Cooperatives and capital markets: The case of Minnesota-Dakota sugar cooperatives

This case study describes the potential use of new risk-sharing instruments (Skees, Skees and Barnett) by three closed sugar-beet-processing cooperatives in Minnesota and North Dakota. The first two sections of this article describe the beet sugar cooperatives, the risks faced by the cooperatives and their members, and currently available risk-management tools. The following two sections present members' stated risk-management objectives and various alternatives that are under consideration as means for achieving those objectives. An important 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 premium subsidies contained in those federal products. The remainder of the article considers an important implementation issue related to one of the alternatives being considered by the cooperatives.