USDA =m

United States

Department of

Agriculture

Rural Development

Rural BusinessCooperative

Service

RBS Research

Report 156

Voting and

Representation

Svstems in

A&icultural

Cooperatives
Abstract This report documents the extent of use of one-member, one-vote and proportional

voting systems in the U.S. by type and function, and membership size for direct-membership, federated, and mixed membership cooperatives. It also documents the extent

of use of at-large, geographic districting, and delegate systems, as well as combinations of at-large with districting and delegate systems by type and function and by

region. The report finds one-member, one-vote, and at-large systems predominate.

Keymnords; cooperatives, membership, voting, proportional representation,

governance.

Voting and Representation Systems

in Agricultural Cooperatives

RBS Research Report 156

Bruce J. Reynolds, Thomas W. Gray, Charles A. Kraenzle

Rural Business-Cooperative Service

June 1997

Price: Domestic $5.00; foreign $5.50
Preface Fundamentally, a cooperative is its members. But this type of membership organization

must have the power to make decisions as a unified and single entity. Cooperatives follow democratic principles for determining and delegating the powers of governance

and decision-making authority. Members elect a board of directors to assume a dual

responsibility of representing member interests and executing fiduciary responsibilities

of control. Directors carry out these responsibilities primarily in periodic board meetings with management.

This report examines the two interrelated aspects of cooperative representation: 1)

determining voting power of individual members, and 2) determining how directors are

to be elected to cooperative boards.

Data for this study were collected from a survey of U.S. farmer cooperatives that use

various voting and representation systems. These data were sorted by region, type or

function, membership size, and by organizational structure, i.e, direct membership, federated, and mixed membership cooperatives.

Specifically, the survey was developed to measure the prevalence of: 1) voting power

either as one-member, one-vote or as proportional voting systems, and 2) director

election methods, as based in at-large, geographic districting, and delegate systems,

or some combination of these alternatives.

Data were collected in Cooperative Services’ 1995 annual survey of farmer cooperatives. About 74 percent of U.S. farmer cooperatives were asked to provide information

on their voting/representation systems.
Contents HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

INTRODUCTION ................................................... .I

Individual Voting Power ............................................ 1

Delegation and Representation ..................................... 1

Survey Design and Response ......................................2

DIRECT-MEMBERSHIP COOPERATIVES .................................3

Voting Method .................................................. .

Representation Systems ..........................................4

FEDERATED AND MIXED COOPERATIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Voting Method .................................................. .

Representation Systems ..........................................8

SUMMARY AND CONCLUSIONS ...................................... .9

APPENDIX - STATE STATUTES AND LAWS ..............................11

GLOSSARY ..................................................... ..ll

REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...12

ii
A survey of voting methods for electing members to boards of directors of cooperatives

was conducted in 1995. Results are reported separately for 1,340 direct-membership

cooperatives and 63 federated and mixed organizational structure cooperatives.

Respondents indicated whether their election procedures were by one-member, onevote or by proportional voting. Respondents were also asked to indicate their method

of defining elected representation from a list with five different ways: at-large, districts,

delegates, at-large and districts, and lastly, at-large and delegates.

Survey results are reported by cooperative type or function, by membership size intervals, and some results are reported for geographic locations.

Direct-Membership Cooperatives:

Direct-membership cooperatives are organized so farmers or ranchers, as producers,

make up the membership of the organization. A survey of cooperatives provided the

following:

l Ninety-three percent of all direct-membership cooperatives used one-member, onevote methods, while the remaining 7 percent used proportional voting methods.

l Several States have, or had, statutes or corporate laws that require a one-member,

one-vote system for organizations to incorporate as cooperatives. Therefore, the

comparative frequency in which either voting method is used is influenced, and in

many States, determined by these statutes. Some of the survey results are grouped

and reported for States with statutes that do not require one-member, one-vote.

l The one-member, one-vote method was used in the greatest percentage by directmembership cooperatives in the Great Plains.

l Proportional voting was used in the greatest percentages by direct-membership

cooperatives in Illinois and California.

l Cotton and dairy cooperatives used the one-member,one-vote method in the greatest percentage.

l Fruit and vegetable and nut cooperatives used proportional voting in the greatest

percentages.

l Direct-membership cooperatives with proportional voting have slightly smaller membership sizes than those that use one-member, one-vote systems. However, this pattern was not evident among the largest sized cooperatives.

l Sixty-six percent of all direct-membership cooperatives used at-large elections of

cooperative directors.

l Twenty-three percent of all direct-membership cooperatives used geographic districting for apportioning elected seats to their boards of directors.

l Northeast and Great Plains cooperatives elected directors at-large in the greatest

percentages. Intermountain, North Central, and Pacific region cooperatives used atlarge methods in the smallest percentages.

. . .

ill
l Pacific and North Central region cooperatives used geographic districting in the

greatest percentages. Great Plains and Southeast cooperatives used geographic

districting in the smallest percentages.

l At-large elections predominated among localized and relatively small membership

cooperatives. Cotton ginning cooperatives used at-large methods in the greatest percentages.

l Geographic districting, delegate systems, and combined at-large districting and atlarge and delegate systems were mostly used in large-membership cooperatives.

l Combined at-large and geographic districting systems were used more frequently

than delegate and combined at-large/delegate systems.

