Robert A. Cropp

Managing the Supply Chain Through Cooperatives and Contract Integration

Since the enactment of the Capper–Volstead Act in 1914, marketing cooperatives have been policy dependent. As contract agriculture has become more prevalent, cooperatives have been forced to adopt a supply chain management mode in order to be competitive. Increased demands for equity capital have forced cooperatives to seek means of attracting investor capital. State governments have responded by creating the legal basis for the formation of new generation cooperatives. These new institutional structures are controversial in the eyes of those who believe cooperatives should adhere to their traditional cooperatives principals. During this period of adjustment in the structure of agriculture, USDA and the federal government have failed in supporting bargaining cooperatives, despite increased contract integration. States have stepped in to provide more research and technical assistance support to cooperatives in the face of declining USDA and federal support. Policies supporting cooperatives are based on the ability of cooperatives to enhance allocative and dynamic efficiency, while providing nonmarket social justice benefits to farmers and consumers.