Estimating potential gains from agricultural cooperative mergers

Abstract

This study uses an ex ante data envelopment analysis approach to examine potential gains that US agricultural cooperatives may accrue from mergers. Empirical estimations utilize data from CoBank, a lender to cooperatives, consisting of 749 midwestern agricultural cooperative observations from 2011 to 2015. Potential overall merger effects are decomposed into learning effects, scope effects, and scale effects. Findings show that less other unique merger costs such as legal fees, there are significant overall potential gains in profits from mergers. Relatively smaller merged cooperatives will accrue more gains in profits compared with their larger counterparts [EconLit Citations: Q13, D20, G34].