Jump to ContentJump to Main Navigation
Show Summary Details
In This Section

Journal of Agricultural & Food Industrial Organization

Ed. by Azzam, Azzeddine

2 Issues per year

CiteScore 2016: 0.70

SCImago Journal Rank (SJR) 2015: 0.189
Source Normalized Impact per Paper (SNIP) 2015: 0.549

See all formats and pricing
In This Section

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

Markus Hanisch
  • Division of Cooperative Sciences, Department of Agricultural Economics, Humboldt-Universität zu Berlin, Berlin 10099, Germany
  • Email:
/ Jens Rommel
  • Corresponding author
  • Division of Resource Economics, Department of Agricultural Economics, Humboldt-Universität zu Berlin, Berlin 10099, Germany; Leibniz Institute of Agricultural Development in Central and Eastern Europe, Halle, Germany
  • Email:
/ Malte Müller
  • Division of Cooperative Sciences, Department of Agricultural Economics, Humboldt-Universität zu Berlin, Berlin 10099, Germany
  • Email:
Published Online: 2013-12-03 | DOI: https://doi.org/10.1515/jafio-2013-0015


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.

Keywords: EU-27; common agricultural policy; competition; cooperative yardstick; dairy farming


  • Bacon, C. M. 2005. “Confronting the Coffee Crisis: Can Fair Trade, Organic, and Specialty Coffees Reduce Small-Scale Farmer Vulnerability in Northern Nicaragua?” World Development 33 (3):497–511. [Crossref]

  • Baltagi, B. H., G. Bresson, and A. Pirotte. 2003. “Fixed Effects, Random Effects, or Hausman–Taylor? A Pretest Estimator.” Economics Letters 79:361–9. [Crossref]

  • Bijman, J., C. Iliopoulos, K. J. Poppe, C. Gijselinckx, K. Hagedorn, M. Hanisch, G. W. J. Hendrikse, R. Kühl, P. Ollila, and P. Pyykkönen. 2012. “Support for Farmers’ Cooperatives Final Report.” Support for Farmers’ Cooperatives. Wageningen: Wageningen UR. Accessed June 6, 2013. http://edepot.wur.nl/245008.

  • Bonus, H. 1986. “The Cooperative Association as a Business Enterprise: A Study in the Economics of Transactions.” Journal of Institutional and Theoretical Economics 142:310–39.

  • Bundeskartellamt. 2012. “Sektoruntersuchung Milch: Endbericht Januar 2012.” Bonn. Accessed June 6, 2013. http://www.bundeskartellamt.de/wDeutsch/download/pdf/Stellungnahmen/2012_01_Sektoruntersuchung_Milch_Endbericht_final.pdf

  • Cazzuffi, C. 2012. “Prices Paid and Value for Members: Dairy Processing and Marketing Cooperatives in Three Italian Provinces.” Paper presented at the international conference “Cooperative Responses to Global Challenges,” Humboldt-Universität zu Berlin, Germany, March 21–23.

  • Chaddad, F. 2007. “The Evolution of Brazilian Dairy Cooperatives: A Life Cycle Approach.” Paper presented at the meeting of the Brazilian Economic Society, Londrina, Brazil, July 22–25.

  • Chamberlin, E. H. 1933. Theory of Monopolistic Competition. Cambridge, MA: Harvard University Press.

  • Cook, M. L. 1995. “The Future of U.S. Agricultural Cooperatives: A Neo-Institutional Approach.” American Journal of Agricultural Economics 77 (5):1153–9. [Crossref]

  • Cook, M. L., and C. Iliopoulos. 1999. “Beginning to Inform the Theory of the Cooperative Firm: Emergence of the New Generation Cooperative.” LTA (Finnish Journal of Business Economics) 4:525–35.

  • Cotterill, R. W. 1984. “The Competitive Yardstick School of Cooperative Thought.” In American Cooperation 1984, edited by American Institute of Cooperation, 41–53. Washington, DC: American Institute of Cooperation.

