United States

Department of

Agriculture

Rural Business–

Cooperative

Programs

Research

Report 220

Cooperative Equity

Redemption
Abstract A 2008 survey of 2,473 U.S. farmer, rancher, and fishery cooperatives was conducted

to examine their equity redemption practices. The 792 respondents provided information on whether they had redeemed allocated equity in 2008 and if so, by what

method. A revolving fund was most often used for redeeming member's equity, closely

followed by redemption to patrons' estates. Information from 460 cooperatives that

responded to both this and a 1991 equity redemption study is also compared.

Additionally, the responses were grouped into eight cooperative types based on products sold or marketed and into seven asset sizes.

Key words: cooperatives, equity redemption, revolving fund, patrons’ estates, patron’s

age, percent of all equities, base capital plan.

Cooperative Equity Redemption

E. Eldon Eversull

Rural Development

U.S. Department of Agriculture

STOP 3256

1400 Independence Ave., S.W.

Washington, DC 20250-3256

Research Report 220

June 2010
Preface This report presents the 2008 equity redemption practices of 792 U.S. farmer, rancher,

and fishery cooperatives and compared these responses with those given to a 1991

survey. With 460 cooperatives responding to both surveys, changes in redemption

practices are noted over the 18-year span of these studies. Results are also presented

by type and cooperative size based on 8 marketing, service, and supply classifications

and 7 different asset sizes, and by State with information representing cooperatives

based in 36 States.

This information provided in this report should act as a guide for cooperative managers

and boards of directors in comparing their equity redemption practices with cooperatives of similar type, size, and location. The author thanks the cooperatives that participated in this study and Dr. David Barton and Dr. Michael Boland, both at Kansas State

University, and Roger Wissman, retired Rural Development-United States Department

of Agriculture agricultural economist, for reviewing the survey instrument and a draft of

this report.

i
ii
Contents Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .v

Equity Redemption Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Comparison With 1991 Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

All Respondents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

iii
iv
Highlights Almost 800 U.S. farmer, rancher, and fishery cooperatives provided information about

their equity redemption practices in this study, with 460 respondents participating both

in this and a 1991 study. Surveyed cooperatives provided information on their equity

redemption plans:

l The revolving fund method of equity redemption (44 percent usage) is most often

used by local cooperatives, but is closely followed by redeeming patrons' estates

(43 percent).

l Almost all cooperatives use a combination of redemption plans to redeem equity.

l When comparing the 2008 and 1991 survey results from the same cooperatives, the

single most important change found was the decrease in estate redemption from 71

percent in 1991 to 47 percent in 2008. This change may be in part due to the

increased formation of family farms as corporations, a business entity that does not

end when one owner dies.

l The revolving fund length remains long, especially for grain and oilseed and farm

supply cooperatives whose revolving fund length averages at least 18 years.

l When looking at their net-worth-to-total-assets ratio, little difference was found in

the financial strength of cooperatives that redeemed equity in 2008 compared to

those that did not redeem equity.

l When looking at time series data from 2003 through 2008, the respondents appear

to be financing operations with more retained earnings and using more debt capital.

v
Cooperative Equity Redemption

E. Eldon Eversull

Rural Business‐Cooperative Service

U.S. Department of Agriculture

Cooperatives are unique in that they are owned

by their members—members who control the business

and benefit from the goods and services that it pro‐

vides. There are three fundamental principles of a

cooperative business:

1. User‐owner—the people who own and finance

the business are those who use it.

2. User‐control—the people who control the

business are those who use it.

3. User‐benefits—the cooperative's sole purpose

is to provide and distribute benefits on the

basis of use. 

User‐owners finance the cooperative through the

accumulation of equity capital by direct investment,

patronage refunds, and per‐unit retains. Without equi‐

ty accumulation, the cooperative cannot grow. To

maintain investment proportionality among current

users, equity redemption is used by most cooperatives. 

Direct investment in a cooperative is usually

through the purchase of an ownership share or shares.

Preferred stock may also be used. Patronage refunds

are net income allocated to a patron based on the

quantity or value of business conducted with the coop‐

erative. Per‐unit retains are not based on net income,

but rather on the amount of products sold through the

cooperative or business conducted. 

Allocating net income and redeeming equity are

unique practices of cooperatives. The bylaws of the

cooperative govern its net income allocation and equi‐

ty redemption. The board of directors is responsible

for determining the allocation of net income, equity

redemption, and capital accumulation, subject to

adherence to the cooperative's bylaws.

Equity Redemption Methods

Agricultural cooperatives are owned by their

members, and they usually distribute earnings on

member business back to members as allocated

patronage refunds. Earnings on non‐member business

are usually kept by the cooperative as retained earn‐

ings.

Cooperatives' allocated equity is generally

returned to members by a process called equity

redemption. There are five major methods of equity

redemption: (1) revolving fund; (2) patron's estate; (3)

patron's age; (4) percent of all equities; and (5) base

capital plan. Most of these methods are used in combi‐

nation, and there are also some other special kinds of

equity redemption. A combination of equity redemp‐

tion methods could be a revolving fund redemption to

eligible members and a redemption to the estate of a

natural person member who died and was approved

for payment. A special equity redemption could occur

when two cooperatives merge and a class of one of the

merging cooperative's equity is redeemed. As with all

equity redemptions, redemption occurs according to

the cooperative's bylaws when funds are available and

is at the discretion of the Board of Directors.

Revolving fund—A revolving fund is the most

common form of equity redemption‐the first equity

accumulated is also the first equity redeemed. If the

revolving fund period is short, current users are

financing the cooperative's operations and the

redemption method is easily understood. As the

revolving fund extends its revolvement period to 10

years and beyond, older members and even retired

members are financing current operations. So the

1
cooperative principle of proportionality—current

members financing the cooperative in proportion to

their use—is not adhered to. 

Patron's estates—In this study, patron's estates

was the second most common form of equity redemp‐

tion, closely following revolving plan in use by coop‐

eratives. Generally a cooperative would pay the equity

to the estate upon notification of the member's death.

Some cooperatives do not pay out 100 percent upon

notification, however. There may be, for example, a

payment cap of $5,000 per estate per year, so it could

take several years to redeem all the equity. Also, some

cooperatives pay a percent to the estate based on the

year the equities were retained. Others may require

both the wife and husband to die before the estate is

paid.

If used exclusively, redeeming patron's estates

does not adhere to the principle that current owner‐

members finance current cooperative operations.

Estate redemption usually works out to a very long

redemption period. It should be considered a minimal‐

ly performing equity redemption plan.

Patron's age—The third redemption method is

patron's age. For example, a cooperative redeems to

patrons who reach the age of 70. Usually 100 percent

of member equity is paid at that time. 

A variation of this method is to pay a percentage

to all members older than a certain age. So, if the coop‐

erative redeemed a percent of all equities to those

patrons over age 65 based on funds available, every

member over age 65 would receive the same percent‐

age refund on his or her eligible equity. 

Percent of all equities—Percent of all equities

was the fourth most used method in this study. With

percent of all equities redemption, every patron

receives a redemption. The cooperative establishes a

percentage of all equities to be redeemed regardless of

the year they were issued. If the cooperative chooses to

redeem 14 percent of its eligible equities each year, this

is equivalent to revolving equity in 7 years.

Base capital plan—A base capital plan equates a

member's use of the cooperative with the member's

investment in the cooperative. The plan requires peri‐

odic adjustments to the member's equity investment to

keep the investment proportional to use of the cooper‐

ative. Proportional use is found by determining each

member's average patronage of the cooperative over

the base period. At least annually, the capital require‐

ments for the cooperative are calculated and each

member's proportional patronage is determined. Based

on this determination, some members will be over‐

invested, others under‐invested, and some will be at

the required investment level. The over‐invested mem‐

bers will have equity redeemed, while the under‐

invested members will be required to invest equity

capital to be at the required investment level.

Few cooperatives were found to use a base capi‐

tal plan. Mainly this is because there is a lack of

dependable funding to make needed yearly adjust‐

ments between over‐ and under‐invested members.

Yearly variations in cooperatives' earnings do not rou‐

tinely provide funds to make the needed adjustments.

To provide a dependable source of funding, per‐unit

capital retains are often used in conjunction with base

capital plans. Per‐unit capital retains are used almost

exclusively by marketing cooperatives. Per‐unit capital

retains are authorized by a cooperative's bylaws or

other agreement between a cooperative and its mem‐

bers. The cooperative deducts a percentage of the pro‐

ceeds of each unit marketed by the cooperative for its

members. The per‐unit capital retain provides a yearly

pool of funds to bring the under‐invested members up

to the required investment level.

Comparison With 1991 Study

This study used the same methodology as a prior

1991 study [Rathbone and Wissman] conducted by

Rural Development and surveyed the same farmer,

rancher, and fishery cooperatives. Some questions

were changed or re‐worded at the advice of one of the

retired researchers who conducted the 1991 survey.

Some questions were also altered at the suggestion of

two Kansas State University professors (Barton and

Boland) who have conducted similar equity redemp‐

tion studies.

The 1991 study analyzed the data by size of coop‐

erative, type of products marketed or sold, and by

region. Comparisons in this section to the prior study

will be done by cooperative size, where size is deter‐

mined by total assets. Six size classifications were used

in the 1991 study, with the sizes as follows: <$1 million

in assets; $1 million to $2.49 million; $2.5 million to

$4.99 million; $5 million to $9.99 million; $10 million to

$49.99 million; and $50 million and over. In this study,

the $10 million to $49.99 million grouping was split

into $10 million to $19.99 million and $20 million to

$49.99 million, due to the large number of cooperatives

that responded in those size groupings.

The eight type categories used in this study cor‐

respond to those used in the 1991 study, and are as fol‐

lows: cotton and cotton gins; dairy; fruits, vegetables,

and nuts; livestock, poultry, and wool; other market‐

2
ing; service; grain and oilseed; and farm supply. Grain

and oilseed and farm supply cooperatives dominate

the results of this report, accounting for 31 percent and

43 percent respectively, or almost 75 percent of all

respondents. Also, grain and oilseed and farm supply

cooperatives have similar operations in that most grain

and oilseed cooperatives sell some farm supplies and

many farm supply cooperatives also market some

grain. The location of respondents by State and region

is given in Appendix Table 1.

Funds available and the strength of the coopera‐

tive's balance sheet are an important part of a coopera‐

tive's equity redemption plans. The ratio of net income

before taxes/total sales is shown in Figure 1. While this

information represents all cooperatives and not just

the 460 respondents from both 2008 and 1991, the ratio

can be used as a proxy for the financial well‐ being of

all cooperatives in these 2 years. Figure 1 shows that

there was a marked increase in the ratio between 2003

and 2008, while the ratio trended down from 1989 to

1993. Since the strength of a cooperative's balance

sheet is an important factor of equity redemp

tion, it appears from this ratio that cooperatives may

have been in a stronger financial position in 2008 than

in 1991.

There were 439 local cooperatives and 21 regional

cooperatives that responded to both surveys. Local

cooperatives generally have sales and members in one

or two States. Regional cooperatives have sales in

many States, often with nationwide sales. Regional

cooperatives usually have other cooperatives as mem‐

bers but can also have individual farmer, rancher, and

fishery members.

In 1991 the median respondent had between $2.5

million and $4.99 million in assets. Almost 20 years

later, the median respondent to the 2008 survey was

much larger, with $5 million to $9.99 million in assets.

Figure 2 shows what methods local cooperatives use to

redeem equity, arranged by cooperative size.

Respondents often used the revolving fund and

patron's estate methods of redeeming equity. In Figure

3 (Appendix Table 2), 1991 responses were similar to

the 2008 responses, except that there was even a

greater reliance on the use of the patron's estate

method of redeeming equity. The movement from

patrons' estates (71 percent in 1991 to 47 percent in

2008) equity redemption as the most used method to a

revolving fund (52 percent in 1991 to 49 percent in

2008) is the single most important change in redemp‐

tion practices noted between 2008 and 1991.

