The Role of Production Cooperatives in Russian Agriculture

Agricultural production cooperatives in Russia have replaced some of the Soviet collective farms (kolkhozes) and state farms (sovkhozes). The cooperatives have been successful due to their strong market position and high market shares in several regions of Russia. This chapter examines why members (workers) choose cooperatives and why cooperatives are relatively strong. The workers of Soviet farms had assets that were best adaptable to large-scale agricultural units. There would have been high transaction costs if they had chosen other forms of organization. The performance of the cooperatives is a result of the members' large transaction-specific assets and labor-intensive production.