The Horizon Problem in Agricultural Cooperatives – Only in Theory?

Abstract

Modern agricultural cooperatives need considerable amounts of capital. Theoretically the financing of cooperatives has been identified as one problem area for their future success. In part, the difficulties associated with raising capital are asserted to stem from heterogeneity among cooperative members, not the least of which is the so-called horizon problem. Here a number of potential heterogeneity dimensions are empirically investigated, in relation to financing and ownership of cooperatives. Almost all the hypotheses surrounding conflicting interests in relation to ownership and financing building on heterogeneity must be rejected. Reported answers provide no support for a horizon problem in agricultural cooperatives.