Cooperative Liquidation Under Competitive Stress

Posted: 24 Nov 2009

See all articles by Robin M Cross

Robin M Cross

Applied Economics

Steven Buccola

Oregon State University - Department of Applied Economics

Enrique A. Thomann

affiliation not provided to SSRN

Abstract

Competitive environments encourage cooperatives to liquidate by distributing equity to their members, often by raising the transfer prices paid for member raw product. We provide a method of detecting when such liquidation activity begins. In the process, we derive the arbitrage-free price bounds of a broad class of forward contracts typical of seasonal and speciality agricultural markets. The bounds are illustrated for the failed Tri-Valley Growers, once the largest fruit/vegetable cooperative in the USA. We show that Tri-Valley began liquidation years before it was detectable through conventional means. Implications are drawn for the expanding competitive pressures accompanying EU enlargement.

Keywords: agricultural cooperatives, arbitrage price bounds, cooperative finance, EU enlargement

JEL Classification: G12, G33, L11, Q13

Suggested Citation

Cross, Robin M and Buccola, Steven and Thomann, Enrique A., Cooperative Liquidation Under Competitive Stress. European Review of Agricultural Economics, Vol. 36, No. 3, pp. 369-393, 2009, Available at SSRN: https://ssrn.com/abstract=1509910 or http://dx.doi.org/jbp027

Robin M Cross (Contact Author)

Applied Economics ( email )

221B Ballard Hall
Corvallis, OR OR 97331
United States

Steven Buccola

Oregon State University - Department of Applied Economics ( email )

213 Ballard Extension Hall
Corvallis, OR 97331-4501
United States

Enrique A. Thomann

affiliation not provided to SSRN

No Address Available

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