United States

Department of

Agriculture

Economics,

Statistics, and

Cooperatives Service

Cooperative

Information

Report No. 2 7

Small Fresh Fruit

and Vegetable

Cooperative

Operations

Fred E. Hulse

Gilbert W. Biggs

Roger A. Wissman
SMALL FRESH FRUIT AND VEGETABLE COOPERATIVE

OPERATIONS. Fred E. Hulse, Gilbert W. Biggs, and Roger A.

W&man. Cooperatives Program; Economics, Statistics, and Cooperatives Service; U.S. Department of Agriculture. Cooperative Information

Report No. 27.

ABSTRACT

Thirty-four small fruit and vegetable cooperatives using different

sales methods-auctions, sales agencies, and their own sales staffsvaried importantly in number and type of services provided, production

and marketing supplies handled, grower payment methods, grower marketing agreements, and financing methods used. Their operating problems and causes for the demise of four cooperative operations are reviewed. A set of guidelines directed to the organization and operation needs of

small fruit and vegetable cooperatives is included.

Keywords: Organization, operation, sales methods, financing, guidelines,

fruits, vegetables, cooperatives

This publication supersedes FCS Information 106, “Small Fresh Fruit

and Vegetable Cooperative Operations,” June 1977.

Issued in June 1980

Reviewed and Approved for Reprinting January 1990

By Agricultural Cooperative Service
This report supersedes FCS Information 106. Substantial modifications in the original report have been made to better fill current requests

for information on small fruit and vegetable cooperatives. New emphasis

is on the functions performed by the 34 cooperatives studied rather than

on the commodities they handle. Guidelines have also been revised substantially to emphasize important requirements in organizing fruit and

vegetable cooperatives for most efficient and effective operations.

CONTENTS

Page

... Highlights ............................................... 111

Introduction .............................................. 1

Organizational structure. ................................... 2

Membership ......................................... 2

Management ......................................... 3

Employees ........................................... 5

Products ................................................. 5

Sales methods ............................................ 6

Auctions ............................................ 6

Using own sales staffs. ................................. 8

Using sales agencies. .................................. 11

Financing ................................................ 13

Operating problems. ....................................... 16

Current status of the 34 cooperatives. ......................... 19

Guidelines for organization and operation. ..................... 20

Feasibility study. ..................................... 20

Other considerations. ................................. 23

The organizing committee. ............................. 25

Special rules for success. ............................... 26

ii
HIGHLIGHTS

This study provides fruit and vegetable growers with information on

34 small fruit and vegetable cooperatives, how they served their members,

and how similar operations might provide other producers with marketing,

supply purchasing, and other services.

Most had product sales of less than $1 million annually. Membership averaged 262. Twenty-nine cooperatives had an average of three fulltime employees. All 34 associations employed an average of 57 part-time

workers. All but five employed full-time, year-round managers.

Thirteen handled primarily fruits and 21 handled mostly vegetables.

Five handled some combination, although the primary emphasis was on

fruits or vegetables.

Operations were influenced by the kind of products handled, kinds

of marketing services provided, and particularly by the sales methods

used. Seven used auction sales. Nineteen handled sales using their own

staffs, and eight used sales agencies.

Cooperatives using auction sales primarily handled vegetables. The

products were usually packed on the farm, but Federal-State inspectors

were available to check grades at most auction markets. All auctions

made sales for growers’ accounts.

Cooperatives using their own sales staffs to market members’ products assumed responsibility for the quality and condition of products sold

to buyers often located many miles from the production area. Available

marketing services enhanced the value of products marketed, but they

also helped develop packs of consistent quality. Those services most

widely used by these organizations included grading, cooling, storing,

packing, washing, and arranging for transportation. About half of these

cooperatives provided farm chemicals, fertilizer, seed, packaging, and

other supplies.

Sales by cooperatives using their own staffs were made directly to

buyers, through brokers, and on a consignment basis. Direct sales were

most widely used and consignments were used sparingly. Buyers purchasing directly were mostly wholesalers and retail chains. Buying

brokers and processors also made some direct purchases.

. . .

III
Payment for growers’ individual accounts was the most important

grower payment method used by about two-thirds of the cooperatives

handling their own sales, and the other third used pooling. Marketing

agreements were used by about half of the associations handling their

own sales.

Cooperatives using sales agencies were primarily fruit handlers. All

of these organizations provided washing, grading, cooling, packing, and

storage services. Like the local cooperative, the associated sales agency

enforced rigid standards of product quality to protect its reputation and

that of any brands or trademarks used to identify products it marketed.

Pooling was the primary grower payment method of cooperatives

using sales agencies. Also, marketing agreements were used by most of

these cooperatives.

Financial assets of cooperatives using auctions were substantially

less than those of the other associations. Equity capital equaled about

two-thirds of assets for associations using auctions and sales agencies, but

only a little more than one-third for associations handling their own sales.

This low level of equity was influenced by three cooperatives which had

been recipients of grant monies, and was not typical of operations

generally.

Some of the associations borrowed from the banks for cooperatives

and a few had loans guaranteed by the Farmers Home Administration. A

commonly used method of obtaining equity capital was to retain part of

the members’ patronage refunds. Another method was to retain for each

unit handled a specified amount as a per unit capital retain. Revolving

funds were the most common method used to return members’ equity.

Reported operating problems were mostly labor related or had to do

with obtaining or maintaining sufficient product volume. Four cooperative

cases are briefly reviewed to provide insight to reasons for termination.

Of the 34 cooperatives surveyed in 1974, 28 were active in 1979.

Product sales data for 25 of these 28 cooperatives showed little change in

operating volume when deflated to 1974 dollars. No major changes were

noted in operations of these cooperatives since 1974.

A set of guidelines for organization and operation of a cooperative is

presented. These guidelines are especially directed to the needs of small

fruit and vegetable cooperatives.

iv
Small Fresh Fruit and Vegetable

Cooperative Operations

Fred E. H&e, Gilbert W. Biggs, and Roger A. W&man*

INTRODUCTION

This report describes operations of 34 small fruit and vegetable

cooperatives in the United States. It provides fruit and vegetable growers

information on how these small yet diverse cooperatives served the needs

of their members, and how other such operations might be formed to provide producers with marketing, supply purchasing, or other services.

