Category: Cooperatives

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Understanding Cooperative Terminology

Phil Kenkel

Bill Fitzwater Cooperative Chair

Oklahoma State University

Terms Describing Structure

Centralized Associations: A regional cooperative where the producers are direct members.  Members in a centralized cooperative do business with a local branch which is controlled by the headquarters.

Closed Membership: A structure in which members can join only during the initial membership drive or by purchasing equity from another member.  In closed cooperative equity is often associated with a usage right which requires members to maintain ownership in …

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The Role of the Board Chair

Phil Kenkel

Bill Fitzwater Cooperative Chair

Oklahoma State University

The board chair (also referred to as the chairman, chairwoman or chairperson of the board of directors) is a key leadership position. The board chair is a member of the board of directors who is elected by the board for a specified term. The bylaws of a cooperative will generally define the process for selecting the chair and the chai’s rights and duties.

The chair serves as leader and manager of …

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Annual Audits – Board Responsibilities

Phil Kenkel

Bill Fitzwater Cooperative Chair

Oklahoma State University

Directors, managers, and advisers of new and developing cooperatives need to be well informed about the importance of an annual audit.

Reasons for Audit

Securing an annual audit of the cooperative’s financial records is the responsibility of the board of directors. Because the board acts as the trustee of the cooperative’s assets, it is responsible for safeguarding, auditing, and appraising the cooperative’s financial resources. The audit is a fundamental part …

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Audit Committee

Phil Kenkel

Bill Fitzwater Cooperative Chair

Oklahoma State University

The Audit

Most cooperative bylaws specify that the organization will hire an outside auditor to conduct an annual audit.  The audit helps to prevent deliberate misstatement of fact.  It also assures that judgment decisions are not duly biased in favor of management and to assure records are dependable.  The audit also assures that generally accepted accounting principles have been consistently followed and that the disclosure is complete.

The audit is a …

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Understanding Regional Patronage

Phil Kenkel

Bill Fitzwater Cooperative Chair

Oklahoma State University

The Federated Cooperative Structure

Cooperatives that operate over a large geographic area are commonly referred to as “regional” cooperatives even though they may be national or even international in scope.  There are two ownership structures for regional cooperatives.  Centralized regional cooperatives are directly owned by producer members.  A federated regional cooperative is owned by the local cooperatives that transact business with it.  This discussion focuses on the federated category of regional …

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Your Opinion Counts!

Phil Kenkel

Bill Fitzwater Cooperative Chair

The cooperative research community is always pondering the challenges and opportunities facing cooperatives and how we, as an industry, can better communicate the value of the cooperative business model.  One approach to gaining those types of insights is to harvest the insights of CEOs and board members.  For example the consulting and auditor group KPMG just completed their most recent survey of 400 corporate CEOs.  CEOs reported higher expectations for sales and hiring in …

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You Will Not Want to Miss this Upcoming Webinar!

Phil Kenkel

Bill Ftizwater Cooperative Chair

The Tax Cuts and Jobs Act of 2017 and the resulting Section 199A provision have major implications for agricultural cooperatives.  The tax rate changes impacts the optimal profit distribution choices for agricultural cooperatives.  The Section 199A provisions creates possible benefits for the cooperative but also the possibility that producers can be disadvantaged by marketing through a cooperative.  In short, tax reform has created the need to re-analyze financial choices.

Cooperative boards have a lot …

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Which One is Your Section 199A Hat?

Phil Kenkel

Bill Fitzwater Cooperative Chair

In a cooperative business we often council board members to take off their “farmer hat” and put on their “board member hat”.  That reflects the fact that a patron’s preference for a decision may not be in the long-run best interest of the cooperative.  Cooperative patrons are often focused on an individual transaction or short term needs.  The board member is challenged with having a longer run perspective and in seeing the big picture.  …

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What Can We Learn From Multi-Stakeholder Cooperatives

Phil Kenkel

Bill Fitzwater Cooperative Chair

As the name implies, multi-stake holder cooperatives have more than one type of member.  An example would be a local food cooperative with producer members, consumer members and employee members.  While multiple stakeholder cooperatives are a small part of the U.S. cooperative sector, most new cooperatives consider the multi-stakeholder model.  Italy was the first country to adopt a multi-stakeholder statute in 1991 and now has over 14,000 multi-stakeholder cooperatives with over 5M members. In …

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We Recorded the Webinar Just for You!

Phil Kenkel

Bill Ftizwater Cooperative Chair

The Tax Cuts and Jobs Act of 2017 and the resulting Section 199A provision have major implications for agricultural cooperatives.  The tax rate changes impacts the optimal profit distribution choices for agricultural cooperatives.  The Section 199A provisions creates possible benefits for the cooperative but also the possibility that producers can be disadvantaged by marketing through a cooperative.  In short, tax reform has created the need to re-analyze financial choices.

Cooperative boards have a lot …

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