Source: UNIV OF WISCONSIN submitted to
COOPERATIVE GOVERNANCE IN AGRICULTURAL MARKETS: A RESEARCH PROPOSAL
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
TERMINATED
Funding Source
NRI COMPETITIVE GRANT
Reporting Frequency
Annual
Accession No.
0212613
Grant No.
2008-35400-18705
Project No.
WIS01287
Proposal No.
2007-04485
Multistate No.
(N/A)
Program Code
61.0
Project Start Date
Dec 1, 2007
Project End Date
Nov 30, 2011
Grant Year
2008
Project Director
Hueth, B.
Recipient Organization
UNIV OF WISCONSIN
21 N PARK ST STE 6401
MADISON,WI 53715-1218
Performing Department
COOPERATIVES CENTER
Non Technical Summary
Despite the apparent historical and contemporary importance of cooperative economic activity in agriculture, theory-driven empirical research regarding the organization and function of cooperative firms is scarce. The principal aims of this research project are to generate hypotheses regarding differential governance practices across cooperative and investor-owned firms, to test for and measure these differences among firms in the food and agricultural sector of the U.S. economy, and to evaluate the effect of these differences on the behavior and performance of cooperative firms.
Animal Health Component
(N/A)
Research Effort Categories
Basic
50%
Applied
50%
Developmental
(N/A)
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
60262103010100%
Knowledge Area
602 - Business Management, Finance, and Taxation;

Subject Of Investigation
6210 - Farmer cooperatives;

Field Of Science
3010 - Economics;
Goals / Objectives
The principal aims of this research project are to generate hypotheses regarding differential governance practices across cooperative and investor-owned firms, to test for and measure these differences among firms in the food and agricultural sector of the U.S. economy, and to evaluate the effect of these differences on the behavior and performance of cooperative firms. This research fits within a larger portfolio of activities at the University of Wisconsin Center for Cooperatives (UWCC). The Center's integrated research, education, and outreach portfolio is designed to achieve four long-term goals that we describe below. In our description, we indicate specific supporting objectives that, if accomplished, will help us reach our long-term goals. We then elaborate on the specific aims of our proposed research project and demonstrate how it is intended to accomplish a subset of our supporting objectives. We also indicate how a number of on-going and planned activities within the Center are relevant to the proposed project.
Project Methods
Our project will involve a combination of case-study, archival, and survey data collection, and will require three years to complete. We will initiate our project with field research to refine both our hypotheses, and our survey design (we describe preliminary thinking regarding survey design below). We will conduct the field research in the form of case-studies, which will allow us to test qualitatively our hypotheses. We will generate a matched-pair random sample of cooperative and noncooperative firms to use in collecting archival and survey data. We will employ these data to test statistically our hypotheses using cross-sectional econometric techniques. The two forms of data---case study and cross sectional---will provide complementary information on the validity of our hypotheses. In this section, we describe our project in terms of specific activities and their sequence, theoretical approach and specific hypotheses, empirical strategy, expected outcomes, and potential limitations. We begin by summarizing planned activities for each year of the project.

Progress 12/01/07 to 11/30/11

Outputs
OUTPUTS: * Presentation and discussion of results: --3 separate annual meetings of the National Council of Farmer Cooperatives --3 separate annual conferences, Farmer Cooperatives Conference (http://www.uwcc.wisc.edu/outreach/FCC) --3 separate meetings of NCERA 210 (http://www.agecon.ksu.edu/accc/ncera210/) --2 separate meetings of the American Applied Economics Association --Use results in class on cooperatives at the University of Wisconsin--Madison * Data dissemination web page (http://data.uwcc.wisc.edu/PublicDataHome.aspx) PARTICIPANTS: Brent Hueth, Anne Reynolds, and Mason Carpenter TARGET AUDIENCES: Manager and board members of agricultural cooperatives. Economics and business scholars interested in governance in cooperatives PROJECT MODIFICATIONS: Not relevant to this project.

Impacts
This project, for the first time, provides systematic description of governance practices in agricultural cooperatives. While there is an enormous body of literature on governance and best practice for boards of publicly held companies, very little is known about practice in cooperatives. The data we have collected have generated important new knowledge and are changing practice in farmer cooperatives. We have widely disseminated results and are implementing training programs that use the data to compare and contrast practices that are used. Testimonials for our education programs provide indirect evidence of changed actions.