Operations of all fruit and vegetable marketing cooperatives having

annual product sales of $1 million or less in 1974 and four cooperatives

that failed in the early seventies are examined. Two of the 34 cooperatives

studied had product sales of more than $1 million and six had combined

product and supply sales in excess of $1 million. Guidelines are also

presented for the organization and operation of small fruit or vegetable

cooperatives.

The 34 small fresh fruit and vegetable marketing cooperatives

examined in this report vary considerably in products handled, business

volume, services provided, facilities used, location with respect to

markets, and many other ways. Although these differences appear very pronounced, all operations had the common objective of providing efficient

marketing services and used one of three basic sales patterns: auction

sales, sales through a marketing agency, or sales by the cooperative’s own

staff. These associations provide examples of how small producers have

worked together to build marketing organizations, meet problems, and

seek solutions.

* The authors are agricultural economists in the Economics, Statistics, and Cooperatives

Service; U.S. Department of Agriculture.

1
Five of the cooperatives included here handled both fruits and vegetables. One classified as a fruit association handled a small volume of

vegetables and the others classified as vegetable associations handled

small volumes of fruit. Two of the five operated as auction markets and

three handled their own sales.

Fruit cooperatives provided more packing facilities, but fewer

supply services than vegetable cooperatives. Eleven of the 13 fruit

associations had packing facilities, and 13 of 21 vegetable associations

packed produce. Seventeen of 21 vegetable associations, and 8 of 13 fruit

associations offered supply services.

These cooperatives have realized varying degrees of success. Differences apparently stemmed from membership needs and area of

operation. The degree of effectiveness depended on member commitment

and management skills in handling operations.

Fruit cooperatives are generally more difficult to organize than

vegetable cooperatives because of the nature of production. Fruit trees

require several years to reach bearing age, while most vegetable crops are

harvested in the year planted. Producers can do little in the short run to

alter fruit production once it is underway. Initially, this may make grower

commitment of the necessary tonnage for operations a difficult objective

to attain. But, in the longer term, these production characteristics of fruit

generate strong producer commitment to ongoing cooperatives and generally result in those associations having stronger financial positions than

vegetable cooperatives.

ORGANIZATIONAL STRUCTURE

The organizational structure of these small fresh fruit and vegetable

cooperatives varied in membership requirements, numbers and terms of

officers, management responsibilities, and number of employees. Differences generally originated with the requirements of producer-members

and economic conditions at the time of organization.

Membership

Membership of the 34 associations averaged 262. Since organization, the combined membership of these cooperatives has doubled.

2
Twenty-one vegetable associations averaged 359 members; 13 fruit associations averaged 106 members. Those associations with the largest memberships generally served smaller producers.

Membership in these cooperatives was open to all who qualified as

producers and met the other conditions established by each cooperative.

Four citrus cooperatives required written application for membership, and approval by a majority vote of the board of directors. No entrance, organization, or membership fee was charged. However, new

members were required to file an agreement to abide by all bylaws, rules,

and regulations and to use the cooperative’s facilities for packing and

marketing their citrus. Marketing agreements were used by all four citrus

cooperatives.

Membership in nine cooperatives handling deciduous fruit required

board approval and the signing of an agreement accepting bylaws and

other rules. Eight of these nine cooperatives required new members to

have some type of financial interest in the cooperative. Five charged a

nominal membership fee, while three others required an investment of

one share of common stock. Four required members to sign a marketing

agreement.

Bylaw and regulation compliance as a condition of membership in

the vegetable cooperatives was similar to that of the fruit cooperatives.

Sixteen of 21 vegetable cooperatives assessed a nominal entrance fee or

small annual charge. Four of the remaining five required the purchase of

one share of common stock. Seven of these cooperatives used marketing

agreements.

One-member, one-vote was the general principle for exercising

member control of these fruit and vegetable cooperatives. Five cooperatives allowed additional votes for some stipulated amount of member

equity.

Management

Management responsibility in a cooperative is divided three ways:

among the board of directors, hired management, and members. The

board of directors is generally responsible for association policy, operational plans, operational evaluations, establishment of controls, and approval of distribution of net savings. Hired management is responsible for

3
implementing policy and plans, supervising operations, and assisting the

board in its duties. Members have responsibilities for adopting and

amending articles and bylaws, approving changes in the association’s

capital structure, facilities and services, electing or removing directors,

and requiring officers and directors to be in compliance with incorporation and bylaw provisions.

Directors and Officers

The number of directors in the 34 cooperatives ranged from 5 to 20,

with three-quarters of the boards numbering 7 to 9 directors. Term of office ranged from 1 to 4 years with more than half of the associations electing directors for 3-year staggered terms.

Boards usually elected officers at their first meeting after the annual

meeting. Presidents and vice presidents were required to be directors but,

in most cases, secretaries and treasurers were not required to be directors.

Boards had authority to appoint committees for studying and

recommending action on various policies and operations. However, 18 of

the 34 boards operated without committees. Seven boards had 1 committee, four had 2 committees, three had 3 committees, one had 7 committees and one had 11 committees.

Of those boards using committees, four had an annual meeting committee and three had an executive committee. Other committees were appointed to study and recommend action on facility, finance, marketing,

and public relations matters.

Hired Management

Hired management of these 34 cooperatives ranged from part-time

help to a full-time management team. Managers of 29 of these

cooperatives were full-time, year-round employees. Three of the five parttime managers served auction associations.

Managers’ most immediate concern depended on the services provided by the cooperative. If, for instance, the cooperative had packing

facilities, a considerable part of the manager’s time was given to supervision of grading and packaging, particularly if sales were made through

a large marketing cooperative, joint sales agency, or other marketing

organization. If the cooperative handled its own sales, a large part of the

manager’s time involved marketing.

4
Employees

All 34 of the cooperatives employed part-time workers and 29

employed full-time workers. Including workers employed in seasonal

harvest operations, the number of part-time employees averaged 57. Fulltime workers averaged three with little variation between types of operations. Part-time employees averaged 23 for auctions, 36 for associations

handling their own sales, and 138 for cooperatives using sales agencies.

PRODUCTS

Operations of the 34 cooperatives have been influenced not only by

the kinds of products marketed for their members, but by the kinds of

marketing services provided to move those products into the channels of

trade. Services performed provide a more revealing basis for analyzing

operations than do products sold.