  • Cotterill, R. W. 1987. “Agricultural Cooperatives: A Unified Theory of Pricing, Finance, and Investment.” In ASC Service Reports: Vol. 18. Cooperative Theory. New Approaches, edited by J. S. Royer, 171–258. Washington, DC: US Department of Agriculture.

  • Euromilk. 2012. “About the European Dairy Industry: General Overview.” Euromilk. Accessed April 2, 2012. http://www.euromilk.org/eda/content_html.aspx?cid=426

  • European Commission. 2010. Proposal for a Regulation of the European Parliament and of the Council Amending Council Regulation (EC) No 1234/2007 as Regards Contractual Relations in the Milk and Milk Products Sector. Brussels: DG Agriculture, European Commission. Accessed June 6, 2013. http://ec.europa.eu/agriculture/milk/proposal-12-2010/com-2010-728_en.pdf

  • European Competition Network, Subgroup Food. 2012. ECN Activities in the Food Sector: Report on Competition Law Enforcement and Market Monitoring Activities by European Competition Authorities in the Food Sector. Brussels: European Commission Accessed June 6, 2013. http://ec.europa.eu/ competition/ecn/food_report_en.pdf

  • Eurostat. 2008. “Handbook for EU Agricultural Price Statistics, Version 2.0.” Accessed September 8, 2013. http://unstats.un.org/unsd/EconStatKB/Attachment502.aspx

  • Eurostat. 2012. Data tables: Maize – Prices per 100 kg [Code: 01500000)]; Raw cows’ Milk Actual Fat Content – Prices per 100 kg [Code: 12112000]; Gross Domestic Product at Market Prices [Code: B1GM/EUR_HAB]; External Balance of Goods and Services [Code: B11/PC_GDP]; Manufacture of Dairy Products [Table: sbs_turn_ind_r2 Code: C105]; Cow’s Milk Collected [Table: apro_mk_cola Code: MM001]. Accessed October 6, 2013. http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database

  • Fahlbusch, M., A. Bahr, B. Brümmer, and A. Spiller. 2009. “Der Markt Für Milch Und Milcherzeugnisse.” German Journal of Agricultural Economics 58 (1):36–52.

  • Fousekis, P. 2011. “Free-on-Board and Uniform Delivery Pricing Strategies in a Mixed Duopsony.” European Review of Agricultural Economics 40 (2):119–39. [Crossref]

  • Fowler, B. B. 1948. “The Cooperative Yardstick.” Law and Contemporary Problems 13 (3):445–57. [Crossref]

  • Galbraith, J. K. 1952. American Capitalism: The Concept of Countervailing Power. Boston, MA: Houghton Mifflin.

  • Goldberg, P. K., and F. Verboven. 2004. “Cross-Country Price Dispersion in the Euro Era: A Case Study of the European Car Market.” Economic Policy 19 (40):483–521. [Crossref]

  • Graubner, M., A. Balmann, and R. J. Sexton. 2011. “Spatial Price Discrimination in Agricultural Product Procurement Markets: A Computational Economics Approach.” American Journal of Agricultural Economics 93 (4):949–67. [Crossref]

  • Greene, W. H. 2011. Econometric Analysis. Essex, England: Pearson Education.

  • Hanisch, M., and M. Müller. 2012. “Ownership and Control Rights Transformations: The Evolution of the Deutsches Milchkontor GmbH.” Support for Farmers’ Cooperatives. Wageningen: Wageningen UR. Accessed June 6, 2013.http://edepot.wur.nl/244991

  • Hanisch, M., M. Müller, and J. Rommel. 2011. “Support for Farmers’ Cooperatives in the Dairy Sector: EU Sector Report.” Support for Farmer’s Cooperatives. Wageningen: Wageningen UR. Accessed June 6, 2013. http://edepot.wur.nl/244940

  • Hanisch, M., M. Müller, J. Rommel, J. Sagebiel, H. Karikallio, S. Pakarinen, and P. Pyykkönen. 2012. “The Effect of Farmers’ Cooperatives on Price Stabilization in the Dairy Sector.” Support for Farmers’ Cooperatives. Wageningen: Wageningen UR. Accessed June 6, 2013. http://edepot.wur.nl/244841

  • Hanisch, M., and J. Rommel. 2012. “Producer Organizations in European Dairy Farming.” Support for Farmers’ Cooperatives. Wageningen: Wageningen UR. Accessed June 6, 2013. http://edepot.wur.nl/245003

  • Hansmann, H. B. 1996. The Ownership of Enterprise. Cambridge, MA: The Belknap Press of Harvard University Press.

