Jens Rommel

The Cooperative Yardstick Revisited: Panel Evidence from the European Dairy Sectors

Abstract Milk is an important agricultural product that has traditionally been processed by cooperatives. Across member states of the EU-27, however, large variation exists between the national market shares of cooperatives in dairy processing. Theoretical models suggest that a strong cooperative sector secures competitive regional prices for agricultural produce. Empirical studies which seek to quantify these effects are rare though. We use panel data to study the impact of cooperative strength – measured by market shares – on national farm gate milk prices in the EU-27 for the period from 2000 to 2010. Our results reveal a positive effect of cooperative market share on price that is relatively large and robust over different specifications of the econometric model. We conclude that dairy cooperatives have a pro-competitive effect and that exemptions for cooperatives from anti-trust regulation may be justified.

The Effect of Heterogeneity and Freedom of Participation on Collective Action in Rural Self-Help Groups Combining In-Depth Interviews With Curve Estimation

In India, self-help groups aim to eradicate poverty. Groups access microcredit via banks, government, or nongovernmental organizations. A vast but inconclusive literature exists on the impacts of heterogeneity and freedom of participation on group functioning. We used survey data and curve estimation to study the effect of these variables on collective action. Survey results were triangulated with in-depth interviews. The applied mixed methods design is useful for empirical studies where the functional form of one variable on the other variable is contested and no a priori model exists for theory-driven deductive empirical testing. We found that both variables are mediated by their institutional context. Heterogeneity promotes the emergence of leadership in bank groups, but it reduces collective action in government-initiated groups.

Farmers’ Adoption of Irrigation Technologies: Experimental Evidence from a Coordination Game with Positive Network Externalities in India

Abstract Electric irrigation contributes to food security in rural India, but deteriorating electrical infrastructures threaten the functioning of farmers’ pump sets. This problem could be solved through investments in energy-efficient technologies. However, network externalities create a coordination problem for farmers. We develop a framed field experiment to study the effects of group size, leading by example, and payoff structures on the ability to coordinate technology adoption investments. The experiment is based on a game that combines features of a step-level public goods game and a critical mass game. Our findings show that smaller groups more frequently coordinate on payoff- superior equilibria and that higher payoffs lead to more investments. Contrary to previous studies, leading by example reduces investments but has no effect on efficiency. Building on this analysis, we discuss possible bottom-up solutions to the energy crisis in rural India.

Comprehension in risk elicitation experiments

ABSTRACT Economic experiments are increasingly conducted with field populations for whom comprehension of instructions may be more difficult to achieve. We investigate how framing experimental instructions in a familiar context and incentivizing the experimental task may affect comprehension. Based on an experiment with 146 German farmers, we compare four different versions of a Holt-and-Laury multiple price list. We find that incentives have a small positive effect on comprehension, as measured by the probability of making inconsistent choices and subjects’ self-assessment. In the absence of incentives, framing negatively affects comprehension. Comprehension is enhanced for farmers who score high on a numeracy test. We conclude that contextual framing might confuse subjects, whereas incentives can help to facilitate comprehension of experimental instructions.

The structural effect of cooperatives on price volatility in the European dairy sector

ABSTRACT Theoretical models and empirical evidence suggest that high market shares of cooperatives can force investor-oriented firms to pay higher producer prices within a region. In the same vein, cooperatives may force investor-oriented firms to reduce price volatility. We use panel data from 27 European Union member states over the period 2001–2015 to investigate how the market share of cooperatives in a country affects milk price volatility. Our key finding is that a higher market share of cooperatives reduces price volatility at the national level. Volatility is influenced by a number of other variables, such as fluctuation in raw milk production, oil price volatility spillover and the number of dairy processors. Policymakers should consider that the promotion of cooperatives might positively affect price stability in the dairy sector.

Farm Gate Prices for Non-Varietal Wine in Argentina: A Multilevel Comparison of the Prices Paid by Cooperatives and Investor-Oriented Firms

Abstract In this paper, we use a unique data set of the prices paid to farmers in Argentina for grapes to examine the prices paid by non-varietal wine processing cooperatives and investor-oriented firms (IOFs). Motivated by contrasting theoretical predictions of cooperative price effects generated by the yardstick of competition and property rights theories, we apply a multilevel regression model to identify price differences at the transaction level and the departmental level. On average, farmers selling to cooperatives receive a 3.4 % lower price than farmers selling to IOFs. However, we find cooperatives pay approximately 2.4 % more in departments where cooperatives have larger market shares. We suggest that the inability of cooperatives to pay a price equal to or greater than the one paid by IOFs can be explained by the market structure for non-varietal wine in Argentina. Specifically, there is evidence that cooperative members differ from other farmers in terms of size, assets and the cost of accessing the market. We conclude that the analysis of cooperative pricing cannot solely focus on the price differential between cooperatives and IOFs, but instead must consider other factors that are important to the members.