Fruit cooperatives handle fewer products than vegetable cooperatives. However, when number of products handled is considered on the

basis of kind of sales operation, five of seven cooperatives operating auction sales handled three or more products, and three of those seven cooperatives handled six or more products (table 1). This is in sharp contrast

with six of eight cooperatives using sales agencies that handled no more

than two products. The 19 cooperatives making their own sales were more

evenly divided, with 11 handling no more than three products and 8

handling four or more products.

Table l-Products handled by the 34 cooperatives

Commodities

handled Auction

sales

Cooperatives usingOwn sales

staffs

Sales

agencies

Total

1 1

2 1

3 2

4 0

5 0

6 or more 3

Total 7

Number

3 4 8

2 2 5

6 1 9

1 0 1

2 1 3

5 0 8

19 8 34

5
SALES METHODS

The seven auction cooperatives were, with one exception, vegetable

associations. The cooperatives using sales agencies included all four

citrus cooperatives, three deciduous fruit cooperatives, and one vegetable

cooperative. Fourteen vegetable associations and five deciduous fruit

associations handled their own sales.

Auctions

Product sales of the seven auction associations ranged from

$108,500 to $1,417,725 in the year studied. Five had production or marketing supply sales ranging from $2,800 to an estimated $510,500 during

the same period.

Services included providing the auction facilities and making

packaging supplies available to growers (table 2). Washing, grading, cooling, packing, and storage services were provided on a limited basis. Only

one or two cooperatives were involved in offering each service. Two auction associations handled production supplies-one offering fertilizer,

the other farm chemicals.

Auction associations have been concerned with having available the

kind and quality of products that attract buyers. Buyers’ wants have been

generally well known. Auction managers pass this information on to

growers in the market area. They also keep prospective buyers informed

about auction opening dates, product availability, and condition. Prices

and general product availability information is provided by Federal and

State market news services and through managers’ contacts with buyers.

This information was relayed to growers mostly through the local media

and in personal contacts.

Growers usually packed their products on the farm, but FederalState inspectors have been available at many auctions to check grades,

either as a requirement of growers doing business there, or when buyers

requested that grading be checked.

All seven auctions made sales for growers’ accounts. Auction costs

were covered by block fees or package charges. Block fees ranged from 3

to 10 percent of sales for four associations. Package charges of 8 cents for

each lug of tomatoes worked well for an auction that handled only this

one product.

6
Table 2-Services and products supplied to members by the 34 cooperatives

Cooperatives usingService or supply Total

provided Auction Own sales Sales

sales staffs agencies

Number

Marketing services:

Sales

Harvesting

Washing

Grading

Cooling

Packing

Icing

Trucking 2

Storage

Weighing

One or more services

Production and

marketing supplies:

Fertilizers

Seeds

Plants

Chemicals

Packaging materials

Tires and hardware

One or more supplies

7 19 8’ 34

0 1 5 6

1 14 8 23

2 18 8 28

1 17 8 26

1 15 8 24

0 5 0 5

0 13 5 18

2 16 8 26

0 1 0 1

7 19 8 34

9 2 12

9 0 9

6 0 6

11 2 14

9 2 16

4 0 4

16 4 25

’ Eight associations depended on a cooperative sales agency or an exclusive sales agent to

make their sales, but the local cooperative remains basically responsible for arranging for

marketing members’ products.

’ Service generally consisted of arranging for transport, not supplying it.

Charges for other services provided and margins on supplies sold

were sources of income for some associations, but some services such as

the use of grading equipment were made available to growers at cost.

Other sources of income for these auctions included the rental of facilities

to firms engaged in associated agricultural enterprises such as an egg

marketing operation.

The seven auctions sold primarily to local roadside market operations or to brokers. The brokers were actually buying brokers who pur7
chased produce for their own accounts and shipped to unidentified principals, a common practice in the produce business. Five of the seven auctions estimated that brokers purchased 70 percent or more of their

volume.

Some auctions provided offices for buyers at no cost. Others provided special loading platforms or other facilities to attract buyers and

expedite sales.

Using Own Sales Staffs

Produce receipts of the 19 cooperatives making their own sales

ranged from $70,000 to $844,200 in 1974. Sixteen had production or

marketing supply sales ranging from $6,300 to $621,500 during the same

period. Fertilizers and farm chemicals accounted for the bulk of supply

sales value by these 16 cooperatives.

In addition to sales and supplies, grading service was provided by 18

of these 19 cooperatives, cooling by 17, storage by 16, packing by 15,

washing by 14, and some trucking services by 13 (table 2). Much of the

trucking service provided was limited to arranging for transportation of

purchased products. Other marketing services provided on a limited basis

included icing, weighing, and harvesting.

About half of the 19 cooperatives handling their own sales provided

supplies such as farm chemicals, fertilizer, seeds, or packaging materials.

Some provided plants, tires, or hardware.

In contrast with the auction associations that provided essentially a

place for growers to sell their produce and an auctioneer to conduct the

sale, those cooperatives handling their own sales became the sellers and

assumed responsibility for the quality and condition of the product sold

to buyers often located many miles from the production area. Although

many of the marketing services these cooperatives provided their

members enhanced the value of the product marketed, they also helped

develop packs of consistent product size and quality. Cooling was widely

used for products requiring it. Most of the cooperatives providing

grading services used Federal-State inspectors. Products thus serviced

assured quality and protected both the cooperative and their buyers from

the consequences of inferior or mislabeled packs.

8
Many fruit and vegetable cooperatives have used brands to identify

their products. Following usual marketing strategy, they put their brand

only on products of identified quality, such as one brand for products

graded U.S. No. 1 and another for products graded U.S. No. 2. They then

advertised those brands as representing those qualities.

Products packaged and branded by those cooperatives handling

their own sales were distributed through the wholesale trade, and the

value of their brands was limited to the impact on that trade. None of

these organizations handled sufficient volume to efficiently package

products in consumer-sized packs and none had advertising budgets

substantial enough to reach consumers in a meaningful way.

Advertising budgets of these 19 cooperatives were small-mostly

less than $1,000, but a few ranged up to $4,000 annually. Funds may have

been allocated to a variety of uses, but half or more of the cooperatives’

available monies were spent as follows: six used newspapers, five used

trade papers, five used credit rating directories, two used radio or television, and one used a commodity program. This put the emphasis on

trade advertising which is the logical choice considering the limitations of

brand impact and market exposure.

Cooperatives using their own sales staffs sold directly to buyers,

through brokers, or consigned products for sale on a commission basis.

