• TABLE OF CONTENTS
HIDE
 Front Cover
 Title Page
 Foreword
 Table of Contents
 Map
 Introduction
 Questions and answers
 Cooperative terms
 Organizing and incorporating
 Suggested organization forms
 Agricultural credit
 Organizing farmers for busines...
 Federal and state laws governing...
 Lifeblood of a cooperative
 Florida statutes on cooperativ...
 List of Florida cooperatives














Group Title: Bulletin - Florida Department of Agriculture ; no. 92
Title: Co-operative agriculture in Florida
CITATION THUMBNAILS PAGE IMAGE ZOOMABLE
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00002902/00001
 Material Information
Title: Co-operative agriculture in Florida a survey of the development of the cooperative ventures in Florida and the United States (also includes Bulletin no.76, Cooperative marketing laws)
Series Title: Bulletin
Alternate Title: Cooperative agriculture in Florida
Physical Description: 149 p. : ill. ; 23 cm.
Language: English
Creator: Brooks, T. J ( Thomas Joseph ), b. 1870
Timmons, Doyal Edgar
Publisher: Dept. of Agriculture
Place of Publication: Tallahassee Fla
Publication Date: <1955>
Edition: Rev.
 Subjects
Subject: Agriculture, Cooperative -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
non-fiction   ( marcgt )
 Notes
Statement of Responsibility: by T.J. Brooks.
General Note: Revision of Co-operative agriculture in Florida, by D.E. Timmons, published in 1948 without series title.
General Note: Earlier editions of Bulletin 92 were another publication of the Dept. of Agriculture with title: Cooperative agriculture.
Funding: Bulletin (Florida. Dept. of Agriculture) ;
 Record Information
Bibliographic ID: UF00002902
Volume ID: VID00001
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: aleph - 001962942
oclc - 01907312
notis - AKD9619
lccn - a 55009815
 Related Items
Other version: Alternate version (PALMM)
PALMM Version

Table of Contents
    Front Cover
        Page i
    Title Page
        Page 1
    Foreword
        Page 2
    Table of Contents
        Page 3
    Map
        Page 4
    Introduction
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
    Questions and answers
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
        Page 32
        Page 33
    Cooperative terms
        Page 34
        Page 35
        Page 36
        Page 37
        Page 38
    Organizing and incorporating
        Page 39
        Page 40
        Page 41
        Page 42
        Page 43
        Page 44
        Page 45
        Page 46
        Page 47
    Suggested organization forms
        Page 48
        Page 49
        Page 50
        Page 51
        Page 52
        Page 53
        Page 54
        Page 55
        Page 56
        Page 57
        Page 58
        Page 59
        Page 60
        Page 61
        Page 62
        Page 63
        Page 64
        Page 65
        Page 66
        Page 67
        Page 68
        Page 69
        Page 70
        Page 71
        Page 72
        Page 73
        Page 74
        Page 75
        Page 76
        Page 77
    Agricultural credit
        Page 78
        Page 79
        Page 80
        Page 81
        Page 82
        Page 83
        Page 84
        Page 85
        Page 86
        Page 87
        Page 88
        Page 89
        Page 90
        Page 91
        Page 92
        Page 93
    Organizing farmers for business
        Page 94
        Page 95
        Page 96
        Page 97
        Page 98
        Page 99
        Page 100
        Page 101
        Page 102
        Page 103
        Page 104
    Federal and state laws governing cooperative corporations
        Page 105
        Page 106
        Page 107
        Page 108
        Page 109
        Page 110
        Page 111
        Page 112
        Page 113
        Page 114
        Page 115
        Page 116
        Page 117
    Lifeblood of a cooperative
        Page 118
        Page 119
        Page 120
        Page 121
        Page 122
    Florida statutes on cooperatives
        Page 123
        Page 124
        Page 125
        Page 126
        Page 127
        Page 128
        Page 129
        Page 130
        Page 131
        Page 132
        Page 133
        Page 134
        Page 135
    List of Florida cooperatives
        Page 136
        Page 137
        Page 138
        Page 139
        Page 140
        Page 141
        Page 142
        Page 143
        Page 144
        Page 145
        Page 146
        Page 147
        Page 148
        Page 149
Full Text


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aRICULTURI


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BULLETIN NO. 92 Revised March, 1955
(Originally Printed 1948)


CO-OPERATIVE

Agriculture

IN FLORIDA


A SURVEY OF THE DEVELOPMENT OF
THE COOPERATIVE VENTURES
IN
FLORIDA
AND THE UNITED STATES


(Also includes
Bulletin No. 76, Cooperative Marketing Laws)

By T. J. BROOKS
Assistant Commissioner of Agriculture
DEPARTMENT OF AGRICULTURE
Tallahassee, Florida


NATHAN MAYO, Commissioner







FOREWORD


This booklet was published in the interest of continu-
ing the agricultural and industrial progress that Florida
has made during the past 30 years. Only with an
educated and informed public will this State continue
being one of the country's leaders in furnishing America's
residents the necessary foodstuffs and other materials
which give the people of this continent the opportunity
of "having the highest living standard in the world."
With this thought in mind we are happy to present you
with this booklet. It is but a token expression of the
service that the Florida Department of Agriculture is
giving to the residents of this State, this country, and
the world.

NATHAN MAYO
Conll, ssionlr of Agriculttlrr


T. J. BROOKS
A,,t CoonIInlT.n.(r of Am.nultiire
Burer., of Imnigraton
MISS BESSIE DAMON
Field Note Di)111ion
J. J. TAYIOR
SIate Chemist
.. II. LEWIS
Stilt Farmners' Markets
N4LLS BERRYMAN
\ eights .ldxl M.asures
THOMAS J. MULLEN
Poultry and Egg
GEORGE W. BRITM
\alhing Dnision


SINCLAIR WELLS
Lind Offic

L. F. CHAPMAN
Sl.Il Prison I)ivision
NEl. RHODES
Stal M\arketing Commissioner
NAT MAYO
Siiuprvising I.nsp actor
G. E COPELAND
Citnlo .nd \,igtabh.l Inspecion
ALEX G. SHAW
Dairy Division
LEE THOMPSON
Auditing Di vision


Published by the lBureau of Immigrati. on, D)epartmnt of Agriculture
State Capitol, Tallahassee, Florida






CONTENTS

Cooperative Agriculture in Florida

Page

INTRODUCTION ................ ..... 5

CHAPTER I-Questions and Answers .. ... 13

CHAPTER II-Cooperative Terms. ........ 34

CHAPTER III-Organizing and Incorporating .. 39

CHAPTER IV-Suggested Organization Forms.... 48

CHAPTER V-Agricultural Credit.. .. .. ... 78

CHAPTER VI-Organizing Farmers for Business.. 94

CHAPTER VII-Federal and State Laws ...... 105

CHAPTER VIII-Lifeblood of a Cooperative ...... 118

CHAPTER IX-Florida Statutes on Cooperatives. 123

CHAPTER X-List of Florida Cooperatives ....... 136



Tlls looklit was first written 1918 1,i DE Tiinmonsu foimeir
MaIrkeling E&onomnist of ill' Agncultiur.al Etension S(ivice at the Ulinver-
sity of Florida It hls rerlaitl been reused through the cooperation of
Jack Slhoeln.mker, Inform.tlionl Specialast of the Bureau of lniigr.atiiuo, .id
Dr E W' Cake. Marketing Economist it lie I. inersilt of Florinda \Mch
of the infolmtilton foundll in the booklet wa.s obtained from the Failm Credit
Admmistratiin, U S i)Dpalntnint of Agikuiltlure, Coui)ty Agents in Fllida,
The Colinhlia Bank fcr Cooperat[\ s, The Attorni CGeneral's office nf
the State of Florida. ,id arlios ineCllbers of agnchlliral cooperati'es
throtlghout Floninda.







AGRICULTURAL COOPERATIVE ASSOCIATIONS IN FLORIDA'


lTnlls miap do(s not in ciid local f
lbreaps or cattlem-ens .SMrrins





COOPERATIVE AGRICULTURE IN FLORIDA


Introduction

There are various kinds of cooperation. We are con-
cerned here with farmer cooperatives only. Determining
this kind by elimination we have

WHAT A CO-OP IS NOT
A co-op is not for the profit of stockholders: Stocks
are limited to a specified rate of interest. The privilege
of retiring all stocks at par is retained by the Cooperative
if its members so determine.
It is not a co-partnership organization
It is not a philanthropic organization
It is not a fraternal order
It is not a charitable institution
It is not a civic club
It does not adhere to socialism
It is basically opposed to communism
Then what is it?

It is a business organization which acts for a group
engaged in a specific business. The members are in the
market to either sell or buy the materials which they
produce or purchase.
It is a non-profit organization because all net profits
are returned to the patrons in proportion to the value
of the business he has transacted through the organiza-
tion. It is incorporated for legal protection. Usually one
member one vote.
Why is it to be preferred to individual operation?
Because volume means advantage in the business world
A co-op pools the business of many into one unit for
operation.





DEPARTMENT OF AGRICULTURE


As far back as 1913 George W. Russell, Editor of the
Irish Homestead magazine, said to the American Com-
mission when meeting in Dublin:
"Economic power means civic power. A dual control
of agriculture is intolerable. Farmers must control agri-
culture by business cooperation. Farmers are manufac-
turers and should enjoy the advantages of industrial
transactions."
In keeping with these ideas we would say that a
democratized civilization is impossible with a totally de-
pendent class. Any vocation whose financial livelihood
is so precarious as to have no power of appraisal cannot
hope to prosper.
No civilization has ever been destroyed when its citi-
zens were home-owners. Therefore, it is the road to a
cataclysm to ignore the welfare of the material sup-
porters of the nation.

Too great a drift from the farms to the cities is a
baneful advertisement that there is something radically
wrong with agriculture. The best way to obviate that
trend is to utilize the protective power of coordinated
agricultural functioning.

As an illustration of the extent to which farmers are
cooperating m this country herewith is submitted a re-
port of the Farmer Cooperative Service, U. S. Depart-
ment of Agriculture.

Current figures of net worths of all cooperative as-
sociations, both purchasing and marketing, are available
only in the form of a statement of figures indicative of
farmers' financial interest in various types of coopera-
tives. Attention is specifically directed to the fact that
m these figures effort has been made to avoid duplica-
tion of net worths of overlapping associations.

Estimates by the Farmer Cooperative Service, based
on financial statements of the cooperatives available in





COOPERATIVE AGRICULTURE IN FLORIDA


their files, show the following amounts as representing
farmers' investment interest in marketing and purchas-
ing associations:


Jan. 1, 1940 Jan. 147 J 1, 17 J 1, 1954
"Markcting Associations S256,000,000) S513,010,000 $S1.100,00,000
Purchasing Association, 74,000.000 296,000,000 555,000,00
Service Associations 9,800,000
TOTALS 330,000,00() 809.000,000 S1.664,800,000


'Statistlls Of ialmers' Marketing, Puihriiasinig and Service Cuoou[prtives,
1951-52 by Anne Gc lsni. Fiannerr Cioupli.ativ Scvice, U. S. Dep'rtncent
of Agilliire.

As indicated above, net worth figures from the U. S.
Department of Agriculture represent farmers' interests
in cooperative associations. Total volume of business for
1952 amounted to a gross value of $12,132,097,000. They
represented a farm cooperative movement which has
grown to consist of 10,166 marketing, purchasing and
service associations doing more than 12 billion dollars
worth of business a year, according to the Farmer Co-
operative Service. Officials of the U. S. Department of
Agriculture say that "Cooperatives are the people's bestrf
protection against monopoly control of business."
In addition to its many cooperatives, Florida has de-
veloped a unique agency for marketing farm products.
It has 21 State Farmers' Markets. These were built
cooperatively by the state and the citizens of the com-
munities where they are located They furnish places
where farmers and buyers meet and trade directly. Dif-
ferent details are followed in different parts of the state
to meet conditions. The markets are owned and managed
by the state but policy making is left largely to local
advisory committees of farmers. Enough charges are
made to meet all overhead expenses, so the markets will
not be an incumbrance on the state. All buyers must






DEPARTMENT OF AGRICULTURE


pay cash or show license that they are bonded. There
are no stockholders to draw dividends. These markets
handled vegetables, fruits and livestock to the value of
$47,000,000 last season. Nine livestock pavilions furnish
accommodations for educational purposes.

The state also conducts the State Marketing Bureau
which keeps all buyers and sellers posted on the markets
throughout the country by wire and daily press. Its "For
Sale, Want and Exchange" Bulletin has a circulation of
60,000 semi-monthly.


FARMER COOPERATIVES IN THE UNITED STATES
Farmer Maiketing, Purchasing and Service Associations, 1951-52
Figures from U S Department of Agriculture, Farmer Cooperative Service

Number Est. Membership Est. Business
Marketing Cooperatives 6,582 4,228,556 $9,673,423,000
Purchasing Cooperatives 3,323 3,032,541 2,448,874,000
Service Cooperatives 261 102,032 9,800,000

TOTALS 10,166 7,363,139 $12,141,897,000






COOPERATIVE AGRICULTURE IN FLORIDA


ESTIMATED BUSINESS FOR SPECIFIED COMMODITIES
BY COOPERATIVES 1951-52 SEASON


Item


Number oif
Associations
Handling


Plroduls marketed fhir patrons.
Beans and peas (dr, edible)
Cotton and Cotton products
D)airy proidulcts
Frnits and vegetables
Grain, so>bl.s, sol)be.n meal
and oil
Livestock and livestock products
Nuts -
Poultry products
Rice
Sugar products
Tobacco
Wool and moluair
Mli sllaneous

Total narketiing
Supplies piurcas'ed for patron :
Bulldbng material
Conl.incrs
Fainr m.ahinery and erquipmnent
Feed .
Fertilizer
Inseticides
Meats, groceries, etc.
Petroleum products
Seedl
Other supplies


Total purchasing 7,11
Receipts for services
Trucking, storage, grnding, locker
pl.ate., iniscellaieoius 3,111
Cotton ginnng 513
Livestock trucknlg 208

Total services 4,127

Total marketing, purchasing, and service 10,166


Cross Business
of all Local
anld
Large-scale
Cooperatives
in S1,000

.12,612
437,626
2,589,181
910,675

2,163.229
1,757,943
128,475
356,708
149,677
147.313
173,399
46,170
54,064

9.257,072

72,953
44,905
126,137
1,068,700
296,771
33,153
45,787
653.610
128.788
289,785

2,760,589


91,511
21,146
1,779

111,436

12,132,097






DEPARTMENT OF AGRICULTURE


NUMBER OF COOPERATIVES BY STATES
Local I marketing, purchasing ani senice .associa.tlns hand ii faIrm
Mupplis during 1951-52


State Marketing Puichansmg Service Total
Alabama 25 33 2 60
Arizona 11 2 0 13
Arkansas 70 I 1 115
California 436 3(1 4 470
Coloraldo 77 410 1 118
Connecticut 12 14 3 29
Delaware 11 0 15
Florida JO 19 1 110
Georgia 36 38 5 79
Idaho 70 39 0 181
Illinoi 361 173 48 582
Indiana 76 76 4 156
low a 575 136 7 718
Kansas 256 102 2 360
Kentucky 2 55 0 80
Lonianl a 53 3 3 58
\mne 9 15 1 25
Maryland 15 39 5 59
Massachusetts 21 21 3 45
Michigan 126 102 10 238
Minnesota 979 329 26 1,334
Mississippi 73 51 8 132
Miissour 106 183 2 291
Mlontana 86 91 1 181
Nebraska 257 151 7 415
Nevada 4 1 0 5
New liampshire 9 4 1 14
New Jersey 25 37 3 65
New Mle-ico 26 5 1 32
New York 121 260 1 388
North Carolina 26 56 4 86
North Dakota 408 131. 14 556
Ohio 189 110 12 311
Oklahoma 166 34 3 203
Oregon 87 11 2 130
Pennsylvmnia 84 93 5 182
Rhode Island 3 0 2 5
South Carohna 11 18 4 33
South Dakota 222 94 1 317
Temnessee .. 28 80 4 112
Teas .. 447 79 27 553
Utah .. 59 14 1 74
Vermont 20 8 11 39
Virgina 53 72 8 133
Waslungton 121 72 0 193
West Virgiia 19 23 3 45
Wisconsin 582 284 5 871
Wyoming 19 7 0 26

United States 6,582 3,323 261 10,166





COOPERATIVE AGRICULTURE IN FLORIDA


SOME THINGS A COOPERATIVE CANNOT DO
It cannot perform miracles.
It cannot distribute large crops to the market at as
high prices as small ones.
It cannot entirely eliminate the middleman.
Controlling only a part of the crop, it cannot domi-
nate markets.
It cannot change human nature or make a good
farmer out of a poor one.
It cannot sell all the produce of all its members all
the time for a profit (neither can this be done by inde-
pendent marketing).
It cannot monopolize supply or prevent all compe-
tition.
It cannot succeed if a majority of its members are
disloyal.
It cannot wave a magic wand and remove all the
difficulties in production and distribution.
It cannot change sorry culls No. 3's to A grade or
No. l's.
It cannot make the weatherman cooperate even if
farmers limit the acreage.

THINGS A COOPERATIVE CAN DO
it can standardize and help stabihze production.
4- It can advertise and widen distribution and develop
new markets.
It can improve grade, pack and containers.
,4jt can help to improve distribution between existing
markets.
<-It can buy collectively.





