Exit strategies of farmer co-operatives in the United States: A competing risks analysis

Abstract

Farmer co-operatives in the United States in general outlive other types of business organisations, yet the overall population has been declining for decades. We address the paradox with survival analysis of 2260 farmer co-operatives in the United States from 2004 through 2017. Using a competing risks scenario, we estimate the cumulative incidence of (i) mergers and acquisitions and (ii) liquidations and dissolutions in relation to demographic, financial, and strategic firm-level characteristics. We observe both expected relationships, such as the high incidence of liquidations and dissolutions in case of high leverage, as well as unexpected relationships, including the relatively high incidence of mergers and acquisitions among larger farmer co-operatives. Based on our results, we advise academics to continue to conceptualize the failure of farmer co-operatives as a multi-dimensional construct. However, we also recommend an alternative perspective of mergers and acquisitions as survival strategies as opposed to exit strategies.