Cooperative Organizations as an Engine of Equitable Rural Economic Development

Cooperatives represent an alternative to large-scale corporate farms and plantations as well as to independent unaffiliated small private farms. This paper presents a comparative modeling narrative on cooperative organizational forms’ potential impact on equitable rural development. This speaks to issues of both increasing the size of the economic pie and how this income is distributed. The case is made the cooperatives can potentially generate higher rates of growth and more equitable growth, even in competitive economic environments. An important type of cooperative that is focused upon in this paper is one based on the linking of smaller farms into a cooperative. Economies of scale and scope can be captured by the cooperatives and transaction costs can be reduced. Given cooperative governance, one would also expect higher levels of x-efficiency. Overall, cooperatives can generate relatively high incomes to cooperative members, whilst remaining competitive with the traditional privately owned large farms. Critical to the success of the cooperative, is a set rules and regulations that place them on a level playing field with the privately owned farm. In addition, the implementation and practice of cooperative principles is key to the success of the cooperative farm and rural cooperatives, more generally speaking.