DEPARTMENT OF AGRICULTURE


/ It can finance marketing operations.
lean maintain favorable relations with the trade by
conforming to the highest ethics in business.
-E-ean hire men who believe in cooperation and fire
men who don't.
It-san be a democratic instead of an autocratic move-
ment
4It can employ skilled salesmanship.
mt can assemble the commodities and resources of its
hnembers.
rlt can employ expert graders and packers.
fit can eliminate competition between local organiza-
tions.
-t can decrease wasteful practices.
/t can more easily secure shipping point inspection.
/.It can cotfeteaidms, improve quality, form pools.
vt can help to avoid gluts and famines.
,It can make cheaper credit possible.
fit can make for cooperative production.
At can make for cooperation in preparation for market.
.tIt can eliminate a large percentage of the middlemen
dealing in farm crops.
/It can get the grower a quality price when he grows
a quality product.





COOPERATIVE AGRICULTURE IN FLORIDA 13


CHAPTER I

Questions and Answers
By D. E. Timmons
(Former Marketing Economist at University of Florida)

1 Q. WHAT IS A FARMERS' COOPERATIVE?
A. It is an organization of agricultural producers
chartered to transact collectively, business pertaining to
agricultural products, supplies or services. The Agri-
cultural Cooperative Act of Florida gives such associa-
tions legal status and defines their purposes and powers.
2. Q. WHAT ARE SOME OF THE ADVAN-
TAGES FARMERS HAVE FOUND FROM
COOPERATIVE ACTION?
A. Farmers use cooperatives to process, store
and market their produce and to purchase supplies and
services. Cooperative processmg plants prepare their
crops, livestock, and livestock products for market. Mar-
keting associations are used to obtain for their members
the highest possible price for their products, quality
considered. The cooperative purchasing association, on
the other hand, assists its members m obtaining their
farm supplies at the lowest possible prices. Coopera-
tives have the opportunity of encouraging production of
quality agricultural products by returning premium
prices to farmers who deliver high quality products.
Through cooperatives, farmers often are able to provide
themselves with better service than they were receiving
from other agencies. Successful cooperatives save money
for their members, giving service at cost. By reducing
the cost of getting goods from the producer to the con-
sumer, cooperatives encourage consumption and expand
markets Working together for mutual helpfulness makes
a better citizenship.
3. Q. WHO MAY ORGANIZE A COOPERATIVE





DEPARTMENT OF AGRICULTURE


UNDER THE FLORIDA COOPERATIVE
MARKETING ACT?
A. Under Florida law three or more persons en-
gaged in the production of any agricultural products, or
three or more cooperative associations, may form a non-
profit cooperative association.

4 Q. WHAT IS THE FIRST STEP THAT SHOULD
BE TAKEN BY A GROUP OF AGRICUL-
TURAL PRODUCERS CONSIDERING THE
ORGANIZATION OF A COOPERATIVE?
A. At a meeting of producers, cooperative mar-
keting or purchasing or service should be thoroughly dis-
cussed as it applies to the commodities under considera-
tion and to local conditions. The prospective members
should determine whether. (1) there is a real need for
a producer-owned and controlled association; (2) a co-
operative can do the job better than it is now being
done; (3) there is sufficient volume of business to assure
savings to the members; (4) the members can be de-
pended on for loyal support in bad times as well as good:
(5) the producers are willing to put their own capital into
a cooperative enterprise: and (6) competent and aggres-
sive leadership is available. Be sure that some outsider
is not encouraging the formation of the cooperative in
order to sell property or equipment or get a job. The
answers to these and similar questions will have a direct
bearing on the success or failure of a new association.

5. Q. WHAT IS THE NEXT STEP?
A. If the decision is to go ahead, the group then
should elect at least 3 producers as incorporating or
temporary directors. Usually a group of 7 or 9 incor-
porating directors is elected. These directors may be
instructed by the group to complete the organization,
obtain a charter, prepare by-laws for the consideration of
the new association, and to take such other action as may
be desirable. A smaller group of 3 or 5 often meet to





COOPERATIVE AGRICULTURE IN FLORIDA 15

draw up the necessary papers and then present them for
consideration of the entire group.
6. Q. HOW CAN A CHARTER BE OBTAINED?
A. The incorporating directors must prepare arti-
cles of incorporation. These articles, after being signed
by the incorporating directors and acknowledged before
a notary public, are sent to the Secretary of State, Talla-
hassee, Florida. (Suggested articles of incorporation
which should be revised to fit local conditions, may be
found in this bulletin) Issuing and delivering the char-
ter usually requires only a few days, if the articles of
incorporation of the association are submitted in proper
form.
7. Q. IS THERE ANY COST TO OBTAINING A
CHARTER?
A A fee of $10 is required by the Secretary of
State for issuing the Charter and making the necessary
records. This fee should accompany the articles of in-
corporation when sent to the Secretary of State at Tal-
lahassee.
8 Q. WHEN AND HOW SHOULD BY-LAWS BE
WRITTEN?
A. Prior to the first membership meeting, or as
soon as possible, proposed by-laws for the new associa-
tion should be drawn up by a committee of directors
appointed or elected to do the job. These proposed by-
laws should then be read, amended, agreed upon in final
form and approved as soon as possible at a special mem-
bership meeting called for that purpose. Suggested by-
laws, which should be revised to fit local conditions, may
be found in this bulletin. One or more of the specialists
with the Agricultural Extension Service in Gainesville
is usually available to advise with grower groups con-
templating the organization of new cooperatives and to
help them draw up proposed charters, by-laws, market-
ing agreements with members, and other necessary





DEPARTMENT OF AGRICULTURE


papers. Contact your County Agent to arrange for this
service.
9. Q. WHAT OTHER FORMS NEED TO BE PRE-
PARED AND WHEN?
A Most marketing cooperatives need a market-
ing agreement or contract to sign with all members.
Usually this must be drawn up and signed with mem-
bers before the cooperative can start domg business. A
membership certificate is very desirable, and should be
printed and used as soon as possible after organization
Revolving-fund certificates are sometimes used in rais-
ing working capital, and some cooperatives may wish
to have these certificates printed before they start doing
business. Beginning with the very first meetings, the
secretary of the cooperative will need to use waiver
notices, and various types of resolutions. Suggested
copies of all these papers may be found in this bulletin.
10. Q. WHEN WOULD THE FIRST MEMBERSHIP
MEETING BE HELD?
A. No specific number of days after filing the
Articles of Incorporation is specified within which the
first meeting of the members shall be held. In most
instances, however, such meeting is held well before the
expiration of 30 days after the filing of the Articles of
Incorporation. Further, under Florida law the first Board
of Directors is named in the Articles of Incorporation
as the first Board, and unless a new and different Board
is elected at the first meeting of the members such Board
named in the Articles of Incorporation would continue
in office until their successors are elected.

11. Q. WHAT RECORDS SHOULD BE KEPT?
A. Records of the action taken at early meetings
of cooperatives are sometimes lost. These may later be
very valuable. Minutes of all membership and director's
meetings should be carefully preserved Accurate rec-
ords of all funds received and disbursed should be kept





COOPERATIVE AGRICULTURE IN FLORIDA 17

from the very beginning so that they will be understand-
able even years later. Nothing should be left to memory
or to loose papers. Bound minute books and ledgers are
much safer. The secretary, treasurer, or the secretary-
treasurer is charged with the responsibility of preserv-
ing these important records
12. Q. WHO MAY BECOME MEMBERS?
A. An association may admit as members all per-
sons engaged in the production of agricultural products.
One cooperative, as an organization, may hold member-
ship in another association.
13. Q. WHAT IS REQUIRED OF A MEMBER?
A The requirements for membership are de-
termined by the members as set forth in the by-laws.
Usually they specify that a member must be a producer
of agricultural products and purchase a share of common
stock or pay a membership fee. The association may
require a member to execute a marketing contract bind-
ing the member to handle all or any specified part of
certain agricultural products through the association.
14. Q. HOW MUCH STOCK MAY ONE MEMBER
OWN?
A. The Florida law states. "No stockholder of an
association organized under this chapter (meaning Chap-
ter 618, Florida Statutes 1941), except an association
organized under this chapter or an association as de-
fined in this chapter, shall own more than one-third of
the outstanding common stock of the association." Of
course, an association organized under the laws of
Florida may further limit in its charter or by-laws the
amount of the common voting stock which each member
may own. In Florida, ownership of preferred or non-
voting stock is not limited by the law itself.
15. Q. DO STOCKHOLDERS VOTE ACCORDING
TO THE SHARES OF STOCK OWNED?





18 DEPARTMENT OF AGRICULTURE


Fruityard of the Florida Citrus Canners Cooperative in Lake Wales

A. "No member in any association without capi-
tal stock shall be entitled to more than one vote; but the
by-laws may provide that such members or the holders
of common stock in an association with capital stock,
may vote upon any or all questions on a patronage basis "

16. Q. MUST STOCK PURCHASES OR MEMBER-
SHIP FEES BE PAID IN CASH?
A. A stock or membership certificate may not be
issued to a member until it has been fully paid for.
Promissory notes of the members may be accepted as
full or partial payments. However, associations with


;i
r

r.




COOPERATIVE AGRICULTURE IN FLORIDA 19

small paid-in capital are in a poor position either for
operating or for obtaining credit.
17. Q. ARE MEMBERS OF COOPERATIVES
LIABLE FOR DEBTS INCURRED BY THE
ASSOCIATION?
A. No, except to the extent of any stock owned
in the association or any unpaid balance on a promissory
note given in payment for stock or membership fees.
18. Q. HOW DO COOPERATIVES ACQUIRE CAPI-
TAL TO PAY FOR AND OPERATE WARE-
HOUSES, PROCESSING PLANTS, PACKING
PLANTS, MACHINERY, EQUIPMENT, ETC.?
A. If the cooperative is to belong to the members.
these members must supply much of the capital used
in their business. Some capital is usually raised in cash
and notes at the time the cooperative is organized.
Growers may be issued stock or revolving fund certifi-
cates for this first capital they provide. In most instances,
this capital raised to begin with is not enough. Addi-
tional capital may be acquired by retaining, or borrow-
ing a small sum from patrons on each unit of produce
handled by the cooperative, each dollar's worth of goods
or services supplied, etc. Members contribute this capi-
tal in exact proportion to the use they make of the
facilities of the association and receive certificates of
stock or certificates of equity commonly called "Revolv-
ing Fund Certificates" or "Certificates of Indebtedness."
19. Q. WHAT IS MEANT BY "ROTATING CAPI-
TAL"?
A. In time. these small amounts invested by the
members from each unit of product they deliver to or
purchase from their association will pay off indebted-
ness, pay for physical property, and also set up operating
capital and reserves. By continuing to retain these small
amounts each year. even after the indebtedness is paid.
the cooperative can soon pay off the oldest certificates





DEPARTMENT OF AGRICULTURE


of stock or certificates of equity. In this way the mem-
bers who actively use the association own and control it.
Members who furnish capital in earlier years, but who
have moved or for other reasons quit doing business
with the association, are gradually paid off as the new
capital becomes available. This plan has much to recom-
mend it to groups forming new cooperatives or those
reorganizing old associations.

20. Q. WHAT STATEMENT TO MEMBERS IS
REQUIRED BY THE FEDERAL INTERNAL
REVENUE BUREAU?
A. The Internal Revenue Bureau requires co-
operatives to send all patrons a statement on a pre-
scribed Bureau form at the end of each fiscal year. who
have had $100 or more allocated to them by the cooper-
ative as a result of the year's operations. The regulation
on this reads as follows: "Patronage Dividends.-Any
corporation allocating amounts as patronage dividends.
rebates, or refunds (whether in cash. merchandise, capi-
tal stock, revolving fund certificates, retain certificates,
certificates of indebtedness, letters of advice, or in some
other manner that discloses to each patron the amount
of such dividend, refund, or rebate) shall render a cor-
rect return stating (1) the name and address of each
patron to whom it has made such allocations amounting
to $100 or more during the calendar year, and (2) the
amount of such allocations to each patron. If required
by the Secretary. any such corporation shall render a
correct return of all patronage dividends, rebates, or
refunds made during the calendar year to its patrons.
This subsection shall not apply in the case of any cor-
poration 'including any cooperative or nonprofit cor-
poration engaged in rural electrification) exempt from
taxation under section 101 (10) or (11) or in the case of
any corporation subject to a tax imposed by supple-
ment G."
"Effective Date.-The amendments made by subsec-





COOPERATIVE AGRICULTURE IN FLORIDA


tions (a) and (b) of this section shall be applicable only
with respect to taxable years beginning after December
31, 1951. The amendment made by subsection (c) shall
be applicable to the calendar year 1951 and subsequent
calendar years."

21 Q. HOW SOON AFTER CLOSE OF A COOPER-
ATIVE'S FISCAL YEAR MUST IT ISSUE
THESE STATEMENTS OF ALLOCATION?
A. The regulations read as follows. "Allocations
made after the close of the taxable year and on or before
the fifteenth day of the ninth month following the close
of such year shall be considered as made on the last day
of such taxable year to the extent the allocations are
attributable to income derived before the close of such
year."

22. Q. WHERE MAY COOPERATIVES OBTAIN
CREDIT?
A. In addition to the usual lending agencies the
Columbia Bank for Cooperatives, Columbia, S. C., is a
possible source of credit for Florida cooperative asso-
ciations. The bank was established under the Farm
Credit Act to furnish credit to farmers' cooperatives.
Such loans are made in accordance with good banking
practice, with adequate security and an acceptable plan
for repayment. A booklet describing cooperative credit
and the services available from this bank may be had
by writing the Columbia Bank for Cooperatives, Co-
lumbia, S. C., or to Florida representative of the Colum-
bia Bank for Cooperatives, L. R. Toy, P. O. Box 647,
Orlando, Florida.

23. Q CAN A COOPERATIVE HANDLE PROD-
UCTS FOR PERSONS WHO ARE NOT
MEMBERS?
A. Yes, as long as the nonmember business does
not exceed in value the business done with members.





DEPARTMENT OF AGRICULTURE


However, it is the policy of most cooperatives to keep
the amount of nonmember business as low as possible
Regular patrons. if eligible, should become members.

24. Q ON WHAT BASIS DOES A COOPERATIVE
DEAL WITH ITS MEMBERS?
A Different plans are followed. It is considered
good practice among marketing associations to advance
only a reasonable part of the market value at the time
products are received from the producer. After the as-
sociation has performed such marketing services as
grading, processing, packing, shipping, selling, etc., the
actual cost of these services is deducted, and limited
interest on capital is paid, any sum remaining is returned
to the producers as final payment. Many associations
retain an amount of money on each unit of produce
handled which becomes the member's investment to
supply working capital and reserves.

25. Q. HOW WOULD THIS PLAN WORK IN THE
CASE OF A COOPERATIVE CITRUS OR
VEGETABLE PACKING PLANT?
A. Each producer will pay to his cooperative at
the time of delivery a rate sufficiently high to cover the
expense. At the end of the season, after all expenses,
such as salaries, labor, fuel, repairs, depreciation, insur-
ance and taxes, are paid, the amount of the net saving
for the season can be determined. The directors will then
provide for the distribution of this net margin or saving.
If the association is in debt, a portion of the cash pay-
ment to members may be withheld for payment of prin-
cipal and interest installments For these amounts with-
held, each member will receive stock, certificate of
equity, or book credit. In this way the capital of the as-
sociation is built up. From any cash remaining, the di-
rectors will provide for payment of limited interest on
the capital invested in the association. They also will set
up reserves and the remainder shall be paid to the mem-




COOPERATIVE AGRICULTURE IN FLORIDA 23

bers as a cash patronage dividend based on the amount
of business each has done with his association.

26. Q. HOW WOULD A PURCHASING ASSOCIA-
TION OPERATE UNDER THIS PLAN?
A. Supplies are sold to members at cost plus a
safe and substantial margin, but usually at prevailing
prices. Periodically, savings above operating costs and
necessary retains for capital and reserves are returned
to members in proportion to their purchases. Price cut-
ting at the time supplies are delivered disturbs business
and has led to disastrous price wars. Selling at regular
market price enables associations to return larger pa-
tronage refunds.

27. Q. DO COOPERATIVES EXTEND CREDIT TO
MEMBERS?
A. "All business for cash" was one principle of
the early cooperatives. Time has proved the soundness
of this rule. Cooperatives should treat all members alike
and if credit is given one, others will demand it. Few
cooperatives can operate on a 100 percent cash basis,
yet many are so careful in handling accounts that they
have practically no loss. Supply cooperatives have a
serious problem, for example, when they deliver fuel
oil to the farms or when a hired hand hauls out a load
of feed. Cash payments, if required, would work a hard-
ship on the patrons. Directors often instruct the manager
to extend credit in such cases, but to require payment
for the last purchase before making another credit sale
to those particular patrons. In that way, accounts are
prevented from getting out of control.

28. Q. DO COOPERATIVES PAY INTEREST ON
CAPITAL STOCK?
A. Many of them pay reasonable interest on the
capital stock invested by members or others. This rate
may not exceed 8 percent per annum under the Florida





24 DEPARTMENT OF AGRICULTURE


law. Often the rate is 3, 4, or 5 percent. This interest
payment must first be earned, then declared by the board
of directors.
29. Q. DO ALL COOPERATIVES PAY CASH PA-
TRONAGE REFUNDS?
A No, very few cooperatives can pay cash refunds
in their early life. Often too much emphasis is placed
on patronage refunds at the time of organization and
members soon become dissatisfied when no checks are
passed out. While an organization is young, margins
are usually required to pay debts or to build capital
strength.
30. Q. IS THE PRACTICE OF LEAVING MARGINS
IN A BUSINESS PECULIAR TO FARMERS'
COOPERATIVES?
A. By no means. Most of the large and successful
commercial businesses in the country started with small
investments. Year after year, a part of the profits are
"plowed back" into the business. Cooperatives, in fol-
lowing this practice, are acting in good American busi-
ness tradition.
31. Q. ARE THERE OTHER BENEFITS THAN
PATRONAGE REFUNDS TO BE OBTAINED
FROM A COOPERATIVE?
A. Yes, farmers can often improve the quality
of service they receive. By mixing their own feed or
fertilizer, they can be sure that the formulas used meet
their requirements. It is not practical for large manu-
facturers that distribute over many sections to do this.
Keeping ownership and control of marketing, processing
and distributive facilities in the hands of a large group
of citizens reduces the concentration of economic power.