Federated and Mixed-Membership Cooperatives:

Federated cooperatives are organized to have only other cooperatives as members.

Mixed-membership cooperatives have both cooperative organizations and individual

farmers as members. A survey of cooperatives showed:

l Twenty-seven of 31 federated cooperatives use one-member, one-vote.

l Twenty-four of 29 mixed cooperatives use one-member, one-vote.

l Fifty-one of 61 federated and mixed cooperatives use one-member, one-vote.

l Nine of 25 federated cooperatives exclusively hold at-large elections, while 16 use

some form of district or unit apportionment.

l Of the 21 mixed cooperatives, 9

sively geographic districts.

exclusively have at-large elections, and 9 use excluiv
Voting and Representation Systems

in Agricultural Cooperatives

Bruce J. Reynolds, Thomas W. Gray, Charles A. Kraenzle

(USDA, RBS-Cooperative Services)

Introduction

The operations and services of agricultural cooperatives are similar to those of many businesses, but cooperatives are distinctive in being owned and controlled

.by their members. All formal power within cooperatives derives from the membership body, and not from

individual members, elected officers, hired management, or employees. While the distribution of this

power may get skewed in various ways, fundamentally the cooperative is the membership body. (Ginder

and Dieter, 1989; and Craig, 1993.)

Cooperative governance is created by a democratic system of representation. It involves two interrelated

components: 1) member voting for directors to a limited number of seats on a governing board, and 2) defining the representation relationship of each elected

director to the membership. These two aspects of

democratic representation are conducted by cooperatives in different ways. Most cooperatives establish ’

voting power on a one-member, one-vote basis. The

alternative method is proportional voting, where

members are granted votes according to the number of

their patronage equity shares.

Cooperatives also use different methods of determining the representation relationship for electing

members to seats on the board. The major methods are

election of directors at-large, by geographic districts,

by district delegates, or by some combination of these

techniques.

Individual Voting Power

Cooperatives must determine the amount of voting power to be vested in each member. This power

can either be distributed on an equal basis as onemember, one-vote, or allocated to members on a proportional basis.

In proportional voting systems, each member has

at least one vote, but can accumulate additional voting

power, often carried to fractional values, in proportion

to patronage volume or

invested shares of stock

niza tions

votes per

vote.

patronage-generated equity, or

in the cooperative. Some orgalimit voting power to a specific number of

member, but all members have at least one

Rationales for these two voting methods vary, and

have been a subject of debate for decades. A few are

mentioned.

The accepted practice of democratic government

in the United States is for each citizen to have an equal

vote in elections for political representation.

Cooperatives have traditionally subscribed to this

equality norm by electing directors on the basis of onemember, one-vote. The overriding idea is that all members cooperate as equals and are governing their organizations on a consensus basis.

Advocates

ness and equity

these members,

organization in

of proportional voting understand fairp in terms of use of the organization. For

it is understood that those using the

the greatest volumes should also have

the greatest governing control. The more a producermember uses the organization, the more votes he or

she should have in its governance. This logic may be

most frequently used where the volume of products

marketed or services used are highly concentrated in a

numerical minority of members.

Delegation and Representation

sion

In cooperati

-making can

.ves with

potentia

small memberships, decilly be made in a town-meeting type of forum. However, the practicality of such

forums is quickly limited by membership size and

complexity in decision-making. The larger the membership body, the slower and more limited the number

of decisions that can be made in a reasonable period of

time (How long members will remain meaningfully

active at a meeting?) Power to make decisions must be

delegated to a governing body, su.ch as the board of

directors. The extent of and limits to this power are

generally specified in cooperative bylaws and other

legal instruments. Some cooperatives require member1
ship to ratify major decisions. When major proposals

are supported by only a slight majority of directors,

decisions are then frequently made by taking a membership vote.

When the membership elects directors to the

board, they delegate power to them to make decisions

in the interest of the collective group. When an individual member casts his or her vote, he or she agrees

to abide by the election outcome. Decision-making

power is shifted from the membership body to the

board. An election lends legitimacy to this shift or delegation of power.

Individual members have varying degrees of

access to the process of nominating and electing members to the board. The different methods of nomination

that can be used were not covered in the survey.

Nominating committees are frequently organized

along the same avenues as the election of directors.

The survey, however, did cover the three major

avenues of election.

1) Electing directors by geographic districts:

Some cooperatives, particularly those with large numbers of members, divide their membership into geographic districts. Members in these districts elect directors to represent them on the board. In general,

members vote only for directors nominated from their

respective districts. Directors are typically elected at

annual district meetings.

2) Electing directors at-large:

Other cooperatives may elect directors on an “at-large”

basis. A board is elected at an annual meeting from,

and by, the entire membership, regardless of districts

or geographic locations. Cooperatives that use geographic districting may designate one or two seats on

the board to be elected at-large.

3) Electing directors by delegates:

Still other cooperatives provide for the election of

directors by delegates. Individual members elect delegates from geographic districts, rather than directly

electing directors to the board. These delegates are typically elected at respective annual district meetings.

Delegates, acting for the entire membership body, elect

a board of directors at an annual meeting.

A small number of case studies have been done

on governance structures. (Schomisch and Mirowsky,

1981; Butler, 1988; Gray, 1988; Gray and Butler, 1991;

and 1995.) A survey of voting by cooperatives was conducted for a study in 1979. (Ward, Schneider, and Lopez,

1979.)