The reduced use of redeeming patrons' estates

may be due to a change in the ownership of family

farms. More family farms are now held in corporate or

partnership ownership form rather than owned by

individual farmers or ranchers. A corporation does not

3

Figure 1—Cooperative net income before taxes/total sales, 1979-2008

0

1

2

3

4

5

1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

Percent

0

10

20

30

40

50

60

70

Revolve Estate Age % Equity BaseCap

Figure 2—2008 equity redemption practices for cooperatives reporting in both

2008 and 1991

Percent Asset size

< $1 million

$1 to $2.49 million

$2.5 to $4.99 million

$5 to $9.99 million

$10 to $19.99 million

$20 to $49.99 million

> $50 million

0

10

20

30

40

50

60

70

80

90

100

Revolve Estate Age % Equity BaseCap

Figure 3—1991 equity redemption practices for cooperatives reporting in both

2008 and 1991

Percent Asset size

< $1 million

$1 to $2.49 million

$2.5 to $4.99 million

$5 to $9.99 million

$10 to $19.99 million

$20 to $49.99 million

> $50 million
cease to exist when one owner dies, so the lowered use

of patrons' estates redemption in 2008 may be due to

the change in ownership form of family farms.

In Figures 4 and 5 (Appendix Table 3), reasons

for not redeeming equity in either 2008 or 1991 are

given. The most common reason in 2008 is not having

the financial resources to redeem equity. That contrasts

with the most common 1991 response: that the cooper‐

ative had little or no equity to redeem.

Type comparisons—Analysis by type is presented

in Appendix Table 4. Cotton and cotton gin coopera‐

tives mainly use the revolving fund method of equity

redemption. Dairy cooperatives' use of the revolving

fund fell about 20 points between 1991 and 2008, while

redeeming patrons' estates fell 10 points. In 1991 two

local dairy cooperatives used a base capital plan. This

increased to seven cooperatives in 2008.

Fruit, vegetable, and nut cooperatives mainly

redeem equity with a revolving fund. Only one coop‐

erative in 2008 and two in 1991 redeemed patrons'

estates. About one‐third of service cooperatives are

regional cooperatives. All of the service cooperatives

mainly use revolving funds.

With at least 150 respondents in both years, infor‐

mation for farm supply and grain and oilseed coopera‐

tives can be reported by type and size (Appendix

Tables 5 and 6). Farm supply cooperatives reduced

redeeming patrons' estates from 82 percent in 1991 to

50 percent in 2008. Grain and oilseed cooperatives' use

of revolving funds trails redemption by patrons'

estates in both 2008 and 1991. However, the use of

patrons' estates fell by over 20 points between 1991

and 2008. 

Redemption combinations—Most cooperatives

use a combination of methods for equity redemption

(Table 1). In 2008, local cooperatives that used the

revolving fund also used patrons' estates redemptions

48 percent of the time; patron's age, 17 percent; percent

of all equities, 10 percent; and base capital, 4 percent.

The revolving fund was used alone by 94 local cooper‐

atives. In 1991, 82 cooperatives only redeemed patrons'

estates. This had fallen to 32 cooperatives in 2008.

For regional cooperatives, it appears there is a

large increase in the use of percent‐of‐all‐equities

redemptions in 2008, but this information is missing

for 1991. The 1991 survey did not list the percent‐of‐

all‐equities redemption method; it had to be handwrit‐

ten in by the respondent as an “other redemption

method.” Thus, this information is no longer available.

Redemption differences—When comparing the

2008 and 1991 responses of the same cooperatives,

there were a number of differences:

l A revolving fund is now used by 54 local

cooperatives that did not do so in 1991, while

162 used a revolving fund in 1991 but did not

do so in 2008 or had a blank response. In 2008,

51 local cooperatives said they did not redeem

estates, whereas they did in 1991, and an

additional 22 said that they redeemed estates

in 2008 but did not do so in 1991.

l A patron's age method of redeeming equity is

now used by 45 local cooperatives that did not

do so in 1991. Seventeen cooperatives no

longer use this method, and an additional 17

that used patron's age in 1991 left a blank

response in 2008. In 2008, the most common

age used by local cooperatives for redemption

was 65 (23 cooperatives), with age 70 used by 

20 cooperatives. Forty‐three cooperatives used

the same age in both studies, while 21 now

have a lower age and 15 use a higher age for

redemption.

4

0

10

20

30

40

50

60

70

80

90

100

Unable Building

equity

Little equity

Figure 5—No equity redemption in 1991 for cooperatives reporting in both

2008 and 1991 

Percent Asset size

< $1 million

$1 to $2.49 million

$2.5 to $4.99 million

$5 to $9.99 million

$10 to $19.99 million

$20 to $49.99 million

> $50 million

0

10

20

30

40

50

60

70

80

90

100

Unable Building

equity

Little equity

Figure 4—No equity redemption in 2008 for cooperatives reporting in both

2008 and 1991

Percent Asset size

< $1 million

$1 to $2.49 million

$2.5 to $4.99 million

$5 to $9.99 million

$10 to $19.99 million

$20 to $49.99 million

> $50 million
l In 2008, 22 local cooperatives said they use a

base capital plan for equity redemption, com‐

pared to 6 in 1991. 

l Only four local cooperatives responded in

both 2008 and 1991 that they did not redeem

equity in the current year because only small

amounts or no allocated equities are held by

patrons. Little or no allocated equity was given

as the reason for not redeeming equity by 112

cooperatives in 1991, while only 16 gave that

reason in 2008. 

l Eleven cooperatives were financially unable to

redeem equity in the current year in both 2008

and 1991. About an equal number of coopera‐

tives (though not the same ones) were finan‐

cially unable to redeem equity: 57 in 2008, and

65 in 1991.

All Respondents

There were 792 usable responses in total to the

equity redemption survey of 2,473 farmer, rancher, and

fishery cooperatives. Both local and regional coopera‐

tives were surveyed, but with local cooperatives com‐

prising 97 percent of the surveyed cooperatives, local

cooperative responses also equaled 97 percent of the

responses. 

5

Table 1—Combinations of equity redemption methods for cooperatives reporting in both 2008 and 1991

Cooperatives and Percent Base

combination of Revolving Patrons' Patron's of all capital Used

redemption methods fund estates age equities plan alone

Percent Number

Local cooperatives, 2008

Revolving fund 100.00 47.69 16.67 9.72 4.17 94

Patrons' estates 100.00 40.87 17.31 4.81 32

Patron's age 100.00 15.63 3.13 29

% of all equities 100.00 5.36 9

Base capital plan 100.00 3

Total (Number) 216 208 128 56 18

Local cooperatives, 1991

Revolving fund 100.00 63.76 13.97 n.a. 0.87 81

Patrons' estates 100.00 35.90 n.a. 1.28 82

Patron's age 100.00 n.a. 0.00 4

% of all equities n.a. n.a. n.a.

Base capital plan 100.00 3

Total (Number) 229 312 117 n.a. 8

Regional cooperatives, 2008

Revolving fund 100.00 15.38 7.69 46.15 15.38 5

Patrons' estates 100.00 33.33 100.00 33.33 0

Patron's age 100.00 100.00 50.00 0

% of all equities 100.00 11.11 2

Base capital plan 100.00 1

Total (Number) 13 3 2 9 4

Regional cooperatives, 1991

Revolving fund 100.00 33.33 13.33 n.a. 13.33 8

Patrons' estates 100.00 40.00 n.a. 0.00 0

Patron's age 100.00 n.a. 0.00 0

% of all equities n.a. n.a. n.a.

Base capital plan 100.00 0

Total (Number) 15 5 2 n.a. 2

n.a. = Not available for 1991.
Over 72 percent of local cooperatives and over 81

percent of regional cooperatives redeemed equity in

2008. Local cooperatives most often redeem allocated

equities by the revolving fund, at 44 percent: patrons'

estates were used 43 percent of the time; patron's age,

27 percent; percent of all equities, 11 percent; and base

capital plan, 4 percent (Appendix Table 7).

Regional cooperatives also use the revolving

fund to redeem allocated equities most often, using

this method 56 percent of the time. The next most used

method by regionals was the percent of all equities, at

33 percent; followed by a base capital plan, 19 percent;

patrons' estates, 15 percent; and patron's age, 11 per‐

cent.

Size and type comparison—Of the 792 respon‐

dents in 2008, 765 were local cooperatives that provid‐

ed information on their equity redemption practices.

The seven size categories used previously in compar‐

ing the 2008 and 1991 studies are used again to

describe similarities and differences in cooperative

equity redemption practices. The largest cooperatives

redeemed patron equity more recently but had a

revolving fund length that, at 17 years, was 4 years

longer than the smallest cooperatives (Table 2). For the

patron's age redemption method, smaller and larger

cooperatives redeemed equity to patrons several years

younger than did middle‐sized cooperatives.

The eight type categories used in this study cor‐

respond to those used in the 1991 study, and are as fol‐

lows: cotton and cotton gins; dairy; fruits, vegetables,

and nuts; livestock, poultry, and wool; other market‐

ing; service; grain and oilseed; and farm supply. Table

3 shows the number of respondents for each type of

cooperative. Grain and farm supply cooperatives dom‐

inate this study, with 240 grain and oilseed respon‐

dents and 327 farm supply respondents. Grain and

oilseed and farm supply cooperatives comprise 74 per‐

cent of all respondents, and even though listed sepa‐

rately, most are similar in that most grain cooperatives

sell some farm supplies and many farm supply cooper‐

atives also market some grain.

The revolving fund length of 18 and 20 years for

grain and oilseed and farm supply cooperatives is very

long. Service cooperatives and livestock, poultry, and

wool cooperatives with a revolving fund length of 7

years or less are redeeming at least 14 percent of their

allocated equities each year. Patron's age of redemp‐

tion varies from 66 to 72 years old on average.

The cash patronage refund was much higher for

smaller cooperatives than all other sizes (Table 4).

Some functions performed by cooperatives required

only limited financial resources. Bargaining coopera‐

6

Table 2—Equity redemption, average year last redeemed, average revolving fund length, and average

patron age, 2008

Year last Revolving Patron's

Total equity fund- age-redemption

asset size Cooperatives redeemed length age

Number Years

Local cooperatives

< $1 million 85 2004 13 68

$1 mill. to $2.49 mill. 87 2005 18 73

$2.5 mill. to $4.99 mill. 101 2006 18 72

$5 mill. to $9.99 mill. 128 2007 17 73

$10 mill. to $19.99 mill. 135 2007 16 71

$20 mill. to $49.99 mill. 119 2007 17 71

≥$50 million 110 2007 17 69

Total 765

Regional cooperatives1

< $2.5 million 5 2006 10

$2.5 mill. to $9.99 mill. 3 2007 7

$10 mill. to $19.99 mill. 5 2008 14

$20 mill. to $49.99 mill. 3 2007 12

≥$50 million 11 2007 15

Total 27

1 Some size groupings were combined to prevent disclosure of individual operations.
tives, wool pools, and livestock auctions are examples.

With a limited need for more resources, high levels of

cash patronage refunds can be returned to members. 

One measure of cooperative financial strength is

the ratio of net worth to total assets. Smaller coopera‐

tives financed about 60 percent of their assets with

equity, while the largest cooperatives had an equity

base of less than a third of total assets. 

The revolving fund and patrons' estates redemp‐

tion methods were used with similar frequency among

all local cooperatives, except that middle‐sized cooper‐

atives used a revolving fund more often than patron's

estate redemption (Figure 6, Appendix Table 7).