Only 5 of the 19 cooperatives used one method of sale exclusively. T W O

made all sales directly and three made all sales through brokers. HOWever, 11 of these cooperatives used the direct method for most of their

sales. Four used brokers for most of their sales, and only one used the

consignment method for more than half its sales. Two divided their sales

about equally between direct and broker methods and one divided its

sales about equally between direct and consignment methods.

One particular method of sale can be as good or bad as another

depending on the cost of using it, the integrity of the principals involved,

and the availability of services. However, the use of a method probably

provided the best measure of its worth for the 19 cooperatives. Direct

sales were used most widely. Consignment sales were used only sparingly,

and most times only as a last ditch measure.

These cooperatives sold primarily to wholesalers or retail chain

stores. Six cooperatives made a major part of their sales to wholesalers

and five shipped mostly to retail chains. Two sold only to brokers (buying

9
brokers), as did many of the auction associations, and three sold only to

processors.

The type of buyer may not have been as important as individual

buyer’s requirements for particular products and services and their

reliability as business people and credit risks. Prompt payment for the

products and services provided has been extremely important for these

small cooperatives and their members.

Methods of Grower Payment

Grower payment methods used by the 19 cooperatives handling

their own sales included payment on growers’ individual accounts or on a

pooling basis. Twelve of these associations made payments on a grower’s

individual account basis exclusively. Five used pooling exclusively and

two used a combination of payment for growers’ individual accounts and

pooling.

Pools set up by vegetable associations were of either daily or weekly

duration. Seasonal pools were used by fruit associations. Differences in

the length of pools often reflected crop perishability and price stability.

Vegetable prices usually are more inclined to fluctuate than fruit prices,

and lead to the use of shorter term pools.

The use of more than one payment method by one cooperative was

related to end product uses. Pooling was used for processed product and

an individual account basis used for fresh sales. For another association,

short crops meant payment on an individual account basis and large

crops meant pooling returns.

Operating costs were covered in a number of ways. Some associations handling their own sales covered costs with a percentage of gross

sales charge. Some made a flat charge for each unit of product graded

and packed. Some included selling costs in this umt charge. Others combined unit charges for handling with a percentage selling charge. Also,

charges were made for other services provided growers. Margins on supplies sold provided additional income.

Marketing Agreements

Members are usually asked to make marketing commitments either

as a condition of membership or in separate written contracts called

marketing agreements. Provisions in some bylaws have been very specific

about the obligations of growers and the cooperative with respect to such

10
things as delivering all products for marketing, assessment of costs for

grading and packing, terms and conditions of payments to growers, and

damages to be assessed for nonperformance. Marketing agreements may

reinforce bylaw provisions, but in all cases they provide the opportunity

to specify any cooperative rules or conditions with respect to marketing

procedures.

Nine of the 19 cooperatives making their own sales used marketing

agreements, in contrast to none being used by the seven auction associations. Where marketing agreements have been used, their main feature

has been to commit all of the members’ products to the cooperative for

marketing. Three cooperatives had agreements allowing growers to

deliver less than their total crop. One required at least 80 percent of the

crop to be delivered if the cooperative helped the grower finance frost

protection.

Using Sales Agencies

Produce receipts of the eight cooperatives using sales agencies to

market their products ranged from $209,406 to $846,031 in 1974. Four

had production or marketing supply sales ranging from $700 to $143,000

during the same period, with packaging materials accounting for the

major part of these sales.

Four of these organizations were citrus cooperatives and Sunkist affiliates, and two were deciduous fruit cooperatives and Blue Anchor

affiliates. An apple cooperative used an independent sales agent as did a

tomato cooperative. These arrangements shift the day-to-day responsibility

for sales from the local cooperative to a specialized staff with broad

market contacts and more comprehensive market information. Such arrangements release local management to spend more time in supervising

the performance of other services.

All eight cooperatives using sales agencies to market their products

performed washing, grading, packing, cooling, and storage services (table

2). Five of these associations, including four citrus cooperatives, provided

their growers harvesting services. Five associations arranged trucking

services for their customers.

Four of the eight associations provided some kind of production or

marketing supplies. Fertilizer, agricultural chemicals, and packaging

materials were each provided by two of the eight cooperatives.

11
Like the cooperatives that provided their own sales services, those

using sales agencies assumed responsibility for the quality and condition

of the packed product. In addition to the local cooperative, the associated

sales agency usually enforced rigid standards of product quality to protect its reputation and that of any brands or trademarks used to identify

products it marketed.

The larger agencies have long provided growers and their local

cooperatives the advantages of nationally advertised brands. Advertising

and promotion of these products has been directed toward increasing

consumer demand. Costs for these programs vary by kind or variety of

product and are usually assessed on a package or container basis along

with the cost of other marketing services provided by the sales agency. In

addition to the sales agency expenditures, all eight local cooperatives earmarked some funds for trade advertising, mostly in the directories of produce firm credit ratings.

Sales methods were not of primary concern to the local cooperatives, since they were not directly involved in sales. Information available

described methods used by the sales agency. Emphasis was generally on

direct sales and a limited use of terminal fruit auctions.

Buyers represented a wide range of retail and wholesale outlets, including some export firms. Sales in export markets demonstrate one of

the advantages to be gained from large volume sales operations, an

impossibility for most small cooperatives operating independently.

Methods of Grower Payment

Pooling was the primary grower payment method for cooperatives

marketing through sales agencies. Seven of the eight associations used

pooling and six used pooling exclusively. One fruit cooperative used pooling but made payments on an individual account basis for local sales

made at the packinghouse door. The one vegetable cooperative using a

sales agent paid growers on an individual account basis. Pooling by the

fruit associations was generally on a seasonal basis. One cooperative used

3-day pools for early plums but seasonal pools for all other plums. One

citrus cooperative used 4-week pools for navel oranges and seasonal pools

for valencias.

Operating costs for the cooperatives using sales agencies were

covered in various ways as were those of the associations handling their

own sales. Charges were made on a percentage or flat fee basis or by some

12
combination of percentage and flat fee. Where made, supply sales also

produced income for these cooperatives. Charges for services performed

by the associated sales agency were added to those of the cooperative

when billed to members.

Marketing Agreements

Six of the eight cooperatives marketing through sales agencies used

grower marketing agreements. In all but one case, these agreements

provided that growers could sell no committed product except to the

association.