These works outline the different structures of representation within the United States, but no previous studies have been made of the prevalence of these options.

This report samples for the prevalence of these representation options within the United States by region, cooperative type or function, and membership size.

Survey Design and Response

Data for the study were collected using

Cooperative Services’ annual survey of farmer cooperatives. Two questions were asked about voting methods. The first question asked if the cooperative used

one-member, one-vote or proportional voting in its

member-voting methods. The second asked if directors

were elected at-large, by geographic districts and/or

divisions, or by district delegates.

The questionnaire requested voting information

related to the operation of each cooperative during fiscal 1995. Results are reported for respondents from

direct membership, federated, and mixed-structure

agricultural cooperatives. Direct-membership cooperatives are organized so that farmers or ranchers, as producers, make up the membership of the organization.

Federated cooperatives have other cooperatives as

their members. Mixed agricultural cooperatives have

both cooperatives and individual farmers as members.

Table I- Number of cooperatives surveyed and

response to questions on voting, 1995

Cooperative type

or function

Number of Cooperatives

Surveyed ’ Responded 2 Response rate

Cotton 15 12 80.0

Dairy 174 84 48.3

Fruit and vegetable 283 95 33.6

Grain and oilseed 3 928 447 48.2

Livestock 77 24 31.2

Poultry 4 17 10 58.8

Nut 19 10 52.6

Other marketing 5 85 33 38.8

Farm supply 1,118 568 50.8

Cotton gin 145 68 46.9

Other service 88 52 59.1

Total 2,949 1,403 47.6

a__-_Number----- Percent

Number of cooperatives queried about voting and representation

methods.

Used either one-member, one-vote or proportional voting.

Excludes cottonseed.

Includes poultry, eggs, turkeys, squab, and ratite cooperatives.

Includes dry bean, rice, sugar, fish, wool, and miscellaneous

marketing cooperatives.

2
About 74 percent (or 2,949) of U.S. farmer cooperatives were asked to provide information on their voting methods and about half responded. The remaining

26 percent- fishery, wool and mohair, tobacco, and

other selected cooperatives - were polled but not on

the voting issue.

Response rates by cooperative type or function

are reported in table 1. Questionnaires were sent to

1,118 farm supply cooperatives, the largest type to be

surveyed, of which 568 or 51 percent responded. Grain

and oilseed cooperatives (grain) were the second

largest group (928) surveyed. More than 48 percent or

447 provided information.

Direct-Membership Cooperatives

Voting Method

Some State statutes for cooperative incorporation

require a one-member, one-vote system. Some of the

effects of State statutes and securities laws on voting

methods are discussed in the Appendix.

The overall results of the survey show the prevalence of the two methods of voting. However, to compare preferences between one-member, one-vote versus proportional voting, a data set for States that allow

both methods of voting is provided.

Comparison Set of Direct-Member Cooperatives:

By excluding States that require incorporation as onemember, one-vote from the data set, the percentage of

direct-membership cooperatives using proportional

voting is much higher than the nationwide aggregate.

A comparison set of 18 States provides 439 responses-353 used one-member, one-vote, and 86 used proportional voting (table 2).

In the formation of most cooperatives, a onemember, one-vote system is the traditional assumption. Where both voting methods have been permitted,

the survey results show nearly 20 percent use proportional voting. However, these results do not adequately indicate a preference for proportional voting. In the

set of 18 States with both methods of voting permitted,

9 States had no cooperatives reporting use of proportional voting. Furthermore, 54 of the 87 cooperatives

reporting proportional voting are from Illinois.

The relatively high incidence of proportional voting in Illinois reflects a historical background of specific regulations (see Appendix). By removing Illinois

from the comparison, proportional voting is 9.1 percent of the total. Where both voting methods are

allowed in State statutes, the 9 percent figure is a more \

accurate indication of proportional voting frequency

than the nearly 20 percent when Illinois is included. It

is also relatively close to the nationwide result of 6.8

percent reporting use of proportional voting (table 2).

Cooperatives by Type or Function:

Circumstances that prompt a departure from onemember, one-vote procedures may be related to the

type of cooperative. These results and all subsequent

reporting for direct-membership cooperatives are

based on responses from 1,340 cooperatives. Of the

1,340 direct-membership cooperatives responding to

the survey, 1,249 or 93.2 percent use a one-member,

one-vote election method. The remaining 6.8 percent

(91) used proportional voting. A survey in 1978 reported similar results. (Ward, et al, 1979.)

Fruit and vegetable and nut cooperatives used

proportional voting more than other types of cooperatives (table 3). Of the 88 reporting fruit and vegetable.

cooperatives, 22 of them or 25 percent, used proportional voting, as did 3 of 10 reporting nut cooperatives.

Table 2-Voting method of direct-membership

cooperatives by States with statutes allowing both

one-member, one-vote and proportional voting

State One-member, Proportional Total Proportional

One-vote voting method

Alabama 15

Arizona 3

California 50

Florida 11

Hawaii 6

Illinois 33

Indiana 26

Maine 3

Massachusetts 5

Michigan 22

Nebraska 66

New Jersey 10

New Mexico 2

New York 22

Ohio 35

Oregon 13

Vermont 2

Washington 29

Total 353

Without Illinois 320

All States 1,249

1

3

1

1

4

1

86

32

91

15

3

69

13

6

87

26

3

6

25

67

10

2

23

35

17

2

30

439

352

1,340

Percent

62.1

16.7

12.0

1.5

23;5

-

3.3

19.6

9.1

6.8

- = None responded.