Smaller local cooperatives (Figure 7) were unable to

redeem equity about 30 percent of the time, and 24

percent had little equity to redeem. About 9 percent of

all sizes were not redeeming equity because they were

trying to build their equity accounts.

All eight types of cooperatives paid at least 40

percent of their patronage refunds to members as cash

7

Table 3—Equity redemption by local cooperatives, average year last redeemed, average revolving fund

length and average patron's age, 2008

Year last Revolving Patron's

Total Local equity fund- age-redemption

asset size cooperatives redeemed length age1

Number Years

Cotton & cotton gins 31 2006 10 70

Dairy 45 2007 15 72

Fruits, vegetables, & nuts 47 2007 11

Livestock, poultry, and wool 18 2007 7

Other marketing 38 2005 10 66

Service 19 2007 6

Grain and oilseed 240 2007 18 71

Farm supply 327 2007 20 71

1 Where there are blank responses, information not available.

Table 4—Average cash patronage and average net worth to assets, 2008

Equity redemption in 2008 No equity redemption in 2008

Cash Cash

Cooperative patronage Net worth/ patronage Net worth/

asset size N1 paid assets N1 paid assets

Local cooperatives Number Percent Number Percent

< $1 million 32 62.72 75.58 48 61.67 63.89

$1 mill. to $2.49 mill. 50 51.99 60.79 33 55.74 59.67

$2.5 mill. to $4.99 mill. 72 44.04 58.38 23 41.81 44.84

$5 mill. to $9.99 mill. 93 44.60 51.12 26 59.17 34.28

$10 mill. to $19.99 mill. 112 40.51 43.21 16 35.79 30.29

$20 mill. to $49.99 mill. 103 40.04 34.51 14 48.60 36.69

≥$50 million 94 41.14 28.09 15 59.47 35.46

All 556 42.50 31.13 175 51.11 35.90

Regional cooperatives1 Number Percent Number Percent

< $2.5 million 3 26.86 81.01

$2.5 mill. to $9.99 mill. 3 50.45 46.67

$10 mill. to $19.99 mill. 3 39.59 64.39

$20 mill. to $49.99 mill. 3 41.67 43.50

≥$50 million 10 44.53 27.40 4 73.33 39.54

All 22 41.85 27.86 4 73.33 39.54

1 N does not equal 765 for local cooperatives or 27 for regional cooperatives as not all cooperatives responded to whether they 

redeemed equity in 2008.
(Table 5). The net‐worth‐to‐assets ratios for those coop‐

eratives that redeemed equity in 2008 are not always

better than that for cooperatives that did not redeem

equities in 2008.

For the local cooperatives that redeemed equity

in 2008, Figure 8 shows the programs or plans used

and their frequency of use. With grain and oilseed and

farm supply cooperatives comprising 74 percent of the

surveyed cooperatives, those are the average respons‐

es. However, responses across cooperative types do

show differences (Appendix Tables 8 to 15).

Over 60 percent of cotton and cotton gins and

fruit, vegetable, and nut cooperatives use a revolving

plan for redeeming allocated patron equities.

Redeeming patrons' estates is heavily used by grain

and farm supply cooperatives. About a third of grain

and farm supply cooperatives redeem equities based

on patron's age. Although few cooperatives overall use

a base capital plan, over 12 percent of cotton and cot‐

ton gins and dairy cooperatives used this form of equi‐

ty redemption.

In figure 8 it is quite evident that the highest pro‐

portion of cooperatives that did not redeem equity in

2008 was in livestock, poultry, and wool cooperatives.

They most often said their reason was that they were

trying to build up equity accounts (28 percent). Further

analysis finds that 8 out of the 18 respondents had

losses or no income in 2008, while another 5 had net

incomes of less than $10,000. It appears that most live‐

stock, poultry, and wool respondents did not have

funds available for equity redemption in 2008.

Twenty‐three percent of locals and 15 percent of

regionals did not redeem member allocated equity in

2008 (Table 6). While regional respondents did not give

a reason for not redeeming allocated equity, locals

were unable to redeem 14 percent of the time probably

due to low net income or losses (Figure 9). In total

there were 175 local cooperatives that did not redeem

equity in 2008. Fifty‐three of these cooperatives suf‐

fered losses in their own operations (negative local

savings). Six had no net income, while 12 had net

8

0

10

20

30

40

50

60

70

80

90

100

Revolve Estate Age % Equity BaseCap

Figure 8—Equity redemption and types used by cooperative type, 2008

Percent

Cooperative type

Cotton & cotton gins

Dairy

Fruit, vegetable, & nut

Livestock, poultry, and wool

Other marketing

Service

Grain

Farm supply

Table 5—Average local cooperative cash patronage

and net worth to assets, 2008

Redemption No redemption

in 2008 in 2008

Cooperative Cash Net worth/ Net worth/

type patronage assets assets

Percent

Cotton & cotton 

gins 68.26 22.46 37.11

Dairy 47.70 30.28 36.31

Fruit, vegetable,

& nut 63.36 34.92 33.99

Livestock, poultry,

and wool 50.85 29.73 21.31

Other marketing 53.69 40.87 43.49

Service 63.63 76.45 53.45

Grain and oilseed 42.15 23.74 26.39

Farm supply 40.43 41.57 37.32 

0

10

20

30

40

50

60

70

80

90

100

Revolve Estate Age % Equity BaseCap

Figure 6—Equity redemption and types used by total asset size, 2008

Percent

Asset size

< $1 million

$1 to $2.49 million

$2.5 to $4.99 million

$5 to $9.99 million

$10 to $19.99 million

$20 to $49.99 million

> $50 million

0

10

20

30

40

50

60

70

80

90

100

Unable Building

equity

Little equity

Figure 7—No equity redemption and reasons by total asset size, 2008

Percent Asset size

< $1 million

$1 to $2.49 million

$2.5 to $4.99 million

$5 to $9.99 million

$10 to $19.99 million

$20 to $49.99 million

> $50 million
income of less than $20,000. There was little or no allo‐

cated equity held by 10 respondents, while 18 others

had recent losses and had little or no retained earn‐

ings. The other 76 local cooperatives that did not

redeem equity in 2008 did not have losses or low

amounts of allocated equity.

Respondents were also asked if there were other

reasons for redeeming allocated equities that were not

covered by questions in the survey. Retirement from

farming or moving out of the cooperative's trade terri‐

tory was mentioned as an equity redemption reason by

33 respondents. Many respondents had very specific

determinations of what it means to quit farming, for

example: “When a patron quits farming and will no

longer actively participate in any farming activities or

receive any further farm income derived from cash

rent or grain sales, the equity will be redeemed.”

All of the equity redemption methods listed in

Table 4 are used in combination by cooperatives (Table

7). The revolving fund was used by 339 local coopera‐

tives, almost half of which also redeemed patrons'

estates. Fifteen regional cooperatives used the revolv‐

ing fund, with 40 percent of those cooperatives com‐

bining the revolving fund with the percent‐of‐all‐equi‐

ties redemption method. The revolving fund was the

only redemption method used by 142 local coopera‐

tives. Patrons' estates were only redeemed by 58 local

cooperatives, while 46 only redeemed equities based

on patron's age.

9

Table 7—Combinations of equity redemption methods and plans used alone, 2008

Cooperatives and Percent Base

combination of Revolving Patrons' Patron's of all capital Used

redemption methods fund estates age equities plan alone

Percent Number

Local cooperatives

Revolving fund 100.00 47.49 18.58 10.32 3.54 142

Patron's estates 100.00 40.55 13.72 4.57 58

Patron's age 100.00 14.08 2.91 46

Percent of all equities 100.00 5.95 6

Base capital plan 100.00 5

Total (Number) 339 328 206 84 27

Regional cooperatives

Revolving fund 100.00 20.00 13.33 40.00 20.00 6

Patron's estates 100.00 50.00 75.00 50.00 0

Patron's age 100.00 66.67 66.67 0

Percent of all equities 100.00 11.11 2

Base capital plan 100.00 1

Total (Number) 15 4 3 9 5

0

10

20

30

40

50

60

70

80

90

100

Unable Building

equity

Little equity

Figure 9—No equity redemption and reasons by cooperative type, 2008

Percent

Cooperative type

Cotton & cotton gins

Dairy

Fruit, vegetable, & nut

Livestock, poultry, and wool

Other marketing

Service

Grain

Table 6—All respondents, no equity redemption in Farm supply

2008 and reasons

Redeem equity Reasons for not redeeming equity1

in 2008

Building Little

Cooperatives No Unable equity equity

Percent

Local 22.88 14.12 8.89 5.36

Regional 14.81

All 22.602 13.64 8.59 5.18

1 No responses if blank. 2 There were 34 local and one regional cooperative that did

not respond to this question, otherwise “All” should equal

27.02 percent.
Further analysis shows that information from

cooperatives reporting in both 2008 and 1991 (Table 1)

is very similar to the 2008 information of all respon‐

dents in Table 7. This is the case for other information

presented in this section. The respondent size is larger,

but the responses overall are similar to those found in

the prior section where the cooperatives had respond‐

ed to both the 2008 and 1991 surveys.

Table 8 looks at equity ratios over 6 years by

cooperative size. With over 100 cooperatives each year,

except for the largest size, the information in this table

is a good time‐series representation of these ratios. The

values presented for each ratio are the median, or mid‐

dle, value by cooperative for each size grouping. As a

median value, the ratio may be considered representa‐

tive of the group as a whole, with the knowledge that

the total group size ranges from 52 to 174 cooperatives

(Table 4).

The ratio of retained earnings to total equity

shows the use of retained earnings and allocated equi‐

ty. Net income from nonmember business is the usual

source of retained earnings (unallocated equity).

Retained earnings are not subject to redemption, but

allocated equities are. The use of retained earnings to

finance operations increases with cooperative size,

with the exception of the ≥$50 million asset size that

somewhat resembles the values for the smaller $5 mil‐

lion to $9.99 million asset cooperatives. Over the time

series, it appears that all sizes of respondents, except

10

Table 8—Median equity ratios by local cooperative size, 2003 to 2008

Size based on total assets 2003 2004 2005 2006 2007 2008

Percent

Retained earnings to total equity1

< $1 million n.a. 14.33 0.232 4.112 11.21 13.07

$1 mill. to $2.49 mill. n.a. 27.51 22.85 23.84 30.13 35.10

$2.5 mill. to $4.99 mill. n.a. 29.51 29.39 31.41 29.31 31.84

$5 mill. to $9.99 mill. n.a. 34.95 36.28 35.92 36.08 39.78

$10 mill. to $19.99 mill. n.a. 37.78 40.11 39.53 36.94 39.19

$20 mill. to $49.99 mill. n.a. 36.33 41.00 39.55 37.61 42.63

≥$50 million n.a. 35.81 34.62 35.30 37.84 41.89

All n.a. 34.78 34.62 34.46 35.14 37.60

Equity-to-assets3

< $1 million 85.82 89.33 77.10 79.57 78.26 80.94

$1 mill. to $2.49 mill. 74.40 75.17 73.18 71.59 68.60 63.16

$2.5 mill. to $4.99 mill. 67.92 67.49 64.89 66.00 59.97 59.89

$5 mill. to $9.99 mill. 62.93 59.20 58.54 56.60 54.48 48.89

$10 mill. to $19.99 mill. 56.42 53.60 52.97 51.72 46.29 39.28

$20 mill. to $49.99 mill. 48.75 45.73 43.89 44.31 40.03 31.85

≥$50 million 42.91 41.31 38.84 37.34 31.77 27.01

All 57.20 55.40 53.49 52.70 48.61 42.77

Adjusted-equity-to-assets4

< $1 million 100.00 100.00 100.00 100.00 100.00 100.00

$1 mill. to $2.49 mill. 99.18 99.68 99.29 99.09 97.11 96.73

$2.5 mill. to $4.99 mill. 96.47 96.42 96.82 98.19 97.21 97.91

$5 mill. to $9.99 mill. 91.65 91.75 92.38 92.50 91.84 91.98

$10 mill. to $19.99 mill. 90.75 91.39 90.12 90.86 90.37 86.08

$20 mill. to $49.99 mill. 83.84 82.77 81.92 82.39 80.05 81.02

≥$50 million 74.63 76.01 75.81 76.13 73.03 72.08

All 90.73 90.65 90.12 90.63 89.58 88.05

1 Retained earnings to total equity = retained earnings/total equity, median values for each size shown. No values for 2003

because retained earnings not available. 2 These observations appear to be outliers. 3 Equity-to-assets ratio = total equity/total assets, median values for each size shown. 4 Adjusted-equity-to-assets ratio = total equity/(total assets-current liabilities), median values for each size shown.
the smallest, are generally accumulating retained earn‐

ings to finance operations. The smallest size has sever‐

al outliers in the data series.

