ABSTRACT
Farmer cooperatives are typically involved in first-stage marketing and food processing activities as a result of their role as vertical extensions of the farming operations of their members. Consequently, the marketing and processing activities in which farmer cooperatives participate are usually characterized by little market power and low margins (Rogers and Marion, 1990). Considerable discussion has focused on explaining why cooperatives have not integrated forward into high-margin, value-added activities to a greater extent. Explanations include arguments that: (1) the production orientation of directors restricts the ability of a cooperative board to supervise and assist management as the organization's scope grows vertically and increasingly involves consumer-oriented merchandising activities (Jamison, 1960), (2) cooperatives are disadvantaged by scale economies associated with complex organizational tasks (Caves and Petersen, 1986), and (3) cooperatives are often insufficiently capitalized to make the substantial investments in research and development and in advertising that are necessary to be successful in processed markets (Rogers and Marion, 1986).
