Producer risk aversion and participation in agricultural cooperatives. Issue 2 (December 2022)

• Record Type: Journal Article
• Authors: Franken, Jason R.V.; Cook, Michael L.; Pennings, Joost M.E.
• Is Part Of: Journal of co-operative organization and management. Volume 10:Issue 2(2022)
• Publication Date: 2022-12
• Subjects: D23 -- D81 -- M31 -- Q1; Cooperatives -- Marketing -- New Institutional Economics -- Risk attitude; Cooperative societies -- Management -- Periodicals; Cooperative societies -- Periodicals; Cooperative Behavior -- Periodicals; Cooperative societies; Cooperative societies -- Management; Periodicals; 658.04705
• DOI: 10.1016/j.jcom.2022.100171
• Languages: English
• ISSNs: 2213-297X

Abstract

Abstract: Little attention is given to cooperatives' role in producer risk management. We review literature and theory in development of a hypothesized positive relationship between producers' risk aversion and usage of cooperatives. We test the hypothesis using a sample of crop and hog producers and find evidence that cooperative membership and the percentage of commodity sold through cooperatives are positively related to producers' risk aversion. These relationships are relevant for decision makers who determine internal cooperative member policies, debt providers to cooperative members, and lenders to cooperatives, in addition to state and national farm policy regulators, legislators, staffers, and advisors. Highlights: A positive relationship between producers' risk aversion and use of cooperatives is hypothesized. No prior study empirically documents this relationship. Probit and Tobit models relate producers' risk preferences to use and intensity of use of cooperatives for marketing. Results support the hypothesized positive relationship between risk aversion and use and intensity of use of cooperatives.