Cooperative and Marketing Orders - Tennessee Tech University合作和销售订单-田纳西技术大学.pptVIP

Cooperative and Marketing Orders Daniel Gregory Cody Eakin Cooperatives and Marketing Orders Marketing institutions designed to increase farmers bargaining power Also to reduce the role of middlemen in the marketing of products Marketing and Supply Cooperatives Group of farmers banded together to buy inputs or market products Basic objective: to increase member profits by lowering the price they pay for inputs and increase price received for products Owned and controlled by member patrons Nonprofit group Marketing and Supply Cooperatives Capper-Volstead Act of 1922: Established conditions under which an organization can be defined as a co-op Protects co-ops from anti trust provisions of the Sherman and Clayton acts Resulting in increased bargaining power Incentive Problems In a co-op, management does not gain or lose depending on the firm’s success Residual Claimants: those that benefit or lose due to management decisions Co-ops do not have these Can lead management to act in a way that does not maximize the present value of the co-ops stream of future residual returns More incentive to favor investments with short payoff horizons With these problems, how do co-ops survive? Tax Treatment of Cooperatives Patronage refunds are counted as personal income to members, not to the co-op Leads to the refunds only being taxed once Marketing Orders Government-enforced regulations that allow producers to work together, to increase prices by limiting competition Defines the commodity and the market area to be regulated Initiated under the federal Agricultural Marketing Agreement of 1937 Marketing Orders Also referred to as “Self-Help” programs Free-rider problem In voluntary programs, there is an incentive to produce more and still receive the same price as others, leading to increased competition A federal marketing order allows producers to use the police power of the government to regulate restrictions on competition Two commodities with Marketing Orders Milk Certain frui