How Much Have Oklahoma Cooperatives Gained from Joining CoMark Equity Alliance – A Grain Marketing Alliance?

Abstract

CoMark Equity Alliance (CEA) lets cooperatives gain the advantages of economies of size in marketing grain without giving up local governance. This study estimates the financial benefit to Oklahoma cooperatives from joining CEA. Knowing the benefit of this alliance is important to other cooperatives considering a similar arrangement. Since previous research showed that joining CEA had little effect on prices paid, the focus is on net returns. The method used is a partial budget. First, firms not in the alliance were interviewed to determine their returns per bushel of grain handled. Firms not joining the alliance had special situations that allowed them to pay less competitive prices and thus distribute more through patronage dividends. The components of the partial budget included (i) the difference in gross returns, (ii) basis difference, (iii) transportation cost differences, (iv) interest cost paid by the alliance, (v) savings on merchandiser salary, and (vi) accounting costs absorbed by the alliance. The estimated net benefit from joining CEA was $0.16/bu.