Generally, higher levels of retained earnings to

total equity occur due to cooperatives either having

more non‐patronage‐based income or distributing a

higher amount of patronage income to retained earn‐

ings. Grain and oilseed and farm supply cooperatives

comprise almost three fourths of the respondents.

Such cooperatives generally have a higher proportion

of non‐member business, and thus more retained earn‐

ings, than other types of cooperative.

The ratio of equity to total assets measures the

use of equity to finance the cooperative, and can be

considered a measure of solvency or financial strength

of the cooperative. Over the time series, it appears that

less equity is being used to finance assets across all

cooperative sizes, so respondents must be using more

borrowed funds. Smaller cooperatives are stronger

financially, because they finance a larger proportion of

their assets with equity than larger ones.

Another measure of solvency or financial

strength is shown by the adjusted equity ratio, where

total equity is divided by total assets minus current lia‐

bilities. When current liabilities are subtracted from

assets, the remainder is long‐term debt and total equi‐

ty, so the ratio shows the relative use of long‐term debt

and equity to finance the cooperative. A higher ratio

indicates higher solvency or a greater use of equity to

finance operations. The median value for small cooper‐

atives of 100 indicates no use of long‐term debt.

Smaller cooperatives have less long‐term debt. The

ratio did not vary much over the time series, except for

cooperatives with assets of $10 million to $19.99 mil‐

lion, where it dropped four points over the last 2 years,

indicating more debt used.

Table 9 has the same information as Table 8, only

this time the ratios are by cooperative type instead of

cooperative size. With a range from 18 cooperatives to

327 in the type groupings, the information in this table

may not be representative for most types other than

grain and farm supply cooperatives, due to the low

number of respondents. It is presented for comparison

purposes. It is hard to determine what might be con‐

sidered outliers in this table. For example, the ratio of

retained earnings to total equity for cotton and cotton

gins ranges from 0.00 to 15.77, with three responses at

the low end and two at the high end. The very low

numbers should be considered outliers, but it should

be noted that they occurred in 3 consecutive years.

Over the time series, most types of respondents

generally are accumulating retained earnings to

finance operations. Grain and oilseed cooperatives

show the most pronounced use of retained earnings,

increasing almost five points over the 5 years.

For the equity‐to‐total‐assets ratio, it appears that

over time less equity is being used to finance assets

across all cooperative types, because respondents were

using more borrowed funds. With the price increase in

grains and oilseeds, and the corresponding increase in

inventory values of these commodities, the equity‐to‐

total‐assets ratio for grain and oilseed cooperatives fell

markedly in 2007 and 2008 as more funds were bor‐

rowed.

Median values of 100 for the adjusted equity to

assets ratio in several years for dairy; livestock, poul‐

try, and wool; and service cooperatives indicates no

use of long‐term debt. Cotton and cotton gins; fruit,

vegetable, and nut; and grain and oilseed cooperatives

all had a ratio of 80 or less in at least 1 year, so used

more long‐term debt.

Cooperative location—The 1991 study used eight

U.S. regions to show cooperative responses to equity

redemption by location. This study will present results

mainly by State with a few States combined where

there were less than three responses (Table 10).

Appendix Table 15 shows the respondents by State to

both the 1991 and 2008 surveys. Several States have

very few respondents in 2008, so responses may not be

indicative of overall use of redemption methods or

types used. Also, with fewer respondents, there are

many places in the tables were the category is blank

because the respondent did not use the redemption

plan listed or did not respond to all questions.

Revolving fund length of 20 or more years was indicat‐

ed in Florida and Georgia (combined), Tennessee,

Virginia, Wisconsin, Illinois, Missouri, Arkansas,

North Dakota, Colorado, and Montana.

Equity redemption in 2008 and the frequency of

each type of redemption plan are presented in Table

11. The revolving fund method is the most widely

used redemption plan, as discussed earlier, though

most cooperatives use a combination of redemption

methods and not just one plan.

In Tennessee, Minnesota, Iowa, Indiana, Ohio,

Oklahoma, Kansas, Nebraska, and Wyoming, respon‐

dents most frequently redeemed patrons' estates.

Patron's age redemptions were done by over half of

the respondents in the following States: Minnesota,

with 71 as the age of redemption; Wisconsin, 73;

Nebraska, 70; North Dakota, 72; and Colorado, 69.

Those States all used the oldest first method in

redeeming equities by patron's age, rather than

redeeming a percentage to all over a certain age.

11
Patron's age redemptions are almost exclusively done

in the Lake States, Corn Belt, Northern Plains, and

Mountain regions. The predominate types of coopera‐

tives in those regions are grain and oilseed and farm

supply cooperatives.

“Percent of all equities” was used by less than 20

percent of all respondents in all States except Kansas,

Montana, and Hawaii. Overall, a base capital plan was

used by the fewest respondents. But by State, over 20

percent of the respondents redeemed equities by this

method in the combined States of Massachusetts, New

Jersey, and New York; and the combined States of

Florida and Georgia; and Montana.

Over 60 percent of the respondent cooperatives in

Maine, Pennsylvania, Maryland, North Carolina,

Louisiana, Mississippi, and Hawaii did not redeem

patrons' equities in 2008 (Table 12). There was a fairly

even split between being financially unable to redeem

equity, building equity, and having little equity, as a

reason for cooperatives in these States not redeeming

equity.

Tables 13, 14, and 15 look at equity ratios over 6

years by cooperative location. Many of the States or

combined States have few respondents. If there are not

four respondents in any given State or combination of

States, no value is presented in the table. The number

of respondents by State ranges from 5 to 76 (Table 10).

The ratio of retained earnings to total equity

shows the use of retained earnings and allocated equi‐

ty. Retained earnings are not subject to redemption,

while allocated equities are. As stated before, many of

the States have few respondents, so only those States

where outliers don't appear to be present will be dis‐

cussed in this section. Net income from nonmember

business is the usual source of retained earnings. The

use of retained earnings to finance operations (Table 

12

Table 9—Local cooperative equity ratios by type, 2003 to 2008

Local cooperative type 2003 2004 2005 2006 2007 2008

Percent

Retained earnings to total equity1

Cotton & cotton gins n.a. 0.62 0.00 0.54 15.77 10.60

Dairy n.a. 17.59 18.85 15.58 19.36 23.41

Fruit, vegetable, & nut n.a. 27.52 8.70 12.06 11.61 27.72

Livestock, poultry, and wool n.a. 0.00 3.01 0.00 0.00 0.00

Other marketing n.a. 32.34 20.70 32.34 28.19 23.62

Service n.a. 7.34 6.49 1.99 9.13 9.66

Grain n.a. 39.30 42.05 42.52 40.27 43.64

Farm supply n.a. 36.40 37.03 35.58 36.61 38.84

Equity-to-assets2

Cotton & cotton gins 61.30 55.93 57.72 55.87 59.03 52.90

Dairy 51.74 49.98 44.75 35.74 30.48 33.74

Fruit, vegetable, & nut 46.15 42.27 38.59 39.91 38.32 38.54

Livestock, poultry, and wool 99.45 93.43 61.00 80.94 80.94 90.47

Other marketing 53.87 62.57 59.76 55.87 53.29 42.54

Service 87.24 89.15 82.19 88.53 82.82 82.24

Grain 49.83 48.26 44.83 44.35 36.23 30.56

Farm supply 64.72 62.93 60.41 61.39 59.39 55.21

Adjusted-equity-to-assets3

Cotton & cotton gins 96.23 83.61 90.32 80.65 78.68 84.76

Dairy 100.00 96.92 97.91 98.19 97.58 96.00

Fruit, vegetable, & nut 91.88 84.42 85.88 76.43 79.00 86.33

Livestock, poultry, and wool 100.00 98.19 99.82 94.76 100.00 100.00

Other marketing 84.42 89.43 86.88 87.86 91.17 90.64

Service 100.00 99.59 97.21 100.00 100.00 100.00

Grain 85.77 86.28 84.91 83.46 82.62 80.18

Farm supply 92.28 93.11 93.13 93.99 93.70 92.95

1 Retained earnings to total equity = retained earnings/total equity, median values for each size shown. No values for 2003

because retained earnings not available. 2 Equity-to-assets ratio = total equity/total assets, median values for each size shown. 3 Adjusted-equity-to-assets ratio = total equity/(total assets-current liabilities), median values for each size shown.
13

Table 10—Equity redemption by local cooperatives, average year last redeemed, average revolving fund

length, and average patron's age, 20081

Year last Revolving Patron's

Region/ Local equity fund age-redemption

State cooperatives redeemed length age

Number Years

Northeast

Maine 8 2002 18

Massachusetts, New Jersey,

New York 18 2007 7 70

Pennsylvania 13 2000 15

Southeast

Alabama 5

Florida, Georgia 9 2008 21

Kentucky 4 2008 6 65

Maryland 3

North Carolina 3

Tennessee 19 2004 26

Virginia 9 2007 21 65

Lake States

Michigan 14 2007 11 65

Minnesota 76 2006 19 71

Wisconsin 50 2008 21 73

Corn Belt

Iowa 58 2007 16 72

Illinois 55 2007 20 63

Indiana 11 2008 18 78

Missouri 30 2006 22 68

Ohio 21 2007 16 68

South Central

Arkansas 12 2002 20 62

Louisiana 6 2002

Mississippi 9 2007 16

Oklahoma 18 2007 15 71

Texas 48 2005 15 73

Northern Plains

Kansas 46 2008 18 70

Nebraska 30 2008 17 70

North Dakota 54 2007 20 72

South Dakota 27 2008 17 73

Mountain

Colorado 13 2008 21 69

Idaho 5 2007 13

Montana 14 2008 23 76

Utah 5 2008 6

Wyoming 3 2006 67

Pacific

California, Arizona, 

New Mexico 35 2008 6

Hawaii 4 2008 9

Oregon 11 2006 18

Washington 19 2005 15

1 Where there are blank responses, information not available.
14 Table 11—Equity redemption methods of local cooperatives by location, 20081

