Bargaining Is Big for Small Business: Resurgence Seen in Bargaining Cooperatives

By Reynolds, Bruce J. | Rural Cooperatives, March-April 2003 | Go to article overview

Bargaining Is Big for Small Business: Resurgence Seen in Bargaining Cooperatives


Reynolds, Bruce J., Rural Cooperatives


Organized bargaining is traditionally a strategy of labor unions and agricultural bargaining associations. But many new applications of formal bargaining have emerged during the past 20 years. The relatively recent applications range from bargaining over healthcare costs to a myriad of purchasing needs by independent business retailers and distributors. The latter are a broad-based category, generally called purchasing cooperatives. Some non-agricultural purchasing cooperatives date back to the early 20th century, but bargaining is a more recent approach for several organized groups of retailers or distributors.

At least 250 purchasing cooperatives currently operate in the United States, according to a survey by the National Cooperative Bank (NCB). The fall issue of NCB's magazine, Bank Notes, reports that purchasing cooperatives have doubled in the past 10 years. The National Cooperative Business Association (NCBA) estimates that about 50,000 small businesses are members of purchasing cooperatives, with membership having doubled in the past decade.

Beginning in the late 19th century, many farmer associations were called "purchasing cooperatives," but did not involve formal bargaining. They achieved discounts by buying large volumes of farm supplies, and then passed these savings on to members. By the middle of the 20th century, many of these cooperatives joined large federations with sufficient size to manufacture, rather than purchase, many agricultural inputs. The term "farm supply" had displaced "purchasing" for designating these cooperatives. But, in recent years, the purchasing activities of local farmer cooperatives have had a resurgence.

Agricultural bargaining is traditionally used in markets for farm products. Most farm product cooperatives have followed a strategy of vertical integration, or what is currently termed "value-added processing and marketing." But bargaining associations have an important role in the marketing of crops for many farmers. There are at least 67 agricultural bargaining cooperatives operating in the United States, as indicated by respondents to the USDA Cooperative Services' annual survey for 2001. The number of farmers belonging to the 67 bargaining associations is not consistently reported, but the median association had 124 farmer members.

Bargaining by agricultural associations and by purchasing cooperatives of retailers/distributors have the same challenge in representing the "many" in negotiations with the "few." A major difference is in positioning on the supply chains in their respective industries. Positioning in this context means proximity to consumers (see figure 1). Although agricultural and non-agricultural cooperatives are usually not examined together, those having a common strategy of collective bargaining provide a basis for comparison and for learning about consumer markets.

Bargaining as a cooperative strategy

The traditional practice of purchasing cooperatives is to capture discounts by buying in large volumes and providing cost savings with wholesale distribution for their members' retail businesses. This modus operandi is frequently used by cooperatives whose members are in the grocery and hardware business. Many recently formed purchasing cooperatives operate instead by negotiating a standard contract for members who then make their own individual transactions according to the negotiated terms. Members have flexibility to address contingencies not covered by, or in conflict with, the contract negotiated by their purchasing cooperatives.

Agricultural bargaining associations exhibit a fundamental distinction that parallels the non-agricultural purchasing cooperatives. Some associations negotiate a standard contract for farm products which members adhere to when making their own sales transactions with processors. Their procedure is basically the same as that of the recently established purchasing cooperatives, which operate as bargaining agents. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Bargaining Is Big for Small Business: Resurgence Seen in Bargaining Cooperatives
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.