UNITED STATES DEPARTMENT OF AGRICULTURE DEPARTMENT BULLETIN No. 1414 Washington, D. C. July, 1926 MANAGEMENT PROBLEMS OF COOPERATIVE ASSOCIATIONS 1 By A. W. MCKAY, Marketing Economist, and W. J. KUHRT, Assistant Marketing Economist, Bureau of Agricultural Economics The value of fruits and vegetables marketed by cooperative associations increased approximately 170 per cent between 1915 and 1924, or from $110,000,000 to $300,000,000. The relative prices for fruits and vegetables during these years (see Table 1) indicate an increase in the quantity of products handled by associations of a little more than 80 per cent. During the same period it has become increasingly difficult to market fruits and vegetables at prices satisfactory to the growers. Table 1 shows that increases in the prices of other commodities have been greater than for fruits and vegetables. Consequently, the position of the growers is relatively less favorable than during the pre-war years. Certain producers are operating under more unfavorable conditions than is indicated by the index numbers for the The discussion in this bulletin refers particularly to the problems of the smaller associations handling fruits and vegetables. 86142°-26-1 1 fruit and vegetable group; for example, the grapefruit growers who received, in 1924, but 44 per cent of the pre-war price, and the potato growers, who received, during the 1924-25 season, prices varying from 92 to 104 per cent of the base price, that is, the average price from August, 1909, to July, 1914. TABLE 1.—Index numbers of wholesale prices by groups of commodities and by years, 1910 to 1914=1001 Cooperative marketing, despite its demonstrated advantages, has not been sufficient to overcome the unfavorable conditions that have existed since 1920. Two fundamental factors have served to keep fruit and vegetable prices at low levels, as compared with other commodities. These, in order of their probable importance, are: (1) Production in excess of what the market will absorb at prices profitable to the producers (see Table 2), and (2) curtailment of the purchasing power of the consumers, to a greater or less extent, expressed perhaps by the purchase of greater quantities of more staple foods at the expense of fruits and vegetables. In discussing the adequacy or inadequacy of marketing services, this bulletin deals particularly with the services offered by cooperative associations. There is a wide variation in the completeness and efficiency of these services, just as there is in the services of noncooperative agencies. There is little question of the value of the services rendered by large, well-established associations and exchanges. Many small local associations, however, fail to realize their opportunities to improve marketing conditions. In part, the general attitude of the producers toward their organizations has retarded the development of the cooperative market ing of fruits and vegetables. As long as the associations are judged altogether by the price they are able to obtain for the current crop, their existence, as a class, will be precarious and the services they can render will be limited. In some cases, the financial stability of the associations is threatened and their reserves depleted through the anxiety of their directors to give the members a higher price than that paid by private dealers who handle the same commodity. TABLE 2.-Total carload shipments of fruits and vegetables for the calendar years, 1920 to 19241 1 From the Fruit and Vegetable Division, Bureau of Agricultural Economics. 'Subject to revision. The members of cooperative associations, naturally, expect their organizations to obtain the full market price for their products and to render marketing service economically. At the same time, a longtime view of production and marketing problems shows the necessity of establishing well-financed, efficient agencies which can handle the crops of succeeding years effectively. This means investment by the members of a part of their returns during the early years of the organization. It means also expenditures by the associations to strengthen their marketing services, the value of which can not be measured immediately in dollars and cents. tion, and the other factors which enter into the production and marketing of fruits and vegetables. The organization and operation of associations on a crop-to-crop basis is a short-sighted policy A long-time view of cooperation will consider the associations as service agencies of the growers, concerned with stabilized production, the production of suitable varieties, standardization, distribu FIG. 1.-Location of the fruit and vegetable associations reporting to the Department of Agriculture for the 1925 season which handicaps the organizations and nullifies many of the services they might otherwise render. In order to arrive at an understanding of the problems which the managers and officers of cooperative associations consider most acute, a survey of the fruit and vegetable organizations was made by questionnaire and by personal interviews. Returns were received from 1,290 associations, whose location is shown by Figure 1. Many of these associations had been organized comparatively recently. Over half the organizations that reported the year in which they were organized had been in business for less than 5 years (see Table 3). About 27 per cent had been operating for 10 years, or more; approximately 14 per cent for 15 years, or longer; and a little over 8 per cent for 20 years or longer. Although there is a substantial nucleus of well-established organizations, the majority are of comparatively recent origin. No associations were included in this study unless at least 50 per cent of their members were active producers. A little over 86 per cent of the associations reporting stated that all members were farmers, whereas approximately 14 per cent had members who were not farmers. The average membership of all associations reporting on this point was approximately 156, making the total membership of 1,290 organizations from which records were obtained in excess of 200,000. Approximately 49 per cent of the organizations reporting were engaged in marketing fruit, a little over 24 per cent were marketing vegetables, and approximately 27 per cent handle both fruits and vegetables. In volume of business, fruit greatly exceeded vegetables both in number of cars and in value. products is shown in Table 5. A comparison of the two TABLE 3.-Number of years 616 fruit and vegetable associations have been active, and percentage of total each group represents Reports from 944 associations show that 725 or 76.8 per cent were incorporated, whereas the balance, 219 or 23.2 per cent, were not. Fruit and vegetable marketing associations are incorporated with capital stock or as nonstock, or membership, organizations. Of the associations reporting, 42.5 per cent were organized with capital stock and 57.5 per cent were nonstock organizations. The features of these two forms of organizations are generally well known. Fruit and vegetable associations, as shown by the reports received, are more commonly organized on the nonstock plan. Membership in associations of this type is conditional on the payment of a mem |