FINANCING

Twenty-five of the 34 cooperatives studied supplied financial data

on assets, equity capital, and net income (table 3). Average assets of the

five cooperatives providing auction services were about two-fifths those of

the other associations, reflecting substantially smaller investments in

facilities and equipment. Substantial assets were required when

cooperatives provided facilities for packing services such as those supplied by all 6 cooperatives using sales agencies and 11 of 14 cooperatives

making their own sales.

Equity capital, or members’ total ownership in the cooperative,

equaled 64 percent of assets for the 5 auction associations, 67 percent for

the 6 cooperatives using sales agencies, and 37 percent for the 14

cooperatives using their own staffs to market members’ produce.

Membership equity of cooperative auctions and cooperatives using sales

agencies would be considered quite adequate. The 37-percent equity level

of those cooperatives having their own sales staffs, although not considered extremely low, would have been considerably higher except for

the impact of three associations, with assets averaging $268,000 but with

meager equities. None of the three had equities exceeding 4 percent. All

were recipients of grant monies at some time and one showed negative

equity capital. Although this cooperative’s losses wiped out its equity, its

principal lenders were private developmental funds that permitted continued operation.

These relatively low-equity associations were not typical of the 14

cooperatives using their own sales staffs. Four associations with assets

averaging $110,600 had equity capital exceeding 80 percent. Equity

ranged from 57 to 79 percent of assets in three others.

13
Table 3-Financial data for 25 of the cooperatives studied’

Item

Cooperatives

Auction

sales

5

Cooperatives usingOwn sales

staffs

Number

14

Sales

agencies

6

Dollars

Assets:

Low 13,674 58,804 49,010

High 148,319 783,883 465,165

Average 98,129 234,242 262,423

Equity capital:

Low 2,410 2 31,826

High 111,319 326,142 289,70 1

Average 62,438 86,491 175,241

Net income:

Low 2,282 (11,206)3 (4,257)3

High 15,847 38,488 73,783

Average 9,154 14,467 30,720

’ Nine of the 34 cooperatives provided only limited financial data including 2 using auctions, 2 using sales agencies, and 5 using their own sales staffs.

2 One association had accumulated losses. Its accumulated losses wiped out its equity. Its

principal lenders were private developmental funds that permitted continued operation.

3 Loss.

Average net income was highest for the cooperatives using sales

agencies, and lowest for the auction associations. None of the five auctions showed a loss for the year. Of the six cooperatives using sales agencies, one had a loss. Among the 14 using their own sales staffs, 2 had losses.

Net income as a measure of performance is not totally satisfactory in

the cases of cooperatives because they are organized primarily to provide

services for member patrons rather than profits for investors. Growers

might better evaluate performance on the basis of services performed and

returns for products marketed. Maintaining and expanding markets could

be the most significant benefit for members.

Sources of borrowed capital include individuals, banks for cooperatives, commercial banks, and other lending agencies. The banks for

14
cooperatives are part of the Farm Credit System. They specialize in loans

to cooperatives.

USDA’s Farmers Home Administration (FmHA) may provide for

direct loans or guarantees of up to 90 percent of the amount of loans

made to cooperatives by local banks or other approved credit institutions.

This is essentially a loan guarantee program. The Small Business Administration (SBA), an independent Federal agency, can make loans, participate with other lenders, or guarantee loans to cooperatives. However,

these activities have been very limited with cooperatives. Some of the

cooperatives surveyed borrowed from the banks for cooperatives and a

few had loans guaranteed by FmHA.

An important source of equity capital for these cooperatives has

been the retention of some part of producers’ patronage refunds.

Patronage refunds are paid out of net savings and are allocated to

patrons in proportion to the use made of the cooperative. Usually 20 percent or more producers’ patronage refunds is paid in cash, and the remainder is credited to members’ capital accounts.

Another method of obtaining equity capital is to retain a specified

amount for each unit of product handled by the cooperative. These per

unit capital retains represent members’ equity in the cooperative. Capital

formation through the use of per unit retains should be authorized in the

cooperative’s bylaws or in a grower marketing agreement. Cooperatives

using unit capital retains are often those using the pool method of grower

payment.

Equity capital can also be raised by members’ cash investment.

Direct cash investment was not a major source of funds among the 34

cooperatives, probably because growers’ financial resources did not permit. In addition to growers’ support, regulations concerning the sale of

securities should also be considered when cash investment is involved.

The revolving fund method is commonly used to redeem growers’

equity in their cooperatives. Under this method, equities are redeemed in

the order invested, the oldest being redeemed first. Six cooperatives using

sales agencies and four making their own sales used revolving funds.

None of the cooperatives providing auction services used revolving funds.

The equities of the 34 cooperatives do not represent large business

investments, yet the individual grower-member’s share of those equities

in many cases undoubtedly represented a major financial commitment.

15
Growers’ understanding, financial condition, and support were major factors in the financing methods used by these cooperatives.

OPERATING PROBLEMS

Twenty-eight of the 34 cooperatives reported one or more operating

problems covering nine different areas (table 4). Labor and insufficient or

variable product volume were major problem areas.

Cooperatives reporting problems with labor cited difficulty in

getting part-time workers, deteriorating quality of work, and turnover in

the work force. Problems of insufficient volume were usually associated

with declining production, or the need to have sufficient volume to cover

rising marketing costs.

Operating problems can be difficult to categorize because one set of

problems can be related to another and managers sometimes may be

unable to distinguish clearly between them. For instance, the problem of

Table g-operating problems of the 34 cooperatives

Cooperatives usingProblems Auction Own sales Sales

sales staffs agencies

Total

Number

Labor 2 5 5 12

Insufficient or variable

product volume 2 2 5 9

Grower commitment and

loyalty 1 3 0 4

Physical plant or

equipment repair 1 1 2 4

Operating capital 0 3 0 3

Rising costs 0 0 1 1

Product quality variation 0 0 1 1

Farm supply inventories 0 1 0 1

Miscellaneous marketing

problems’ 0 3 0 3

No problems reported 1 4 1 6

’ Includes general marketing problems, customer problems, and problems in gaining

grower understanding of product maturity requirements for marketing.

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grower commitment or loyalty could lead to insufficient or variable product volume. Similarly, physical plant or equipment repairs could arise

because insufficient operating capital had been available for

maintenance.

An indepth analysis of operating problems was not undertaken, but

a review of four cooperatives that ceased operations in the early seventies

gives some insight to the causes of termination.

