Published once e week a* Palmer, Alaska for the Matanuska Valley Farmers'
Copperatlng Association for the purpose of giving news of the Associations
work, problems and accomplishments.
financing cooperatives
One of the important aspects of your Co-op is the matter of financing, this is not as
easy or simple as it might seem to be, in the first place the average Co-op is made
up of people who have little or no available financial resources, this has always
been true in the beginning of most every Co-op for when the prospective member has
enough money to finance himself and to furnish his share in the organization then he
usually doesn't need the benefits of a Co-op as bad as the average member does and
he is inclined to hold back both in financial and productional participation, the
little fellow who has inadequate finances and who is unable to sell or market his
products is the one who really needs the Co-op and naturally he doesn't have the
money needed to finance the organization.
This fact has been clearly recognized by the Government and as a result considerable
Federal funds have been appropriated to help Co-ops get started and to finance their
operations. Some funds have been granted but usually there is an agreement to repay
the Government with interest. This is the method by which our Co-op was financed,
the only requirements for membership in a financial sense is the purchase of one share
of stock at $5.00, then in order to insure enough volume of business to justify the
establishment of the organization, it is necessary to require the stockholder to sign
an agreement to purchase his supplies and services from the Co-op, and also to sell
or present his products for sale by the Co-op. This requirement in turn protects the
Co-op from fluctuations in sales and purchases to a large extent, the member in turn
benefits by enabling the Co-op management to purchase carload lots at better prices
than small.purchases and also reduces the freight which is a large item in the Alaska
trade.
In the beginning it wa.s necessary to have an operational fund to enable the manage
ment to make the necessary purchases for resale to the consumers and to purchase the
products that the farmer had to sell, it is some time from the date of purchases of
both producer and consumer goods before payment is made and in the meantime all the
expenses of doing business has to be met, this includes purchases made, labor, taxes,
overhead and other expenses.
For several years the Co-op was unable to borrow any funds from the banks in Alaska,
this was partly due to prejudice on the part of the bankers, political chicanery,
and ignorance of the possibilities of the Co-op in business, most of the members re
member about the various campaigns of abuse, villification attempts to discourage the
idea of this particular Co-op. This campaign was promoted by various persons and
groups, some local people were involved, along with a lot of politicians and govern
ment bureaucrats who should have known better. Most of the trouble was no doubt
caused by self-esteemed, egostistical would be saviours of the Co-op (on their own
terms and to their self benefit usually) however, the sane and sensible members always
managed to get the ship back on an even keel and bail the water out before the boat
sank. One thing that the selfish financiers and the politicians and bureaucrats have
never learned is that when the Co-op members feel that they are being imposed upon
they will unite and rally for an offensive movement that usually succeeds.
For ten years now we have been able to finance the operations of the Co-op,without
benefit of the big selfish bankers, and for three years we have been able to receive
aid from two of the smaller banks who have been very cooperative, but now with a large
expansion of business it will soon become necessary to secure additional funds. The
Board is investigating various sources that might supply these funds and in addition
a plan by which members and employees and possibly other persons can participate is
being worked out that would undoubtably be a great benefit to both parties. Two fin
ancial agencies of the government are being contacted and private organizations also.
It is gratifying to the members of the Board of Directors and the Management that our
financial condition has become more favorable during the last three years and that we
have a good rating with both banks and credit agencies. It might be interesting to
know that the Co-op has met all of its mortgage payments with interest on time and
that we have been able to take practically all discounts on purchases that were favor
able to the Co-op all during the time it has been operated by the farmers. As was
stated to the employees at the meeting this week, the members have a book value of
about, one hundred eighty thousand dollars, most of this money has been spent in build
ing new facilities and meeting payments on the mortgage and has not been dissipated,
it adds to the financial resources of the organization.