[Intro music]
While a lot of businesses claim the
customer is the boss, at cooperatives it's
literally true.
A cooperative is a business that's owned by
those who use it and controlled.
So the
decisions are made by those who use it
and it's primarily meant to benefit
those who use it.
So the members who are
coming in to sell grain or to buy inputs
have a voting stake in the company and
benefit from it by sharing of profits.
Anyone can become a voting member of a
co-op as long as he or she has
production at risk.
Most co-ops are open membership in the
state of Iowa, so the grain and farm supply
cooperatives will allow anyone to be a
member as long as they have production
at risk.
And what that essentially means
is if you are a producer who's raising
livestock and you would buy feed from
the co-op or you're producing grain and need
to purchase inputs or sell grain, as long as
you have production at risk
you can be a member of the cooperative.
Producers are free to end their
membership in a co-op at any time and the
co-op has the right to decide who can
and who cannot be members.
It's not a requirement to use the co-op
if you are a member.
Cooperatives have
the right to decide who is going to be a
member.
The laws say they can't
discriminate on the protective classes
like age and race and religious
preferences, but if someone is not doing
business with a co-op for a number of
years the co-op can decide, we don't want
you to be a member anymore.
And the
reason that's important is if someone is
not using the co-operative there's a
question about whether you would want
them to have a say in the voting, to be
able to vote for a board of directors
and vote on big issues like mergers or
acquisitions or demutualizations.
So you don't have to use the co-op if you're
a member.
We do have producers who are
members of several co-ops, and that's also
not uncommon.
You can have a member who's a
very good member and buys inputs from one
co-op, sells grain to another, that's
also common.
The members have ultimate control through the
co-op through their membership share.
When
they become a member of a cooperative,
I'm speaking specifically with grain and
farm supply agricultural cooperatives,
they become a member, they have that
voting share.
That voting share allows
them to elect the board of directors.
So
ultimate control of the cooperative
lies in the hands of the voting members.
They give that control to the board of
directors by voting on a board of directors.
So that board of directors is really the
voice for the membership.
The board of
directors then hires a general manager,
hires a CEO.
That CEO works for the
board members, who work for the
membership.
Voting members are the
foundation of every co-op.
Cooperatives
are the most democratic form of
corporation thanks to the concept known
as one member-one vote.
One member-one vote means that members
of an agricultural cooperative have an
equal say and that's important to
prevent situations where you have
control in the hands of a very few.
And
when you have control in the hands of
very few what that essentially means is
they begin offering the business for
themselves rather for the entire
membership.
So a co-op is intended to
benefit all members and one way they
achieve that is by allowing all members
to have equal say.
While members govern
the co-op with their votes, their
responsibilities go well beyond the
ballot box.
Members ultimately own the co-op, so their
responsibility is to be informed
about it.
Their responsibility is to vote and make
sure that the board of directors is
representative of the membership.
Their
responsibility is to use it because
without using the co-op, there's no way
for that co-op to be financially
sustainable if members are not using the
co-op.
And they have a responsibility
to capitalize it in the sense that they
are using the coop,
its profitable, and those profits are
retained at the co-op for a certain
period of time.
So because ultimate
control of the co-op lies with a membership,
ultimate responsibility for the success
of that co-op very much lies with the
membership in their use of it.
Elections to the board of directors
usually takes place annually.
Every
voting member is eligible to serve on
the board, which has its own set of
responsibilities.
Responsibility a board member has is to
represent the membership and oversee the
business.
When we talk about board member
responsibilities, we're primarily talking
strategic responsibilities.
So maintain a
vision for the co-operative, ensure that
vision is carried out and
implemented by the CEO.
The board members'
responsibilities are those of in a
fiduciary nature.
So they are overseeing
the financial interest of the members,
they're making sure that the co-op is
operating a legal way, very big picture
type responsibilities.
When we talk about the roles and
responsibilities of someone who uses the
cooperative, an agricultural producer, we
tend to use four terms pretty
interchangeably. The customer means I'm
transacting, I'm buying and selling
through the co-op.
A patron means I'm
getting the patronage back through my
use of the co-op in a year, I get allocated
a part of the profits or a part of the
savings.
The owner part means that i have
an equity stake.
My transaction is to
provide equity, provide that capital to the
co-op and sometimes they do that
passively and sometimes it's actively
through my membership share.
The
membership, the member role, is the voting
roll.
It's the responsibility to elect a
board of directors, to be involved in the
co-op.
So in summary most customers that
employees are going to interact with at the
co-op are all four of those.
They're customers, patrons,
owners and members.
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