Food Processing Business and Agriculture Cooperatives in Japan: Market Power and Asymmetric Information

Food processing businesses run by agriculture cooperatives (in this paper referred to as food processing cooperatives) are basically firms that are owned by the suppliers of raw materials. Typically, in this type of firm, corporate decision-making is the responsibility of member farmers through the one member one-vote rule, and the surplus of the business is divided among them according to the amount of raw agricultural products they have supplied to the firm. This is in contrast to a conventional capitalistic firm, in which corporate decision-making is ultimately made by the stockholders through the one share-one vote rule, and the profit is divided among them according to the amount of financial capital they have supplied to the firm. Based upon statistical data and case studies, the present paper considers some economic factors that might influence the establishment of food processing cooperatives. Copyright 2008 The Authors.