University of Wisconsin Center for Wisconsin
Rural Cooperatives, September/October 1997, p. 2.
Published by the Rural Business and Cooperative Development Service
Sound Cooperative Practices Key to Successful Operations
Randall E. Torgerson
Cooperative boards of directors and management must continually scrutinize their business and organizational practices to ensure that they continue to operate on a cooperative basis. These practices frequently define how members are treated and how they perceive the level of service they are receiving from their cooperative. These practices fall into a number of categories including: finance, governance, information systems and transaction accounting, among others.
If members are going to control their cooperatives, they have to finance them. Numerous methods of acquiring equity are used, including up-front subscriptions, retention of allocated earnings, per unit capital retains and establishment of base capital programs. Understanding, communicating and managing these equity programs are important elements in keeping control of a cooperative in the hands of current users. As noted in the article on the finances and performance of the nation's largest cooperatives, continued improvements have been made in asset growth, but long-term debt appears to be growing faster than assets acquired.
Cooperatives also need to ensure the proper divisions of responsibility between hired management and accountability to the board of directors. An attempt by a board chairman to also serve as the cooperative's chief executive officer didn't work for Tri Valley Growers. An article in this issue highlights the efforts made by new management to turn around the situation there. The fruit and vegetable marketing cooperative has reinvented itself, breathed new life into the cooperative community, and is demonstrating to California agriculture that cooperatives can be aggressive marketers and operated to the benefit of grower members on a sound business basis.
Member communication programs are also critical as a cooperative practice. An informed membership is the most loyal. Cooperatives are using expanded member information meetings, web sites, and improved house organs as a means for getting factual performance information and market evaluation to their members.
Cooperative Services in USDA has always been regarded as a source of information on best cooperative practices, and its publications reflect lessons learned within the cooperative community throughout the United States. This magazine is dedicated to bringing this information to cooperative decision-makers and information providers throughout rural America. We intend for it to be an important element leading to stronger, more efficient and ultimately successful cooperative business organizations.