  • Hausman, J. A. 1978. “Specification Tests in Econometrics.” Econometrica 46 (6):1251–71. [Crossref]

  • Hausman, J. A., and W. E. Taylor. 1981. “Panel Data and Unobservable Individual Effects.” Econometrica 49(6):1377–98. [Crossref]

  • LeVay, C. 1983. “Agricultural Cooperative Theory: A Review.” Journal of Agricultural Economics 34 (1):1–44. [Crossref]

  • Levi, M., and A. Linton. 2003. “Fair Trade: A Cup at a Time?” Politics & Society 31 (3):407–32. [Crossref]

  • Lewis, M. 2008. “Price Dispersion and Competition with Differentiated Sellers.” The Journal of Industrial Economics 56 (3):654–78.

  • Liang, Q., and G. W. J. Hendrikse. 2013. “Pooling and the Yardstick Effect of Cooperatives.” Paper presented at the 17th annual conference of The International Society for New Institutional Economics, Florence, Italy, June 20–22.

  • Marshall, A. 1890 [1920]. Principles of Economics. London: Macmillan.

  • Milford, A. B. 2012. “The Pro-Competitive Effect of Coffee Cooperatives in Chiapas, Mexico.” Journal of Agricultural & Food Industrial Organization 10 (1):1–27, Art.2.

  • Ménard, C. 2004. “The Economics of Hybrid Organizations.” Journal of Institutional and Theoretical Economics 160 (3):345–76. [Crossref]

  • Ménard, C. 2007. “Cooperatives: Hierarchies or Hybrids?” In Vertical Markets and Cooperative Hierarchies: The Role of Cooperatives in the Agri-Food Industry, edited by K. Karantininis and J. Nilsson, 1–17. Dordrecht: Springer.

  • Nilsson, J. 1999. “Co-Operative Organisational Models as Reflections of the Business Environments.” LTA (Finnish Journal of Business Economics) 4:449–70.

  • Nourse, E. G. 1945. “The Place of the Cooperative in Our National Economy.” In American Cooperation 1942 to 1945, 33–9. Washington, DC: American Institute of Cooperation.

  • Pennerstorfer, D., and C. R. Weiss. 2013. “Product Quality in the Agri-Food Chain: Do Cooperatives Offer High-Quality Wine?” European Review of Agricultural Economics 40 (1):143–62. [Crossref]

  • Pigou, A. C. 1920. The Economics of Welfare. London: Macmillan.

  • Pigou, A. C. 1924. “Income Tax and Co-Operative Societies.” In Essays in Applied Economics, edited by A. C. Pigou, 141–8. New York: Staples Press.

  • Rabe-Hesketh, S., and A. Skrondal. 2008. Multilevel and Longitudinal Modeling Using Stata. 2nd ed. College Station, TX: Stata Press Publication.

  • Royer, J. S. 1995. “Potential for Cooperative Involvement in Vertical Coordination and Value-Added Activities.” Agribusiness 11(5):473–81. [Crossref]

  • Sauer, J., M. Gorton, and J. White. 2012. “Marketing, Cooperatives and Price Heterogeneity: Evidence from the CIS Dairy Sector.” Agricultural Economics 43(2):165–77. [Crossref]

  • Schramm, M., A. Spiller, and T. Staack. 2005. “Zur Brand Orientation Genossenschaftlicher Unternehmen Der Ernährungsindustrie.” In Jahrbuch Der Österreichischen Gesellschaft Für Agrarökonomie, edited by D. I. S. Pöchtrager and E. Schmid, 141–52. Vienna: Österreichische Gesellschaft fürAgrarökonomie.