Redeem Redemption methods

equity

in 2008 Revolving Patron's Patron's age2 Percent of Base capital

Region/State Yes fund estates all oldest first % to all all equities plan

Percent

NortheastMaine 25.00 12.50Massachusetts, New Jersey,

New York 55.56 33.33 11.11 5.56 5.56 22.22

Pennsylvania 30.77 38.46 15.38 7.69 7.69SoutheastAlabama 20.00Florida, Georgia 44.44 22.22 11.11 22.22Kentucky 75.00 25.00 50.00 25.00MarylandNorth CarolinaTennessee 84.21 36.84 63.16 15.79Virginia 44.44 33.33 44.44 11.11 11.11 11.11Lake StatesMichigan 78.57 57.14 28.57 7.14 7.14 7.14Minnesota 84.21 43.42 56.58 55.26 34.21 3.95 14.47 2.63Wisconsin 84.00 56.00 56.00 54.00 30.00 8.00 4.00Corn BeltIowa 84.48 46.55 65.52 34.48 17.24 10.34 15.52Illinois 72.73 45.45 56.36 9.09 3.64 3.64 1.82Indiana 90.91 27.27 45.45 45.45 18.18 9.09Missouri 73.33 36.67 36.67 30.00 6.67 10.00 3.33Ohio 85.71 52.38 61.90 9.52 4.76 19.05South CentralArkansas 66.67 66.67 16.67 8.33 8.33 16.67Mississippi 33.33 33.33Oklahoma 83.33 50.00 61.11 27.78 5.56 5.56 16.67Texas 70.83 56.25 20.83 2.08 12.50 10.42Northern PlainsKansas 86.96 47.83 69.57 23.91 8.70 8.70 21.74Nebraska 83.33 30.00 66.67 60.00 30.00 10.00 10.00North Dakota 75.93 35.19 48.15 51.85 44.44 9.26 14.81 1.85South Dakota 55.56 22.22 40.74 48.15 29.63 14.81 14.81
15

Table 11—Equity redemption methods of local cooperatives by location, 20081 (Continued)

Redeem Redemption methods

equity

in 2008 Revolving Patron's Patron's age2 Percent of Base capital

Region/State Yes fund estates all oldest first % to all all equities plan

Percent

MountainColorado 53.85 30.77 38.46 69.23 30.77 15.38Idaho 40.00 60.00 20.00Montana 42.86 21.43 28.57 35.71 21.43 21.43 21.43Utah 100.00 80.00Wyoming 100.00 33.33 33.33 33.33PacificCalifornia, Arizona,

New Mexico 71.43 74.29 2.86 5.71 2.86

Hawaii 25.00 25.00Oregon 90.91 100.00 18.18 9.09Washington 73.68 68.42 31.58 15.79 10.53

1 Where there are blank responses, information not available.2 “Oldest first” and “percent to all” are a form of redemption by patron's age, these two responses should add to “all”, except all respondents did not answer all questions.
16

Table 12—Reasons for no equity redemption by local cooperatives in 20081

Redeem equity Reasons for not redeeming

in 2008 equity in 2008

Region/ Building Little

State No Unable equity equity

Northeast Percent

Maine 62.50 37.50 37.50

Massachusetts, New Jersey,

New York 44.44 22.22 11.11

Pennsylvania 61.54 23.08 23.08 30.77

Southeast

Alabama 40.00 20.00 20.00

Florida, Georgia 44.44 11.11 11.11

Kentucky 25.00 25.00

Maryland 100.00 66.67 33.33

North Carolina 66.67 33.33

Tennessee 10.53 15.79 21.05 10.53

Virginia 55.56 22.22 44.44

Lake States

Michigan 21.43 7.14 7.14 14.29

Minnesota 13.16 2.63 9.21 5.26

Wisconsin 16.00 2.00 12.00 4.00

Corn Belt

Iowa 10.34 3.45 10.34 13.79

Illinois 25.45 3.64 7.27 10.91

Indiana 9.09 9.09

Missouri 20.00 3.33 13.33 10.00

Ohio 9.52 9.52 14.29

South Central

Arkansas 16.67 8.33 25.00 8.33

Louisiana 66.67 50.00 16.67

Mississippi 66.67 22.22 11.11 22.22

Oklahoma 16.67 11.11 5.56

Texas 25.00 16.67 14.58

Northern Plains

Kansas 13.04 10.87 6.52

Nebraska 13.33 3.33 16.67 3.33

North Dakota 20.37 5.56 11.11 11.11

South Dakota 40.74 7.41 29.63 14.81

Mountain

Colorado 30.77 23.08

Idaho 40.00 20.00

Montana 42.86 7.14 28.57

Utah 20.00

Wyoming

Pacific

California, Arizona,

New Mexico 22.86 8.57 8.57 2.86

Hawaii 75.00 75.00 25.00

Oregon 9.09 18.18 9.09

Washington 15.79 10.53

1 Where there are blank responses, information not available.
17

Table 13—Local cooperative retained earnings percentage of total equity1 by location, 2004 to 2008

Region/

State 2004 2005 2006 2007 2008

Northeast Percent

Maine 4.96 0.00 10.33 5.63 68.22

Massachusetts,

New Jersey,

New York 22.61 15.79 12.06 10.44 11.82

Pennsylvania 48.11 19.04 0.00 0.00 27.59

Southeast

Alabama 3.34 53.11 5.41 5.92 7.52

Florida, Georgia 46.26 30.86 20.79 35.89 37.95

Kentucky 64.69 36.97 0.00 27.53 18.77

Maryland2

North Carolina2

Tennessee 33.49 34.66 36.95 31.47 33.61

Virginia 0.00 14.34 0.00 0.00 28.03

Lake States

Michigan 21.22 17.08 16.29 16.48 23.06

Minnesota 19.72 19.55 19.38 19.34 22.44

Wisconsin 27.43 28.40 29.33 32.85 33.59

Corn Belt

Iowa 44.19 43.51 44.67 45.15 48.39

Illinois 62.98 66.60 64.49 66.05 68.89

Indiana 53.76 62.56 63.88 64.15 64.83

Missouri 45.44 47.11 53.03 55.60 57.21

Ohio 42.55 52.21 53.71 44.48 49.87

South Central

Arkansas 21.65 35.37 41.73 30.18 40.83

Louisiana 0.00 1.16 0.00 11.28 15.75

Mississippi 0.46 0.00 0.00 0.00 0.13

Oklahoma 45.73 46.00 45.04 49.46 45.01

Texas 19.03 2.82 8.82 14.18 12.95

Northern Plains

Kansas 29.11 33.20 30.16 27.50 31.48

Nebraska 40.57 41.87 44.81 42.77 44.03

North Dakota 22.50 22.39 23.66 26.40 28.43

South Dakota 33.23 32.23 36.90 35.05 44.99

Mountain

Colorado 61.11 60.64 61.11 62.76 65.28

Idaho 57.32 32.25 25.07 30.96 41.79

Montana 14.97 14.90 14.33 14.85 11.18

Utah 22.78 40.77 29.70 17.82 18.67

Wyoming2

Pacific

California,

Arizona,

New Mexico 28.30 29.98 28.88 33.49 35.10

Hawaii2

Oregon 41.17 41.86 29.81 31.65 34.98

Washington 48.69 46.41 45.08 44.65 42.36

1 Retained earnings percentage of total equity = retained earnings/total equity, median values for each State shown. Retained 

earnings for 2003 not available. 2 Less than four observations.
18

Table 14—Local cooperative equity-to-assets ratio1 by location, 2003 to 2008

Region/

State 2003 2004 2005 2006 2007 2008

Northeast Percent

Maine 30.78 31.39 19.10 29.48 13.79 27.51

Massachusetts,

New Jersey,

New York 38.31 41.42 42.22 38.83 35.93 43.93

Pennsylvania 54.76 42.67 40.95 42.63 38.23 42.09

Southeast

Alabama 71.18 72.38 67.98 70.85 68.05 70.81

Florida, Georgia 45.03 50.98 56.96 47.94 50.26 38.35

Kentucky 79.28 75.65 67.09 57.36 45.91 59.04

Maryland2

North Carolina2

Tennessee 71.64 74.17 78.70 76.34 72.64 71.00

Virginia 71.40 72.39 56.44 56.01 34.04 21.65

Lake States

Michigan 51.29 62.55 55.32 55.04 46.23 42.11

Minnesota 64.29 65.21 64.53 62.00 55.53 51.17

Wisconsin 68.58 68.50 68.15 67.66 71.52 57.75

Corn Belt

Iowa 51.95 48.51 43.73 46.99 40.74 31.66

Illinois 55.29 46.41 48.52 44.28 35.41 26.01

Indiana 56.57 58.68 53.32 55.95 48.44 43.04

Missouri 59.64 60.96 60.41 61.02 56.99 51.85

Ohio 39.98 40.66 41.21 39.97 35.39 27.02

South Central

Arkansas 70.37 62.49 59.76 65.46 65.84 62.66

Louisiana 62.14 67.91 62.61 69.85 59.19 68.12

Mississippi 92.67 66.30 87.94 87.44 86.01 80.10

Oklahoma 60.07 49.86 56.29 60.59 57.58 43.04

Texas 67.50 57.81 60.63 57.08 58.69 52.01

Northern Plains

Kansas 45.27 45.31 42.53 40.58 37.14 37.75

Nebraska 44.62 50.76 47.70 42.12 36.36 37.63

North Dakota 59.63 63.08 57.15 59.17 56.54 48.26

South Dakota 61.11 56.13 53.74 52.62 44.96 42.73

Mountain

Colorado 66.85 58.84 53.69 60.83 56.21 54.60

Idaho 61.81 41.56 42.70 35.98 63.16 41.25

Montana 72.51 88.09 71.42 79.77 64.24 76.53

Utah 74.81 71.06 52.78 60.11 65.44 47.54

Wyoming2

Pacific

California,

Arizona,

New Mexico 60.95 45.31 52.70 45.21 53.84 47.53

Hawaii2

Oregon 48.15 45.87 43.21 44.01 47.11 40.28

Washington 63.06 54.04 53.62 54.85 56.15 60.14

1 Equity-to-assets ratio = total equity/total assets, median values for each State shown. 2 Less than four observations.
19

Table 15—Local cooperative adjusted-equity-to-assets ratio1 by location, 2003 to 2008 

Region/

State 2003 2004 2005 2006 2007 2008

Northeast Percent

Maine 48.14 100.00 29.61 89.18 69.95 100.00

Massachusetts,

New Jersey,

New York 95.08 90.63 97.58 95.58 91.83 96.54

Pennsylvania 100.00 99.68 99.89 80.94 80.94 96.80

Southeast

Alabama 94.30 100.00 99.82 100.00 100.00 100.00

Florida, Georgia 95.83 99.35 100.00 80.62 88.02 87.16

Kentucky 97.69 100.00 98.45 98.22 100.00 98.71

Maryland2

North Carolina2

Tennessee 97.93 96.39 100.00 100.00 100.00 100.00

Virginia 97.13 98.98 90.37 88.10 92.44 71.36

Lake States

Michigan 86.62 91.58 94.82 88.84 93.79 92.87

Minnesota 97.70 94.25 94.33 96.20 91.75 93.81

Wisconsin 88.88 90.98 90.94 93.95 94.09 92.02

Corn Belt

Iowa 82.89 82.74 77.84 79.73 80.02 76.64

Illinois 87.46 85.23 87.16 78.97 79.54 75.28

Indiana 94.08 93.30 93.18 94.93 94.31 91.52

Missouri 89.97 91.83 93.13 94.89 95.25 96.35

Ohio 77.51 75.00 82.14 83.23 79.09 72.38

South Central

Arkansas 96.64 95.02 94.81 92.82 94.88 95.51

Louisiana 89.15 87.04 81.97 93.73 82.51 94.68

Mississippi 100.00 98.09 100.00 100.00 100.00 99.01

Oklahoma 83.55 87.31 87.56 88.98 87.58 90.08

Texas 96.23 87.49 90.58 89.37 89.56 90.37

Northern Plains

Kansas 85.50 91.39 82.63 85.34 90.93 84.31

Nebraska 91.07 90.23 89.96 88.23 86.90 82.87

North Dakota 93.10 93.68 91.12 93.96 94.42 94.91

South Dakota 93.66 95.38 97.40 94.82 93.19 93.68

Mountain

Colorado 85.96 92.94 88.38 94.10 87.85 89.68

Idaho 95.40 83.59 79.59 74.73 76.13 80.18

Montana 96.27 99.41 95.51 94.46 98.90 99.21

Utah 98.08 98.59 76.97 87.06 100.00 94.84

Wyoming2

Pacific

California,

Arizona,

New Mexico 96.67 89.10 88.16 86.14 88.98 84.76

Hawaii2

Oregon 76.40 77.29 79.36 83.82 84.84 66.28

Washington 91.75 89.65 89.63 93.80 90.25 91.28

1 Adjusted-equity-to-assets ratio = total equity/(total assets-current liabilities), median values for each State shown. 2 Less than four observations.
20

13) increased over time in Minnesota, Wisconsin, Iowa,

Illinois, Indiana, Missouri, Ohio, Kansas, Nebraska,

North Dakota, Colorado, and California, Arizona, and

New Mexico. The use of retained earnings appears to

be declining in Montana, Oregon, and Washington,

and about the same over the time period in Tennessee

and Oklahoma.

