The Effect of Cooperatives and Other Market Structure Variables on Ammonium Nitrate and Anhydrous Ammonia Pricing, 1951-1972

The problem considered in this study may be delineated as follows: a determination of (1) the extent to which the retail prices of ammonium nitrate and anhydrous ammonia are affected by some of the major market structure variables of the nitrogen fertilizer industry, (2) the role that cooperatives have played in the pricing of these nitrogen fertilizers, and (3) recommendations for cooperative action based on the findings of this study. Cooperatives have become increasingly active in the marketing of agricultural products and in the distribution and manufacture of agricultural inputs. Initially, cooperatives were organized for the marketing of dairy products, fruits, and grain, but TOC\u3ere recently they have also become involved in the marketing and production of farm supplies. As suppliers at the wholesale level, cooperatives have entered into the wholesale supply of petroleum products and commercial fertilizers. The operating principles of cooperatives are essentially different from those of profit-oriented firm5. These ·operating principles include (1) member ownership and control, (2) nonprofit or operation at cost, and (3) limited returns on capital. The principles of operation at cost and limited returns on capital contribute to the ability of cooperatives to effectively compete on a price basis. The effect that the established distribution system of cooperatives, the entry of cooperatives into fertilizer production, and the use of new technology by cooperatives has had on the retail prices of nitrogen fertilizers is largely unknown. From an analysis of available historical data, the impact of cooperatives on the retail prices of ammonium nitrate and anhydrous ammonia will be determined