Internal Control, a Key Issue of Farmer Specialized Cooperatives

The problem of insider control is an important factor of current constraints on development of specialized famer cooperatives. This paper explores main sources of the insider control problem such as: imperfect system of property rights and shares, scarcity of financing and capital operation ability, unequivalence of residual claim and control rights, natural requirements of modern agricultural production system, famers´ genetic relationship-based opportunism behavior tendency, and undue external intervention. Therefore, people should create a targeted system of financing and distribution, strengthen selective incentive and monitoring mechanisms, cultivate co-specific factors of production, reduce administrative intervention, and establish cyclical support mechanism.