Martin J. FRICK
pp. 1-5

Slovenia’s agriculture is essential for the economic livelihood of rural areas as it continues to act in accordance with a market-oriented agriculture, which includes cooperative businesses structures. One solution for improving the marketing and profit margins for so many farm enterprises in Slovenia is the formation of a cooperative business. The cooperative form of business can serve both small and large producers by providing a business structure that can grade, process, sell, and distribute products with the best interests of member-patrons in mind. In other sectors of an economy, the impetus to gain economic efficiencies often leads to a horizontal expansion of the firm. Instead of expanding their business horizontally, farmers are sometimes motivated to form a cooperative in expectations of increased economic efficiencies from vertical expansion. Understanding the economic justifications for starting a cooperative business and the economic strategies that cooperatives can use to compete in the market to remain in business is an important prerequisite for making wise business decisions. Eight economic justifications for cooperative organization are provided for consideration which includes; market failure, economies of size, profits from another level, provide missing services, assure supplies or markets, gain from coordination, risk reduction, market power, the competitive yardstick.

Key words: cooperatives, economic justification, Slovenian agriculture

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