3
Grain cooperatives, 41 of 442 or 9 percent, were the

most numerous users of proportional voting and all 41

were in Illinois.

The other groupings of cooperatives by type predominantly used the one-member, one-vote method

(table 3). Only 1 of 74 dairy cooperatives reporting

used proportional voting, as did only 16 of 550 farm

supply cooperatives. If Illinois cooperatives are

excluded, less than 1 percent of farm supply cooperatives used proportional voting. However, use of proportional voting is significant among California fruit,

vegetable, and nut cooperatives.

Cooperative size (membership) does not appear to

influence voting method. Table 4 shows seven intervals

of membership size for 1,340 direct-membership cooperatives, including a separate column for the 91 cooperatives with proportional voting. All seven intervals

reported at least one cooperative using proportional

voting. Because the number of cooperatives in each

interval varies widely, proportional voting is also

reported as a percent of each interval.

Summary:

Of the 1,340 direct-membership cooperatives in the

study, 93 percent used a one-member, one-vote election method. It is used by a majority of cooperatives in

all States except Illinois.

When considering only States with incorporation

statutes that allow both voting methods and do not

restrict the adoption of either method, the frequency of

proportional voting is only slightly higher than the

national results. So, even given a choice, most cooperatives favor the one-member, one-vote system.

Proportional voting was used most by the fruit,

vegetable, and nut cooperatives operating in

California, or by local grain and farm supply cooperatives in Illinois. Membership size does not appear to

influence decisions about choice of voting methods.

Representation Systems

Of the 1,268 direct-membership cooperatives that

responded to survey questions on representation, 832

or 65.6 percent exclusively used at-large election methods for choosing directors (table 5). Elections based on

Table E Percent of direct-membership cooperatives

using proportional voting, grouped by membership

size intervals, 1995

Membership

size intervals

Less than 100

100-249

250-499

500-999

1 ,ooo-2,499

2,500.4,999

5,000 or more

Total

co-ops Proportional Percent

Voting of interval

~*~~~~~er__- Percent

185 17 9.2

208 17 8.2

317 13 4.1

307 17 5.5

229 19 8.3

60 7 11.7

34 1 2.9

1,340 91 6.8

Table ~-Voting methods used by direct-membership cooperatives, by type, 1995

Direct-Membership

Cooperative

type/ function

Cotton

Dairy

Fruit and vegetable

Grain and oilseed 2

Livestock

Poultry 3

Nut

Other marketing 4

Farm supply

Cotton gin

Other service

One-member, Proportional Total

one vote voting

Number Percent 1 Number Percent 1 Number

5 100.0 5

73 98.6 1 i.4 74

66 75.0 2 2 25.0 8 8

401 90.7 41 9.3 442

22 95.7 1 4.3 23

10 100.0 10

7 70.0 3 30.0 10

29 90.6 3 9.4 32

534 96.7 16 3.3 550

63 96.9 2 3.1 6 5

39 95.1 2 4.9 4 1

Total 1,249 93.2 91 6.8 1,340

1

2

3

4

4

Percent of cooperatives in each type using the voting method.

Excludes cottonseed.

Includes cooperatives marketing poultry and eggs, turkey, squab, and ratite.

Includes dry bean, rice, sugar, and miscellaneous marketing cooperatives.
geographic districts were reported by 286 or 22.6 percent. Only 22 cooperatives or 1.7 percent used a delegate system. Nearly 10 percent (122) used some combination of geographic districts and at-large elections.

Only six cooperatives used some combination of atlarge and district delegates for electing directors.

Representation Systems by Membership Size:

Table 5 compares the frequency of responses for different representation systems by seven intervals or classifications of membership size. More than half are in the

smallest three intervals of membership size. In the two

largest intervals, covering all responses by cooperatives having at least 2,500 members, there were only 83

cooperatives out of 1,268.

Although most respondents used at-large representation, an increasing number used districting and

delegate systems with large memberships.

Across Representation Systems:

In the first four ranges of membership size, a majority

used the at-large representation (table 5). The greatest

percentage was in the smallest membership range.

With each larger membership size interval, the percent

of cooperatives that used at-large representation rapidly declines until leveling off at about 30 percent in the

largest two membership groupings.

Geographic district systems were more prevalent

in the middle range of membership size (500.999),

reaching 28.1 percent. It is the most frequent method

used in the largest two intervals. Representation systems that combine at-large and geographic districts or

service divisions also become relatively more prevalent

in terms of the percent share of the membership size

intervals from the middle to the largest. In the 2,500 to

4,999 range, 13 of 57 cooperatives (22.8 percent) used a

combination of at-large and districts or divisions.

Relatively few respondents used delegate systems

in all membership size intervals. Results show there is

also relatively less inclusion of at-large seats in district

delegate systems than in those using geographic districts or divisions for member voting.

Within Representation Systems:

Table 6 focuses on the membership size distribution

within each system. Cumulative percentages are given

by size intervals for each system.

