Analysis of management and financial performance of local farmer cooperatives in Missouri
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Local farmer cooperatives are important to agriculture and to farmer members. They provide services, farm inputs, and market farm produce on behalf of members. Continued survival of local farmer cooperatives in Missouri has been seriously threated by socio-economic problems in recent years. Studies have shown that the number of local farmer cooperatives in Missouri is slowly declining due to mergers, liquidations, and other problems. Furthermore, almost half of local cooperatives in Missouri are losing money and profitability has continued to drop since 1980. With this scenario in mind, the basic purpose of this study was to examine relationships between characteristics of cooperative management and profitability of local cooperatives. The aim was to provide cooperative members and leaders with information that may be useful in selecting directors and in employing managers who have potential to improve financial performance. Data were obtained by a survey of board presidents, vice-presidents, and managers and from the 1982/83 financial records of participating locals. Frequency tables, chi-square test of independence, and multiple linear regression were used to analyse data. Results show that in 1982/83, profitability of local farmer cooperatives in Missouri was related to directors' compensation for performing management duties and to cooperative management training received by managers. Furthermore, long-term profitability of locals was related to the degree of member participation in electing directors. Financial support from members, measured by total net worth, and patronage dividends received from regional cooperatives were significantly related to long-term profitability of local cooperatives in Missouri. However, continued reliance on patronage refunds from regionals seem to weaken long-term profitability. Lack of statistically significant relationships between personal characteristics of directors and managers and financial performance show that factors which influence profitability are more complex than we can explain by examining characteristics of individuals in management positions. Most of the variance in long-term profitability of locals cannot be accounted for by cooperative management and financial structure variables examined in this study. Factors external to local cooperatives appear to influence profitability much more than management variables.
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This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 License.