The ratio of equity to total assets measures the

use of equity to finance the cooperative and can be

considered a measure of solvency or financial strength.

Over the time series, it appears that less equity is being

used to finance assets across just about all States, espe‐

cially in 2008, when grain and oilseed and petroleum

price increases caused the value of inventories to vastly

increase (Table 14). States showing a marked decrease

in the equity‐to‐assets ratio in the time series include

Florida, Georgia, Kentucky, Michigan, Minnesota,

Wisconsin, Iowa, Illinois, Indiana, Missouri, Ohio,

Oklahoma, Texas, Kansas, Nebraska, and California,

Arizona, and New Mexico. No change is noted in

Tennessee, while Montana's ratio varied but went up in

2008.

Another measure of solvency of financial strength

is shown by the adjusted equity ratio, where total equi‐

ty is divided by total assets minus current liabilities.

When current liabilities are subtracted from assets, the

remainder is long‐term debt and total equity, so the

ratio shows the use of long‐term debt and equity to

finance the coopeative. A higher ratio indicates higher

solvency or a greater use of equity to finance opera‐

tions. A Median value of 100 indicates no use of long‐

term debt. The adjusted equity ratio indicated about an

equal number of States that increased and decreased

their use of long‐term debt (Table 15). Minnesota, Iowa,

Illinois, Indiana, Ohio, Texas, Idaho, California,

Arizona, and New Mexico, and Oregon increased their

use of long‐term debt, while Tennessee, Michigan,

Wisconsin, Missouri, Oklahoma, Colorado, and

Montana decreased their use of long‐term debt.

Kansas, North Dakota, South Dakota, and Washington

used aboout the same amount of long‐term debt over

the time series.

Future Plans and Actions

The final survey question asked if there were

changes being considered in current equity redemption

plans, what plans were being considered, and whether

other actions were being undertaken. No changes were

noted by 343 respondents. Changes in redemption

plans or actions undertaken are presented in Table 16.

Twenty‐two local cooperatives are considering a new

redemption plan, with a revolving plan and a base cap‐

ital plan both considered by seven cooperatives. For

actions considered, seven cooperatives are planning to

lower the age of redemption for their patron's age plan.

Two cooperatives had offered to redeem older equities

at a discount to speed up their redemption plan.

Members could accept speeded up payment at a dis‐

count or wait for their equities to be retired in their

normal time for full value.

Table 16—Changes in redemption plans or actions considered by local cooperatives

Frequency

of response Changes

Redemption plans considered

7 Revolving plan

7 Base capital plan

4 Patron's age

4 Percent of all equities

Actions considered or undertaken

7 Lowering the age on the patron's age plan

2 Discounting older equity values and redeeming them

1 Increasing the percentage of cash patronage

1 Starting a non-qualified allocated reserve
Summary

A primary objective of this study was to docu‐

ment equity redemption practices of cooperatives and

compare this information with practices used in a 1991

study. More than half of the respondents to the 2008

study also participated in the 1991 study, allowing a

strong basis for comparison. It was found in both stud‐

ies that most cooperatives redeemed their allocated

equity in the survey years, with larger cooperatives

more likely to do so. Small cooperatives that did not

redeem equity in 2008 most often stated that they were

financially unable to do so.

When comparing the two studies, the revolving

fund is now the most often used equity redemption

plan, at 49 percent in 2008, while the patrons' estates

plan was, in 1991, at 71 percent. Most cooperatives use

a combination of equity redemption plans, although 94

respondent local cooperatives in 2008, and 81 in 1991,

only used the revolving fund. A major change

occurred in the use of patrons' estates redemption: it

fell from 82 cooperatives only using this plan in 1991

to 32 in 2008. The use of corporate ownership of family

farms may be a major reason for the decline in the use

of patrons' estates redemption plans.

Cooperatives redeem equity when they have net

income and funds are available. Some local coopera‐

tives, especially grain and oilseed and farm supply

cooperatives, have allocated equities that are 17 or 18

years old. Even with older equities, though, it is

important for cooperatives to redeem allocated equi‐

ties when funds are available and not stress their bal‐

ance sheets or solvency in doing so.

Service and livestock, poultry, and wool local

cooperatives both have a revolvement period of 7

years or less. Cotton and cotton gins; other marketing;

and fruit, vegetable, and nut cooperatives also have a

shorter revolvement period of 11 years or less.

Most (74 percent) of the respondents were grain

and oilseed or farm supply cooperatives. Since most

grain and oilseed cooperatives sell some farm supplies

and many farm supply cooperatives market some

grain, their operations are very similar. Grain and

oilseed and farm supply cooperatives have a higher

proportion of retained earnings to total equity than

other types of cooperatives. Generally, retained earn‐

ings (unallocated equity) are generated by net income

from nonmember business, so those cooperatives must

have more nonmember business.

The benefits of using retained earnings are two‐

fold: retained earnings do not have to be revolved to

members, and losses can be written off from retained

earnings without lowering member equity accounts.

The downside of using more retained earnings is that

members can gradually lose their sense of control and

ownership of the cooperative, and as retained earnings

accumulate, they may want to take cash out by selling

the cooperative.

Equity financing has generally been decreasing,

with many cooperatives using more debt. Leverage

financing allows the cooperative to expand the busi‐

ness or its services and offer members higher rates of

return when profitable. However, leverage can

decrease solvency if there are unforeseen expenses or

an overall contraction of the economy or farming sec‐

tor.

With the recent overall crisis in the U.S. economy,

most experts are recommending a stronger balance

sheet, which means more equity financing.

Cooperatives most often accumulate equity capital

through net income allocated to members as patronage

refunds. To strengthen their balance sheets with more

equity financing in uncertain economic times, coopera‐

tives may need to lengthen their equity redemption

plans.

Bibliography

DeVille, Katherine, Jacqueline Penn, and Eldon

Eversull, Cooperative Statistics, 2008, U.S. Department

of Agriculture, Rural Development, Service Report 69,

October 2009.

Frederick, Donald, Tax Treatment of Cooperatives, U.S.

Department of Agriculture, Rural Development,

Information Report 23, May 1995.

Rathbone, Robert, and Roger Wissman, Equity

Redemption and Member Equity Allocation Practices

of Agricultural Cooperatives, U.S. Department of

Agriculture, Agricultural Cooperative Service,

Research Report 124, October 1993.

Royer, Jeffery, and Gene Ingalsbe, Equity Redemption

Guide, U.S. Department of Agriculture, Agricultural

Cooperative Service, Information Report 31, April

1983.

Vogelsang, Donald, John Bailey, Lloyd Biser, and

Eldon Eversull, Cooperative Organization and

Structure, U.S. Dept. of Agriculture, Agricultural

Cooperative Service, Information Report 1, Section 6,

21
22

Appendix Table 1—All respondents by State to the 1991 and 2008 surveys

Region/

State 1991 2008

Number

Northeast

Maine, Connecticut, Vermont 7 8

Massachusetts, New Jersey,

New York 29 18

Pennsylvania 19 12

Southeast

Alabama 17 6

Florida, Georgia 21 10

Kentucky 29 4

Maryland, Delaware 13 4

North Carolina 10 3

Tennessee 33 20

Virginia, West Virginia 52 9

Lake States

Michigan 31 16

Minnesota 217 82

Wisconsin 111 52

Corn Belt

Iowa 158 58

Illinois 93 57

Indiana 41 12

Missouri 30 31

Ohio 48 22

South Central

Arkansas 24 12

Louisiana 17 6

Mississippi 25 9

Oklahoma 48 19

Texas 116 50

Northern Plains

Kansas 106 46

Nebraska 92 31

North Dakota 102 54

South Dakota 67 27

Mountain

Colorado 29 13

Idaho 13 6

Montana 23 14

Utah 10 6

Wyoming 4 3

Pacific

California, Arizona,

New Mexico 105 36

Hawaii 4 4

Oregon 29 11

Washington 45 21

Total 1,818 792
23

Appendix Table 2—Equity redemption methods of local cooperatives reporting in 2008 and 1991

Redeem Redemption methods

equity

Year and Revolving Patrons' Patron's age1 Percent of Base capital

cooperative asset size N Yes fund estates all oldest first % to all all equities plan

2008 Number Percent

< $1 million 29 51.72 24.14 17.24 6.90 0.00 0.00 17.24 0.00

$1 mill. to $2.49 mill. 43 58.14 34.88 39.53 20.93 13.95 2.33 2.33 2.33

$2.5 mill. to $4.99 mill. 52 76.92 44.23 38.46 32.69 15.38 5.77 17.31 1.92

$5 mill. to $9.99 mill. 71 76.06 52.11 32.39 26.76 14.08 1.41 11.27 4.23

$10 mill. to $19.99 mill. 83 84.34 50.60 51.81 33.73 20.48 2.41 12.05 2.41$20 mill. to $49.99 mill. 74 91.89 51.35 62.16 32.43 21.62 4.05 17.57 2.70

≥$50 million 87 87.36 20.69 62.07 33.33 20.69 8.05 11.49 10.34

All 439 79.27 49.20 47.38 29.16 17.08 3.87 12.76 4.10

1991

< $1 million 54 87.04 24.07 59.26 5.56 n.a. n.a. n.a. 0.00

$1 mill. to $2.49 mill. 121 99.17 54.55 72.73 33.06 n.a. n.a. n.a. 0.00

$2.5 mill. to $4.99 mill. 94 98.94 54.26 73.40 23.40 n.a. n.a. n.a. 0.00

$5 mill. to $9.99 mill. 95 98.95 52.63 78.95 32.63 n.a. n.a. n.a. 2.11

$10 mill. to $19.99 mill. 37 100.00 64.86 78.38 35.14 n.a. n.a. n.a. 2.70$20 mill. to $49.99 mill. 14 100.00 50.00 64.29 42.86 n.a. n.a. n.a. 0.00

≥$50 million 24 100.00 75.00 41.67 8.33 n.a. n.a. n.a. 20.83

All 439 97.72 52.16 71.07 26.65 n.a. n.a. n.a. 1.82

N=Number of respondents1 “Oldest first” and “percent to all” are a form of redemption by patron's age, these two responses should add to “all”, except all respondents did not answer all questions.