There were 832 respondents exclusively using atlarge elections. Nearly 65 percent were in the smallest

three membership-size intervals. The four systems of

districting are mostly used by cooperatives with large

memberships. But it is noteworthy that several cooperatives with small memberships make use of representation systems with districts or divisions or delegate voting. These results suggest that some cooperatives define

their representation system with districts, not only

when having large memberships, but also for providing

a local focus when their members are widely dispersed.

Type or Function:

Table 7 classifies the 1,268 direct membership cooperatives by 9 different types or functions. In all categories, at-large representation was most prevalent

(65.6 percent).

TM~ 5- Distribution of membership size across representation systems of direct-membership co-ops, 1995

Representation:

Membership At-large

BY

geographic

districts1

BY

district

delegates

At-large &

geographic

districts1

At-large &

district

delegates

Total 2

Less than 100 142 87.1 14 8.6

loo-249 162 81.0 20 10.0

250-499 234 75.5 52 16.8

500-999 176 59.7 83 28.1

1 ,OOO-2,499 93 42.9 82 37.8

2,500.4,999 17 29.8 24 42.1

5,000 or more 8 30.8 11 42.3

Total 832 65.6 286 22.6 2 2 1.7 122 9.5 6 0.5 1,268 100.0

No. % No. % No. %

0.6 6 3.7 - 163 100.0

1.5 15 7.5 200 100.0

1 .o 19 6.1 2 0.6 310 100.0

1.4 31 10.5 1 0.3 295 100.0

2.3 3 5 16.1 2 0.9 217 100.0

3.5 13 22.8 1 1.8 57 100.0

15.4 3 11.5 2 6 100.0

No. % No. % No. %

l And/or divisions.

2 Excludes 45 cooperatives that reported voting method used but not representation and another 20 cooperatives that reported representation

by both geographic and district delegates. Totals may not add to 100 percent due to rounding.

5
Table 7 reports the frequency and percentage of Sixty-five percent of dairy cooperatives used attotal respondents for each of the five systems of repre- large representation, or about the same as the 66 persentation. These percentages are useful for comparing cent for the total sample. Among the five categories of

with those of the nine cooperative types or functions representation, 30 percent used geographic districts.

reported for the five different categories of representa- Seventy-one percent of fruit and vegetable cooption systems. eratives used at-large representation, slightly higher

Table 6- Distribution of membership size within representation systems of direct-membership co-ops, 1995

Representation:

Membership

Less than 100

100-249

250-499

500-999

1 ,ooo-2,499

2,500.4,999

5,000 or more

At-large

NO. %”

142 17.1

162 36.5

235 64.8

176 85.8

93 97.0

17 99.0

8 100.0

BY BY At-large &

geographic district geographic

districts’ delegates districts’

No. % 2 No. s/o2 No. % 2

14 5.2 1 4.6 6 4.9

20 12.1 3 18.1 15 17.2

52 30.1 3 31.7 19 32.5

83 59.5 4 50.0 31 57.7

82 87.9 5 72.6 35 87.0

2 4 96.2 2 81.7 13 97.6

11 100.0 4 100.0 3 100.0

At-large &

district

delegates

No. % 2

- -

- -

2 33.3

1 50.0

2 83.3

1 100.0

- -

Total 3 832 286 22 122 6

l And/or divisions.

* Cumulative percentages.

3 Excludes 45 cooperatives that reported voting method used but not representation and another 20 cooperatives that reported representation

by both geographic and district delegates.

Table 7- Representation used by direct-membership cooperatives, by type, 1995

Representation:

Cooperative

type/function

Dairy

Fruit and vegetable

Grain and oilseed

Livestock

Poultry

Other marketing 3

Farm supply

Cotton gin

Other service

At-large

No. %

43 65.2

54 71 .I

274 63.9

13 65.0

6 60.0

17 41.5

346 65.2

57 93.4

22 64.7

BY

geographic

districts’

No. %

20 30.3

13 17.1

104 24.2

3 15.0

2 20.0

15 36.6

119 22.4

2 3.3

8 23.5

BY

district

delegates

No. %

1 1.5

1 1.3

6 1.4

3 15.0

- -

3 7.3

6 1.1

- -

2 5.9

At-large &

geographic

districts1

No. %

1 1.5

8 10.5

42 9.8

1 5.0

2 20.0

5 12.2

59 11.1

2 3.3

2 5.9

At-large &

district

delegates

No, %

1 1.5

- -

3 0.7

- -

- -

1 2.4

1 0.2

- -

- -

Total *

No.

66

76

429

20

IO

41

531

61

34

Total 832 65.6 286 22.6 22 1.7 122 9.6 6 0.5 1,268

1

2

3

6

And/or divisions.

Excludes 45 cooperatives that reported voting method used but not representation and another 20 cooperatives that reported representation

by both geographic and district delegates. Totals may not add to 100 percent due to rounding.

Includes cotton, dry bean and pea, rice, sugar, nut, and miscellaneous marketing cooperatives.
than the total sample. The 17.1 percent of total fruit

and vegetable cooperatives using geographic districts

was below the 22.6 percent for all cooperatives in the

sample.

The 429 grain cooperatives used all five representation systems at about the same rate as the total sample

.

Among 20 livestock cooperatives, (15 percent),

used geographic districts, well below the 22.6 percent

reported for all cooperatives in the sample. Livestock

cooperatives had the greatest percentage use of district

delegates. Two of the 10 responding poultry cooperatives used geographic districts and none used district

delegates.