32. Q. WHO DETERMINES THE BUSINESS POLI-
CIES OF A COOPERATIVE?
A. The affairs of the association are managed by





COOPERATIVE AGRICULTURE IN FLORIDA 25

the directors, elected by the members from their own
number. The directors give general supervision and
control to the business. Provision is made in the law
for referring certain important matters to the member-
ship for its consideration and action.

33. Q. WHAT PROTECTION HAVE MEMBERS
FROM DISHONEST EMPLOYEES?
A. The Florida law itself (again meaning Chap-
ter 618, Florida Statutes 1941) does not specifically and
mandatorily require that all officers or employees han-
dling funds or property be adequately bonded. How-
ever, no code of by-laws for a cooperative association




















Largest volume egg arkeing cooperative n Florida.





Largest volume egg marketing cooperative in Florida.





DEPARTMENT OF AGRICULTURE


organized under Florida law would be considered at all
sufficient unless it contained a mandatory requirement
that such officers and employees be adequately bonded.
Of course, some associations in Florida even put such
provision in the charter.

34. Q. WHAT PROTECTION HAVE MEMBERS
AGAINST INEFFICIENT MANAGEMENT?

A. Managers of cooperatives are selected by the
board of directors. The best interests of the members
demand that they elect directors who have courage and
sound judgment and who are willing to work at the job
if they would guard against inefficient management.
Active participation of the members in elections and
membership meetings is necessary to prevent an un-
healthy condition of the cooperative. No relative of a
member of the board of directors or of the manager
should be employed by the association.

35. Q. WHAT OTHER QUALIFICATIONS SHOULD
MEMBERS EXPECT IN DIRECTORS?

A. Members might well raise the following ques-
tions when considering the fitness of a nominee for the
important responsibility of director:
Will he give the necessary time and attention
to the business of the cooperative? Has he con-
flicting interests? Has he a near relative en-
gaged in a competing business? Has he shown
sound judgment in handling his own business?
Will he require a strict accounting for all funds
and property handled by employees? Has he
the qualities of leadership that will attract
members-and beget public confidence? Is he
progressive enough to keep the association mov-
ing ahead yet conservative enough to avoid
unwise expansion?




COOPERATIVE AGRICULTURE IN FLORIDA


36. Q. DO COOPERATIVES PAY TAXES?
A. Yes Cooperatives pay the usual state, county,
city and school taxes on their property. They also pay
excise, transportation, communication, unemployment
taxes, social security, occupational license taxes and a
special annual license fee collected from farmers' co
operatives only. In fact, cooperatives pay taxes on the
same basis as comparable businesses owned by partner-
ships or individuals. Cooperatives meeting the strict
requirements of the statutes may obtain exemption from
federal income tax. Margins distributed to the patrons
of a tax exempt cooperative do not escape income tax
as they become taxable income to the recipient. Ap-
proximately one-half of the farmers' co-operatives in the
nation have obtained exemption from federal income tax.

37. Q. WHAT REQUIREMENTS MUST AN ASSO-
CIATION MEET TO BE EXEMPT FROM
FEDERAL INCOME TAXES?

A Briefly stated, a cooperative must meet the
following requirements to qualify for a letter of exemp-
tion from federal income tax:
1. The association must be owned by producers
of agricultural commodities. Substantially
all voting rights must be owned by actual
producers who patronize the association.
2. The association must not do more business
with non-members than with members.
3. The rate of dividends (or interest) on capi-
tal shares must not exceed 8 percent or the
legal interest rate of the state, whichever
is greater.
4. Operations must be of a mutual nature with
non-member patrons treated equally with
members in business dealing and in the
distribution of savings





28 DEPARTMENT OF AGRICULTURE

5. Patronage records must be maintained and
permanently preserved.
6. Purchasing or farm supply associations must
not sell supplies to nonmembers who are
also nonproducers (not farmers) in excess
of 15 percent of the total volume of business.
7. Financial reserves must have a necessary
purpose and must be reasonable in amount.
8. The legal structure of the association must
be co-operative in principle.
Many of the difficulties between coopera-
tives and the Bureau of Internal Revenue come from
failure to answer correspondence and make prompt re-
ports. When farmers go into business, they must be
business-like. Officers and employees should be instructed
to reply to all important mail.

38. Q. HOW MAY A COOPERATIVE CLAIM
EXEMPTION FROM FEDERAL INCOME
TAXES?
A. While cooperatives meeting these require-
ments are eligible for exemption from federal income
taxes, this exemption must in all cases be sought. Appli-
cation for this exemption is made on a special Treasury
Department Form, a copy of which may be obtained
from the Collector of Internal Revenue, Jacksonville,
Florida. This form is a questionnaire which should be
completed and sent to the nearest Collector of Internal
Revenue. Determination will then be made whether
the association is exempt.

39. Q. MUST EVERY COOPERATIVE FILE A
FEDERAL INCOME TAX RETURN FOR
EACH TAXABLE YEAR?
A. Yes, a return must now be filed each and every
year on special forms provided for the purpose by every





COOPERATIVE AGRICULTURE IN FLORIDA


cooperative regardless of whether or not the cooperative
has received a letter of exemption and regardless of
whether or not the cooperative had any net income for
the year.
40. Q. CAN PATRON REFUNDS TO NON-MEM-
BERS BE MADE IN THE FORM OF BOOK
CREDIT TOWARD THE PURCHASE OF
VOTING STOCK OR ACQUIRING MEM-
BERSHIP?
A. Yes, the Treasury Department has ruled that
patronage refunds may be credited to the nonmember
until he pays for voting stock or pays his membership
dues, and still meet the requirement that the association
deal with members and nonmembers alike.
41. Q WHAT IS THE REASON FOR EXEMPTING
COOPERATIVES FROM THE FEDERAL IN-
COME TAXES PAID BY MANY OTHER
CORPORATIONS?
A. A cooperative acts as the agent for the patron
Produce is processed or marketed or supplies are pur-
chased for the member. The association deliberately
under-pays the farmer for his produce or overcharges
him for his supplies and services. The cooperative con-
tracts with its patrons to refund the amounts withheld,
after paying the costs of doing busmess and setting up
necessary business reserves. Amounts so withheld by
the association are for the account of the patron, held
temporarily in the business and eventually returned to
the rightful owner as final settlements of business trans-
actions It is a well established principle of law that an
agent, as such, is not liable for tax on funds he tempo-
rarily holds in trust for the principal The difference be-
tween the savings dollar of a cooperative and the profit
dollar of a commercial business is that the savings dollar
goes back to the patron, who not only owns and finances
the cooperative but whose business made the saving pos-
sible, while the profit dollar of the commercial enter-





30 DEPARTMENT OF AGRICULTURE

prise very properly goes to those wNho invested their
capital in the business.
42. Q. IS THE COOPERATIVE MOVEMENT AN-
TAGONISTIC TO DEMOCRATIC GOVERN-
MENT?
A. A cooperative is simply a democratic way of
doing business and thrives best in democratic soil. In
England and Scandanavian countries, where coopera-
tives have operated for a century, authorities find the
cooperatives a steady influence in times of unrest.
43. Q. WHAT IS THE ATTITUDE OF THE FED-
ERAL GOVERNMENT TOWARD FARMERS'
COOPERATIVES?
A. The Congress has recognized that farmers need
a special type of business organization. The Capper-
Volstead Act set forth the purposes for which coopera-
tives may be organized and the powers they may exer-
cise. The Farm Credit Administration, created by Act
of Congress, provides credit to meet the various needs
of cooperatives and set up a research service which is
now the Farmer Cooperative Service of the U. S. De-
partment of Agriculture, to develop facts and informa-
tion helpful to cooperatives. The President of the United
States sent a commission to Europe in 1936 to study
cooperatives and to report its findings. There are many
evidences that the Federal Government is sympathetic
with farmers in their efforts to help themselves.
All of our recent U S. presidents and Secretaries of
Agriculture have praised cooperatives as a farmer self-
help tool. The report of the Committee on Small Busi-
ness of the House of Representatives contains the follow-
ing paragraph:
"The enactment and reenactment of section 101 (12)
and (13) of the Internal Revenue Act appears to repre-
sent a continuing attitude on the part of the Congress
that the maintenance of a sound agricultural economy





COOPERATIVE AGRICULTURE IN FLORIDA 31

is necessary for the preservation of the national well-
being. It has now become an established national policy
co-existent with all other policies designed to extend all
possible support and assistance to agriculture. This policy
apparently is further reflected in state legislation and
the combined policy has been affirmed enumerable times
by the Supreme Court "

Both of the major political parties have repeatedly
endorsed the principles of cooperation among farmers
and have pledged their support to farmers in their busi-
ness organizations.

44. Q. ARE FARMERS THE ONLY ONES WHO
USE COOPERATIVES TO SERVE THEIR
INTERESTS?
A. No. The business world has found cooperative
principles useful in many ways. Newspapers have their
large news gathering cooperatives; retail merchants
have their cooperative wholesale establishments; other
merchants have their mutual insurance service; banks
have their cooperative clearing house arrangements;
railroads have cooperative provisions for operating union
stations and the interchange of cars. Many other exam-
ples could be listed.

45. Q. WHAT FUNDAMENTAL RIGHTS DO MEM-
BERS HAVE WHICH COOPERATIVE DI-
RECTORS SHOULD RESPECT?
A. Members have the right to:
1. Elect and remove directors of the association.
2. Adopt and amend by-laws.
3. Increase or decrease the capitalization; approve
loans under special circumstances; and adopt
marketing contracts and other contractual ar-
rangements between the members and the co-
operative.





32 DEPARTMENT OF AGRICULTURE

4. Require officers, directors, and other agents to
comply with the law under which the association
was set up and with its articles of incorporation.
by-laws, and marketing contracts
5. Hold directors and officers who fall so to comply
liable for any losses caused members by failure.
6. Examine the association's books and records and
its property, when the request is made in good
faith and at a proper time.

46. Q. DO MANY COOPERATIVES FAIL?
A. Some do, as a matter of course. Some should
never have been organized. Others are launched with
insufficient educational work among the members. Tak-
en as a group, cooperatives have a much better record
of survival than have businesses in general. A survey
made by the Farmer Cooperative Service inquired into
the cause of the failure of a number of cooperatives.
Briefly summarized, the reasons assigned for coopera-
tive failures were as follows:
(a) Difficulties in management high overhead,
inadequate accounting, speculation, friction
among board members, etc.
(b) Difficulties in membership-lack of necessary
information among members, inexperience of
farmers in cooperating, promises of big refunds
unfulfilled, etc.
(c) Financial difficulties-under-financed by mem-
bers, too liberal credit, over-borrowing, fire
loss with insufficient insurance, insistence of
members on refunds when cash is needed in
business, operating with too small margins,
lack of financial reserves, etc.
(d) Insufficient volume of business -failure to
check carefully on volume available before or-
gamzation, failure of members to patronize the




COOIERAiIVF; AGHICULTURE IN FLORHIA 3

business, over-expansion of facilities. changes
in production of crops and livestock, etc.
(c} Detective legal oiganzation-failure to incor-
porate, neglect in observing the terms of the
charter, by-laws and contracts, etc.


LORIDA -ONE
FLO ID& ,-ONE


4 j -, ,. .'.




A honey cooperative in Umatjlla.





DEPARTMENT OF AGRICULTURE


CHAPTER 11
Cooperative Terms

The meaning of words and phrases frequently used
in connection with cooperatives

ASSOCIATION This term is often used to designate
a farmers' cooperative, society or mutual business.
COOPERATIVE A farmers' cooperative is a group
of agricultural producers incorporated to provide
off-the-farm services for the members on a mutual
non-profit basis. Whatever savings are effected
through the association are distributed according
to patronage. There is a wide variety of services
performed by cooperatives, such as packing or
canning citrus fruits, handling and marketing vege-
tables, processing milk, purchasing feed, seed, fer-
tilizer and other farm supplies. "Association" and
"society" are often used somewhat interchangeably
to denote the mutual features of a cooperative.
DIRECTOR One of a board elected by the members
of a cooperative to direct and manage the affairs
of the corporation.
DIVIDEND Refers to the rate of return paid by the
cooperative on the members' invested capital. By
statute this rate may not exceed 8% and in actual
practice it usually runs 4% or 5%. It represents a
"reasonable wage" for capital and not profit on in-
vestment Distribution made on patronage is often
called a "dividend" but "refund" is a more accurate
term.
MANAGER-The executive head of a cooperative, em-
ployed and directed by the board of directors and
accounting to the board.
MEMBER The term "member" shall include actual
members of the associations without capital stock





CoOPERi.rIVE AGRICULTURE IN FLORIDA


and holders of common stock in associations organ-
izcd with capital stock, according to the Cooperative
Marketing Act. The terms "member." "stockholder"
and "shareholder" are each used to designate the
people who make up a farmers' cooperative and
participate in its control
MEMBER EQUITIES-Is a term often used in financ-
ial statements of cooperatives as the equivalent of
"net worth" in commercial businesses. It includes
such items as the members' stock, revolving fund
certificates and equity in reserves.
NET MARGIN or NET SAVING Represents the
margins between the amount received by the co-
operative and the cost of doing business.

ONE MEMBER-ONE VOTE-Is a rule generally fol-
lowed in farmers' cooperatives in elections and de-
ciding matters presented to the membership for
action. Members vote as individuals, rather than
as the holders of investment capital.

OPERATING STATEMENT-Is more descriptive than
"profit and loss statement" when referring to the
operations and margins of a cooperative.

PATRON Has come to have a special meaning in
identifying those who do business with a coopera-
tive. A patron is more than a customer since he
shares in any savings made by the cooperative. Both
members and non-members are included among
patrons The patronage refund is one of the chief
marks of distinction between cooperatives and com-
mercial businesses.

PATRONAGE REFUND Is a return to the patrons
of the net saving of the cooperative on the basis of
the business each did A cooperative deliberately
plans to underpay patrons for the produce it markets
for them and to overcharge for farm supplies or





DEPARTMENT OF AGRICULTURE


services it purchases for them. The patronage re-
fund is a means of returning these accumulated un-
der and over payments to the rightful owners. "Re-
fund' describes this operation better than "dividend"
or "rebate."
PROFIT Is a term often applied to the net margins
accumulated in a cooperative. Non-profit associa-
tions naturally do not make profits for themselves,
but they make profit for the farmers by increasing
the net returns from produce processed and mar-
keted and reducing the net cost of farm supplies
purchased.
REVOLVING CAPITAL A method of increasing
capital by leaving patronage refunds or retains in
the cooperative and issuing evidences of indebted-
ness to members for a certain number of years or
until a certain amount of capital is acquired, after
which each year's current margins are used in re-
tiring patrons' equities in the order in which they
accrued.
REVOLVING FUND CERTIFICATES -The usual form
used by cooperatives to evidence indebtedness to
members in a non-stock cooperative for working
capital furnished by such members.
STOCK Common stock, preferred stock, certificates
of equity-each refer to investment in the coopera-
tive's capital structure. Common stock usually car-
ries the voting right while other evidences of invest-
ment do not.
ANOTHER DEFINITION OF A COOPERATIVE
A cooperative corporation is one in which the mem-
bers receive the returns from shipments or purchases on
the basis of the amount sold or purchased through the
organization. Stockholders' dividends are limited to a
certain percent on the stock a legal rate of interest
only. Therefore, a cooperative is designated a "non-
profit" organization.





COOPERATIVE AGRICULTURE IN FLORIDA 37

Clipping from "Grain Producers News"
A COOPERATIVE FAILS-
WHEN producers have more confidence in private mar-
keting agents than in the management of their
own cooperative.
WHEN its purposes and plans are not understood by its
own members.
WHEN its only foundation is the promise to members
of "Cost of production plus a profit."
WHEN members expect to make all low-price years
into high-priced ones.
WHEN large groups of the membership persist in act-
ing upon rumors destructive to the organization
without first getting an explanation from head-
quarters.
WHEN the management believes that a cooperative is
immune from all the rigid, exacting rules which
guide all business undertakings.
WHEN members are not given the "truth and nothing
but the truth" about the operation of their or-
ganization.

A COOPERATIVE SUCCEEDS-
WHEN members have sufficient confidence in their asso-
ciation to ignore the occasional tempt-offers of
private dealers.
WHEN members can talk intelligently about the plan
and purpose of their organization and about the
productive operations on their farms.
WHEN the foundation of cooperation is not a promise
of profits, but a conviction that cooperation will
bring the best possible results under the circum-
stances.
WHEN members ignore rumors, always seeking the
facts of the business.






.-a


Florida Citrus Canners' Cooperative Lake Wales, Florida


,"





COOPERATIVE AGRICULTURE IN FLORIDA 39

CHAPTER III

Organizing and Incorporating

The first thing that one, who is called upon to form
an agricultural cooperative association, should ascertam
is whether there is an actual need for the association.
Make sure that proper investigations have been made
to determine if an association has a reasonable chance
of being a success.
Agricultural cooperative associations have been or-
ganized, and plants and equipment have been purchased.
where the volume of the commodity to be handled could
not possibly enable the association to operate on an effi-
cient basis. Many cooperatives have been organized
where the amount of farm products produced in the ter-
ritory, if it were all delivered to the cooperative, would
not be enough to enable it to operate efficiently. Unless
there is a distinct economic need for an association, and
unless an association will have an adequate volume of
business, it should not be organized. No one should have
his name identified with a failure if it can be reasonably
avoided.
A point that is frequently overlooked is the fact that
a cooperative association has overhead and operating
expenses similar to those of any ordinary corporation in
the same type of business. If the association is not able
to function efficiently and economically, benefits cannot
accrue to the farmers from its operation.