“Patron's age”, “oldest first” and “percent to all”, and “percent of all equities” were not collected in the 1991 so are listed as n.a., not available
24

Appendix Table 3—Reasons for not redeeming equity in survey year, local cooperatives responding in 2008

and 19911

Total Building Little

asset size Unable equity equity

Percent

2008

< $1 million 27.59 10.34 17.24

$1 mill. to $2.49 mill. 30.23 16.28 6.98

$2.5 mill. to $4.99 mill. 17.31 9.62 3.85

$5 mill. to $9.99 mill. 14.08 1.41 2.82

$10 mill. to $19.99 mill. 15.66 8.43 2.41

$20 mill. to $49.99 mill. 2.70 9.46 1.35

≥$50 million 3.45 5.75 1.15

All 13.21 7.97 3.64

1991

< $1 million 9.26 16.67 14.81

$1 mill. to $2.49 mill. 9.92 0.83 24.79

$2.5 mill. to $4.99 mill. 9.57 1.06 23.40

$5 mill. to $9.99 mill. 15.79 1.05 31.58

$10 mill. to $19.99 mill. 16.22 24.32

$20 mill. to $49.99 mill. 21.43 28.57

≥$50 million 16.67 29.17

All 12.30 2.73 25.06

1 Where there are blank responses, information not available.
25

Appendix Table 4—Equity redemption by type for cooperatives responding in 2008 and 1991

Redeem Redemption methods

equity

Year and Revolving Patrons' Patron's age Percent of Base capitalcooperative asset size N Yes fund estates all oldest first % to all all equities plan

Number Percent

Cotton and cotton gin

All, 2008 24 75.00 62.50 16.67 4.17 0.00 0.00 8.33 12.50All, 1991 24 95.83 87.50 12.50 0.00 n.a. n.a. n.a. 4.17DairyAll, 2008 26 80.77 57.69 46.15 26.92 19.23 0.00 19.23 26.92All, 1991 26 96.15 76.92 57.69 15.38 n.a. n.a. n.a. 7.69Farm supplyAll, 2008 191 76.96 43.46 49.74 37.70 20.94 3.14 16.75 2.09All, 1991 191 99.48 47.12 82.20 31.94 n.a. n.a. n.a. 0.52Fruit, vegetable, and nutAll, 2008 28 75.00 75.00 3.57 0.00 0.00 0.00 3.57 14.29All, 1991 28 100.00 75.00 7.14 0.00 n.a. n.a. n.a. 17.86Grain and oilseedAll, 2008 150 86.67 48.00 63.33 32.00 20.67 7.33 14.00 1.33All, 1991 150 98.67 46.00 86.00 34.00 n.a. n.a. n.a. 0.00Livestock, poultry, and woolAll, 2008 10 40.00 40.00 0.00 0.00 0.00 0.00 0.00 0.00All, 1991 10 60.00 30.00 10.00 0.00 n.a. n.a. n.a. 0.00Other marketingAll, 2008 11 72.73 54.55 18.18 0.00 0.00 0.00 9.09 9.09All, 1991 11 100.00 54.55 36.36 0.00 n.a. n.a. n.a. 0.00ServiceAll, 2008 20 85.00 65.00 10.00 10.00 0.00 0.00 15.00 5.00All, 1991 20 95.00 70.00 30.00 15.00 n.a. n.a. n.a. 5.00

n.a. = not available.
26 Appendix Table 5—Farm supply cooperative equity redemption by asset size for cooperatives responding in 2008 and 1991

Redeem Redemption methods

equity

Year and Revolving Patrons' Patron's age Percent of Base capitalcooperative asset size N Yes fund estates all oldest first % to all all equities plan

Number Percent

2008

< $1 million 10 70.00 20.00 50.00 10.00 40.00 0.00

$1 mill. to $2.49 mill. 28 60.71 28.57 42.86 28.57 17.86 3.57 3.57

$2.5 mill. to $4.99 mill. 29 72.41 37.93 44.83 51.72 24.14 10.34 13.79

$5 mill. to $9.99 mill. 41 73.17 39.02 41.46 41.46 19.51 2.44 17.07 4.88

$10 mill. to $19.99 mill. 33 78.79 45.45 51.52 42.42 24.24 3.03 9.09 3.03$20 mill. to $49.99 mill. 28 92.86 60.71 64.29 28.57 17.86 21.43

≥ $50 million 16 87.50 75.00 56.25 43.75 18.75

Regionals 6 100.00 66.67 16.67 66.67 16.67

All 191 76.96 43.46 49.74 37.70 20.94 3.14 16.75 2.09

1991

< $1 million 29 96.55 27.59 82.76 10.34 n.a. n.a. n.a.

$1 mill. to $2.49 mill. 70 100.00 45.71 78.57 42.86 n.a. n.a. n.a.

$2.5 mill. to $4.99 mill. 38 100.00 47.37 89.47 31.58 n.a. n.a. n.a.

$5 mill. to $9.99 mill. 38 100.00 52.63 89.47 28.95 n.a. n.a. n.a. 2.63

$10 mill. to $19.99 mill. 10 100.00 80.00 80.00 50.00 n.a. n.a. n.a.$20 mill. to $49.99 mill. 0

≥ $50 million 0

Regionals 6 100.00 66.67 33.33 n.a. n.a. n.a.

All 191 99.48 47.12 82.20 31.94 n.a. n.a. n.a. 0.52

n.a. = not available.
27

Appendix Table 6—Grain and oilseed cooperative equity redemption by asset size for cooperatives responding in 2008 and 1991 

Redeem Redemption methods

equity

Year and Revolving Patrons' Patron's age Percent of Base capitalcooperative asset size N Yes fund estates all oldest first % to all all equities plan

Number Percent

2008

< $1 million 1 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

$1 mill. to $2.49 mill. 7 71.43 42.86 57.14 14.29 14.29

$2.5 mill. to $4.99 mill. 7 85.71 14.29 57.14 14.29

$5 mill. to $9.99 mill. 15 66.67 40.00 26.67 13.33 13.33 6.67

$10 mill. to $19.99 mill. 37 86.49 51.35 64.86 32.43 21.62 2.70 16.22$20 mill. to $49.99 mill. 40 92.50 42.50 70.00 37.50 25.00 7.50 17.50 2.50

≥ $50 million 42 95.24 2.38 73.81 42.86 23.81 16.67 14.29 2.38

Regionals 1 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

All 150 86.67 48.00 63.33 32.00 20.67 7.33 14.00 1.33

1991

< $1 million 3 100.00 33.33 100.00 n.a. n.a. n.a.

$1 mill. to $2.49 mill. 34 97.06 50.00 82.35 26.47 n.a. n.a. n.a.

$2.5 mill. to $4.99 mill. 37 97.30 43.24 89.19 27.03 n.a. n.a. n.a.

$5 mill. to $9.99 mill. 42 100.00 45.24 88.10 42.86 n.a. n.a. n.a.

$10 mill. to $19.99 mill. 23 100.00 56.52 78.26 30.43 n.a. n.a. n.a.$20 mill. to $49.99 mill. 9 100.00 22.22 100.00 66.67 n.a. n.a. n.a.

≥ $50 million 1 100.00 100.00 100.00 100.00 n.a. n.a. n.a.

Regionals 1 100.00 n.a. n.a. n.a.

All 150 98.67 46.00 86.00 34.00 n.a. n.a. n.a. 0.00

n.a. = not available.
28 Appendix Table 7—Equity redemption and types by asset size, 20081

Redeem Redemption methods

equity

Revolving Patrons' Patron's age2 Percent of Base capital

Cooperative asset size N Yes fund estates all oldest first % to all all equities plan

Number Percent

Local cooperatives

< $1 million 85 37.65 18.82 11.76 3.53 9.41 1.18

$1 mill. to $2.49 mill. 87 57.47 35.63 28.74 13.79 8.05 1.15 2.30 2.30

$2.5 mill. to $4.99 mill. 101 71.29 43.56 34.65 24.75 9.90 2.97 12.87 1.98

$5 mill. to $9.99 mill. 128 72.66 46.88 36.72 26.56 14.84 3.91 10.16 3.91

$10 mill. to $19.99 mill. 135 82.96 48.15 51.11 39.26 22.22 5.19 14.07 3.70$20 mill. to $49.99 mill. 119 86.55 49.58 63.87 35.29 20.17 5.88 15.13 1.68

≥$50 million 110 85.45 58.18 60.00 35.29 21.82 6.36 10.00 9.09

All 765 72.68 44.31 42.88 26.93 14.90 3.92 10.98 3.53

Regional cooperatives

< $2.5 million 5 60.00 20.00 20.00

$2.5 mill. to $9.99 mill. 3 66.67 33.33 33.33

$10 mill. to $19.99 mill. 5 80.00 80.00 20.00 20.00 20.00 20.00 20.00$20 mill. to $49.99 mill. 3 100.00 100.00 33.33

≥$50 million 11 90.91 54.51 27.27 18.18 9.09 54.55 27.27

All 27 81.48 55.56 14.81 11.11 7.41 0.00 33.33 18.52

N=Number of respondents1 Where there are blank responses, information not available.2 “Oldest first” and “percent to all” are a form of redemption by patron's age, these two responses should add to “all”, except all respondents did not answer all questions.
29

Appendix Table 8—Equity redemption by type of cooperative and asset size, 20081

Redeem Redemption methods

equity

Revolving Patrons' Patron's age2 Percent of Base capital

Cooperative asset size N Yes fund estates all oldest first % to all all equities plan

Number Percent

Cotton and cotton gin

< $1 million 2 50.00 50.00

$1 mill. to $2.49 mill. 8 75.00 37.50 12.50

$2.5 mill. to $4.99 mill. 8 62.50 50.00 12.50 25.00 25.00

$5 mill. to $9.99 mill. 6 83.33 100.00 16.67

$10 mill. to $19.99 mill. 2 100.00 100.00$20 mill. to $49.99 mill. 1 0.00

≥ $50 million 4 75.00 75.00 50.00 25.00

Regionals 3 66.67 66.67 33.33

All 34 70.59 61.76 11.76 2.94 0.00 0.00 5.88 14.71

Dairy

< $1 million 12 58.33 8.33 8.33 8.33 8.33 8.33

$1 mill. to $2.49 mill. 8 75.00 50.00 37.50 12.50 12.50 12.50

$2.5 mill. to $4.99 mill. 6 50.00 50.00 16.67 16.67 16.67 33.33

$5 mill. to $9.99 mill. 6 50.00 50.00 16.67

$10 mill. to $19.99 mill. 2 100.00 50.00 50.00 50.00 50.00 50.00$20 mill. to $49.99 mill. 1 0.00

≥ $50 million 10 100.00 40.00 80.00 100.00 33.33 60.00

Regionals 3 100.00 66.67 66.67 100.00 33.33 100.00 33.33

All 48 70.83 39.58 35.42 18.75 12.50 14.58 18.75

1 Where there are blank responses, information not available.2 “Oldest first” and ”percent to all” are a form of redemption by patron's age, these two responses should add to “all”, except all respondents did not answer all questions. 
30

Appendix table 9—Average cash patronage and average net worth to assets by cooperative type and size,

2008

Equity redemption in 2008 No equity redemption in 2008

Cash Cash

Cooperative patronage Net worth/ patronage Net worth/

asset size N1 paid assets N1 paid assets

Number Percent Number Percent

Cotton and cotton gin

< $1 million 1 29.99 96.16 1 100.00 55.70

$1 mill. to $2.49 mill. 6 76.63 57.77 2 54.14

$2.5 mill. to $4.99 mill. 5 77.21 54.80 3 49.88 59.16

$5 mill. to $9.99 mill. 5 75.81 55.22 1 77.88 40.35

$10 mill. to $19.99 mill. 2 41.18 45.72 0

$20 mill. to $49.99 mill. 0 1 77.24 27.57

≥ $50 million 3 56.70 21.09 0

Regionals 2 62.50 54.92 1 34.12

All 24 68.01 28.08 9 67.46 37.11

Dairy

< $1 million 7 100.00 57.40 5 60.00 20.22

$1 mill. to $2.49 mill. 6 56.68 26.42 2 63.91

$2.5 mill. to $4.99 mill. 3 27.39 63.95 3 20.00 32.85

$5 mill. to $9.99 mill. 3 40.67 26.70 3 100.00 10.13

$10 mill. to $19.99 mill. 2 23.91 58.20 0

$20 mill. to $49.99 mill. 0 1

≥ $50 million 10 37.48 30.02 0

Regionals 3 47.13 21.80 0

All 34 44.30 25.55 14 55.00 36.31

1 Values not shown if N is less than 3, information is not available, or if disclosure would reveal individual operations.
31

