7. Conclusion
Agricultural co-operatives play an important role in rural development, as vehicles of employment provision, food security, fairer income distribution and potentially poverty alleviation. Contrary to predictions of standard economic theory, the evidence points to the viability and sustainability of agricultural cooperative form. Specifying the conditions under which cooperatives can be established and fostered, this article employs institutional analysis, x-efficiency theory, efficiency wage theory, and transaction cost analysis, to model co-operatives as viable organizational forms. Co-operatives are not necessarily superior to IOFs as competitive economic entities, but they should also not be modeled as a high cost alternative to investor owned firms or farms. Cooperatives provide a viable alternative to the typically hierarchical IOF, in that they provide small farmers as well as agricultural workers with the means to capture economies of scale and scope as well as to reduce transaction costs in a manner that is at least equal to what can be achieved by the larger privately owned farm. In addition, agricultural co-operatives can better and more easily achieve higher levels of x-efficiency and reduce transaction costs related to opportunism with guile. This is related to the governance structure one would expect deployed, at least in theory, in the cooperative organization.