START WITH INFORMATION MEETING:
In the formation of a cooperative association, meet-
ings are usually held for the purpose of ascertaining the
views of the farmers concerned. Meetings afford a means
of finding out how deeply interested the farmers are in
forming an association. Through meetings, those initi-
ating an association may obtain information that will
help them in making further plans.





DEPARTMENT OF AGRICULTURE


An organization agreement is the means, usually em-
ployed by those interested in forming an association, to
ascertain what percentage of the farmers in a given area
will patronize an association if it is organized By this
means, an approximation may be obtained of the amount
of the agricultural commodity in question that will be
available for handling by an association. A suggested
organization agreement may be found in this bulletin.
If an association will not have enough volume to
operate in the "black' from a competitive standpoint
from the day it begins business, it should not be organ-
ized. Farmers do not like to join associations that figu-
ratively or actually are operating in the "red." They
know that they will be called upon to make up losses
previously sustained.
From the outset, emphasis should be placed upon the
fact that, in forming an association, the farmers con-
cerned are going into business and, in general, no man
can go into business without furnishing a certain amount
of capital. Unless it is possible to raise a reasonable
amount of capital, relative to the proposed activities of
an association, the association should not be organized.

INCLUDE ALL OBJECTIVES IN CHARTER
In the drafting of the articles of incorporation for a
cooperative association, frequently called a charter, care
should be exercised to see that the purposes of the asso-
ciation are entirely consistent with the statute and that
the association, from the very beginning, is authorized to
do all things that the association may find it desirable to
do in the future, thus avoiding the necessity for amend-
ing the articles of incorporation.
One of the important factors that should be consid-
ered in organizing a cooperative association is the basis
on which the members will be entitled to vote in meet-
ings of the association. Most cooperatives are organized
on the basis of one man, one vote. Cooperative leaders





COOPERATIVE AGRICULTURE IN FLORIDA 41

regard this method of votmg as the preferable one for
cooperative associations.
Associations that are operating over a wide territory
frequently provide for voting by mail on certain ques-
tions, and it is believed desirable to include in the or-
ganization papers of an association that is to operate
over a wide territory, authority for voting by mail on
specific questions and propositions.
Under Florida cooperative statutes, it is provided
that the minimum number of directors a cooperative as-
sociation shall have is three. Usually some minimum
number is provided for in the charter, below which the
association would never wish to go. The by-laws may
provide for the exact number of directors that an asso-
ciation shall have at a given time. In this way, in case
it becomes desirable to change the number of directors
of an association it may be done by an amendment to
the by-laws, which usually may be amended more easily
than the articles of incorporation.
As soon as possible after the charter has been drawn
up, the proposed by-laws should be carefully explained
at a meeting of the producers interested. They should
be given every opportunity to ask questions and make
suggestions and in this way they will feel more a part
of the association. After a vote of approval by these in-
terested producers, the by-laws should be signed by the
incorporators as the charter members.

MEMBER CONTRACTS ADVANTAGEOUS
Many marketing associations use marketing contracts,
or agreements, and it is ordinarily desirable for a mar-
keting association to have a "firm" contract obligating
the members to deliver all of the agricultural commodity
produced by them that is handled by the association.
With "firm" contracts, an association should be able to
make better marketing and operating plans than would
otherwise be possible. A marketing contract should





DEPARTMENT OF AGRICULTURE


clearly specify the terms and conditions under which the
association will function with reference to the commod-
ity in question. Purchasing associations ordinarily do
not enter into contracts with their patrons, although it
is believed that there would be advantages in a purchas-
ing association entering into "firm" contracts with its
patrons so that it could learn in advance the number of
tons of fertilizer, for instance, that its patrons would
need.

One advantage that accrues from entering into a
marketing contract is the fact that the parties have an
opportunity of specifying the exact status of all amounts
that are deducted by the association. All agricultural
cooperative marketing or purchasing associations should
be organized and their papers should be so drawn that
it will be clear that all amounts received by the associa-
tion in connection with or on account of business done
by the cooperative for its patrons, over and above the
operating and maintenance costs and expenses of the
association, will have the status of capital at the instant
of receipt. Associations ordinarily and normally increase
their capital out of receipts from current operations. It
is unusual for an agricultural cooperative association
to begin business with more than a relatively small
amount of capital.

INCLUDE "TRUE COOPERATIVE" PROVISIONS:

In forming a cooperative association, if it is desired
that the association be what the courts have called a
"true cooperative." Provisions should be included in
the organization papers positively obligating the associa-
tion to account to its patrons on a patronage basis for
all amounts over operating and maintenance costs and
expenses received by the association.
Of course, the members of an association would have
notice of the provisions in the by-laws as a matter of
law by reason of their membership. In the case of non




COOPERATIVE AGRICULTURE IN FLORIDA


members, appropriate measures should be taken by an
association to insure that non members have notice of
the provisions and deal with the association in reliance
upon them.
Federal tax law now provides that cooperatives must
send a statement at the end of each fiscal year to all
patrons who are refunded or allocated $100 or more in
any form, notifying them of the amounts credited to
them on the books, and/or returned to them in any other
manner. It is preferable if this type statement can be
sent to all patrons regardless of the amount involved.

Such mandatory obligations to account are important
from the standpoint of exemption from the payment of
federal income taxes. They draw a sharp fundamental
and vivid distinction between a cooperative and an or-
dinary business corporation. An ordmary business cor-
poration is naturally and properly concerned with the
selling of goods to its customers at a profit and then dis-
tributmng the profit to other persons as dividends on their
stock. This is the direct opposite of true cooperation.

It has been said that no man may make a profit by
dealing with himself, and it is believed that no corpora-
tion, cooperative or otherwise, may make a profit in
transactions in which it is under a contractual obligation
to account for and return to its customers or patrons in
some form all amounts received over operating and
maintenance costs and expenses.

If a cooperative association is to be a true coopera-
tive, it must strictly account to each of its patrons, mem-
bers and non members ahke, for all amounts which the
association received on account of their business, over
the operating and maintenance costs and expenses of the
association. It should account in the form of cash or
certificates of some kind, or in the form of book credits.
This basic difference between a cooperative association
and a noncooperative business enterprise should be care-





44 DEPARTMENT OF AGRICULTURE

fully and meticulously spelled out in the organization
papers of an association.

The provisions obhgating an association positively to
account to its patrons in the form of cash, or credits,
or certificates of some character for all amounts furn-
ished by them over and above their share of the operat-
ing and maintenance costs and expenses are entirely con-
sistent with the revolving-fund plan of financing that
has been discussed earlier. In fact, it is by means of
these mandatory provisions that excess amounts over
and above operating and maintenance costs and expenses
may be furnished, received and handled as capital. Pro-
visions of this character should provide for the refund-
mg of amounts furnished by patrons at any time the
board of directors deems it financially advisable to make
such distributions and, in any event, the organization
papers should provide for distribution at the time of
dissolution.

DEFINE PROPERTY RIGHTS CLEARLY:

In the case of nonstick association, the statutes gen-
erally provide that the articles of incorporation shall
state the basis for determining the proper rights and
interests of members. An additional reason for obligat-
ing a nonstock association to account to its patrons for
all amounts over operating costs and expenses is the fact
that, if such an association is not so obligated, it would
appear to be quite clear that the amounts that are now
under discussion would become a part of the property
rights and interests of members. This, of course, would
operate to exclude non-members from any participation
and this would jeopardize the right of a cooperative as-
sociation to obtain exemption from the payment of fed-
eral income taxes.

Again, if the articles of incorporation provide, as they
frequently do, that the property rights and interests of





COOPERATIVE AGRICULTURE IN FLORIDA 45

all members are equal, an inequitable distribution of as-
sets in liquidation would result unless each of the mem-
bers did an equal amount of business with the associa-
tion. Moreover, the cooperative statutes generally re-
quire an association to pay a member, who has been ex-
pelled or who withdraws, the amount of his property
rights and interests within one year thereafter. If these
excess amounts become part of the property rights and
interests of members, withdrawing members of a non-
stock association might be in a position to insist upon
being paid a large amount of money at a time when it
might embarrass the association to make such payments.

On the other hand, if the amounts under discussion,
because of contractual obhgations, are excluded in de-
termining property rights and interests, it will ordinarily
mean that, on the withdrawal of a member, an associa-
tion is required to pay him little or nothing on account
of property rights and interests. Of course, the amounts
so excluded in determining the property rights and in-
terests of a member should be paid to him in due course
when such amounts are revolved. All that is said is that
a withdrawing member should not, because he has with-
drawn, be able to get his share of capital refunded out
of turn.

There appears no reason why these excess amounts
allocated to patrons and contingently credited to them
on the books of the association or evidenced by certifi-
cates of some kind would not be assignable by the pa-
trons. But of course, an assignee would have no higher
or greater rights than those possessed by his assignor.
Cooperative by-laws usually provide, however, that re-
volving fund certificates and other such certificates may
be transferred only on the books of the association.

There is, of course, no obligation on the part of any
association to operate in such a way that it is eligible
for exemption from the payment of federal income taxes,





DEPARTMENT OF AGRICULTURE


and about half of the agricultural cooperative associa-
tions have elected to proceed on a nonexempt basis. Many
of these associations are engaged in the distribution
among their members of any small earnings that are
made on non-member business. If an association is not
eligible for exemption from the payment of federal in-
come taxes, it will still be desirable to organize such an
association so that it will be under a firm obligation to
account to each of its members for all amounts received
on account of business done with or for him, over and
above his share of the operating and maintenance costs
and expenses of the association. Of course, the associa-
tion should be obligated to account either in cash or in
some other appropriate way.

PATRONAGE REFUNDS NOT ALWAYS
DEDUCTIBLE:

"Many persons have assumed that so-called patronage
refunds or dividends may always be deducted or ex-
cluded by any corporation in computing its income taxes.
This is a false assumption. The Tax Court of the United
States in at least two cases, one of which was affirmed
by the Circuit Court of Appeals for the Ninth Circuit,
has made it clear that patronage refunds or dividends
may be excluded or deducted in computing the income
taxes of a nonexempt association only when the associa-
tion is under a firm, mandatory obligation to account to
its members or patrons for such patronage refunds or
dividends. Its board of directors must have no discre-
tion relative to the payment of such refunds, or divi-
dends. In the case of the American Box Shook Export
Association, the association had actually paid in cash
nearly $8,000 as patronage refunds ,which the Tax Court
held that it could not exclude in computing its income
taxes because it has not been paid out in pursuance of
a firm obligation to make the disbursement. In affirming
this decision the Circuit Court of Appeals said:





COOPERATIVE AGRICULTURE IN FLORIDA


"In order to be a true cooperative, however, the de-
cisions emphasize that there must be a legal obligation
on the part of the association, made before the receipt of
income, to return to the members on a patronage basis.
all funds received in excess of the cost of the goods sold.
Such an obligation may arise from the association's arti-
cles of incorporation, its by-laws, or some other contract."


Filling machines at a citrus concentrate cnners' cooperative in Lake Wales.





DEPARTMENT OF AGRICULTURE


CHAPTER IV

Suggested Organization Forms

Requests often come to this office asking for blank
forms to be used in applying for charters for cooperative
associations. There is no one blank form that will meet
the requirements of every kind of association coming
under this head.
The suggestions herein offered are intended as guides
only, and not as finished forms. Other suggested forms
for agricultural cooperatives appear on succeeding pages.
Articles of incorporation and by-laws for non-stock asso-
ciations are included, as well as several other forms
needed for non-stock association use. These forms how-
ever may be adapted to the use of stock associations by
contacting an attorney, by contacting the office of the
Secretary of State, Tallahassee, or by securing a copy
of the book, "Legal Phases of Cooperative Associations,"
by L. S. Hulbert, Bulletin No. 50, Farm Credit Admin-
istration of the U. S. Department of Agriculture. Addi-
tional assistance with any of these forms may be secured
by contacting your County Agent, who will arrange for
a specialist from the Agricultural Extension Service to
meet with you.
The fundamental cooperative principles discussed in
the text, such as democratic control, the revolving-fund
plan of financing, adequate reserves, and equitable dis-
tribution of earnings, are reflected in the forms.
Since these forms are general in character, the serv-
ices of an attorney who is familiar with cooperative law
may be required for adapting them to suit the needs of
a particular association; and they should be checked,
altered, and modified to meet the local needs and legal
requirements of the State of Florida. The forms would
also be modified so as to best serve the business needs
and methods of operation of the Association.





COOPERATIVE AGRICULTURE IN FLORIDA 49


While the forms have been prepared primarily for
use in forming agricultural marketing associations of
producers, they may be adapted for use in forming an
association that is exclusively engaged in handling sup-
plies. Ordinarily, such an association would not use a
marketing agreement which would bind its members to
patronize the association, revolving funds would be ob-
tained by including, m the sales prices, margins for the
purpose of accumulating such funds, rather than by mak-
ing deductions from sales proceeds. Certain other changes
should be made also.


APPLICATION FOR CHARTER FOR NON-STOCK
COOPERATIVE ASSOCIATION
To the Governor and Secrctar. of State of the State of Florida:
The following namird persons, ~hose piostoffce addre is as f follows,
to-wit:
NAME POSIO'FFICE





have proposed to organic, cooper, tln association under Chapter 618,
Flonda Statutes, and ihrreby declare thll if granted a charter for sueld
cooperative association that the hlisilless of said assuo'lation shall .and will
lb conducted under the provisions of said Chaptci 618. Florida Statutes
"Ihat said org.niuirs file heIn'tthl a sttlinunt setting fotdl the proposes
for which such cooperltive associatiotii is organized. alid declaring the
iannner an ietd vthod whicli ill be purIsud in the 'ondiluct of the business
of suclh i ooper.aive ,ts(ci,.ation
The n.iine of association is to be
Purpose of Organizing Association,-This Association is to be organized
under this Chapter for lthe purpose of engaging in any tooperative activity
in connection with the producing, marketing and selling of agrciiltural
products. or will the growing, harvesting, presernlg, drying, processing,
c.mning, packing, gading, storing, war-houising, hndhng, shipping, and
utilzng such products, and the manufacturing and marketing of the by-
products thluof; and in connection will any of the activities mentioned
herein, the manufacturing. selling and supplying of niaclinery. equipment
and supplies, and in tin financing of an of tie above enumerated activi-
ties; and in prrfornlng or furnishing ibusline and educational services,






DEPARTMENT OF AGRICULTURE


in i iperatit' I.LMi1 fFlr lliMt il 112i t( 1 II tciliillihrt dt lW IlL FI(( prTo-
111( 1 l i 1f d ti llliirl pr i Itod o11 r i 111 ll 11 ( i llr lll n r il 1I1 a( \lt


If"] prm Il shill iiliitini i111 ol)rtlioll for thin pll llild fi lifts s ils, ilr until
i...)]I IIl 1 )\ lam Ipi I tIN rintti I tpcIo, 1% (it 1i f M -tlbird1 t i f l niy itl Ier.
1 li rilnllihts .,iid .i.t r l.t' of i i.I oriiil r ilf this asl.n ti. t latI r s hall l I
St ll ,t arI' S o forth i thl h'-l.\' <,ip oi ii ii ,ire ,,filed lon'r.tli
'1e Ii inorpiiliipirs sihll oidtitit ti Hii.irl of Di)rctdrl, hr .1 peril!
it onu o 'er Irntii (lif le A f ]nIirpiorlti.n
\\h~ rl fort it is pr.,-ed that l, llrs Patai i[ rantid to tihoI' in(r-
i.i)Itfors I I purui.inolll of th prl ro onl0 li sU.lll Chbapte r f61 FlorTda
Stl."itl'


Sunll d ,rnil sile d it
' 1) I)


(d1, of


APPLICATION FOR CHARTER FOR JOINT STOCK
COOPERATIVE ASSOCIATION

"I thie (Go;rnor mnd Secr.itarx of State f tt of State of i1ihrlda
]it I folo11111 iiUil.Cd pronis ho lio(S p. stofIh( addrtn' Is as foll. o s,


NAME


POSTOFFICE.


i,\t propsIed to orglize' oi]l stock (oopratlne Lssot itiin uln(h(r
Chi.lpti r 618 Utirilda Statutes, .uid lureb. dI ( l.ir that if igrnited a charttr
f .r M l( t (ooptrAl\<1 .sLO)Llati I [. h t it thI Il..i.I. ss of S LiI .IS((l iltnlOT sl ill
,II bl, be ti) Iil .ted nlldr flit prOtiSlon1 if said Chiptr 61R8 Flortid

I I' l H1' nii Of 1s.Ks'ititO i is to bh
P1irpose of h('r,iii7nHg \sso,( iilain-Tll \'[lscl iotiuu1i s ti I o1 orLaui-
l/t Id .iler tills (l'liplt.r for tip purpose of triioiging lii ,in\s iloperitLo i





COOPERATIVE AGRICULTURE IN FLORIDA 51


activity in connection with the producing, marketing and selling of agr-
clitural products, or with the growing, harvesting, preserving, drying,
processing, canning, packing, grading, storing, warehousing, handling, ship-
lping, and utilizing sucb products, and the imanllufaclring and marketing
of the by-ploductL thereof, and in connection with any of the activities
nlntioned herein, tie manufacturing, selling and supplying of machinery,
eqnpmenit and supplies; and in tile financing of any of the iabove enumer-
ated activities, and in performing or furnishing business and educational
seivices, on a cooperative basis for those engaged in agriculture as bona
fide producers of agricultural products or in any one or more of the active
ties specified herein
The principal place of business shall be
and it shall continue in operation for the period of fifty years, or until
dissolved by law or by the written consent of two-thirds of the members,
or by the holders of two thirds of the common stock,
The incorporators shall constitute the Board of Directors for a period
of one year from date of ncolporation.
The capital stock shall be S divided into shares of
S- each.
Number of directors
Wherefore, it is prayed that Letters Patent be granted to those incor-
porators in pursuance of the provisions of said Chapter 618, Florida
Statutes
Signed and sealed at .this day of
AD 19 ..... (Seal)
(Seal)
.... (Seal)
S(Sedl)
S (Seal)




ORGANIZATION AGREEMENT

We, the Indleisigned, all of whom are residents of the State of Florida,
engaged in the production of (insert products),
together with signers of agreements identical herewith, in order to promote,
foster, and encourage the marketing of- cooperatively,
propose to organize a cooperative .. marketing associa-
tion at Florida, with (or without) capital stock
under the laws of the State of Florida, and to acquire suitable facilities
therefore.

