COOPERATIVES MARKETS: AND CAPITAL

This case study describes the potential use of new risk-sharing instruments (Skees, Skees and Barnett) by three closed sugar-beet-pro-cessing cooperatives in Minnesota and North Dakota. ~ h k s e instruments are discussed in the context of members'crop yield risk. Zeuli, in a companion paper, develops the back-ground for applying new risk-sharing instru-ments to mitigating the business-risk of co-operatives. The first two sections of this article describe the beet sugar cooperatives, the risks faced by the cooperatives and their members, and cur-rently available risk-management tools. The following two sections present members ' stat-ed risk-management objectives and various alternatives that are under consideration as means for achieving those objectives. An im-portant point raised here is that although members are not pleased with some features of currently available federal crop insurance products, they are unwilling to forego the pre-mium subsidies contained in those federal products. The remainder of the article con-siders an important implementation issue re-lated to one of the alternatives being consid-ered by the cooperatives. Segmenting of yield risk into systemic (spatially correlated) and independent components-a concept dis-cussed in the Skees and Zeuli companion pa-pers-is demonstrated. This example draws on information from focus groups with co-operative members and processing plant man-agers, yield data maintained by the coopera