There is a long debate in the literature regarding the economic role of farmer-owned cooperatives in the agrifood sector. On one hand, some scholars argue that co-operatives will have declining importance as the agrifood sector becomes increasingly industrialized and global (e.g., Helmberger 1966; Boehlje 1997; Caves and Petersen 1986; Holmstrom 1999). On the other hand, others speculate that co-operatives may increase their participation in the agrifood sector to ameliorate market failures, reduce transaction costs, and also to add value to producers' incomes (e.g., Abrahamsen 1966; Sexton 1986; Royer 1995; Rogers 1997). In general, agricultural co-operatives play an increasingly important economic role in advanced agricultural countries such as the United States (Cook 1995) and Western Europe (Van Dijk et al. 1997; Hendrikse 2007). Particularly in the dairy industry, farmer-owned co-operatives play a rather dominant role with market shares above 80% in milk collection in the US, the major dairy countries in Western Europe and also in Australia and New Zealand (Chaddad 2007). Throughout the twentieth century farmer-owned co-operatives played an increasingly important role in the Brazilian dairy sector. By the end of the 1980s, tier-one, local dairy co-operatives were collecting about 70% of the total milk produced in the country.
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