  • Sexton, R. J. 1986. “Cooperatives and the Forces Shaping Agricultural Marketing.” American Journal of Agricultural Economics 68 (5):1167–72. [Crossref]

  • Sexton, R. J. 1990. “Imperfect Competition in Agricultural Markets and the Role of Cooperatives: A Spatial Analysis.” American Journal of Agricultural Economics 72 (3):709–20. [Crossref]

  • Shleifer, A. 1985. “A Theory of Yardstick Competition.” RAND Journal of Economics 16 (3):319–27. [Crossref]

  • Staatz, J. M. 1989. Farmer Cooperative Theory: Recent Developments. Washington, DC: United States Department of Agriculture.

  • United States Department of Agriculture (USDA). 2011.“Marketing Operations of Dairy Cooperatives – Historical Summaries.” Accessed June 6, 2013. http://www.rurdev.usda.gov/BCP_Coop_Data_DairyMarketing.html

  • Valentinov, V. 2007. “Why Are Cooperatives Important in Agriculture? An Organizational Economics Perspective.” Journal of Institutional Economics 3 (1):55–69. [Crossref]

  • Verbeek, M. 2004. A Guide to Modern Econometrics. Chichester: John Wiley & Sons.

  • Walras, L. 1865. Les Associations Populaires De Consommation, De Production Et De Crédit. Paris: Dentu.

  • Williamson, O. E. 1981. “The Economics of Organization: The Transaction Cost Approach.” American Journal of Sociology 87 (3):548–77. [Crossref]

  • Williamson, O. E. 1985. The Economic Institutions ofCapitalism: Firms, Markets, Relational Contracting. New York: Free Press.

  • Williamson, O. E. 1996. The Mechanisms of Governance. New York: Oxford University Press.

  • Zoeteweij-Turhan, M. H. 2012. The Role of Producer Organizations on the Dairy Market. Baden-Baden: Nomos.

  • Zuvielzicht/Rabobank/MI, V. 2012. “TOP 10 Molkereien in Europa 2012.” Rabobank Accessed June 6, 2013. http://www. milchindustrie.de/uploads/tx_news/TOP_Molkereien_EU_ Homepage_01.pdf

About the article

Published Online: 2013-12-03

In the following, we use the terms “cooperative yardstick” or “cooperative yardstick effect” for referring to the set of theoretical contributions holding that cooperatives have a pro-competitive effect on prices in markets with imperfect competition. Most commonly, the terms “competitive yardstick”, “competitive yardstick effect”, or “competitive yardstick school of cooperative thought” are used in the literature (cf. Fousekis 2011; Sexton 1990; Staatz 1989; Cotterill 1984, 1987). Some authors (e.g. Fowler 1948) have also used the shorter “cooperative yardstick” when describing the phenomenon with regard to agricultural or consumer cooperatives.

The variable was calculated the same way for all member states. Additional information on calculation of this variable at the level of member states is available in the Handbook for EU Agricultural Price Statistics (Eurostat 2008). Summary statistics on variation across states and years are available from the authors on request.

One drawback of our approach is that these data were available only for 2010. We have thus implicitly assumed that the market share of cooperatives has been historically determined and stable over time.

Within this project, a national report on agricultural cooperatives was written for each of the 27 member states by academic experts. As part of these reports, experts were asked to provide information on the market shares of major agricultural sectors, including dairy, for 2010. Through discussions within the project, it turned out that for two countries – Belgium and the United Kingdom – the country experts provided very low estimates. After checking these figures with respective national cooperative umbrella organizations, they were subsequently corrected.

Citation Information: Journal of Agricultural & Food Industrial Organization, ISSN (Online) 1542-0485, ISSN (Print) 2194-5896, DOI: https://doi.org/10.1515/jafio-2013-0015. Export Citation

Comments (0)

Please log in or register to comment.
Log in