Economic Justification for a Cooperative

Phil Kenkel

Bill Fitzwater Cooperative Chair, Oklahoma State University

Why Are Cooperative Formed?

In one sense, the cooperative form of business needs no more justification than do proprietorships, partnerships or investor owned corporations.  Businesses are formed when the owners perceive a positive return on investment from providing some combination of products and services to customers.  A cooperative is simply an alternative structure for organizing economic activity.  The major rationale for forming a cooperative is to improve the economic well-being of …

Distributing Returns

Phil Kenkel

Bill Fitzwater Cooperative Chair, Oklahoma State University

Introduction

Chapter 12 laid the foundation of understanding and measuring cooperative returns.  It acknowledged the fact that a cooperative can provide returns at both the farm level and cooperative level and even generate a value simply through existence.  It also discussed the challenges in measuring the return on investment in a cooperative due to the multiple categories of returns and the fact that patrons can acquire equity without out-of-pocket investment. This …

Cooperatives and Anti-Trust

Phil Kenkel

Bill Fitzwater Cooperative Chair, Oklahoma State University

The 1800’s were a period of rapid growth in the U.S. economy.  Rapid industrialization was driven by the expansion of railroads, financed by large banks.  The U.S. government initially encouraged the growth of large scale industry but then became concerned over the power of wealthy individuals.  Industrialist, often referred to as “Robber Barons” took a stranglehold on American Industry.  They formed “trusts” which were corporations or combinations of corporations formed mainly …

Cooperative Taxation

Phil Kenkel

Bill Fitzwater Cooperative Chair, Oklahoma State University

Sub-Chapter T

Any corporation or LLC “operating on a cooperative basis” can be taxed under Sub Chapter T of the Internal Revenue Code.  Sub Chapter T does not apply to mutual savings banks, mutual insurance companies, or rural electric or telephone cooperatives.  All of those organizations are taxed under separate special sections of the IRS code.  Consumer and retail cooperatives are taxed under Sub Chapter T.  The taxation classification of a …

Cooperative Legal Environment

Phil Kenkel

Bill Fitzwater Cooperative Chair, Oklahoma State University

The Legal Structure of Cooperatives

In terms of their legal identity, cooperatives are corporations.  Cooperatives are incorporated under separate statutes which gives them some distinct and unique legal features.  This makes it important to understand the legal environment under which cooperatives operate and to understand some of important areas where their legal characteristics differ from other corporations.

As mentioned, cooperatives are a special form of corporation.  A corporation is a separate …

The Cooperative Board of Directors

Phil Kenkel

Bill Fitzwater Cooperative Chair, Oklahoma State University

Every individual should understand the role of the board of directors.  While there are differences across the business forms, the board of directors is an important part of the governance of investor owned corporations, cooperative corporations and not for profit corporations.  Understanding the functions and role of the board of directors will help you better understand those specific business forms.  Additionally, many individuals are asked to run for or serve on …

Feasibility of Feral Swine Trapping Equipment Cooperatives

Phil Kenkel

Bill Fitzwater Cooperative Chair, Oklahoma State University

There are over 6M feral swine in the U.S. creating over $1.5B of damages annually. Because of their high reproductive capacity, control methods must eliminate 75% of the population annually to match population growth. Trapping swine with remotely monitored and triggered traps is considered an effective control strategy. Alternative control options include ground shooting, aerial shooting, and poisoning. Sophisticated traps can cost over $5,000 and are cost prohibitive for many landowners. …