Border to Border Broadband Conference
Wednesday, Feb. 5th, 2014
Joel Dahlgren, Chief Risk Officer
United Farmers Cooperative
Minnesota is Important for Ag Co-ops
• 213 agricultural co-ops are headquartered in
Minnesota, the most of any state in the USA.
These Co-ops’ volume = $17.6 billion. Only
Iowa, which has 109 ag co-ops, has a larger
business volume at $18.1 billion.
• Two of the five largest agricultural co-ops, CHS
Inc. and Land O’ Lakes are headquartered in
the Twin Cities.
• Minnesota provides for corporate 308A co-ops
and unincorporated 308B co-ops.
International Cooperative Alliance
• Definition of Co-op: An autonomous association
of persons united voluntarily to meet their
common economic, social and cultural needs and
aspirations through a jointly owned and
democratically controlled enterprise.
• Principles include . . . Voluntary membership;
democratic control; economic participation on
basis of use rather than ownership; responsibility
for wider community; education of members.
Co-ops Operate at Cost
• The co-op is an aggregate of the members, an
extension of the members for obtaining needed
services and products.
– The Co-op is an agent of members, and patronage
earnings belong to members rather than co-op.
– So patronage earnings are viewed as rebates or
refund owned by members, not owned by the co-op.
– In USA, co-op receives a tax deduction for patronage
earnings distributed to patrons on basis of use. At
least 20% cash, balance up to 80% as allocated equity
– At dissolution – if ever – final distribution of proceeds
is done on the basis of historical patronage.
Underneath the Definition and
Principles of Co-ops
• “Co-operatives define their philosophy and find
their niche in society where neither private
capital nor governmental planning are optimal;
they are “autonomous”.
• The principle of self-help practiced by members
of co-operatives corresponds to a self-help
attitude of the co-operative movement as a
whole, which looks inward for solutions rather
than outward to society’s most powerful
Cooperatives as Social Policy Means for Creating Social Cohesion in
Communities, Robert Dobrohoczki, Centre for the Study of Co-operatives,
Saskatoon, Canada, 2006.
Cooperatives are Instruments of Policy
• Cooperatives are policy instruments in the
– State and federal governments use cooperatives
to achieve legislative objectives.
– Cooperatives are protected by legislation like the
Capper Volstead Act.
• The UN, ILO, FAO, World Bank and IMF all view
cooperatives as instruments to achieve
international economic development
objectives and reduction of poverty.
• Rural electric cooperatives
– Generation and Transmission
• Water – mutual association
• Rural telephone cooperatives
– Paul Bunyan Telephone (northern Minnesota)
– Federated (Lac Qui Parle County)
– And others
– Now RS Fiber Cooperative
RS Fiber Cooperative
• Formed as 308B Minnesota Cooperative
– Versus 308A: 308Bs can raise “outside” capital more
easily than 308A co-ops
• Chapter 308B Cooperative:
– Patron members – controlling voice and economic
interests over non patron members
– Non patron members
• Corporate shield comparable to corporation
• Board of Directors is made up of patron and non
patron members elected by members at the