Among the 531 farm supply cooperatives, 346 or

65 percent used at-large representation, about the same

as the total sample. All five systems of representation

are used by this type of cooperative.

At-large representation was used by 57 of 61 cotton gin cooperatives, or 93.4 percent.

Cooperatives by Region:

Table 8 compares how cooperatives in different regions

of the Nation establish systems for representation on

governing boards. Although cooperative State statutes

vary in their membership voting requirements, there

are no comparable restrictions to influence the frequencies of cooperatives’ use of the five different systems of representation.

Among regions, use of the at-large system is the

most common at 66 percent and geographic districts

are the next most widely reported method at 23 percent of the total sample.

Observations from the North Central and the

Great Plains regions were more than 71 percent of the

total. This condition, coupled with the relatively small

number of cooperatives that reported other than atlarge systems, resulted in no observations in some

regions for representation systems that combine atlarge with districting methods. The lack of observations in these cases does not mean that these representation systems are not used by cooperatives in those

regions.

Half of the 22 responses for the district delegates

system are in the North Central region. Five of the six

systems that combine at-large with district delegates

are in the Great Plains region. Among the regional differences in table 8 is a relatively high percentage of atlarge representation use by Northeast cooperatives.

The Intermountain region had a relatively high percentage of cooperatives combining at-large and geographic district representation.

-

Table &- Representation used by direct-membership cooperatives, by region, 1995

Representation:

-

Region’ At-large

BY

geographic

districts*

BY

district

delegates

At-large 81

geographic

districts*

At-large &

district

delegates

Total 3

No.

Pacific 68 61.8 29 26.4 2 1.8

Intermountain 39 60.0 14 21.5 1 1.5

Great Plains 276 71.7 67 17.4 4 1 .o

Southeast 90 67.2 27 20.1 2 1.5

North Central 317 61 .l 138 26.6 11 2.1

Northeast 42 76.4 11 20.0 2 3.6

Total 832 65.6 286 22.6 22 1.7 122 9.6 6 0.5 1,268

% No. % No. % No. % No. % No.

11 10.0 - - 110

11 16.9 - - 65

33 8.6 5 1.3 385

15 11.2 - - 134

52 10.0 1 0.2 519

- 55

States included in each region:

Pacific - CA, OR, WA, AK, and HI.

Intermountain -AZ, NM, CO, UT, NV, ID, WY, and MT.

Great Plains - ND, SD, NE, KS, OK, and TX.

Southeast - AR, LA, MS, AL, GA, FL, SC, NC, TN, KY, VA, and WV.

North Central - MN, IA, MO, IL, WI, IN, OH, and Ml.

Northeast - MD, DC, DE, PA, NY, NJ, CT, RI, MA, VT, NH, and ME.

And/or divisions.

Excludes 45 cooperatives that reported voting method used but not representation and another 20 cooperatives that reported representation

by both geographic and district delegates. Totals may not add to 100 percent due to rounding.

7
Summary: Voting Method

Of the five systems of representation for electing directors, the at-large alternative was the most frequently

used (66 percent), followed by geographic districting,

(almost 23 percent). Ten percent used some combination of districting with at-large representation methods. Only 22 cooperatives, or 1.7 percent, used a delegate system. Only six cooperatives, or 0.5 percent,

combined district delegates with an at-large representation system.

Larger cooperatives tended to make the most use

of districting, delegates, or some combination that

included at-large methods. Some relatively small-membership cooperatives also used districting methods for

defining their systems of member representation.

The frequency of one-member, one-vote and proportional voting are reported separately for federated

and mixed cooperatives and combined in subtotals

(table 9). One-member, one-vote was used by 51 federated and mixed cooperatives, while 10 used proportional voting. Twenty-seven of the 32 federated cooperatives and 24 of 29 mixed cooperatives used the

one-member, one-vote method. Eighteen out of 61

cooperatives with federated or mixed structures were

in farm supply.

By cooperative type or function, about 66 percent

used at-large methods (93.4 percent among cotton ginning cooperatives). Dairy cooperatives used geographic districts in the highest percent. More than 71 percent

of survey respondents to representation questions

were from the North Central and Great Plains regions.

Table 10 presents the voting methods of federated

and mixed cooperatives by region. With fewer federated and mixed cooperatives than the direct membership

cooperatives, the differences in State statutes do not

distort results. Several statutes allow cooperatives with

organizations as members to have proportional voting.

Federated and Mixed-Membership

Cooperatives

Twenty-seven of the 61 total federated and mixed

cooperatives reporting were in the North Central

region (table 10). Twenty-two North Central cooperatives used one-member, one-vote and five used proportional voting. All 14 federated and mixed cooperatives in the Great Plains region used one-member,

one-v0 te.

Thirty-two federated and 31 mixed-organizational-structure cooperatives responded to questions on

voting and representation. Two mixed-membership

cooperatives are excluded from the tabulations

because they used both one-member, one-vote and

proportional voting.

Representation Systems

Federated and mixed cooperatives use the same

types of representation systems as direct-membership

cooperatives- exclusive at-large, two kinds of districting, and two kinds of combined representation systems.