The nndcisigned, each for himself and collectively for the express
benefit of and for the association to be organized, and in consideration of






DEPARTMENT OF AGRICULTURE


the prei'ses and of the suliscriptions of others to agreements identical
herewith. hereby covenant and agree ~ith each other as follows.
(1) l1e association shall be organized with suitable articles of incor-
piration and by-laws. by ian orgamnttion comnuinttee consisting of the fil-
lowing persons:
NAME ADDRESS






If am member or members of ties Comiittee siall resign or hie unable
to act, the remainder of the Committee may elect a successor to fill .ny
iclh vacancy, or the Commiittee imay increase its mlnmber1shiip if deemed
necessary.
(2) The orgamriaton Committee shall keep a full, true, and detailed
account of all receipts and of all expenditmres of every kind. and shall have
uellc accounts audited and render a written report thereof to the Board
of directors of the Association, when organized, and shall tlherepon turn
over to the Association any balance remaining in its hands, free of obli-
gation. If an Association is not organized. such nnexpe ded balance shall
be prorated among those who contributed to the organization fund.
(3) The amount of the capital stock shall he dollars
(S ), divided ilto shares of counlon stock, each
of the par value of dollars ($ ), and
shares of preferred stock, eadl of the iar valid of dollars
($ ) (Tlu i provision omitted if Association organized witl-
out capital stock).
(4) Tle undersigned agree to purehiase and do herely l ,subsrilie for
thll amount and kid of capital stock het opposite our respective nan es,
and agree to pay for same as follows:
(Here insert plan of stock payment to be used)
(5) If, on or before ................. 19. Iona fide sb-
scriptions from acceptable parties to tie coinnion and preferred stock of
tile Assnciation shall equal tle sium of......... ... -.dollars ($ .-. .. ),
and producers of ..... ............ ........whose annual production
thereof for sales purposes aggregates at least ....---..... h-ave
agreed to execute marketing agreements covering their crops of ..
the orgam/ation Committee shall forthwith proceed to
file the articles of incorporation and to lave the organii/alon of the Asso-
ciation completed, subject, however, to the foregoing conditions only, the
undersigned agree that their signatures hereto .ar irrevocable and they
,o agree in order to induce others to sign this or similar agreements for
their mutual benefit.





COOPERATIVE AGRICULTURE IN FLORIDA 53


(6) Acceptance of tin agreement by the Association shall be denied
conclusive upon the mailing of notice to that effect to the undersigned,
at our respective addresses listed hcreon, and such notice shall he con-
clusively established by the affidavit of the secretary of the Association.
Upon receipt of such notice, the undersiglnedl shall promptly tender to the
Association the respective aunounts sn birdied for conunon and prefoired
stock, or the initial payments required thereon
(7) The undersigned represent t thathe average a annual acreage of
harvested and the average qua'ntity of pro-
dnced annually for sales purposes during lie past years are set
forth opposite our respective names
(8) lThe undersigned agree that we will become members of the Asso
citation, when formed, ald will execute ilmarketlng algreinlents, the terns
of whuch shall be similar to the terms contained in the form attached
hereto and made a part hereof.
In witness whereof, we have hereunto set our hands as of this
day of 19-
Shares Shre Sres Acres Quantly
SIGNATURE ADDRt S Common Preferred Hareltd Sold










ARTICLES OF INCORPORATION

OF
(A Non-stock Corporation)
We, the undersigned, all of wholo are residents ;nd citizens of the
State of Florida, engaged In the production of agriculttr.l products, do
hereby voluntarily associate ourselves together for the purpose of forming
a eooperatlve association, withoullt capital stock, under thie provisions of
Chapter 618, Florida Statutes.
ARTICLE I
The name of the association shall be the
SAssociatilon.
ARTICLE II
The association is forn.ed for the following purposes
To acquire ind/or handle and market the or
.iy of tle iprodlets derived therefron, of its members and to engage in





54 DEPARTMENT OF AGRICULTURE


any activity in connection with the producing, gathering, harvesting, re
ceiving, assembling, handing, grading, standardizing, packing, processing.
transporting, storing, financing, advertising, selhng, marketing and/or dis-
tributmg of any ..delivered by its members or
any of the products denved therefrom and in connection with the purchase
or use by and/or for its members of supplies, machinery, and/or equip-
ment, all in any capacity and on any cooperative basis that may be agreed
iipon

ARTICLE III
This association shall have the following powers:
(a) To borrow money without limitation as to amount of corporate
indebtedness or liability, to give a lien on any of its property as security
therefor in any manner permitted by law; and to make advance payments
and advances to members.
(b) To act as the agent or representative of any member or members
in any of the activities mentioned in Aiticle II hereof.
(c) To buy, lease, hold, and exercise all privileges of ownership over
such real or personal property as may be necessary or convenient for the
conduct and operation of the business of the association, or incidental
thereto.
(d) To draw, make, accept, endorse, guarantee, execute, and issue promn
issory notes, bills of exchange, drafts, warrants, certificates, and all kinds
of obligations and negotiable or transferable instruments for any purpose
that is deemed to further the objects for which this association is formed
and to give a lien on any of its property as security therefore
(e) To acquiie, own, and develop any interest in patents, trade-mauks.
and copyrights connected with or incidental to the business of the associa-
tion.
(f) To transact business with or for nonmembers in an amount not
greater in value than the business which it transacts with its members
(g) To cooperate with other similar associations in creating central,
regional, or national cooperative agencies, for any of the purposes for which
this association is formed, and/or to become a member or stockholder of
such agencies as now are or hereafter may be in existence.
(l) To have and exercise, in addition to the foregoing, all powers, pnvi-
leges, and rights conferred on ordinary corporations and cooperative mar-
kcting associations by the laws of this State and all powers and rights
incidental or conducive to canying out the purposes for which this asso
ciation is formed, except such as are inconsistent with the express provis
ions of the act undei which this association is incorporated, and to do any
such thing anywhere, but the enumeration of the foregoing powers shall
not be held to limit o restrict in any manner the general powers which
may by law be possessed by this association, all of which are hereby ex-
pressly claimed





COOPERATIVE AGRICULTURE IN FLORIDA 55


ARTICLE IV

The association shall have its principal place of business in the city of
,County of-- State of Florida.
ARTICLE V
The term for which this association shall exist is 50 years from and
after the date of its incorporation
ARTICLE VI
This association shall have not less than directors. Of the first
elected hoard of directors ... (Numbel) shall be elected for 1 year,
(Number) for 2 years, and h (Number) for 3 years,
and thereafter all directors shall be elected for 3 years The names and
addresses of those who a e to serve as incorporating directors until the
first annual meeting of the members or until their successors are elected
and qualified are
NAME ADDRESS






ARTICLE VII
Section 1. This association shtll not have any capital stock, but shall
admit applicants to memboiship upon such uniform conditions as may
be prescribed by ithe board of directors of the association, or in its bylaws
This association shall be operated on a cooperative basis for the mutual
benefit of its members as producers, and membership in the association
shall be restricted to producers, who shali patronize the association. The
voting rights of the members of the association shall be equal and no
member shall have more than one vote. The property rights and interests
of each member in the association shall be unequal, and shall be determined
and fixed in the proportion that the patronage of each member shall bear
to the total patronage of all members with the association. New members
admitted to membership shall he entitled to shale in the property of the
association in accordance nith the foregoing general rule.
In testimony whereof, we have hereunto set our hands this
day of .. 19 ,





56 DEPARTMENT OF AGRICULTURE


State of
County of, ss.
Before me, a notary public, within and for said county and State on
this. ... day of 19 personally appeared
_, known to me to be one of the identical
persons who executed the within and f rer:iug instrument, and le ac
knowledge to me that he executed the I,. lt :' hiis free and voluntary
act and deed for the uses and purposes the-ci. i forth
Witness my band and official seal the d. I year above set forth.

Notary Public.
In and for the County of State of Florida. My
commission expires


BYLAWS

OF ASSOCIATION
(A Non-stock Corporation)
ARTICLE I
Purposes and Powers
The purposes for which ., hereinafter referred
to as the Association is formed and the powers wluch it may exercise are
set forth in the articles of incorporation of the Associaton.
ARTICLE II
Directors and Officers
Section 1. Number and qualifications of directors -The business of
the association shall be controlled by a board of directors of ......
(. ) members, each of whom shall be a member of the association or
an authorized representative of an incorporated member No person shall
be eligible for the office of director if he is in competition with or is
affiliated with any enterprise that is in competition with the association
and if a majority of the board of directors of the association finds at any
time following a hearing that any director is so engaged or affiliated, he
shall thereupon cease to be a director.
Section 2. Election of duectors.-At the first annual meeting of the
members of the association, dnectors shall be elected to succeed the in-
corporatinmg directors. -...........(._. _) directors shall be elected for
1 year, ___ __( ) directors for 2 years, and __ ( )
directors for 3 years, and thereafter each director shall be elected for 3
years At least two members shall be nominated for each directorship.
Directors shall be elected by secret ballot The nominee who, among the
nominees for each directorship, receives the greatest number of votes shall
be declared elected to the directouship for the ensuing term. Insofar as
feasible, directors shall be chosen to represent fairly the various producing





COOPERATIVE AGRICULTURE IN FLORIDA


sections in the area seved by the association Direlcois shall hold office
until their successors Ihae been elected and qualified and have entered
upon tie discharge of their duties.
Section 3 Election officers The board of directors shall meet
witlln ( ) days after the first election aind within -
( ) da;s after ach onea election aind shall elect by ballot a presi-
dent, vice president, secretary, treasurer, (or a secretary-treasurer), and
such other officers as the board deems nec ssa.r each of whom shall hold
office until the election and iqualifieation of his successor unless earlier
removed by death, resignation, or for cause lhe president and vice presi-
dent only need be members of the board of directors.
Section 4. Vacanoiecs-Whenever a vacancy occurs in the board of
directors, other than from the expiration of a term of iofice, the remaiining
directors shall appoint a member to fill the vacancy until the next regular
meeting of tie members.
Section 5. Board nimeligs.--In iddtllon to the meetings mentioned
above, regular meetings of the board of directors shall be held (monthly,
quarterly, or semi-annually) or at sueli oilier tunes and at such places as
the board nay determine,
Section 6. Special meetings.-A special meeting of the board of
directors siall be held whenever called by the president or by a majority
of the directors. Any and all busineLss may be transacted at a special
meeting. Eachl cll for a special meeting shall be in writing, signed by
ihe person or persons linking the same, addressed and delivered to the
secretary, and sllhl state the e e and place of such meeting, and the
imattcrs to ei acted upon.
Section 7. Notice ol board lmetulgs--Notice of ithe regular or spe-
cial meetings of the directors slill be n.uled to each director at least
( ---- ) days prior to the inme of such meeting unless waiver
notice is signed by a ml;lorit, of directors
Section 8. Compensation.-Thle compensation, if any, of the mem-
bers of the board of directors and of the executive committee, shall be
determined by the iliiemlirs of thle association at .ay annual or special
meeting of lie association, Provided, however, That ino member of the
board of directors, other than one who is acting as an officer of tile asso-
ciation and receiving a regular salary therefor, shall rective comrpen.atlon
or allowance for services rendered the association for more than thirty (30)
days im any one year, exclusive of the periods for which compensation is
paid for attenllance at dneetors' meetings, or at incetiniig of thle c\intive
committee.
Section 9. Quormi.-A majority of thei board of directors shall con-
stitute a (qiiirialn at any iieeting of the hoard.

ARTICLE IIl
Duties of Directors
Section I. Manageinent ol business -The board of directors shall






DEPARTMENT OF AGRICULTURE


have general supervision and control of the business and the affairs of the
assolatton and shall make all rules and regulations not inconsistent with
lav\ or alth these bylaws for the management of the business and guid-
ance of the members. officers, employees, and agents of the association
They shall have installed an accounting system winch shall bc. adequate
to the requirements of the business and it shall be their duty to require
proper records to be kept of all business transactions.
Section 2 Emplnymnnt of nmanager-The board of directors shall
have power to employ or to authorize the employment of a manager and
such other employees os may be deemed necessary, and to fix their com-
pensation. The mana ger shall have charge of the business of the asso-
ciation under the direction of the board of directors. No director shall
serve as manager.
Section 3. Bonds and insurance.-The board of directors shall require
the manager and all other officers, agents, and employees charged by the
association with responbdilty for the custody of any of its funds or ne-
gotiable instruments to give adequate bonds Such lbonds shall be furnished
by a responsible bonding company and approved by the board of directors,
and the cost thereof shall be paid by the association. The board of di-
reLtors shall provide for the adequate insurance of the property of the
association, or property which may be in the possession of ihe association,
or stored by tt. and not otherwise adequately insured, and in addition
adequate insurance covering liability for accidents to all employees and
the public
Section 4. Audits--At least once in eaic year the board of directors
shall secure the service of a competent and disinterested public auditor
or accountant, who shall make a careful audit of tle books and accounts
of the association and render a report in writing thereon, which report shall
be submitted to the members of the association at their annual meeting
This report shall include at least (1) a balance sheet showing the true
assets and liabilities of the association; (2) an operating statement for the
fiscal period under review which shall show die cost of, and income from,
sales and the gross income or loss from each of the commodities handled
idring the period, (3) an iteonized statement of all expenses for the penod
under review.
Section 5. Agreements with members -The board of directors shall
have lte power to carry out all agreements of the association with its
nembhers in every way advantageous to the association representing the
mebibn s collectively.
Section 6 Depository.-The board of directors shall have the power
to select one or more banks to act as depositares of the funds of the asso-
ciation and to determine the manner of receiving, depositing, and dis-
bursmg the funds of tie association and the form of checks and the person
or persons by whom same shall be signed, with the power to change such
banks and the person or persons siglnng such checks and the form thereof
at will.
Section 7. Membership certificates.-The association shall admit to
membership only those eligible applicants who liase paid the prescribed





COOPERATIVE AGRICULTURE IN FLORIDA 59


fee of dollars ($ ), and wliO have inet all other con-
thtions for membership prescribed by the board of directors. Tih board
of directors shall cause to be issued appropriate certlfic..its of irlembership.
ARTICLE IV
Duties of Oficers
Section Duties of president -The president shall (1) preside over
all meetings of the association and of the board of directors, (2) c.ll spe-
,cal mietings of the board of directors, (3) perform ,dl acts and duties
usually performed by an executive and presiding officer, and (4) ign all
membership and revolvg-fertifts,nd oig-fun erika, d such other papers of the
association as he may be authorized or directed to sign by the hoard of
directors, Provided, however, That the board of directors may authorize
llny prison to sign any or all checks, contracts, and other imstrtnuments in
writing on behallf of the association The president siall perform such
other dulties as iimy le prescribed by the board of directors.
Section 2 Duties of the vice president.-In the lasence or disability
of the president, the vice president shall perform the duties of the presa-
dent, Provided, however, That in case of death, resignation, or disability
of the president, the board of directors Inay declare the office vacant and
elect his successor.
Section 3. Duties of secretary -Thi secretary shill keep a coimpletc
record of all mei tings of the association and of the board of directors and
shall have g neral charge and supervision of the books and records of the
association lie shall sign all menmbersl lp and revolving-fund certificates
withthhe president and such other papers pertaining to the asso.eiiion as
he mab) le authorizedd or directed to sign by the hoard of directors. IHe
shall serve all notices ieqmiied by law and by these bylaws and shall
make a full report of all mnitters and linsimes peitailiniig to his office to
tihe members at the amnnal meeting He shill keep the corporate seal and
the book of blank niclnlierlirp anmd levolvmng-find certificate, eomplcte
and countersign all ceirlficatls issued, and affixi tile corporate seal to all
papers requiring I seal lie shall keep complete membership and revolving-
fund certificate records. lie shall act as secretary of the executive com-
mittee He slhll make all reports required by law and shall perform such
other duties as may he required of Inln by the adsslelation or the bodll
of directors Upon the election of IIIs sul.essor, tie secretary shill turn
over to him all books and other property belonging to the associalioii tat
lie may have in his possession
Section 4. Treasurer.-The treasurer shall plelornn such dmiius with
respect to the finances of the association as may bel prescribed hv the
board of directors
Section 5 Other olffcers-Any other offers elected by the board of
directors if the association shall have such duties as may be prescribed
by the board
ARTICLE V
\ecuntive Conmittee
Section 1. Powers and duties--'ihe board of directors mav m their