Gloucester County

Gloucester County Agricultural Cooperative Association, Glassboro,

N.J., closed down its operations in 1974. It was organized and incorporated in 1933 to hydrocool, store, and market fresh fruits for its

members, and to furnish them with production and marketing supplies.

Membership was open to persons producing agricultural products who

patronized the association and paid the annual $1 membership fee.

Farm product sales accounted for 57 percent of the association’s

total business volume from 1965 to 1971. Farm supply sales accounted for

37 percent and services accounted for 6 percent of total business volume

over this same period. Total business volume averaged $1,748,000 over

this 7-year period. In the years just prior to the termination of operations,

business volume was reduced substantially.

The major buildings used for the auction, farm supplies, storage,

and offices were scattered enough to make efficient management of the

operation difficult. Recognizing this problem, the manager recommended

the purchase of a site to accommodate centralized operations. The board

of directors approved and completed the purchase of the land. But, as

plans proceeded for construction of facilities, members became

concerned about costs and vetoed the proposed project. As a result, the

admittedly competent manager resigned and the project was never

completed.

From that time, the cooperative’s operations began to show signs of

tveakness. Manager turnover became a problem as each new candidate

proved either incompetent or failed to receive necessary membership support. As the cooperative terminated its operation, it was apparent the

board of directors, members, and management had failed to reconcile

their differences.

17
Atlantic County

Atlantic County Market Growers Association Cooperative, Inc., Egg

Harbor, N.J., closed in 1970. It was organized in 1936 to market fresh

vegetables, potatoes, and berries and to provide a limited selection of

marketing supplies for grower-members. Closure was attributed to lack of

member commitment which resulted in deterioration of support. Most

members used the association when the price was right, but only five

members fully supported the cooperative. It was also difficult to persuade

growers to pack produce to buyers’ specifications. Erosion of member

participation and support caused a serious drop in the association’s sales

volume, reducing marketing effectiveness and necessary operating

revenues.

Hanover County

Hanover County Vegetable Growers Association, Inc., Richmond,

Va., closed in 1973. It was organized in 1957 to grade, pack, and market

tomatoes, greens, and melons for its 168 members. The association never

had the necessary member support. It operated with an annual volume of

sales ranging from $100,000 to $200,000, a level inadequate for success.

Closure actually resulted from a combination of factors including poor

location within the central city, reduced volume, a decline in active membership, limited grower commitment, and a decline in vegetable farming.

Trent Farms

Trent Farms, Inc., New Bern, N.C., also closed in 1973 after 6 years

of operation. It was organized in 1967 to help 125 small growers market

strawberries and cucumbers and provide them with farm supplies. Among

factors contributing to the closure were the termination of supporting

grants, members’ inexperience in vegetable and berry production, lack of

volume, and too much hired help. In addition, the cooperative suffered

because the broad of directors, employees, and members lacked understanding of cooperative philosophy and operation. Many members used

the cooperative only if its prices exceeded those they could expect to get

on their own. Intrastaff rivalry and friction also resulted in useless bickering and inefficiency.

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All Four Cooperatives

All of these terminated organizations shared a common problem:

lack of member support. Although closure or failure was related to a combination of circumstances, lack of membership support contributed

heavily in each case. In the Gloucester County case, membership support

was lacking for building a more efficient plant. Members of the Atlantic

County cooperative failed to support the marketing program on a price

basis and in meeting buyers’ specifications. The Hanover County

organization suffered from lack of product and the Trent Farms

cooperative demonstrated a lack of commitment, to cooperative methods

generally and to the marketing program in particular.

CURRENT STATUS OF THE 34 COOPERATIVES

No further survey of the 34 cooperatives was undertaken as this

report was revised in 1979, and no special attempt was made to

enumerate or analyze the activities of associations organized since the

original study was completed. However, examination of data reported to

ESCS and information available in credit rating directories showed 28 of

the 34 cooperatives to be active in 1979. Deflated to 1974 dollars, product

sales for 25 of the 28 associations showed little change in recent years. No

operating data were available on the other three cooperatives.

Cooperatives among the original 34 that have terminated operations

all had 1974 product sales below the average of those using similar

marketing methods. The three terminated cooperatives making their own

sales were among the four associations with smallest sale volumes.

However, the other terminated cooperatives, one auction and two using

sales agencies, had 1974 sales volumes only slightly below average for

their groups.

A continuation of operating methods was apparent from reports

recently supplied by the 25 associations. In 1974, 17 of the 25 cooperatives provided supplies for members. Eleven of the 17 continued to provide supplies in succeeding years.

No major changes were noted in the operating of these small fruit

and vegetable cooperatives since 1974. Cooperative discontinuances were

few, and only 3 of the 25 associations exceeded the $1-million product

sales level (deflated to 1974 dollars).

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GUIDELINES FOR ORGANIZATION AND OPERATION

Cooperatives are usually organized to provide a service where none

exists or where existing services are inadequate. At first, there may be

only a few close friends or neighbors who see the need for better marketing services for their produce, or a better source of production or

marketing supplies. As they visit informally, they may begin to realize

others in their area have similar needs.

Believing a cooperative might provide such services, these leaders

may seek the advice of someone more familiar with cooperative organization such as a marketing specialist in the office of the county or State extension service, or an officer in an established cooperative, an employee

of a district bank for cooperatives, the Farmers Home Administration, or

a State cooperative council. With the help of an adviser, the leaders

should gather facts and figures needed to present their ideas about a

cooperative. They may discuss their ideas with community leaders during

this period to test general interest.

If this work indicates enough interest to take further action, a

meeting of potential members is arranged. Should this meeting generate

a show of sufficient interest, the next step in forming a cooperative would

be to appoint a survey committee to consider all the conditions under

which the cooperative would operate.

Feasibility Study

A feasibility study addressing two questions should result from the

survey committee’s efforts. First, will the proposed cooperative be successful and beneficial to its members? Second, if success is probable for

the proposed cooperative, what specific and detailed organizational pattern will the new organization take?

The committee will collect pertinent facts, weigh the merits of alternative courses of action, and set forth recommendations in a carefully

prepared report. The committee may need the advice of experts in such

fields as law, accounting, financing, marketing, and engineering. Most

helpful to the committee would be the counsel of someone with a sound

knowledge of the kind of fruit or vegetable business operation under consideration. The legal requirements and limitations affecting virtually

every phase of the committee’s work in planning the operation require

careful attention and expert advice of an attorney.