Table 9- Federated and mixed cooperatives using one-member, one-vote or proportional voting by type, 1995

Type of cooperative

One-Member, One-Vote

Federated Mixed l Subtotal

Proportional Voting

Federated Mixed l Subtotal

Total

Cotton

Dairy

Fruit and vegetable

Grain and oilseed

Livestock

Miscellaneous marketing

Farm supply

Cotton gin

Other service

Total 27 24 51 5 5 10 61

7

a

4

4

1

1

14

3

9

7

9

7

4

1

1

18

3

11

l Excludes two mixed cooperatives that use both voting systems.

8
Federated Cooperatives:

Table 11 reports the representation method for 25 federated cooperatives by commodity or industry type.

Thirteen used geographic districting for determining

representation in director elections, while 9 used atlarge methods.

Mixed-Membership Cooperatives:

Table 12 reports the representation method for 21

mixed cooperatives by commodity or industry type.

Nine each used either at-large representation or a geographic districting system.

Summary and Cc$nclusions

Direct-Membership Cooperatives:

The predominant choice for voting in direct-membership cooperatives is one-member, one-vote, regardless

of commodity, region, or membership size.

Statutes for cooperative incorporation have

required one-member, one-vote in several States.

Although a few States have recently changed their

statutes to allow proportional voting, about half have

had these regulations for many years. They have

helped reenforce the predominance of one-member,

one-vote systems. However, in States with statutes that

have permitted both methods, proportional voting is 9

percent, only slightly higher than the overall average

of 7 percent.

Proportional voting is most widely practiced in

the Pacific region among fruit and vegetable cooperatives, and among most of the local grain and farm supply cooperatives in Illinois, due to that State’s security

laws and incorporation statutes.

The most frequently used method for defining

elected representation, regardless of region or commodity type, is with at-large election methods.

Geographic districting is the second most frequently

used. As membership size increases, cooperatives are

more likely to use either geographic districting, a delegate system, or some combination. Cooperatives in the

Northeast and Great Plains had the highest percentage

use of at-large methods. Pacific region cooperatives

had the highest percentage use of geographic districting. By type or function, cotton ginning cooperatives

had the highest use of at-large methods.

Of the three remaining options for determining

representation for director elections, the most frequently used method was the combination of at-large

with districting. Dairy cooperatives used this method

in the smallest percentages, the miscellaneous marketing cooperatives in the largest percentages. By region,

Intermountain cooperatives had the highest percentage use of this method, while organizations in the

Great Plains reported the lowest use.

Relatively few cooperatives used a delegate system, either in combination with at-large representation

or exclusively with delegates. The largest number of

cooperatives using a delegate system were in the

North Central region. The largest number using atlarge with a delegate system were in the Great Plains.

By type, farm supply and grain cooperatives had the

Table IO- Federated and mixed cooperatives using one-member, one-vote or proportional voting by region, 1995

Type of cooperative

One-Member, One-Vote Proportional Voting

Federated Mixed ’ Subtotal Federated Mixed 1 Subtotal

Total

Pacific 2 1 3 3 3 6

Intermountain 1 1 2 1 1 3

Great Plains 10 4 14 14

Southeast 1 4 5 1 1 6

North Central. 11 11 22 5 - 5 27

Northeast 2 3 5 5

Total 27 24 51 5 5 10 61

l States included in each region: Pacific - CA, OR, WA, AK, & HI

Intetmountain - AZ, NM, CO, UT, NV, ID, WY, & MT

G reat Plains - ND, SD, NE, KS, OK, & TX

Southeast - AR, LA, MS, AL, GA, FL, SC, NC, TN, KY, VA, & WV

North Central- MN, IA, MO, IL, WI, IN, OH, Ml

Northeast - MD, DC, DE, PA, NY, NJ, CT, RI, MA, VT, NH, & ME

9
highest percentage use of a delegate system, though

grain cooperatives often combined at-large with a delegate system.

Federated and Mixed Membership:

One-member, one-vote was the predominant voting

system used among the federated and mixed- structure cooperatives (51 of 61). Geographic district representation was used by 22 of these cooperatives, while

18 organizations used at-large representation.

Most U.S. agricultural cooperatives prefer to have

equal voting power among individual members-nemember, one-vote. The most frequently used method

for defining representation was elections at-large. As

cooperative membership size increases, there is a

strong tendency to shift away from at-large techniques,

in favor of geographic districting, delegate systems, or

some combination of methods. This tendency generally

holds across regions and commodities, although federated cooperatives used districting more frequently than

at-large methods, mixed membership cooperatives

used at-large and districting techniques equally often.

Table I I- Representation used by federated cooperatives, by type, 1995

Representation: 1

Type of cooperative At-large

BY

geographic

districts 2

BY

district

delegates

At-large &

geographic

districts 2

At-large &

district

delegates

Total

Cotton

Dairy

Fruit and vegetable

Grain and oilseed

Miscellaneous marketing

Farm supply

Cotton gin

Other service

Total 9

1

1

13 I 1 1 25

Number

a 3

2

1 1

- 2

1

1 1 7

2

I 7

l Seven cooperatives that provided information on voting method used did not report on representation.