Publications

  • Hueth B., and A. Reynolds, "A Life-Cycle Perspective on Governing Cooperative Enterprises in Agriculture," Choices Magazine, 3rd Quarter 2011
  • Hueth, B. and P. Marcoul, "Incentive Pay for CEOs in Cooperative Firms," American Journal of Agricultural Economics, 91(5) 2009.
  • Hueth, B. and M. Fulton, "Cooperative Conversions, Failures and Restructurings: An Overview," Journal of Cooperatives, 23(9) 2009.
  • Hueth, B., and P. Marcoul, "The Producer Cooperative as Monitored Credit The Case of West Liberty Foods," 23(9) 2009.
  • Reynolds, A., "Benefitting from the Board: A Case Study," University of Wisconsin Center for Cooperatives Staff Paper, 2011


Progress 12/01/09 to 11/30/10

Outputs
OUTPUTS: Two staff members were hired in early 2010 to lead the interview and data collection/analysis process. Graduate students were recruited to conduct paired interviews with CEOs and board chairs from a national sample of cooperative firms in the agricultural, finance, utility, grocery and other sectors. 165 paired interviews were completed, and 336 were in process at the end of 2010. Data is collected on a real-time basis and data analysis is ongoing. A system of quality control and secondary review of qualitative results was instituted. Preliminary results were presented at the Farmer Cooperatives Conference and the Association for Cooperative Educators' Institute. PARTICIPANTS: Anne Reynolds, University of Wisconsin-Madison; Mason Carpenter, University of Wisconsin-Madison, Brent Hueth, University of Wisconsin-Madison; Michael Chronister, University of Wisconsin-Madison; Tom Flory, University of Wisconsin-Madison TARGET AUDIENCES: Not relevant to this project. PROJECT MODIFICATIONS: Not relevant to this project.

Impacts
New systems for administering CEO compensation. New methods for performing board and CEO evaluations. Changes in board practices. Understanding of the key differences between board practices in cooperatives and non-cooperative firms.

Publications

  • No publications reported this period


Progress 12/01/08 to 11/30/09

Outputs
OUTPUTS: A survey instrument was developed and refined. Site visits completed with 18 firms during the summer of 2009. Paired interviews conducted with CEOs and board chairs of these firms. Focus of the interviews was on the relationship between the CEO and the board. Information was gathered on board structure, CEO evaluation systems and basic firm data. Initial research started on a national sample of firms. PARTICIPANTS: Anne Reynolds, University of Wisconsin-Madison; Mason Carpenter, University of Wisconsin-Madison, Brent Hueth, University of Wisconsin-Madison TARGET AUDIENCES: Not relevant to this project. PROJECT MODIFICATIONS: Not relevant to this project.

Impacts
New systems for performing board and CEO evaluations. Changes in board practices. Differences between board practices in cooperatives and non-cooperative firms.

Publications


    Progress 12/01/07 to 11/30/08

    Outputs
    OUTPUTS: Site visits to two separate firms to perform case study analyses of board behavior. Board training workshop at the National Council of Farmer Cooperatives annual meeting. Board training, CRI international, Michigan Blueberry growers, Foremost Farms, and Dairy Farmers of America Farmers Cooperatives Conference with sessions on board best practices PARTICIPANTS: Anne Reynolds, University of Wisconsin-Madison; Mason Carpenter, University of Wisconsin-Madison; Brent Hueth, University of Wisconsin-Madison TARGET AUDIENCES: Not relevant to this project. PROJECT MODIFICATIONS: Not relevant to this project.

    Impacts
    New systems for performing board and CEO evaluations. Changes in board practices.

    Publications

    • Hueth, Brent and Philippe Marcoul, 2009, "The Cooperative Firm as Monitored Credit: The Case of West Liberty Foods of Iowa," forthcoming.
    • Reynolds, Anne, Dec. 2008, "Benefit from the Board: A Case Study," University of Wisconsin Center for Cooperatives Staff Paper, available at http://www.uwcc.wisc.edu
    • Hueth, Brent and Philippe Marcoul, 2009, "CEO Incentives in Cooperative Firms," forthcoming in the American Journal of Agricultural Economics.
    • Hueth, Brent and Murray Fulton, 2009, eds. "Cooperative, Conversions, Restructurings, and Failures: Lesssons Learned from U.S. and Canadian Agriculture, forthcoming book.