20
The main areas for survey committee consideration include: need

for the cooperative, potential membership, membership commitment,

volume of business, necessary management skills, required facilities,

operating costs, capitalization, and other related considerations.

Economic Need

The economics of the proposed business venture should be carefully

considered. The kind and costs of services to be provided by the cooperative must be determined. If these services are currently available in the

community or nearby, the committee must consider whether the cooperative can improve them or reduce their costs.

In determining which marketing services the proposed cooperative

could provide, the committee should review sales alternatives outlined in

the foregoing sections of this report: auction sales, establishing their own

sales staff, or using the services of a sales agency. These and other marketing services, and the purchasing of production or marketing supplies

should be recommended only after each has been considered carefully.

A cooperative is not needed unless its members will receive

monetary or other benefits from it they would not receive otherwise. If

there is no clear need for the cooperative, the committee need not proceed further.

Estimating Potential Business

Potential membership and business volume must be estimated. A

necessary volume for efficient operation must be determined. This may

require a survey of potential members to discover their service requirements. These estimates should be conservative. Not all persons interested

will join. Not all who join will do so at the beginning. And not all members

will make full use of the cooperative’s services. Full consideration should

be given to the extent of prospective members’ experience in producing

fruits or vegetables as these estimates are made.

Necessary Management Skills

A small fruit and vegetable cooperative may require only part-time

or seasonal employees. A member of the board of directors could serve as

a manager in some small operations, but probably directors would be involved in farming operations at the time their services were most needed

by the cooperative.

21
In most cases, a full-time manager is needed to run an efficient

business operation. Although the survey committee would not be hiring a

manager, it should be sure that such a person competent to meet the proposed cooperative’s needs is available. Without a good manager, the new

cooperative will have much difficulty in operating satisfactorily no matter

how urgently its services are needed.

Facilities Required

Facilities necessary for the kind of operation recommended by the

survey committee must be outlined in the feasibility study. Expected

business volume should be considered carefully with consideration for

future expansion.

Costs of buying or leasing an existing plant or used equipment, as

well as the costs of a new facility, should be investigated. If elaborate

cilities are contemplated, the advice of skilled technicians should

obtained.

fabe

Estimating Operating Costs

Estimating cost of operation is one of the most important jobs of the

study committee. Potential members should not be led to expect a better

performance than the cooperative can achieve. These estimates can be

compared with costs of services now provided, permitting growers to

make their own evaluation of the worth of any projected savings.

Estimates will provide an opportunity to compare costs at various levels

of business volume. Such an analysis will help the committee determine

an optimum business volume around which operations can be organized.

Capitalization

Attention must be given to the whole package of financing issues, including how the cooperative will raise capital, how much will be needed,

and provision for reserves. Small fruit and vegetable cooperatives have

taken a number of approaches to these issues. The foregoing section of

this report summarizes financing methods used by the 34 cooperatives,

and discusses the range of financing options commonly used.

The financing methods to be used by the cooperative should, as

much as possible, be the ones most acceptable to the members who must

make the capital contributions, or pay the cost of borrowed capital.

Members should be capable of raising equity capital sufficient to assure

adequate supplemental funding through borrowings. Plans should also be

made for repaying growers’ capital contributions through revolving fund

22
financing, or some other method of keeping members’ investment related

to use of the cooperative. Also, plans need to be made to meet unforeseen

circumstances such as might occur in a poor business year.

In developing a financial plan for the cooperative, committee

members can use specialized information available from the district

banks for cooperatives, the ESCS cooperatives program, and other

sources. If possible, a finance specialist should be consulted. Lacking this

possibility, the proposed plan could be checked with a financial institution, such as the district bank for cooperatives, to assure its soundness.

Other Considerations

All matters of importance to organization and operation of the

business should receive attention of the survey committee.

Membership

Membership qualifications need to be considered. Membership to

be served by the cooperative should be located in an area no larger than

will permit efficient service. Active participation may be a requirement of

membership. Some evidence of membership support or commitment is

desirable, such as a membership fee or the purchase of a share of common stock. The survey committee should recommend whether the cooperative will do business with nonmembers and, if so, to what extent and

under what conditions. State laws covering cooperatives and State and

Federal income tax laws have provisions to be taken into account when

deciding the extent of nonmember business.

Representation on the Board of Directors

It may be desirable to elect directors by districts if membership will

be widely scattered. If several commodities will be marketed, it may be

desirable to have producers of each commodity represented on the board.

Grower Payment Methods

Payment methods include outright purchase, selling for the individual grower’s account, and pooling. However, in the case of a newly

formed cooperative, members’ products are not usually purchased

outright because the risk in covering costs in such transactions can be

high. Instead, using either of the other two payment methods, the cooperative sells the products and returns to members the proceeds, minus

selling expense and the cooperative’s operating cost.

23
Pricing Supplies and Services

Usually, purchasing and service cooperatives charge members

prevailing prices for supplies and services. Any savings at the end of the

fiscal year are returned to members in the form of patronage dividends.

Quality

Good product quality control can enhance the cooperative’s reputation in the marketplace. Such a program should be considered by the

survey committee with recommendations for handling, grading, and

inspecting the fruit and vegetable products to be marketed. For some

products, marketing may be limited to only certain varieties produced

under specific cultural practices. Controlled harvesting and central packing may be specified.

Marketing Agreement

The basic purpose of grower organization marketing agreements, or

contracts, it to assure the cooperative a definite volume of business. Also,

they may be used to specify other rights, duties, and obligations of the

two parties entering into the agreement. It might, for instance, have provisions for controlling quality as outlined above, or it may spell out how

costs are to be covered. The marketing agreement is an integrating device

which transfers some decisionmaking from the individual grower to the

organization. By relinquishing some control over their production or

marketing, growers permit the association to coordinate the marketing

activities of all members more effectively.

Other Matters

The committee should make recommendations on a number of other

matters that must be settled before the articles of incorporation and the

bylaws are drafted, such as the name of the organization, voting procedures, and rules for management of the association. These management issues would at least include rules for meetings; duties of directors,

officers, and managers; appointment of committees; provisions for the

allocation and distribution of savings; and other pertinent matters.

