EFFICIENCY AND SURVIVAL: THE IMPACT OF THE INTERNATIONAL COFFEE AGREEMENT'S DEMISE ON COSTA RICA'S COOPERATIVE COFFEE PROCESSING, 1988–2005

Robert Mosheim

Annals of Public and Cooperative Economics, 2008, vol. 79, issue 1, 79-106

Abstract: ABSTRACT**: This paper uses a profit per member (or dividend) frontier model to analyze the impact of the 1989 demise of the International Coffee Agreement on a group of Costa Rican coffee processing cooperatives. Firm‐level data on costs span the period from 1988/89 to 1992/93 and information on cooperative survival covers 1988/89 to 2004/05. The more efficient member‐owned enterprises survived the crisis. An increasing cost of servicing the smallest farmers may constitute an incentive to restrict membership, however. Dividends fall as investor‐owned firms compete to buy farmers' raw coffee. Still, member loyalty does enable cooperative processors to maintain scale economies and market share. Despite several bankruptcies, cooperative firms in Costa Rica processed 40 percent of the national crop in 2004/05, the same proportion as in 1988/89.

Date: 2008
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