Cooperatives and Contracting in Agriculture: The Case of West Liberty Foods, October 2005

The West Liberty Foods turkey cooperative was formed in 1996 to purchase the assets and assume operations of Louis Rich Foods (an investor-owned processing rm), which, at the time, announced the imminent shutdown of its West Liberty, Iowa, processing facility. We study the creation and performance of this �new generation� cooperative using eld interviews with grower members and company management. We describe changes, before and after the buyout, in the contractual apparatus used for procuring live turkeys, and in the communication requirements, work expectations, and nancial positions of growers. During the private ownership period, most of the inputs (except labor and facilities) were provided by the rm; there was substantial supervision of the growers' actions; growers faced little price and production risk; and growers' equity was due largely to ownership of land and other farm assets. Our interviews reveal that, after cooperative formation, growers were exposed to considerable additional risk; monitoring of growers by the rm was less intensive; grower time and effort commitments to turkey production increased substantially; and a signicant fraction of rm (cooperative) equity came from growers' willingness to leverage their farm and personal assets (and hence indirectly their existing relationships with local lenders). We argue that some of these changes are consistent with a nancial contract where asset pledging and its corollary risk generate higher work effort by growers and a reduction in agency rents. These economies likely compensate for an organizational deadweight loss traditionally associated with cooperative governance.

Investigation of Video Crack and Patch Surveying for Pavement Management, MLR-92-01, 1992

The Iowa DOT has been using the AASHTO Present Serviceability Index (PSI) rating procedure since 1968 to rate the condition of pavement sections. A ride factor and a cracking and patching factor make up the PSI value. Crack and patch surveys have been done by sending crews out to measure and record the distress. Advances in video equipment and computers make it practical to videotape roads and do the crack and patch measurements in the office. The objective of the study was to determine the feasibility of converting the crack and patch survey operation to a video recording system with manual post processing. The summary and conclusions are as follows: Video crack and patch surveying is a feasible alternative to the current crack and patch procedure. The cost per mile should be about 25 percent less than the current procedure. More importantly, the risk of accidents is reduced by getting the people and vehicles off the roadway and shoulder. Another benefit is the elimination of the negative public perceptions of the survey crew on the shoulder.