Abstract
Recent advances in cooperative theory have focused on membership heterogeneity as being a significant challenge for cooperative sustainability. We use predictive analytics to forecast U.S. farmer cooperative sustainability at an aggregate level and include multiple dimensions of membership heterogeneity. We report the importance and shape of the effect of membership heterogeneity when predicting and forecasting cooperative sustainability in the near-term. We also report forecasts of cooperative sustainability given expected changes to membership heterogeneity. The data this study used are from the United States Department of Agriculture (USDA)-Economic Research Service (ERS) Agricultural Resource Management Survey (ARMS) joined with USDA-Rural Development cooperative financial data at the state level. Membership heterogeneity was found to be less relevant than other variables included in the model for predicting cooperative business volume and number of cooperatives headquartered per state, and an estimate of cooperative sustainability. Membership heterogeneity effects were mostly offsetting given expected changes to member heterogeneity, and/or were offset due to changes to other macro factors. Consequently, we conclude membership heterogeneity may affect the number of cooperatives and extent consistent with theoretical literature at a micro level; however, we also expect a similar level of sustainability of cooperatives at an aggregate level in the near-term despite changes to membership heterogeneity.
Highlights
Membership heterogeneity has been a recent focus of theoretical cooperative literature to understand behaviors of cooperatives
We conclude membership heterogeneity may affect the number of cooperatives and extent consistent with theoretical literature at a micro level; we expect a similar level of sustainability of cooperatives at an aggregate level in the near-term despite changes to membership heterogeneity
Members of cooperatives can vary in multiple dimensions but the most cited types of member differences that can be observed or measured and are expected to affect cooperative behavior are when members differ in farm level characteristics, geography, and personal characteristics [1]
Summary
Membership heterogeneity has been a recent focus of theoretical cooperative literature to understand behaviors of cooperatives. A review of empirical studies of cooperatives shows most studies have been limited to a few cooperatives in specific regions, sectors, and during a limited timeframe [5] This is partly due to lack of data on cooperative membership heterogeneity and/or limited empirical methods that could advance the literature using broader measures of membership heterogeneity. Aggregate statistics at the state level are reported annually on the number of farmer cooperative headquarters, the number of members, employees, and some financial information such as gross business volume. In 1975, at most, 28 cooperatives, or 0.64% of all cooperatives would have exceeded the inflation-adjusted threshold of $1 billion dollars, and would have accounted for no more than 45.2% of total cooperative gross business volume.)
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