An Economic Analysis of Selected Production Co-Operatives in Saskatchewan
Date
1972-09
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ORCID
Type
Degree Level
Masters
Abstract
This thesis contains an examination of the co-operative approach to agricultural production to determine the extent of economic benefits and disadvantages associated with its use in Saskatchewan. More specifically, the operations of selected machinery co—operatives and co-operative farms incorporated in Saskatchewan under The Co—operative Production Associations Act, 1967 were analyzed to determine if during selected periods of their operations, their members had achieved a level of well-being superior to that realized by operators of comparable individual proprietorships.
Co-operative theory and selected economic theory were reviewed. Both suggest that production co-operatives should attain benefits from the realization of cost economies, and the advantages of diversification, specialization of labor and resource pooling. Indifference curve analysis was used to examine the effect of various levels of economic and non—monetary returns upon a member's well-being relative to his preferences for each.
Operations of similar co-operatives in Britain and continental Europe were reviewed, as were the recorded experiences of the production co-operative movement in Saskatchewan.
Eleven co-operative farms operating in Saskatchewan between 1964 and 1968 and seven machinery co-operatives operating in 1968 were analyzed. Sources of data and information included two sets of questionnaires, annual co-operative financial statements, interviews with the secretaries of all the co—operatives studied, publications by the Saskatchewan Department of Agriculture, and other published material. A major effort was required to make the available data pertaining to co—operatives and individual proprietorships comparable. However, it was not possible to establish the extent to which data pertaining to individual Saskatchewan farms represented the performance that members of the co-operatives would have achieved if they had farmed individually.
The economic analysis in general consisted of comparing production co-operative data with comparable "yardstick" data from individual
proprietorships. Co-operative farm economic performance was measured in terms of ratios of costs to returns, Net Farm Income to Value of Production as a ratio to Value of Production. Absolute, per-member, Net Farm Income and Operator Labor and Management Returns were also calculated. Economic performance of machinery co—operatives was largely evaluated in terms of production costs, although an income measure was also used.
Certain sociological concerns such as decision—making, group management, member relationships, and other similar aspects arising from
the operation of the subject production co-operatives were examined in a non-monetary analysis. The economic analysis indicated that in terms of only economic measures, farms had achieved performance inferior to that of "yardstick groups" selected; only four had achieved generally superior economic performance. Most machinery co—operatives had achieved cost economies, although the extent of such achievements varied.
The analysis of non-monetary features revealed that many production co-operatives had experienced some degree of member relationship
difficulties. Group management and decision-making required often difficult adjustment by members who had, in many cases, been accustomed to individuality in such matters. However, members reported the achievement or greater leisure time, enhanced security and other nonmonetary benefits from their co-operatives.
The combined economic-sociologic nature of production co-operatives was evident throughout this study. As production co-operatives can not
be adequately evaluated unless both economic and sociologic considerations are taken into account, and as each co—operative was somewhat unique, the case study method was used in place of more formal and precise analytical procedures.
The study demonstrated that production co—operatives, in general, offer potential economic performance superior to that achieved by many
individual proprietorships. However, achievement of that potential is not ensured by the mere existence of a production co-operative as the
achievement of economic success is not automatic.
Achievement of economic or social benefits from a production co—operative, consistent with members' preferences, requires the availability of sufficient productive resources, an adequate legal and operational framework, and sufficient managerial capability to ensure that the co-operative functions in an economically and sociologically superior satisfactory manner.
Interpretation and use of the specific conclusions arising from this study requires recognition of the limited number of production co-operatives upon which the study was forced to rely, the data limitations which were experienced, and that a full examination of all the sociological aspects of such organizations was beyond the scope of this study. However, these limitations do not detract From the general
conclusion that production co-operatives offer potential advantages to agricultural producers under certain circumstances.
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Degree
Master of Science (M.Sc.)
Department
Economics
Program
Agricultural Economics