New Generation Co-operatives (NGC) as a Model for Value-Added Agricultural Processing in Alberta: Applications to Factors Affecting Choice of Pricing and Payment Practices by Traditional Marketing and New Generation Co-operatives

Abstract

This study examines the factors affecting choice of pricing and payment practices by traditional marketing and new generation co-operatives for commodities delivered by their members. These factors include the demographic variables related to type of co-operative organization, level of competition in commodity market, and risk-return perceptions of members and co-operatives. Data for the analysis were obtained through a mail survey. Questionnaires were send to one hundred and ninety five (195) co-operatives in mid-west states of the U.S.A. and Canada. Altogether 93 co-operatives responded to the survey. Mean score analysis, factor analysis and multinomial logit analysis were done. The results indicate that traditional marketing co-operatives are more likely to choose spot market cash price, while new generation co-operatives are more likely to choose pooling practices. Traditional marketing co-operatives appear to be concerned about the members' cash flow needs and members' uncertainty of return; they are also more responsive to increased competitive level in commodity market. New generation co-operatives are more concerned with avoiding the risk of co-operatives' operating deficits and survival of co-operatives. This has implications for new co-operatives just beginning in business.