60 DEPARTMENT OF AGRICULTURE


discretion appoint from their own membership an executive committee of
three (3) members, determine their tenure of office and their powers and
duties The executive committee shall have such powers and duties as
may, from time to time, be prescribed by the board of directors and these
duties and powers may be all of the duties and powers of the said board
of directors, subject to the general direction, approval, and control of the
board of directors. Copies of the minutes of any meeting of the executive
committee shall be mailed to all directors within seven (7) days follow-
ing such meeting.
ARTICLE VI
Duties of Manager
Section 1. In general -Under the direction of the board of directors
the manager shall have general charge of the ordinary and usual business
operations of the association, including the purchasing, marketing, and
handling of all products and supplies handled by the association. He shall,
so far as practicable, endeavor to conduct the business in such a manner
that the members will receive just and farr treatment. The manager shall
deposit all money belonging to the association which comes into his pos
session in the name of the association in a bank selected by the board of
directors and if authorized to do so by the board of directors shall make
all disbursements by check therefrom for the ordinary and necessary ex-
penses of the business in the manner and fonn prescribed by the board of
directors. Upon the appointment of his successor, the manager shall de-
liver to him all money and property belonging to the association which
he has in his possession or ovei which le has control.
Section 2. Duty to account.-The manager shall be required to main
tain his records and accounts in such a manner that the true and correct
condition of the business may be ascertained therefrom at any time. lie
shall render annual and periodical statements in the form and manner
prescribed by the board of directors He shall carefully preserve all books,
documents, correspondence, and records of whatever kmd pertaining to
the business which may come into his possession.
Section 3 Control of employees -Subject to the approval of the
board of directors, the manager shall employ, supervise, and dismiss all
agents and employees of the association not specifically employed by the
board of directors.
ARTICLE VII
Members and Patrons
Section 1. Qualifications of members Any person, finr, partnership,
corporation, or association, including both landlords and tenants in share
tenancies, who is a bona fide producer of agricultural products in the
terntory in which the association is engaged i business may become a
member of the association by paying the membership fees, and meeting
such other conditions as may be plescnbed by the board of directors. The
membership certificate shall be m such form as may be prescribed by the
board of directors, but shall not be transferable.
Section 2. Suspension or termination -If, following a hearing, the





COOPERATIVE AGRICULTURE IN FLORIDA


board of directors shall find that a member has closed to be a piuducer
or that such member bas not, for a period of years, marketed
his agricultural products or purchased any supplies through the association,
or has moved out of the territory in which the association is operating,
they may suspend his rights as a member or terminate his membership
Upon termination of memhbciship in the association in any manner, all of
the rights and interests of such member in the association shall, by that
act, be canceled, and such member shill be entitled only to payment or
credit for the equitable appraised value of his property rights and inter-
ests in the association, is conclusivels determined by the board of direc-
tors No action taken hereunder shall impair the obligations or liabilities
of either party under any contract which may be terminated only as
provided therein.
Section 3. Nonnmember patrons.-The association may transact any
authorized business with nonmembers provided that the total value of
business translated by the association with nonmembers in any fiscal year
shall not eceeed the total value of business transacted with its members
Nonmember patrons shall be treated the same as members with respect
to the distribution and allocation of income. The association shall have
the right to retain an amount of the patronage allocatuiO of a nonoeilnher
patron equal to the menmbership fee, if such patron is eligible for meinber-
ship in the association and is approved by the board of directors

ARTICLE VIII
Revolving Capital
Section 1. Revoliiig-fund ecrtificates.-The assiuiation is authorized
to issue and sell to mniihbeis and other revolving-fund certificates, of a
charatetr elocafter described, for the purpose of iisinlg capital funds with
which to engage in business, and in order to further tile cooperative char-
acter of tihe association and to provide a means wmhereby its current and
active patrons Vill finance the association thereafter. The association is
authonzed to issue revolving-fund certificates evidencing deductions made
pursuant to agreements and/or patrona.i dividends, wlich are, in whole
or in pait, so paid, at tle end of each fiscal year Funds arising friin the
issue of such certificates shall be used for creating a revolving fund for
the purpose of building up such an amount of capital as may be delned
necessary bh the board of directors from time to tune and for revolving
suci capital, and such fund or funds derived from any other source shall,
when, in the opinion of the board of directors of the association sich
runds are not necessary for the proper financing of the operaUons of the
association, be devoted to the refunding of tle oldest outstanding series
of revolving-fund certificates. Such certificates may contain such other
terms ,nd conditions not consistent herewith ;as I4n he prescribed from
time to time by the board of directors of the association. Such certificates
shall be issued in annual scenes, each certificate in each series upon its
face being identified by the vcar in which it is issued, and each series
shall be retired fully or on a pro rait basis, only at the discretion of the
board of directors of the association, in the order of issuance by years as
funds are available for that purpose Notwithstanding any of the foregoing
provisions, the board of directors shall have the power, front tine to time






DEPARTMENT OF AGRICULTURE


nll ,ian an lime, to piay off or retire or secure a release or .latisfaction of
an\ revoklIng-fund tcrltifieate coulpronising or settling a dispute heinCeen
tle holder thereof ,and the assoctatioi.
Sni.l revolving-fIud certificates shall bear such rates of interest and
onl.\ sIIu rates iif interest (in Iol event to exct'ed 6 percent per annum)
is tle board of dhroctors of the association in its sale discretion i1ma from
time to tire preserhnb without .ny obligation nl the part of the board of
directors and ite i association to p.y interest on sich certificates A record
of ill holders of revolving-fund certificates hdll be kept and maintained
by tlle assoelatio n and such certificates shall be transferable only oll the
books of fhe associ.iion and no transfer of certificates shall Ie binding
upon tic association unless so transferred. All other debts of tle associe-
tion. both secured ,ind unisecred, shall he entitled to priority over all
outstaind ng revolving fmnd certlfaites. Upon the dissolution or winding
up of the association in any manner, after the payment of all other debts,
all outstanding revolivng-fund cerfinfates shall ie retired it full or on a
pro rota basis without pnority before any liquidation dividends are de-
clared on melbiership certificates or on account of property rights and
interests
ccltion 2 Reserves--The books and records of the association shall
bh kept in such .I manner, by ye.arl, that the .iiount cared to reserves,
wlich halve the status of capital, iecrrung from patronage of each patron
of the association nay he ascertlinedt t any till. Whenever in a given
year the operation of the association results in a net loss, suhi loss, to the
extent that reserves are available, shall be charged against the same and
they shall thereby he reduced accordingly. The board of directors shall
precrilbe the basis on which the reserve contrilntions of patrons by yeirs
shal lbe reduced oil account of a.y such loss, so that it will be borne by
the patrons on as criutable a basis is their board of directors find practicable.
Whenever in lhe discretion of the board of directors the reserves are
found to be in excess of the amount deemed reasonably necessary for the
sound financial operations of the association, such excess shall be applied
to paying off ratably, by year the oldest unnehausted reserve contnbu-
tiois of patrons. Upon tde dissolution or winding up of the association
in any manner, after the paynlont of all debts, including revolving-fund
certificates, any balance remaining over shall be distributed ratably in
the following order and manner in the liquiiid.lion of (a) unu\ihausted re-
serve contbutions, (b) membership certificates, and () property rights
and interests.

ARTICLE IX
Meetings
Section 1. lFstil aryeir-l e fiscal year of the association shall con-
mente on the first day of .. and end on the last day of
Section 2 Annual. meting.-The annual meeting of the members of
the association shall be held in lth town of- State
of Florida, at 10'00 o'clock A.M., on the- .. day of _.
of each ear, or on any date w ich the board of directors sIall designate
at least 30 days in advance of lie date specified above.





COOPERATIVE AGRICULTURE IN FLORIDA


Section 3 SpecLil meetinRl, -Special meetings of the IImembllers of
tie iassoc itioin may be tailed at any time by order of the board of direc
tois, and shall be called at any time 1, the president upon the written
request of least ( ) percent of the members, plovmded,
however, thait in no rase shall the required number of signatures of Inem-
bers to such a request 1he less than ( ) The leiqest
shall state the time, place, and obleet of the meeting.
Sectioni Notice of meetings -Written or printed notice of every
regular r special mIeettim of tneilMbers ~hall he prepared and illiled to
the last known post o e address offic dr f each imemnlber not less than
( ) days before such inceting Such notice shall sttet tlhe object or
obeccts thereof and the tine and place of meeting No business allhll he
transacted .it special intinmgs other t.an that referred to in the call
Section 5. Absenlte voting. otmng by proxy shall not be permitted
])ut absent miiemb.ers IIai vote on speci.Lfi~ q1iitions oilier than tlhe removal
of directois by ballots tiaiuunmtted to ti' secretary ihy mal, and such bal-
lots shall be counted only in the iiiettng at the tine in winch such vote
is taken, provided that all mcimbr rs, poisiant to ticlion by the board of
directors, have been called an exact top) of the mIotion or resolution
upon llic.h sol'l vote is taken, and .i copy of the samel is forwarded with
and attached to til vole of the membller voting.
Section 6. Quorumn- ( ) percent of the members
shall tLOltlltt I qiIorlln for the transac.tion of bullsine at any meeIing
of the .isal iationi e\.ept for the tri.allltion of bIisiiines conccrniln w chll
a different qionin is spellie.ll provided by law or hy these hblaws, hut
in the ecilt a quorum is not prcteent suc meeting may be adliourned
from Lime to time Iy those present unlil a quorum is obtained
Section 7 Order of business The order of business at thle annual
ineetmnag shall be.
(1) Roll <.al
(2) Proof of due notice of meeting.
(3) Reading and disposal of iiniilut
(4) Annual reports of officers and committees
(5) Election of dirictols
(6) Unfinished biustl.ss
(7) New busiess.
(8) Adjournment.
ARTICLE X
Allocation and Distribution of lucomlne
Seclion 1. Allocation of income-At the end of each fiscal year, the
board of directors shall allocate the net income of the association, as
shownt oil the annual report of the auditors, in the following older and
inanner
(a) GeCeial reserve.-An aimmouint of the net income equal to not less
than ( -- ) percent thereof shall be set aside for the purpose
of establislhing, building ip, and nmamntaunny a genera, reserve of not less






64 DEPARTMENT OF AGRICULTURE


than (- ) percent of the aggregate of the par value of all
outstanding membership certificates and the face amount of outstanding
revolving-fund certificates.
(b) Interest on revolving-fund certificates.-A sufficient amount of net
income shall le set aside for the payment of interest, if any, on outstand
ing revolvingfund certificates, as determined by the hoard of directors.
(c) Patronage allocation.-The net income remaining after provision
for reserves and interest, if any, on revolving-fhnd certificates shall be
allocated to each patron m proportion to his patronage of the association
during the fiscal year. In computing patronage allocations, the hoard of
directors is authorized if deemed advisable to make such computations on
an equitable basis at different rates upon different classes or kinds of
products or supplies handled, or services performed
Section 2. Distribution of patronage allocations. The patronage al-
locations determined in the manner provided in section 1 (c) hereof shall
be distributed in the following order and manner:
(a) Membership fees of eligible nonmembers -From the amount al
located to each nonmember patron eligible for membership in the associa
tion and approved by the board of directors therefore there shall first be
deducted, insofar as funds are available, an amount equal to the par value
of a membership in the association as payment on the purchase price
thereof, and when any such patron has compiled with all the conditions
for membership a certificate of membership shall be issued to him.
(b) Revolving-fund certificates -At least .. ( ) percent,
as determined by the board of directors, of the undistributed allocation
of each patron shall be retained by the association for capital purposes,
and revolving-fund certificates more particularly described in Article VIII,
Section 1 of this bylaws shall be issued to the members and patrons
therefore.
(c) Cash dstribution.-The remaining balance of the patronage allo-
cation of each patron may then be distnbuted to hmn in cash,
(d) Application of cash distribution to indebtedness -Any part of or
all the cash patronage distributions and/or cash payments for retirement
of revolving-fund certificates payable to any patron may be applied at
the discretion of the board of directors to the payment of any indebted-
ness of such patron that may be due the association.
ARTICLE XI
Miscellaneous Provisions
Section 1 Bylaws printed.-After adoption these bylaws, precede
by the articles of incorporation, shall be mimeographed and a copy there-
of shall be delivered to each member and to each person who may be-
come a member of the association.
Section 2 Seal -The seal of the association shall contain these words
and figures. ", Incorporated, 19 in circular
form, the impress of which is placed hereon,






COOPERATIVE AGRICULTURE IN FLORIDA 65


ARTICLE XII
Amendments

If notik of the ciarattr of the amendment proposed has been given
in the notl i of a meeting, these bylaws may be altered or amended at
ainy regulhi or special meeting of the members by the affirmative vote of
or more itf the members present or voting by mai
We, the undersigned, being all the incorporators of
do hereby assent to the foregoing bylaws and do adopt the sare is the
bylaws of said association; and in witness whereof, we have hereunto sub-
sceibed our names, this day of -...., 19













MEMBERSHIP CERTIFICATE
NO.
Association

This is to certify that is a member of the
Association, and as such is entitled
to the rights nd privileges of membership and is likewise bound by and
sbiihett th te obligations and conditions pertaniing thereto, all as set forth
in the artieles of incorporation, bylaws and marketing agreement, now or
hereafter in effect Said ,iiiember has paid a membership fee of $
This certificate and the membership and rights represented hereby are
nontransfera.ble.
In witlale whereof, the Association has
caused this certificate to be signed by its duly authorized officers and its
corporate seal to be hiclo Bafixed this day of
19 .
(SEAL)
By -- -
President
Attest:
By ...- --- -- -- ----
Secretary
(It is recommended that these be mimeographed.)






DEPARTMENT OF AGRICULTURE


MARKETING AGREEMENT

Tins agreement between hereinafter called
and the undelsigncd, hcrcmaftei called the "Producer,"
VWitnesseth
(1) bu s and the Producer sells to all

hereinafter referred to as "products," produced by or for him or acquired
bx him as landlord or lessor and the Producer agrees to deliver all such
products at such place or places as__-_ may direct This agree-
mont is intended by the parties to pass an absolute title to all such prod-
ucts as soon as the same have a potential existence but such products shall
be at the risk of the Producer until delivery is authorized
to exercise any and/or all powers conferred upon it hereunder through any
central agency of which this and any other similar associations are or imay
become members
(2) -. agrees to make su advances to the Producer on
such products upon the delivery thereof as in the discretion of its board
of directors may be justified by marketing conditions
(3) .... agrees to sell, either in the natural or processed
state, such products, together with the products delivered by other pro-
ducers. and to pay over ratably the net amount received therefrom as set-
tlement in full to the Producer. less following deductions authorized by
Producer not to exceed a total of (a) advances, interest
upon advances, interest or dividends on capital, the cost of picking. gather-
ing, harvesting, receiving, assembling, transporting, handling, grading,
packing, inspecting, processing, financing, advertising, storing, insuring, sell-
ing, and marketing such products and/or products derived therefrom; (b)
organization, operating and maintenance expenses and purchase of stock
in a central agency, (c) revolving-fund retains for the purpose of building
up such an amount of capital as may be deemed necessary by its board of
dncctois from hme to time and for revolving such capital in the manner
that may be provided in the bylaws of the Association, and (d) reserves
which have the status of capital to meet the general contingencies of the
business of ... .. .. The deductions made for capital
purposes and for revolving such capital erom time to time shall be evi
dented b, revolvingfund certificates distributed to the Producer by
.- within the discretion of its board of
directors, is authorized to establish, from uine to time, daily, weekly,
monthly, or seasonal pools of the agricultural products marketed by it of
the same color, variety, grade, and quality, and all producers having such
products in the particular pool shall share ratably in the net amount
received therefrom
(4) All products shall be delivered by the Producer at his expense at
the earnest reasonable time after harvesting at such places as tle Asso-
ciation may direct, and with such identification as may be prescribed by
the Association.





COOPERATIVE AGRICULTURE IN FLORIDA


(3) An; loss that I ra. mna t sien on account of infrnor or
damaged condition of products at dehvely shall be charged agaist the
Pioducer, individually
(6) The Prodiinee further agrees that and/or the oen-
tial markeng agency shall have the powel to borrow money for any
piipose of and/ o the central Imarketing agency on the
security' of the products delivered to and/ol the piodiuts
derived theicfrom and/oi on any evidence of sulch products or bypI) dults
or cash or accounts arising fronm the siale tlheeof and to give a lien either
legal or equitable thereon, as the absolute owner thereof, and
and/or the central marketing agTncy max grade, pool, or coImrnleggle Such
ploduets and/ia produIcts d(elied tlheefronm or any pant thiclof with otihe
products of like color, grade, size, quality and variety, and shall exercise
all other lights of ovwncrslip without limitation
(7) In as much as the remedy at law would be inadequate and in as
mueli as it would be ilnpii acticib I an d e\xiemelv difficult to det(rminin the
ntual diamiige resulting to should the Producer fail to
delivci the pioducits livered heleby, regardless of dhi cause of such fail-
lei, the Pl'odliucr hereby agrees to pa, to the Assoclation for all products
dcliverid rr disposed of, by or for him, other than in accordance with
the trils hIereof, the stum of cien prr mon all products,
.,i hlqu1dated damages fr i the breaLch ot tins agreneent, all parties agree-
ing [hat Ilns agieoelent is one of a series dependent for its true value
upon the adherence of cuch and .ll ot the contracting parties to each and
all of the said agreements, but tihe cancellation of any other simnir. con
tract or tie failure of any ot the parties theieto to comply theiewith shall
not affect the validity of this contract
(8) If bangs any action whatsoever by reason of a
bieachl or threatened breach hereof, the Producer shall pay all costs of
court, costs for bonds and otherwise, expenses of travel and all expenses
arising out of ol caused by the litigation, and reasonable attorney fees ex-
ilnd d rl i nctlred by it in suich proceedings and all such costs and cx-
prnse shall ie included in tlie judgment
(9) It is aged that the articles of incorporation and the bylaws, now
or ieieaftl ir in effect, aid ltis agreement consliltit thie entire agreement
lietw'rn .- and the Producer.
(1() i may enter into agreements will othlci producers
differig in leIms from thols contained herein but consisteint with the
bylaws of it l i hot invlidating this agreement, pilvilded
that the Ploducer at iusi reqliest may sign a similar agreemellnt s a sllbsti-
tute for tins agicement. By signing this agreement the Producer apples
for memlershrslipd in and the signing hereof by
shall c(onstitrute an acceptance theleof.

