of production. 38.5% of this output is generated by the cooperative sector (about €260 billion). In the EU there are about 40,000 cooperative enterprises employing over 600,000 persons; with 9 million members. e turnover is around €260 billion. ese cooperatives represent over 50% of the shares of the supply of agricultural inputs and over 60% of shares of the collection, processing and marketing of agricultural products (Cooperatives Europe 2008; Cogeca 2010). In the US, in 2010 agri-food cooperatives had a market share of about 28 per cent in the processing and marketing of agricultural products, and a 26 per cent share in the supply of inputs. e USDA 2010 survey of marketing, supply, and service cooperatives identied 2,310 farmer, rancher, and shery cooperatives in the US, with approximately 2.2 million members, 129,000 full-time and 54,000 part-time and seasonal employees. Net value of products marketed by cooperatives was $94 billion, and the total net income was $4.0 billion (USDA 2010).ese impressive gures notwithstanding, the modern situation of agricultural cooperatives in the Western hemisphere is paradoxical. While the importance of agricultural cooperatives in most industrialized countries is widely acknowledged, they keep facing substantial pressures and challenges of both internal and external nature. is paper seeks to explain this paradoxical evidence in terms of the tension between the economic nature of agricultural cooperatives and their institutional embeddedness into the contemporary Western agri-food systems. e paper traces the economic nature of agricultural cooperatives back to the sector-specic organizational characteristics of agricultural production. While these characteristics have so far been utilized to explain the superiority of family-based organization in agriculture (Schmitt 1993; Pollak 1985), this paper contends that they also provide a clue to rationalizing the reasons behind the emergence of transaction costs and imbalances in market power which create a functional niche for agricultural cooperatives. is will lead to an explanation of why cooperatives are dramatically important in agriculture, particularly in the institutional context of Western countries where family farming is a dominant form of agricultural organization. However, it is this institutional context that sheds light on why agricultural cooperatives face severe challenges. It will be shown that the institutional structure of the contemporary Western agri-food systems imposes new roles on agricultural cooperatives that expose them to continuing strain. e economic nature of agricultural cooperatives is explained by means of a logical continuation of the organizational economics rationale for family farms. e importance of family farms has been traditionally explained in terms of the low feasibility of hierarchical organization of agricultural production due to supervision and monitoring diculties and to the high value put by family farms on land ownership and independent production. What these explanations tend to under-emphasize is that the transaction cost-economizing effect of family farms has a price in the form of their limited ability to effciently achieve large sizes. is limitation gives rise to two organizational disadvantages of family farms: they nd it difficult to realize external economies of scale and to develop market power comparable to that
of their up- and downstream trading partners. ese disadvantages represent the major motives for the
creation of agricultural cooperatives, whose role lies in enabling the realization of advantages of hierarchical
organization in agriculture while avoiding the need to incur its transaction costs, which are prohibitively
high in this sector, and without forcing family farms out of independent production. is explanation of
agricultural cooperatives is sector-specic since it does not apply to sectors other than agriculture. Other
explanations, rather, point out the general abilities of cooperatives to economize on transaction costs and
to develop ‘countervailing power’ in the presence of upstream monopoly and downstream monopsony in
input and output markets.
After some initial highlights, the following sections will explore the sector-specic reasons for the
importance of agricultural cooperatives by building upon the theory of the social division of labor. A
recapitulation of this theory will serve as a foundation for rethinking the sectoral specicity of agricultural
production. is argument will highlight several sector-specic limitations on the social division of labor in
agricultural production and on this basis will develop an alternative explanation of agricultural cooperatives.
e subsequent section will draw implications for understanding the institutional embeddedness of
Western agricultural cooperatives. It will argue that the main manifestation of this embeddedness is in
the competitive pressures which are experienced by cooperatives in the course of the structural change
in the agri-food sector of the Western hemisphere. It is these pressures that lead to the formation of new
cooperative models
1.2 Statement of the Problem
1.3 Purpose of the Study
1.4 Significance of the Study
1.5 Research Questions
1.6 Delimitations of the Study
1.7 Limitation of the study
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Review of Related Literature
2.2 Empirical Studies
2.3 Theoretical Framework
CHAPTER THREE: RESEARCH METHOD
3.1 Introduction
3.2 Area of the Study
3.3 Research Design
3.4 Population of the Study
3.5 Sample and Sampling Technique
3.6 Research Instrument
3.7 Validation of the Instrument
3.8 Data Collection Technique
3.9 Data Analysis Technique
CHAPTER FOUR: DATA PRESENTATION, ANALYSIS
AND DISCUSSION
4.1 Introduction
4.2 Data Presentation
4.3 Discussion of Findings
CHAPTER FIVE: SUMMARY, CONCLUSION AND
RECOMMENDATIONS
5.1 Introduction
5.2 Summary of Findings
5.3 Conclusion
5.4 Recommendations
5.5 Suggestions for Further Research
References
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