| It is a common practice of agricultural processing and marketing cooperatives to operate pools. Pooling involves combining returns from sale of a number of growers' products and prorating these returns among growers according to a prearranged formula. A pooling rule is principally characterized by two aspects: (a) the number and identity of products included within the pool (its "structure") and (b) the method used to allocate the pool's net returns among growers (its "share valuation").;Data were obtained from a processing and marketing cooperative. The cooperative's membership was represented by ten distinct classes of farm enterprises, each with a characteristic crop mix. Yearly profits that would have resulted from employing each rule during the period 1960-1980 were calculated for each enterprise class.;Decision analysis techniques used included second-degree stochastic dominance (SSD), stochastic dominance with respect to a function (MSD), mean-Gini analysis (MG), and mean-variance analysis (MV). These techniques compare aspects of profit distributions associated with alternative rules, then identify sets of rules that are undominated for all decision makers in a specified category.;Results showed that undominated rules vary among enterprise classes and across risk aversion levels. Thus, interest conflicts among the cooperative membership are highlighted. Generally, MSD and MG resulted in smaller undominated sets than did SSD or MV.;The principal objective of the present study is to analyze choice of an optimal pooling rule by risk averse cooperative members. Alternative pooling rules were formulated by utilizing different combinations of pool structures and share valuation methods. In all, five pooling rules were evaluated: multiple pools (M), a farm-price-based single pool (S(,F)), farm-price-based grouped pools (G(,F)), a profitability-based single pool (S(,p)), and profitability-based grouped pools (G(,p)).;To find a collectively optimal rule, three voting schemes were used: (a) one-person-one-vote, (b) voting based on a valuation of each member's pool contributions, and (c) a combination of these two. For all three schemes and for most risk aversion levels, the collectively optimal choice was G(,F). Rule S(,F), presently employed by the cooperative, was not collectively optimal at any risk aversion level studied. |