(11) or thIe central agency hall establish or adopt
standads toi such products and slhll make rules and regulations govern-
ing the handling and shipping thereof and shall provide inspectors or






DEPARTMENT OF AGRICULTURE


graders to grade the products, and the Producer agrees to be bound by
such grading and to observe such rules and regulations ..
or said central agency shall provide for the inspection of all products de-
livered hereunder, and if any such products are not in proper condition
for sale they shall be prepared for sale at the expense of the Producer
(12) After this agreement shall have been in effect 2 years from the
date of its acceptance by _, either party hereto may termi-
nate it in any year on the last day of the anniversary month in which
tins agreement was so accepted by notifying the other party in writing
of this intention, such notice to be given between the first and fifteenth
of the month immediately pnor to the effective date of termination. If
neither of the parties hereto terminate this agreement in any year, as
aforesaid, it is hereby mutually agreed that this shall constitute conclusive
evidence that the parties hereto have renewed this agreement for another
year.
(13) If there is a hen on any of the products delivered hereunder, the
Producer authorizes the Association and/or central agency to pay the
holder of said lien from the proceeds derived from the sale of such prod-
ucts before any payment is made to the Producer hereunder.
(14) The parties agree that there are no oral or other conditions, prom-
ises, covenants, representations or inducements in addition to or at vari-
ance with any of the terms hereof.
Read, considered, and signed at ................_ .. this
-day of ..... 19...
Producer's signature
(Do not sign without reading)

(Print Producer's name here)
Address ...... .
(R FD. or Street No.) (Town)
County- ..... State..........-
Accepted this day of .... ..........19 ...
S .... Association
By ...................
Its..


REVOLVING FUND CERTIFICATE

.....Association
Series 19--
No. ...... (Date).....
Amount, $..
This certifies that .
(Name)





COOPERATIVE AGRICULTURE IN FLORIDA 69


,if is entitled hi clceive tih aml iunt of
dollars from the
(Name of association)
Ion account of capital furnisield and/or patronage dividends or deduction
loi Ievolving-fliud purposes as provided in the bylaws theliof, subject to
the following conditions:
I. This and othl r revolving-find certificates of Ithe same series are
rrtirable in the sole discretion of the board of directors, etlher full or on
a pro rata basis, but certificates issued in prior years shall be entitled to
priority in retircmncnt accept in liquidation.
2. The amount stated in this certificate shall ,ear only such rate of
interest. if .ay. as the board of directors may fix. fron tune to time, in
io eveiit to cceed si\ percent per ainniin.
3. This certificate is transferable only on the books of the association.
4. This and other certificates shall he Jinior and subordinate to all
other debts f the .isociiation, both ecuired and unsecured. Upon the
winding tup or liquidation of the association iln .ay manner. after full
payunt to iall its olier creditors, all revoliimg-fiind certificates hall then
be retired in full or on a pro rata basis, without priority.
In witviless wlercof the
(lanme of association)
.has .caumLd tlli ceIriflete to I, signed I) its duly authliriacd officers aind
to ibe sealed with its sl, this d.i of 19




(It is recolmmlitndcd that these be printed on reir~ilar st(ck forms llith
der or.tive design tcdges, etc)


COMMON STOCK CERTIFICATE
(For use in stock Lornoratiis)
Incorporated in,
No. Shares

(NannLe f Asso.,i.thon)


(Address)
Autthlorized Capital $
Coiiinunon Stock Shares. Preferred Stock Shares.


Par Value


per share. Par Value $


Per Share.






DEPARTMENT OF AGRICULTURE


This ertifies that.


is the owner of


,hares of common stock. ach, of a par value of
( s ) n tile
(name of association)


dollars


transferable on the books of the
(town and state)
assoi etin on othe surrender of this certfic.atc properly endorsed, by the
holder thereof, Ur ib an attorney properly autbolrized, winch stock l si)b-
jett to the following conditions
(here insert material in Section 1 (a) of Article IV
of the by-laws for a stock association.)
Seldh ncmnllon stock is subject to the pieference given to preferred stock
in the ailtlies of incorporation of the association, and the holder hereof
accepts the sane isubeet to such preference, and it is also subject to all
the other terms and conditions of the articles of corporation and the
by-laws now in effect or hereafter adopted


- -4o. -Z


The Florida Tropicl Fruit C ati n Gou.
The Florida Tropical Fruit Cooperative in Goulds


1l-h- -






COOPERATIVE AGRICULTURE IN FLORIDA


In iwiticss whereof the said association has ca.Ied this cdltfl ate to
be signed db its duly autihoiized officers and its cmporiat sell to be here
uiinlo affixed
This day of 19


(President)


ATTEST.


(Secretaiy)



PREFERRED STOCK CERTIFICATE
Incorpol ated in


Conlllln. Stock
Par Value S


This certlfies that
is the oxnei of
value of


(Name of Association)

(Address)
Authorized Capital
Shares Preferred Stock
Pli Shall Pll Value $


Shares
Per Share


shares of preferred stole, each with a par
dollars ($ ), in ithe
(Name of Association)
transfeiable on the books of the association


(Town and State)
on th sirieindei of this certificate, plopeily endorsed, by the holder thereof,
oi lby attorney properly authorized, which stock is subject to the following
con(htions:
heree inset liaterial in Section 1 (I) of Article IV
of the iby -lis for a stock association)
InI winless whelcof the said l.ssoll.oition haas .iii sd tilis certificate to
be signed by its duly authorized officers rnd its corporate seal to be heice
unto affixed.
This .- -day of 19


President


ATTEST:


Secretary





72 DEPARTMENT OF AGRICULTURE


TRANSFER OF COMMON (PREFERRED) STOCK
(To be printed on back of stock certificates)
For value received, and subject to the consent of the Board of Dlrec
tors, the undersigned hereby seils, assigns, and transfers unto -- .
.. ....shares of common (preferred)
stock represented by the within certificate, and does hereby irrevocably
constitute and appoint .. ......._ to transfer the said
stock on the books of the within-named corporation with full power of
substitution in the premises, this ..... ....day of., 19 .

In the Presence of


NOTICE, The signature of this assignment must correspond with the
name as written upon the face of the certificate in every particular without
iltoration or enlargement or any change whatever.


WAIVER OF NOTICE OF FIRST MEETING OF MEMBERS

We, the undersigned, being all the incorporators of_ .
... ......-......._ of
(name of association) (town and state)
constituting all the present members of such association, hereby waive
notice of a meeting of the members and consent to the holding of a meet-
ing of such members at o'clock .. (a.m. or p.m), on the
day of___, 1__, t ... ..... ......t
(place of meeting)
in for the purpose of adopting by-
(town and state)
laws for the government of the association and transacting any other busi-
ness that may properly come before the meeting.
Witness oum signatures this day of__- 19 ..








WAIVER OF NOTICE OF FIRST MEETING
OF BOARD OF DIRECTORS

We, the undersigned, being all the directors of __. .... _.





COOPERATIVE AGRICULTURE IN FLORIDA 73



(name of association) (town and state)
hereby waive notice of a meeting of the ducctors and consent to the hold-
inmg of a meeting of such directors at o'clock -
(a.m or p m)
on the day of .... 19
(day)
at .. in
(place of meeting) (town and state)
for electing the officers of the association to serve dlming the ensuing year,
adopting the form of marketing agreement, and transacting any other busi-
ness that may properly come before said meeting
Witness our signatures this day of 19 -









MINUTES OF FIRST MEETING OF MEMBERS

The fHst meeting of the members of .
(name of association)
was held at o'clock on the .. day
(a.m. or p in )
of .19 at ..
(place of meeting)
in .. The chair called for proof of notice
(town and state)
of the meeting, wheic-upon presented a waiver of notice
and consent to hold the meeting signed by all the members of the asso-
ciation, which waiver and consent was in the following form:
(copy waiver of notice and consent to meeting)
The chair ruled that the meeting was properly called and it was ascer-
tained that all the members of the association were present. The chla
reported that the articles of incorporation of the association were filed
on the day of 19 at. -
o'clock the office of the Secretary of State of Florida and
(a.m. or p )
presented a copy of said articles of incorporation, which was read, and
on motion duly made, seconded and carried, was directed to be entered
in full m the minute book (See page. ) A draft of proposed by-laws
for tie government of the association was presented by ....






74 DEPARTMrINT OF AGRICULTURE


a.nd .. I r ad to thk TIil tITIr g a.ld l( 11t ihsed 1(It* tH)IIn i 'ctilO in ld Ias a
%Ilit .l, d tlii prh, po, d 1- 1 1a..e x1r( i i,11111o11 l\ adopted Eadl l .in -
I'r l lihtd li Nliglltr( lo the In .iits .ii I tli sc.recti r was Liii. tr ttid
to spread tim L- -la,, i s n lli of iii tL eetingt. t
(l nr( IlisI rT re(ird oif di]; Otlitr l)ii Ss, ri nl nit tItdl
1ii, r. ii ig 11lII o frtlher blslusl, l Ill c(o li leforei tille 'citilln On IillIIll
dll') Ia.id(, ( M d.tlld idd Uti,.lllinolls)' .ilddp)l d, ti/ t ih i ctm i was ,adourni'd


Temporary Chairman

Temipor.r S.cre.tary


MINUTES OF FIRST MEETING OF BOARD
OF DIRECTORS

Il filst nimeclig of the Ibo.ard of directors of thel
(nami of n isri. tioni)
.is held it o'clock
(ton. and state (a m or p.m)
on L-- 19 at
(dlya) policee of meeting)

(town arld st,,te,
Ipon Oivienng., X. a eletd tlporairy chair-
1ilan anid tiiiEpiI..I s'Ciet.arv of Illt meeting and
I'e.'li a. Silud his office
The chall called fur ilroof o noftic of thill ilicting. hilremlpon
iprolnted a liveir ,)f not.ie and [onisrIt to hold
tilh meeting, sineilld iby ill the dlrecttrs of lilte a solation, wlciliI waIl'cr
and i ont'iil was.in II the folo\ ing form
(hcl lpto" ,l\t, a nl l d roniselnt frlll)
Up(on roll c.ll of the diretois of the Ahsociationr, lie following ians ered
present.
(lccnrd the iiii.ies of all dillctors present)
The hair ruled that propei and legal notte of the meeting had beei
ellcn and that a qlorlinl xxs p1)r snt anid a.Imoulnced that the meeting
xi as open to transact biusniiir
The ch.air talll that the meeting .is called nfi llh purpose of clect-
ng offiLers of Ithe Association for tlie tl.Iing Ceal and trallnactlng all other
business that eight properly conic bcfole the imetlng





COOPERATIVE AGRICULTURE IN FLORIDA


Upon motion duly made, seconded and candid, the following officers
were unanimolsly elected to serve at the discretion of the boaid until the
time of the first regular meeting ot the board to be held as soon as prac-
ticable following the first annual meeting of the stockholders
(record the names of the officers elected and their offices)
Following the election of officers, the president took the chair, and the
secretary assumed his duties as secretary of the meeting
Upon motion duly made, seconded and carried, the following were
appointed members of the executive committee as provided in the by-laws.
(record the names)
Upon motion duly made and seconded, the following resoltiton was
adopted
Resolved, that the Executive Committee be charged with the following
specific powers and duties.
(state here cpoers and dutes of this Committee)
Upon motion made and seconded, the following resolution was adopted:
Resolved that the president and secretary be, and they are hereby,
authorized to issue certificates of membership in form as submitted to this
lmeting and each in form as follows
(here insert folm of membership certificate)

Upon motion duly made ard seconded, the following resolution was
adopted:
Resolved that the president and secretary be, and they aie hereby,
athorized to have pointed a sufficient numbll of copies of the articles of
mcoipuration and by-laws so that a copy thereof may be delivered to each
member and each person who may later become a member of the Asso-
ciation
Upon motion duly made and seconded, the following esoliition was
adopted.
Resolved that the marketing agreement, in form as submitted to this
meeting, a copy of which appears hercaftel, is hereby approved
(hele insert form of marketing agreement)

Upon motion duly made and seconded, the following resolution was
adopted

Resolved that all applications for membership in the association and
all marketing agiecments tendeicd the association, appearing on the list
submitted by the secretary, be accepted, and that the president and secre-
tary be, and they are hereby duceted to carry out the terms and condi-
tions of such membership applications and to execute all marketing agree-
ments tor and on behalf of the association,






76 DEPARTMENT OF AGRICULTURE


Upon motion duily made ai..d Isconded thI following rcgolutiton was
adopted
Resolved that the hank be selected as a. depositary
for the funds of thei association,
U]po motion dlly .de. and M .t econdid, lie fIllowing rnnholutioin was
adopted:
Resolved that all checks dr.an upon the bank, for
'ithdraw.l of funds of lthe asso'.tlon on dieposil tlherewitlh, be signed by
the treasurer managerer.
Upoin notion diuly mde ,id seconded the following resolution was
adopted:
Resoli th tht tihe treasurer (minl.ager) is hIerIeb authorized to receive
all funds paid to the association, endorse all elacks and otihe media of

cclirige, and deposit tih sanme to the account of the a.soeiatlion in

bank.

Upon motion diuly made and seconded, thl following resolution was
adopted:

Rreolved that tie Executive Committee lht, and tiey are hereby,
authorized to deteinrne the amount of the bhnd or bonds whlih the b)-
laws specify shall bx required of all officers, agents, and employees dcarged
by lte association wilh responsibility for the custody of any of its funds
or property, and to see that the bonds, as rirequired, are ciuteld and
preselned for the approval of the Board of Directors

(Snndiar resolutuloii should bc adopted, piolduug for the i insurance of
the property of the alsociation and any othei additional business trans-
acted by tih Board of Directors should be recorded here )

Thlerc being nio F either b11sin ss to coei l befolrC tlhic meet iig, on motion
dul made, seconded and unuiiiinnoudly adopted, Ihe mcet inng idiourned.


Cl trmnin.








* S.


-111iw
^b .W


Florida Citrus Exchange, Tampa, Florida


*7~~i~
lt~z


I-
III
HILL


si,





78 DEPARTMENT OF AGRICULTURE

CHAPTER V
Agricultural Credit

Credit is available to farmers and their cooperatives
through such sources as banks, supply merchants, indi-
viduals. National Farm Loan Associations, Production
Credit Associations, Banks for Cooperatives and the
Farmers Home Administration.

THE FARM CREDIT ADMINISTRATION
National Farm Loan Associations, Production Credit
Associations, and Banks for Cooperatives are all a part of
our Farm Credit Administration.
The Farm Credit Administration is essentially a
farmers' cooperative organization. Almost without ex-
ception farmers were largely, if not entirely responsible
for obtaining the legislation which has made the various
units of the Farm Credit Administration possible. They
induced Congress, in several instances at least, to supply
the initial capital for the various units of the Farm Credit
Administration. At the same time, they insisted on a
proviso pertaining to most of the units that the farmers
themselves or their cooperatives would be given the
opportunity to replace the Government's capital and to
own their cooperative credit institutions themselves.

The Farm Credit Administration's units do not seek
to monopolize the farm credit field by any means. Right
now, perhaps, the national farm loan associations and
the Federal land banks are making about 10 percent of
the farm mortgages of the country. The Production
Credit System, known as the PCA's, perhaps handle
about the same percentage of the short term credit needs
of farmers and ranchers advanced by lending institutions.

No units of the Farm Credit Administration have been
set up at a time when there was not distress in the coun-
try, at least so far as farming and ranching are concerned.




COOPERATIVE AGRICULTURE IN FLORIDA 79

The cooperative system grew out of distinct needs, not
needs for the moment but needs for a different system of
credit, one geared to the processes of agriculture, one
that could wait long enough for funds for the biological
and marketing processes of agriculture to be completed.

Granted, interest rates have been exceedingly im-
portant factors, but they did not cause all the troubles.
Turn your mind back to the days before the Land Bank
System was started, some 38 years ago, and you will re-
call that interest rates were excessively high, so high in
some localities that farmers absolutely could not make
the grade with sizable loans on their properties. But
many of the practices that had grown up in the farm
mortgage field distressed farmers fully as much as in-
terest rates themselves. Farm mortgages were all writ-
ten for very short periods. They had a habit of falling
due at the most inopportune times when farmers found
it very difficult or absolutely impossible to raise the
funds with which to pay off their loans. Because of the
scarcity of money in some areas, it was the practice to
charge unconscionable commissions In those days a
long-term farm mortgage loan which could be amortized
over the years was a thing only dreamed of by those who
advocated the passage of the Federal Farm Loan Act.
The Production Credit System also brought into the
farm credit picture a type of loan particularly adapted
to farmers and ranchers. And in much the same way
the banks for cooperatives in 1933 made available three
special types of credit for farmers' cooperative market-
ing, purchasing, and service associations.

