The Organizational Nature of Agricultural Cooperatives: A Perspective from the Farm Problem Theory
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This article uses the farm problem theory as the framework for a comparative
analysis of cooperative, market and hierarchical organization in the agrifood
system. In order to carry out this analysis, the article proposes the organizational
economics approach to the farm problem which supplements the
traditional approaches explaining it in terms of low opportunity costs and
high mobility costs of factors employed in agriculture. According to the proposed
organizational economics approach, the farm problem is the outcome
of inappropriateness of hierarchical and market organization for effective coordination
of agricultural activities. The central argument of the article is that
agricultural cooperatives are important because they partially perform the coordination
functions not effectively delivered in agriculture by the
conventional hierarchical and market types of economic organization.