Agricultural cooperation, especially in a current socio-economic, political and institutional environment, has a significant impact on the development of agricultural economy, rural communities and rural territories. The effectiveness of agricultural cooperative performance depends on the government activities aimed at creating agricultural cooperatives and supporting them in terms of information, consulting and finances. It also depends on the scientific concepts used for determination of modern cooperative policy instruments and strategies. The assessment of agricultural cooperatives' performance in the Kurgan Region (Russia) indicates that traditional type cooperatives, set-up in the modern institutional conditions, result in low performance level of such cooperatives. New, modern features of cooperatives, contradicting the traditional cooperative model, and reflecting entrepreneurial behavior of organizations, have emerged in the last several years. This study has undertaken the in-depth interviews with potential and existing cooperative members in the Kurgan region. Results of the study indicate the importance of formal and informal institutions for successful development of agricultural cooperation, and the importance of compliance of cooperative principles to the currently existing institutional environment. Study results show, that present formal and informal institutions lead to the low effectiveness of agricultural cooperatives' performance. A traditional cooperative model is hard to be well-functioning within the modern institutional environment.