2 And/or divisions.

Table 12- Representation used by mixed cooperatives, by type, 1995

Representation:

Type of cooperative At-large

BY

geographic

districts 1

BY

district

delegates

At-large &

geographic

districts 1

At-large &

district

delegates

Total

Cotton 1 1

Dairy 4

Fruit and vegetable 1 2

Grain and oilseed 1 1

Livestock and poultry - 1 -

Farm supply 5 1

Cotton gin 1 -

Total 9 9 1

Number

2

1 5

_

1 4

2

1

6

1

2 0 21

1 And/or divisions.

10
Appendix

State Statutes and Laws

Cooperative incorporation statutes and the securities laws in many States restrict voting methods in different ways and to varying degrees. Some State

statutes restrict voting power to be exclusively onemember, one-vote, while others allow proportional

voting with various restrictions. Although these regulations restrict choices about voting methods, they represent historical and institutional preferences about

democratic governance of cooperatives.

A comparison of one-member, one-vote and proportional voting can be examined as aggregations of

individual choices or as preferences, only when confined to States that allow both methods of voting.

Furthermore, counting the incidence of voting methods only for States that allow both methods of voting

would not necessarily provide a meaningful count if

some of these States only recently revised their cooperative statutes to allow either method of voting. Even

when States have revised their regulations most cooperatives continue to use their original policies. For this

reason, States that recently revised their incorporation

statute restrictions on proportional voting were not

included in the comparison data set for table 2.

Earlier surveys of voting by cooperatives recognized, but did not consider the effect of States having

widely differing regulations on voting, when reporting

national or regional results. This report provides a special tabulation of voting methods by direct-membership

cooperatives in States that allow both methods (table 2).

Cooperative incorporation statutes in 21 States

require one-member, one-vote. Eleven States have

either recently revised their statutes to permit proportional voting, or have allowed its use under certain circumstances. (Reilly, 1996). Eighteen States have cooperative incorporation statutes that allowed either

voting method since at least the 1982 survey of State

statutes. (Baarda, 1980.)

Illinois is the only State that required cooperatives

to use proportional voting if organized on a stock basis.

In addition, its proportional voting requirement is not

related to volume of patronage, rather, a member has

one vote for every share of stock invested in the cooperative. Many cooperatives in Illinois have historically

been organized on a stock basis, and therefore onemember, one-vote was prohibited. Although the State’s

regulations on proportional voting for all stock-holding

businesses have recently been revised to allow one vote

per member or per investor, most cooperatives were

organized when the earlier rules were in effect.

Glossary

1.

2 .

3)

4)

5)

6)

7)

8)

9)

At-large voting system-When a representative is

elected by the entire membership.

Delegate system-Delegates are officers, intermediate to members and directors, who act as agents for

members in cooperative decision-making. They typically act in place of the members, as a delegate

body at delegate meetings. Powers generally always

include electing the cooperative board of directors

and approving financial statements, but may also

include election of other officers, proposing and

approving governing resolutions, as well as bylaw

changes. Delegate systems are generally combined

with a districting system. Delegates represent members from respective districts, and serve in the interest of cooperative representativeness.

Direct-membership cooperatives-Agricultural

cooperatives organized so only farmers or ranchers,

as producers, are the members.

District system-Member representation by directors is defined by geographic regions.

Federated cooperatives-Agricultural cooperatives

organized so only other cooperatives make-up the

membershiP of the organization.

Geographic-district, election system-District divisions across a cooperative’s membership area are

the basis for representation and election to office.

Members from within a district, elect fellow district

member(s) to represent them in cooperative decision-making. Officers are generally elected at annual district meetings.

Mixed-Both cooperative organizations and individual farmers are members.

One-member, one-vote system-Voting power

based solely on farmer membership in a cooperative. Each member has equal voting power, i.e., one

vote.

Proportional voting system-Voting power based

on member’s use of the cooperative or on the

amount of stock ownership. Typically, each member

is allocated one vote, plus additional votes based on

the amount of volume transacted with the cooperative or stock owned.

11
References

Baarda, James R., State Incorporation Statutes for

Farmer Cooperatives. Washington, D.C.: USDA

ACS CIR 30, Oct. 1980.

Butler, Gillian, Designing Membership Structures For

Large Agricultural Cooperatives. Washington,

D.C.: USDA ACS RR 75, August 1988.

Craig, Jack, The Nature of Cooperation, Blackrose

Press, 1993.

Ginder, Roger and Ron E. Deiter, “Managerial Skills,

Functions, and Participants,” in David Cobia

(ed.) Cooperatives in Agriculture, New Jersey:

Prentice Hall, 1989.

Gray, Thomas W., Structuring for Member Control in

Large Cooperatives: A Case Study in Dairy.

Washington, D.C.: USDA ACS RR 72, July 1988.

Gray, Thomas W. and Gillian Butler, “Charting From

Within a Grounded Concept of Member Control.”

Journal of Agricultural Cooperation. 6.1991.

Gray, Thomas W. and Gillian Butler, Membership

Structural DesignWashington, D.C.:

USDA/RBS/CS RR 131, Nov. 1994.

Reilly, John, D., Recent Changes to State Incorporation

Statutes Used by Farmer Cooperatives,

Washington, D.C.:USDA/RBS/CS, unpublished

manuscript, 1996.

Schomisch, Thomas, and Gillian Mirowsky, Delegate

Systems, Washington, D.C.:USDA ACS unpublished manuscript, 198 1.

Ward, Clement, Vernon Schneider, Ramon Lopez. 1979.

Voting Systems in Agricultural Cooperatives.

Washington, D.C.: USDA ESCS RR 2, February

1979.

12