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| If the middle man has it so good, why not become one? The COOP's (as JB pointed out) are a way for farmers to capture some of the profits made by the 'next step' in the food chain. The advantage for the farmer is limited risk and responsibility - I don't have to own the elevator on my own or run it, but I can participate in it's management and, hopefully, profit. As John pointed out if it's run poorly it doesn't work out - just like any business.
There is also some tax advantages for coops that make it worth while to have one. In a way it is encouraging a behavior that should occur naturally though. If there isn't a local elevator and there is a need, but no business will come in and set one up, us farmers could pool our cash and establish an elevator. There is always the question of whether or not it makes sense if a regular business wouldn't do it, but farmers also tend to be used to much lower profit margins than regular business. ie. most businesses want 20% return on equity, and historically we do around 5% (until grain prices skyrocketed).
oops, shouldn't have answered since I'm not an uberbull er.... I mean thinker :-)
Edited by Pat H 2/26/2014 07:44
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Question about coops for you big thinkers, for my daughter.
