Published every Thursday at Palmer, -vLaska, for the -^atanuska “alley Farmers’
Coaperating "ssociation for the purpose of giving nsws of the associations work,
Problems and accomplishments.
SUBSCRIPTION 3Y IviaIL <1.75 BOX <1.00 SINGLE' C'oTY \ 10*
SIZING UP YOUR CO-OP—OPERATING POLICIES
ltaenty-five years ago when Co-ops were getting well under way many of them failed.
Reasons for that failure have been studied and tabulated so that other Co-cps in the
future could benefit by those findings and avoid the pit-falls. Consequently there
are fewer Cooperative failures as the years pass.
A Cooperative is an Association set up to do business. It must be incorporated the
same as any other business. It naturally follows that it must conform to accepted
business standards and practices the same as any other business firm. The one main
difference between a Co-op and other incorporated business is that it is owned by the
patrons and the profits go to the patrons. Its operation must be every bit as sound
as a privately owned firm.
In the Cooperative form of business the patron members have a voice in establishing
tho operating policies. The directors are guided by the wishes of the membership and
the management is guided by the instruction of the directors, Theso operating policies
as outlined by Cocperrtive publications include:
1. Method of advancing funds upon the delivery of the producers products.
2. The assembling, processing, merchandising and handling of those products.
3. Collecting of the accounts of the association and making final returns.
4. Accounting of tho business.
5. Protection against risks such as fire, tornado, theft, and dishonesty.
Unsound operating policies in any of these fields may cause disaster to your co-op.
Many associations have failed because they made advances on produce too high--and
then received less for the commodity than the original advance, plus costs, reserves
and retains. Pooling and more conservative advances are recommended for that reason.
A Cooperative uoes not go in for price cutting. There are,, times when prices may be
lowered to make a sale when this does not involve price-cuttipg competition.Coopera
tives usually sell at a sufficient margin not only to cover the cost but to provide
for:
a. the expanse of selling
b. all other costs of the association
c. an amount sufficient for patronage dividends at the end of the year.
d. increases in reserves and surplus
e. adequate contingency roservos.
What on association pays the producer when he delivers his crop or what it charges
him for his supplies is vital. This reflects either a conservative or a speculative
policy.
J.E. Wells, Jr. lists these tosts. as a measuring stick for members to apply when
sizing up their co-op. It will help members to better understand the practices of
their assjciation and appreciate established polices of the association#
1. Are the operations of tho Association timed so that the producer receives h*is
returns in a reasonable time after he has delivered his product?
2. Do the accounting practicos of the Association permit accurate reports aS to the
the status of the Association and its progress?
3. One of the distinct advantages of belonging to a Cooperative Association is the
pooling services to protect the producers against various hazards of fire, floed,
tornado and other insurable hazards. Are the policies of your association conser
vative in regard to insurance?
4. Does the Association adequately protect its funds, and hence the members’ funds
by semi-annual or annual audits by independent accountants?
5.Does the Association maintain a system of adequate internal control in order to
guarantee against dishonesty, and has this system of internal control been comment
ed upon and approved by the independent auditors?
6. Are adequate fidelity and faithful performance bonds required covering all
officers and employees who handle cash end other assets of the Association?
The membership, ^oard of Directors, and Management must be continually on the alert
to sense changes in operating policies, A Cooperative may maintain for a'considarabje
time a quiet existence, showing no outward change. Others may go down hill rapide.ly.
Coht. on pp. 5