Appendix Table 10—Equity redemption by type of cooperative and asset size, 20081

Redeem Redemption methods

equity

Revolving Patrons' Patron's age2 Percent of Base capital

Cooperative asset size N1 Yes fund estates all oldest first % to all all equities plan

Number Percent

Farm supply

< $1 million 21 52.38 19.05 33.33 4.76 23.81

$1 mill. to $2.49 mill. 45 55.56 33.33 31.11 20.00 11.11 2.22 2.22

$2.5 mill. to $4.99 mill. 56 71.43 39.29 41.07 37.50 14.29 5.36 12.50

$5 mill. to $9.99 mill. 74 75.68 40.54 41.89 37.84 20.27 4.05 12.16 5.41

$10 mill. to $19.99 mill. 60 81.67 43.33 58.33 51.67 26.67 5.00 11.67 3.33$20 mill. to $49.99 mill. 45 93.33 55.56 68.89 40.00 22.22 15.56

≥ $50 million 26 84.62 57.69 69.23 40.00 12.50 11.54

Regionals 8 100.00 62.50 25.00 22.22 12.50 50.00 25.00

All 335 75.52 42.39 48.06 37.01 19.70 2.99 12.84 2.39

Fruit, vegetable, and nut

< $1 million 15 40.00 46.67

$1 mill. to $2.49 mill. 4 50.00 75.00 25.00 25.00

$2.5 mill. to $4.99 mill. 5 40.00 40.00

$5 mill. to $9.99 mill. 4 75.00 100.00 25.00

$10 mill. to $19.99 mill. 8 100.00 62.50 12.50$20 mill. to $49.99 mill. 4 75.00 75.00 25.00 25.00

≥ $50 million 7 57.14 85.71 14.29

Regionals 3 100.00 100.00

All 50 62.00 66.00 2.00 0.00 0.00 0.00 4.00 8.00

1 Where there are blank responses, information not available.2 “Oldest first” and ”percent to all” are a form of redemption by patron's age, these two responses should add to “all”, except all respondents did not answer all questions. 
32

Appendix table 11—Average cash patronage and average net worth to assets by cooperative type and size,

2008

Equity redemption in 2008 No equity redemption in 2008

Cash Cash

Cooperative patronage Net worth/ patronage Net worth/

asset size N1 paid assets N1 paid assets

Number Percent Number Percent

Farm supply

< $1 million 11 44.27 79.92 9 25.00 77.36

$1 mill. to $2.49 mill. 25 43.87 69.56 18 41.25 65.01

$2.5 mill. to $4.99 mill. 40 39.97 61.94 11 43.37 53.32

$5 mill. to $9.99 mill. 56 40.96 58.76 11 56.63 46.24

$10 mill. to $19.99 mill. 49 35.78 50.08 8 30.07 40.12

$20 mill. to $49.99 mill. 42 40.03 43.26 3 70.00 30.83

≥ $50 million 22 38.11 31.99 4 33.81 29.19

Regionals 8 48.57 36.18

All 253 39.91 39.21 64 41.55 37.32

Fruit, vegetable, and nut

< $1 million 6 60.00 58.24 7 100.00 77.83

$1 mill. to $2.49 mill. 2 59.29 1 49.65

$2.5 mill. to $4.99 mill. 2 29.05 58.38 3

$5 mill. to $9.99 mill. 3 70.89 46.06 0

$10 mill. to $19.99 mill. 8 72.22 39.45 0

$20 mill. to $49.99 mill. 3 43.25 37.98 0

≥ $50 million 4 58.60 33.97 3 87.46 34.25

Regionals 3 20.67 36.30 0

All 31 54.11 34.83 14 72.47 33.99

1 Values not shown if N is less than 3, information is not available, or if disclosure would reveal individual operations.
33

Appendix Table 12—Equity redemption by type of cooperative and asset size, 2008

Redeem Redemption methods

equity

Revolving Patrons' Patron's age2 Percent of Base capital

Cooperative asset size N1 Yes fund estates all oldest first % to all all equities plan

Number Percent

Grain and oilseed

< $1 million 5 20.00 20.00 20.00

$1 mill. to $2.49 mill. 18 61.11 33.33 38.89 11.11 5.56

$2.5 mill. to $4.99 mill. 18 83.33 38.89 50.00 11.11 5.56 11.11

$5 mill. to $9.99 mill. 33 66.67 39.39 39.39 18.18 12.12 6.06 12.12

$10 mill. to $19.99 mill. 57 80.70 47.37 56.14 35.09 22.81 7.02 19.30 1.75$20 mill. to $49.99 mill. 60 88.33 41.67 73.33 36.67 20.00 11.67 13.33 1.67

≥ $50 million 49 93.88 61.22 71.43 36.67 14.29 2.04

Regionals

All 241 80.50 45.23 58.51 29.46 17.43 8.30 13.28 1.24

Livestock, poultry, and wool

< $1 million 12 8.33 8.33

$1 mill. to $2.49 mill. 0

$2.5 mill. to $4.99 mill. 1 100.00 100.00

$5 mill. to $9.99 mill. 1 100.00 100.00 100.00

$10 mill. to $19.99 mill. 2 100.00 100.00$20 mill. to $49.99 mill. 0

≥ $50 million 1

Regionals 0

All 18 27.78 27.78 5.56 0.00 0.00 0.00 0.00 0.00

1 Where there are blank responses, information not available.2 “Oldest first” and ”percent to all” are a form of redemption by patron's age, these two responses should add to “all”, except all respondents did not answer all

questions
34

Appendix table 13—Average cash patronage and average net worth to assets by cooperative type and size,

2008

Equity redemption in 2008 No equity redemption in 2008

Cash Cash

Cooperative patronage Net worth/ patronage Net worth/

asset size N1 paid assets N1 paid assets

Number Percent Number Percent

Grain and oilseed

< $1 million 1 67.96 4 71.93

$1 mill. to $2.49 mill. 11 51.37 62.02 6 59.78 56.69

$2.5 mill. to $4.99 mill. 15 45.36 46.57 3 30.00 49.06

$5 mill. to $9.99 mill. 22 43.76 39.23 10 49.99 31.46

$10 mill. to $19.99 mill. 46 39.26 34.20 7 42.46 22.05

$20 mill. to $49.99 mill. 53 40.06 26.70 6 33.33 24.99

≥ $50 million 46 38.90 21.65 3 60.00 18.62

Regionals

All 194 40.19 24.00 40 46.16 26.39

Livestock, poultry, and wool

< $1 million 1 11 100.00

$1 mill. to $2.49 mill. 0 0

$2.5 mill. to $4.99 mill. 1 52.03 35.84 0

$5 mill. to $9.99 mill. 1 23.29 0

$10 mill. to $19.99 mill. 0 1 11.48

$20 mill. to $49.99 mill. 2 49.67 30.18 0

≥ $50 million 0 1 22.64

Regionals 0 0

All 5 50.85 29.73 13 0.00 21.31

1 Values not shown if N is less than 3, information is not available, or if disclosure would reveal individual operations.
35

Appendix Table 14—Equity redemption by type of cooperative and asset size, 2008

Redeem Redemption methods

equity

Revolving Patrons' Patron's age2 Percent of Base capital

Cooperative asset size N1 Yes fund estates all oldest first % to all all equities plan

Number Percent

Other marketing

< $1 million 7 14.29

$1 mill. to $2.49 mill. 3

$2.5 mill. to $4.99 mill. 4 100.00 75.00 25.00 25.00

$5 mill. to $9.99 mill. 4 75.00 75.00

$10 mill. to $19.99 mill. 3 100.00 66.67 33.33 33.33 33.33$20 mill. to $49.99 mill. 6 50.00 33.33 16.67 16.67 16.67 33.33

≥ $50 million 11 63.64 45.45 27.27 9.09 9.09 9.09

Regionals 2 100.00 50.00 50.00

All 40 57.50 40.00 15.00 10.00 5.00 0.00 7.50 7.50

Service

< $1 million 11 36.36 18.18 9.09 18.18

$1 mill. to $2.49 mill. 1

$2.5 mill. to $4.99 mill. 3 66.67 66.67

$5 mill. to $9.99 mill. 0

$10 mill. to $19.99 mill. 2 100.00 100.00$20 mill. to $49.99 mill. 0

≥ $50 million 2 100.00 50.00

Regionals 7 57.14 28.57 28.57

All 26 53.85 34.62 3.85 0.00 0.00 0.00 15.38 0.00

1 Where there are blank responses, information not available.2 “Oldest first” and ”percent to all” are a form of redemption by patron's age, these two responses should add to “all”, except all respondents did not answer all questions.
36

Appendix table 15—Average cash patronage and average net worth to assets by cooperative type and size,

2008

Equity redemption in 2008 No equity redemption in 2008

Cash Cash

Cooperative patronage Net worth/ patronage Net worth/

asset size N1 paid assets N1 paid assets

Number Percent Number Percent

Other marketing

< $1 million 1 96.92 5 20.71

$1 mill. to $2.49 mill. 0 3 100.00 22.83

$2.5 mill. to $4.99 mill. 4 35.16 64.79 0

$5 mill. to $9.99 mill. 3 46.67 43.99 1 100.00 19.65

$10 mill. to $19.99 mill. 3 42.50 57.57 0

$20 mill. to $49.99 mill. 3 30.00 60.51 3 36.55 60.31

≥ $50 million 7 71.19 38.98 4 25.76 42.37

Regionals 2 30.00 18.50 0

All 23 39.63 38.75 16 72.46 43.50

Service

< $1 million 4 68.90 91.55 6 60.61

$1 mill. to $2.49 mill. 0 1 100.00 94.49

$2.5 mill. to $4.99 mill. 2 75.00 71.51 0

$5 mill. to $9.99 mill. 0 0

$10 mill. to $19.99 mill. 2 60.66 43.08 0

$20 mill. to $49.99 mill. 0 0

≥ $50 million 2 38.29 80.13 0

Regionals 4 27.64 82.89 2 100.00 38.07

All 14 48.22 75.23 9 100.00 53.45

1 Values not shown if N is less than 3, information is not available, or if disclosure would reveal individual operations.
U.S. Department of Agriculture

Rural Business–Cooperative Service

Stop 3250

Washington, D.C. 20250-3250

Rural Business–Cooperative Service (RBS) provides research,

management, and educational assistance to cooperatives to

strengthen the economic position of farmers and other rural

residents. It works directly with cooperative leaders and

Federal and State agencies to improve organization,

leadership, and operation of cooperatives and to give guidance

to further development.

The cooperative segment of RBS (1) helps farmers and other

rural residents develop cooperatives to obtain supplies and

services at lower cost and to get better prices for products they

sell; (2) advises rural residents on developing existing

resources through cooperative action to enhance rural living;

(3) helps cooperatives improve services and operating

efficiency; (4) informs members, directors, employees, and the

public on how cooperatives work and benefit their members

and their communities; and (5) encourages international

cooperative programs. RBS also publishes research and

educational materials and issues Rural Cooperatives magazine.

The U.S. Department of Agriculture (USDA) prohibits

discrimination in all its programs and activities on the basis of

race, color, national origin, age, disability, and where

applicable, sex, marital status, familial status, parental status,

religion, sexual orientation, genetic information, political

beliefs, reprisal, or because all or a part of an individual's

income is derived from any public assistance program. (Not all

prohibited bases apply to all programs.) Persons with

disabilities who require alternative means for communication

of program information (Braille, large print, audiotape, etc.)

should contact USDA's TARGET Center at (202) 720-2600

(voice and TDD). To file a complaint of discrimination write to

USDA, Director, Office of Civil Rights, 1400 Independence

Avenue, S.W., Washington, D.C. 20250-9410 or call (800) 795-

3272 (voice) or (202) 720-6382 (TDD). USDA is an equal

opportunity provider and employer.