Evening star., 1946-12-29

duction units with large buying and
selling departments.
4,OOO, 900 Members in u. s.
There are over 10000 farmer CO.
operative marketing and purchasing
associations in the United States,
with over 100000 members. These
are found from Maine to California
and handle all basic crops and live
stock products, plus such specialties
as avocadoeS, honey, mushrooms,
etc. Cooperative purchasing asso-
Citations handle feed, fertilizer, build
ing supplies, petroleum products and
many other items needed on the
farm.
Co-operatives cannot solve Ma
tion-wide problems of farm sur
pluses and low prices, but they do
help in returning to the farmer all
that is possible under given market
conditions and enable him to effect
economies in purchasing farm sup
plies, thus increasing agricultural
purchasing power and hence the
farmers standard of living.
The important thing to the farmer
is that his cooperative looks at
marketing and purchasing problems
from his point of view and not that
of a third party who merely handles
products and supplies for the farmer.
Co-operatives facilitate economical
and efficient distribution, reduce
market gluts and shortages, mini
mize product spoilage, encourage
better grading, develop better trans
portation and storage methods and
encourage fairer competition.
AS a result, co-operatives have
not only improved agricultural con-
ditions but have made material con-
tributions to general welfare. A
more efficient system of marketing
benefits both producers and con-
sumers; and more purchasing power
on the farm means better markets
for industrial goods.
How Co-ops Function.
How co-operatives function can be
best told in terms of an example
Assume that John Smith is men,
ber of an egg marketing co-opera-
tive. Mr.. Smith has contributed a
modest amount of capital and is
therefore part owner Of the busi-
ness. His most important contrlbu-
ton is patronage-it is the lifeblood
Of the cooperative. Capital plays
secondary role, for Mr.. Smith is
more interested in efficient service
than in earnings on invested capl-
tai. At membership meetings Mr..
Smith has only one vote despite
the amount of capital he may have
invested, and he receives very mod
est, if any, returns on such capital.
Mr.. Smith may also be director,
and if so, can aid in setting policies
pursuant to the members wishes
on a democratic basis.
Mr.. Smith himself is a sound busi-
nessman, as are all progressive
farmers. He is firm believer in
the private profit, free-enterprise
system and will have nothing to do
with the various "isms." He sees
no reason, however, why his CO.
operative should make profit since
it is an intergrated part of his farm.
Instead his cooperative has been
set up to tender him a service in
marketing his eggs; it functions as
his agent.
Mr.. Smith is interested in increas-
ing his own returns. not in setting
up a business to make profits as
an entity. In fact, the law under
which it is incorporated, as well as
the bylaws or membership contract,
spell out the nonprofit nature OF
his organization.
At the conclusion of a successful
business year there will be funds to
be distributed to the patrons in
addition to funds already advanced.
The cooperative has no legal right
to this money; it is not income to
the cooperative. Instead, it is dis
tributed to patrons on the basis of
their volume of business and Is
termed a patronage refund.
Purchasing co-operatives operate
in the same manner, only their
business is obtaining production
supplies for farms instead of mar
keting farm products. Thus, in a
marketing cooperative this adjust
ment is actually an addition to the
price of the product and in a pur-
chasing cooperative a refund on an
overcharge when the purchases were
made.
In the past few years the subject
of co-operatives and taxation has
been a much discussed issue. No
doubt a great deal of the impetus
came from the fact that income
taxes were high during the war and
certain co-operatives could qualify
for exemption from the Federal in
come tax when their nonprofit
character was established.
The campaign against co-opera-
tives is spearheaded by a group
known as the National Tax Equality
Association, commonly referred to
as the NTEA. This group is not
primarily interested in "tax equal
ity" but has launched an extensive
anti-co-operative campaign. Part of
their program has been to spread
the idea that co-operatives pay no
taxes.
Such is absolutely false Cooper
atives pay real estate taxes, personal