Cooperatives help members manage marketing risk within a season, but not production risk across years. We show how the multi-year cooperative relationship can also provide limited crop insurance.

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Abstract

Agricultural cooperatives have long played an important role in helping their members manage risk, though they do a much better job of helping members manage some sorts of risk than others. In particular, co-ops are good at helping members manage marketing risk, but seem not to be particularly good at helping their members manage production risk. This paper argues that by taking advantage of the multi-year nature of most members’ relationship with the cooperative, the cooperative can also provide a useful, though limited, form of insurance against crop shortfalls.

BibTeX

@Article{	  ligon09,
  author	= {Ethan Ligon},
  title		= {Risk Management in the Cooperative Contract},
  journal	= {American Journal of Agricultural Economics},
  year		= 2009,
  volume	= 91,
  number	= 5,
  pages		= {1211--1217},
  doi		= {10.1111/j.1467-8276.2009.01286.x}
}