The Feasibility Report

The feasibility report will include the survey committee’s findings

and recommendations. It need not be lengthy, but it should be orderly

and available when the committee reports to prospective members. At

that time, the committee should be ready to answer questions and to present any additional facts and figures collected but not included in the

report.

24
Presentation of the report will be made at the second general

meeting of potential members. Enough time should be taken to discuss

the report thoroughly even if the meeting has to be adjourned and

reassembled at a later time to complete the deliberations. After the

discussion, if enough people are interested to go ahead an organizing

committee is appointed.

The Organizing Committee

The organizing committee has five main tasks: sign up the required

number of members, obtain the subscribed capital, draft the legal

organization papers, file the articles of incorporation, and arrange the

first meeting of the original members.

Signup

Signing up members may proceed best if an organization agreement

is used. By signing this document, the signer agrees to belong to and

patronize the proposed cooperative and to furnish a specified amount of

the initial capital-if a certain number of other prospective members also

sign up within a given time period.

The committee may want to enlist others to help in making a canvass of all prospective members. However, all who solicit should

thoroughly understand the way the cooperative is to operate and make no

promises or assurances about the cooperative’s operation that cannot be

fulfilled.

Capital Subscriptions

Collection of capital subscriptions by the committee should be

undertaken when enough members have signed up to insure the desired

volume of business. This should be turned over to someone designated by

the committee and complete records kept of all subscriptions.

Legal Papers

Drafting legal papers will require close cooperation with a legal

adviser to insure that they provide for the kind of operation the incorporators want. These papers will include articles of incorporation, the

bylaws, and (in many instances) a marketing agreement. Some marketing

agreements can be drafted to also serve as an application for membership. Other legal documents usually needed include: Membership application, membership or stock certificate, other equity certificates, meeting

25
notice, and waivers of notice. All documents must be drawn to conform to

applicable State statutes.

Incorporation

Filing the articles of incorporation in the proper State office brings

about the legal birth of the cooperative corporation. The organizing committee does the filing.

The First Meeting

Under most State cooperative statutes, bylaws must be adopted by a

majority of members or stockholders. The procedure for bylaw adoption

may vary but, essentially, a limited number of persons named in the articles of incorporation attend the first meeting as charter members to

adopt the bylaws. The charter members, or shareholders, convene the

meeting and transact the essential business including the adoption of

bylaws and the election of directors.

As soon as possible after the adoption of bylaws the directors should

hold a meeting to make the cooperative ready for operations. If this

meeting is held without notice, the directors must sign a waiver of notice.

This first meeting of the directors should:

Elect the first officers of the cooperative.

Adopt an application form for membership or stock subscription.

Adopt the form of marketing agreement if one is to be used.

Choose the cooperative’s bank.

Designate officers or employees to be authorized to handle

funds and issue checks.

Arrange for bookkeeping and auditing.

Arrange for bonding officers and employees as required in the

bylaws.

Provide for necessary insurance.

Arrange for securing facilities.

Arrange for distribution of copies of the articles of incorporation and the bylaws.

Select a manager.

Special Rules for Success

Know The Law

Know the law pertaining to cooperatives and to all business matters.

Know the requirements, the limitations, and the actions required. Selling

26
of investment securities, tax consequences of issuing patronage refunds,

and per unit retains should be examined.

Get Expert Help

Get expert help in meeting the special problems of law, accounting,

engineering, and marketing. An experienced adviser can save directors

and management much time and the cooperative much expense.

Separate Policy and Management Functions

Except in the smallest of cooperatives, boards of directors are concerned primarily with setting basic policies and objectives, employing a

manager, and reviewing operations to assure conformance with policies

and objectives. The manager is responsible for day-to-day management of

the association, hiring employees, and planning a program to carry out

the policies and objectives established by the directors. Although the

directors and the manager should work as a team, one should not interfere with the functions and responsibilities of the other.

A competent manager must be a good supervisor of the

cooperative’s employees and he should be capable of developing and executing operating plans. The manager should also be prepared to develop

and advise the board of directors on policy alternatives and organization

objectives. The manager’s qualifications should include experience in the

marketing of fruits and vegetables and an understanding of the requirements of the food industry. This person must be alert to improved

methods. In addition, the manager should be sympathetic to cooperative

principles and able to develop membership confidence and loyalty.

Keep Board Flexible

A flexible board assures regular changes in directors and a continuing benefit of new ideas and fresh approaches. To assure flexibility, the

bylaws should provide for directors’ terms of office to be staggered so

some experienced directors remain on the board after each election. Also

helpful would be bylaws requiring at least two nominees for each board

vacancy, provisions for a nominating committee on which no director

would serve, nominations from the floor, and voting by secret ballot.

Encourage Member Participation

A good member relations program could encourage active member

participation. Members need to be informed of developments in operations, market outlook, new developments in production, and numerous

other matters. Membership meetings, both annual and special, can be a

27
means for getting this information to growers. But, perhaps more effective are management’s visits to members’ farms where specific problems

can be discussed and the use of newsletters to keep growers informed of

current developments.

Be Realistic

“Be realistic” is an especially good general rule. Ask hard questions

and insist on factual answers. Establish reasonable goals, but avoid overly

ambitious undertakings. Encourage grower participation and membership, but never oversell potential benefits or underestimate any risks. Be

realistic about the economic need for the cooperative and members’ support and ability to finance the undertaking. Emphasis must be given to

establishing a cooperative in the highly competitive environment of the

real world.

OTHER PUBLICATIONS AVAILABLE

Farmer Cooperative Publications, CIR-4.

Fruit, Vegetable and Nut Cooperatives, CIR-1, Section 13.

Cooperative Development in Rural Areas, CIR-1, Section 4.

Mr. Chairman, CIR8.

“Sample Legal Documents,” Legal Phases of Farmer Cooperatives,

Inf. 100, Part 1.

Handling Net Margins Under Federal Tax Laws, CIR-23.

For copies, write the Economics, Statistics, and Cooperatives

Service, U.S. Department of Agriculture, Room 550, 500-12th St. S.W.,

Washington, D.C. 20250.

28
U.S. Department of Agriculture

Agricultural Cooperative Service

P.O. Box 96576

Washington, D.C. 20090-6576

Agricultural Cooperative Service (ACS) 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 agency (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.

ACS publishes research and educational materials and issues

Farmer Cooperatives magazine. All programs and activities are

conducted on a nondiscriminatory basis, without regard to race,

creed, color, sex, age, marital status, handicap, or national origin.