Farmers' credit cooperatives are very much like other
cooperatives, They. too, are under fire. and it may be
just as hot The attacks on cooperatives in general are
intended to weaken them and the attacks on farmers'
cooperative credit institutions are for the same purpose.
They cannot be attacked because of the volume of busi-
ness they do. That it is only a small proportion of the





DEPARTMENT OF AGRICULTURE


total. It cannot be because of the fact that some of the
units of the Farm Credit Administration still have Gov-
ernment capital, because that capital is intact. As a mat-
ter of fact, no Government capital in any unit of the Farm
Credit Administration is impaired, and much of it has
been repaid to the Federal Government. Enemies of the
system cannot claim that cooperative units lend Govern-
ment money or that they make Government guaranteed
loans, because our funds come mainly from the sale of
bonds and debentures which are not guaranteed by the
Government either as to principal or interest. They are
backed by the notes and mortgages of the thousands of
farmers who borrow from these cooperative organiza-
tions plus the strength of the cooperative credit units
themselves.
It would seem, therefore, that those who are trying
to make it uncomfortable for the cooperative credit units
are attacking them because they want the FCA units to
charge a higher rate of interest so that they themselves
can do the same.
So if farmers and ranchers want cooperative credit to
continue to serve with specialized forms of loans fitted
to their particular needs, it will be necessary for them
to come to its support in an active manner.
Since the units were set up the farmers have used
them extensively, and this use to a marked degree has
resulted in their ownership of stock. As of June 30, 1954
farmers and farmers' cooperatives in the United States
owned $187 milhon in the capital stock of the national
farm loan associations, production credit associations,
and banks for cooperatives. Farmers had an investment
of $76 million in the capital stock of national farm loan
associations and $93 million in that of the production
credit associations. Farmers' cooperatives had invested
$18 million in the capital stock of the banks for co-
operatives.
As of this same period, 2,050 farmers' cooperatives





COOPERATIVE AGRICULTURE IN FLORIDA


were using the services of the 13 banks for cooperatives.
These include federated cooperatives so the number of
cooperatives served would be much higher. They had
$491 million in loans. In Florida, 29 cooperatives had
loans of $11.5 million outstanding from the Columbia
Bank for Cooperatives on June 1954 In that fiscal year,
the Columbia Bank made 51 loans for $18 million to Flor-
ida Co-ops.
Farmers m the United States obtained 266,907 loans
totaling $1 2 billion from the 498 production credit asso-
clations in the year ended June 30, 1954. In Florida,
farmers obtained 3,589 loans for $23 million from the 10
Florida Production Credit Associations. There are 6,588
farmer-members of PCA's m this State.
Florida farmers obtained 362 farm mortgage land
bank loans for $2 million through their 12 national farm
loan associations in the year ending June 1954. And as
of this date there were 3,009 Florida Farmers with land
bank loans amounting to $11 million. Besides providing
most of the lending funds for this State's 10 PCA's, the
Columbia Federal Intermediate Credit Bank made loans
and discounts of $887,460 to other financial institutions in
Florida.


THE FEDERAL BANK AND NATIONAL FARM
LOAN ASSOCIATIONS

Federal land bank loans are made through National
Farm Loan Associations to persons who are engaged or
about to become engaged in farming or raising livestock,
or whose principal income is derived from such opera-
tions. Loans are made for the purchase of land for agri-
cultural uses, purchase of farm equipment and livestock,
to erect and improve farm buildings, and to pay debts
of the farmer. Loans can be made for any agricultural
purpose or any needs related to the farmer and his
family.





DEPARTMENT OF AGRICULTURE


THE FEDERAL LAND BANK OF COLUMBIA, S. C.
AMORTIZATION TABLE
1,000 Lo n-Repaya be in 25 inniil installlnnts at 4 percent interest
Interest and pnnc ipal payable annually.


Plinmlpal


Total
Inistllmlnt

$80 00
78 40
76 80
7520
73 60
72 00
70 40
6880
67 20
6560
64.00
62.40
60.80
59.20
57.60
56.00
54.40
5280
51 20
49.60
48 00
46.40
4480
43 20
4160

$1,520 00


Application for a loan is made to the secretary-treas-
urer of the local national farm loan association serving
the county in which the farm offered for security is
located. The association office is open on all business
days. Repayments on loans are made through this office

Loans may be made for terms of five to forty years.
The present contract rate of interest on land bank loans





COOPERATIVE AGRICULTURE IN FLORIDA 83

is 4 per cent. Partial or full repayment is permitted at
any time.
The security required is a farming unit of sufficient
size and earning power to meet expenses, including main-
tenance, insurance, taxes, living costs, and installments
on the loan. Loans are based on the normal value of the
farm and limited to 65 per cent of this value. Loans are
also made on soundly managed farm woodlands and
"forest farms."
Farmer-members of local national farm loan associa-
tions, through which long-term land bank loans are made,
increased their investment in these cooperative credit
associations more than $5.7 million in the year ended
June 30, 1954, Thomas A. Maxwell, Jr., Director of Land
Bank Service of the Farm Credit Administration, an-
nounced recently.
At June 30, 1954, 323,000 farmer-members had in-
vested S75.7 million in stock in these cooperatively owned
and operated associations compared with $70 million a
year ago. Each farmer obtaining a land bank loan
through a local national farm loan association buys stock
in the association equal to 5 percent of his loan.
Each farmer-borrower becomes a member of the as-
sociation and has a vote in determining the management
of the association.
Farmer-members of national farm loan associations
received $3.8 million in dividends on the stock they own
in these local associations during this year, Maxwell
announced.
About 1,100 farm loan associations serve every agri-
cultural county m the country. More than 300,000 farm-
ers through them are using $1 2 billion in farm mortgage
land bank loans.
"Farmers are finding it necessary to cut costs wher-
ever possible. By reducing interest costs these dividends
help to increase net farm income," Maxwell pointed out.






DEPARTMENT OF AGRICULTURE


"Because of these and other savings, farmers m increas-
ing numbers are using the cooperatively owned and oper-
ated farm loan associations. On June 30, 1954, 7,500 more
farmers than a year ago were using credit obtained
through these associations," he added.

SECRETARY-TREASURERS OF NATIONAL FARM LOAN
ASSOCIATIONS IN FLORIDA


Association See'y-Treasurer
Bradrnton W R. May


Gainesville R W Bryan


Lakeland Kirby Me\lahen



Marianna Henry A Williams


Miani Charles B. Long, ir


Orlando II D Freeman


Pensacola E. II. Robinson


Tampa Homer T. Thompson


Waverly E B Howard
Asst Sec.-Treas


Address Telephone
111-113 Walcaid Building 32051
P.O Box 686
Bradenton, Florida
622 North Main Street 5484
P.O. Box 32
Gaineville, Florida
2011 New Tampa Highway 37521
Opposite Pubhlx Varchouse
P.O Box 1090
Lakeland, Florida
301 North Caledonia Street 245
P O. Box 791
Maninna, Florida
16 NW. 26th Avenue 64-5110
P.O Box 665. Riverside Station
hiami 35, Florida
Room 7, Church & Main Bldg 6728
P.O Box 1567
Orlando, Florida
Room 222, Bront Building HEmlock
P.O. Box 908 2-4552
Pensacola, Florida
433 Grand Centhal Ave, 6 Zone 8-1437
P O. Box 3132, 1 ZoIn
Tampa, Florida
Waveily, Florida None


PRODUCTION CREDIT SYSTEM

In the last 20 years, farmers and stockmen through-
out the country have seen the Production Credit System
come into being, grow m service and build financial
strength through the investments of its members and





COOPERATIVE AGRICULTURE IN FLORIDA 85

accumulated earnings. Organized in 1933, PCS has re-
sulted in great strides forward for agriculture and the
total output of crop and livestock products per man has
risen about 70 percent,

The most important accomplishment of PCS has been
its part in helping the farmers meet their expanding
needs for short-term credit Membership has grown to
more than 479.000 because the farmers have found that
these associations are filling a definite need in the financ-
ing of their operations. A total of $11.9 billion has been
borrowed from the system and losses have been low, only
1/7 of one percent of the total cash advanced.

Farmer members owned $92 million of the capital
stock of the local PCS associations as of June 30, 1953,
with Government investments totaling $5.5 million in
the 499 local groups. The Farm Credit Act of 1933 au-
thorized the System and provided supplemental capital
of $120 million, and within 20 years the members were
able to accumulate reserves from net earnings of $86
million.

Production Credit Associations Provide Short-Term
Credit. They are permanent local cooperative organiza-
tions providing dependable short-term credit for farmers
in every agricultural county in the United States. A
farmer-borrower becomes a member and stockholder in
his own credit institution.
Loans Made for Many Purposes. Farmers and stock-
men borrow to finance expenses connected with farm
production, family needs, or refinancing debts. For ex-
ample, money for feed, seed, fertilizer, spray material,
gasoline, tile, cement, lumber, fencing and other supplies;
money to pay for livestock, poultry, machinery, labor,
rent, taxes, interest, and insurance.

Loans are made for any amount from $50.00 up. The
amount a farmer or stockman may borrow depends pri-





DEPARTMENT OF AGRICULTURE


maril upon how much he needs to properly carry on his
business and upon his ability to repay the loan out of the
farm income. Farmers usually give a first lien on crops
and livestock as security for their loans.

Costs Reasonable. The rate of interest charged on
loans is determined by the prevailing cost of money.
Interest is charged only on actual amount borrowed and
for the actual time the money is in use. A nominal fee
is charged to cover the cost of making and servicing the
loan.

Loan Repaid from Sale of Farm Products. Loans are
repaid as the crops, livestock, or livestock products fi-
nanced are sold Dairymen and commercial poultrymen
usually pay their loans in installments out of their regu-
lar checks for milk, cream, or eggs. Loans for crop pro-
duction usually come due during the marketing season.
Livestock loans, and loans which include substantial
amounts for the purchase of machinery, the repayment
of debts, or for other capital purposes, usually come due
at the end of 12 months, and the unpaid balance at that
time can be renewed if satisfactory progress has been
made. In short, repayments are planned to fit the indi-
vidual's operations.

Budgeted Loans. The "budgeted loan" feature saves
both time and money. One loan is made to carry through
the entire production period. It permits the operator to
obtain money when he needs it-pay it back when he
markets his crops or livestock -and pay interest on each
dollar only for the exact number of days he uses it.

All Who Borrow Are Members. Each person who
borrows owns voting stock in the association equal to
approximately $5 for each $100 of his loan. Collectively,
the members own all of the voting stock of the associa-
tion. but each member, regardless of the amount of stock
he owns, has only one vote.






COOPERATIVE AGRICULTURE IN FLORIDA 87


Loan applications are acted upon by the association's
loan committee which is composed of the association
secretary and two members of the board of directors.
Loans are made promptly.

Where to Apply. Applications should be made at the
nearest office of the Production Credit Association serv-
ing your section or to its nearest representative.










es-zsr,^^- ^_ -


A far. mer C t A-
a -.



A farmer's helping hand-a Credit Association





SVU\I\ARY OF PRODI)CTION CREDIT ASSOCIATION OPERATIONS 1953
CoIlInliai District


AND I
ASSOCIATION





FIA RIDAI)

('Crrirl Flon(ia
lr.lldttdll lll

Iini.n*, of S. Fl[.

*C.un ei illllt

.in.r 11111. 1

N.ialllirll

North Filrda


* Sto'kl retired in full J.U


of
I )'Members

31. 1953


CAPITAL STOCK AND
RESERVES
DI)eciiler 31, 1953


ll.I] L.e gal C.)pit.11
xl Ri-M-nr<- S L
!i ly v .'rd O'wnil
dhers Surl~iu* Ily PCC


SI'I,\IARY OF LEI )I\(. OIP'ERlII()N


LOANS MADIAE,
19.53



Niil 6i A-lt..i..i


15T $31
285 21
4119 21

177 7
W01 20
1,77-9 3

550 10(
212 15
1,061 lII


iniary 2, 1951,


$1,216 (X )
3,77,(000
3,77,000


2.13,.S000
2,SS0,0(0

1,0198,000
2.027,000
1.II 0. (1.


Si/e 11

OuI-
l(f :.dliii
Jne ;10.





1.081
3,390
3.03.1
2.031
2.3817


1,.251
3.020
I 1.1S3 |





COOPERATIVE AGRICULTURE IN FLORIDA 89


SECRETARY-TREASURERS OF PRODUCTION CREDIT
ASSOCIATIONS IN FLORIDA


Srcrtal y-Treasirer Address


Bradenton Win. C, GrCnngcr


Cental Fla J P. PIic


F.inniis


Chil, s B. Lung, Jr.


Florida Citrus A II \VWItilOn


C.ues'ille Geraltld E, lHor


Luikeland L 0 Black


l.lllia C. F Morton



Mmniiiello J S. Elin


Northeast J E Dukbs


Nollh FloiLda Xibrc Fow il


1lth i Strt & (6t Avenue
P O Box 71
Bradenton, Florida
Dolive Building, Room 21
108 Nolth Orange Avernu
Oilando, Florida
16 NW 26th Aveni
P.O Box 665, Riverside Stt
Mihan 35, Florida
427 South Ollang Avenue
PO. Bo, 2111
Orlando, Florida
620 North MaiI Street
P.O. Buo 102
Cainicville, Flohuda
150( New Taimpa IIigihwav
P O, Box 1150
Lak land, Floi ida
COieli Chlnton and
Caledoima Sheets
P 0 Box 330
lariainna, Florida
Coult IlHoull Circle
P 0 Box 307
Monticello, Florida
110 Main Strut
P Box 328
Palatka, Florid.
418 South Olh Avenue
P.O. l3o\ 660
Live Oiak Flould.


COLUMBIA BANK FOR COOPERATIVES

Types of Loans-Three distinct classes of loans are
made to farmers' cooperative associations by Banks for
Cooperatives:

Commodity Loans are generally of the shortest term.
seldom over 9 months, and are made on the security of
staple commodities. Each commodity loan is secured by
a first lien on staple farm products or supplies approved


Assol ationi





DEPARTMENT OF AGRICULTURE


by the Cooperative Bank Commissioner. The commodi-
ties must be of sufficient value at the time the loan is
made to afford an adequate margin of security without
the necessity for additional collateral of other kinds.
Operating Capital Loans generally are short-term
loans. They are frequently used to supplement the co-
operative association's own capital funds during times
of peak seasonal activity. There are no legal require-
ments as to the collateral which must be taken to secure
such loans, but in many cases the banks require liens
on real estate, equipment, or other property.
Facility Loans are made for the purpose of financing
or refinancing the acquisition of land, buildings, and
equipment used in the business activities of cooperative
associations. The security usually consists of a first lien
on the land, buildings and equipment. No loan on physi-
cal facilities may be made in excess of 60 per cent of
the appraised value of the security offered and no loan
may be made unless the purchase or lease price is con-
sidered reasonable. The statute limits the term of facility
loans to 20 years, but generally they are made to mature
within ten years.
Interest Rates-The current effective interest rates
on the three classes of loans in continental United States
are as follows:

Type of Loan Interest Rate
(Per Year)
Commodity 23/ per cent
Operating capital 3/ per cent
Facility 41 per cent

The banks for cooperatives charge interest on only
the unpaid principal portion of the loans.
Repayment Provisions-Repayment plans are adapted
to the types and requirements of the enterprises financed.
Commodity loans are generally repaid out of the sales





COOPERATIVE AGRICULTURE IN FLORIDA 91

proceeds of the collateral. Operating capital loans, as a
rule, are repaid at the end of the season. In many in-
stances repayment is accomplished by setting aside a
certain amount on each unit of product handled by the
borrowing association. Facility loans are generally re-
paid in installments over the life of the loans.
Eligibility-The law specifies that to be eligible to
borrow from a bank for cooperatives a cooperative must
be an association in which farmers act together in doing
one or more of the following.
1. Processing, preparing for market, handling, or
marketing farm products.
2 Purchasing, testing, grading, processing, distribut-
ing, or furnishing farm supplies.
3. Furnishing farm business services.
The law further stipulates that, to be eligible, an
association-
1. Must be operated for the mutual benefit of its
members.
2. May not do business with nonmembers in an
amount greater in value than its business with members.
3. Must either provide that no member may have
more than one vote in the affairs of the association, or
must limit its dividends on stock or membership capital
to 8 per cent a year.
Where to Apply-Application forms and information
concerning the services of the banks for cooperatives
may be obtained by writing or visiting the Columbia
Bank for Cooperatives, Columbia, S. C, or by contacting
its Florida Representative, L. R. Toy, P.O. Box 647,
Orlando, Florida.
Credit Standards-A bank for cooperatives, in ex-
tending credit to an association otherwise eligible to
borrow, ascertains that the association's organization,




I71


a


Miami Home Milk, Inc., a Cooperative Dairy, Miami, Florida





COOPERATIVE AGRICULTURE IN FLORIDA 93

management, and business policies are such as to insure
the reasonable safety of the loan.
In determining whether a cooperative meets the
bank's credit standards, the economic need for the or-
ganization is investigated. Factors such as the type and
stability of production m the area and prevailing market
conditions are analyzed.
Investigation is also made to determine that an as-
sociation has the active support of its members and that
they realize the economic need for the cooperative.
The capital of a cooperative association must be ade-
quate if it is to qualify for a loan from a bank for co
operatives. Such a cooperative must have a capital struc-
ture consistent with cooperative principles, designed to
provide ultimately the assets necessary to conduct its
normal operations. In all cases it is expected that pro-
vision will be made for the farmer-members to capitalize
the association.
Finally, the banks for cooperatives require assurance
that the cooperative association which applies for a loan
is operated efficiently. It must be shown that the organi-
zation has competent management, an adequate account-
ing system, an efficient plant, and a well-rounded pro-
gram for development.
Service-Incident to the granting of loans on a sound
business basis, the banks for cooperatives have the op-
portunity of making their services effective in many
ways which are reflected m the sounder operations of
cooperative associations. Improved financial and organi-
zational structures, sounder credit policies, better rec-
ords, more complete audits, and the development of
increased director and member interests are a few of the
results of the activities of the banks for cooperatives.





DEPARTMENT OF AGRICULTURE


CHAPTER VI

Organizing Farmers for Business

The farmer is a manufacturer: The soil, atmosphere,
sunshine and showers are the material to which he ap-
plies his skill, and from nature's laboratory is poured
annually into the channels of trade the materials from
which is fed and clothed the teeming millions of the
earth

The farmer is a business man: The selling of his sur-
plus is the great paramount source of the world's com-
merce and trade. He furnishes 1,000,000,000 tons of food
annually to feed the nations of the earth.

The farmer is a consumer of the materials turned out
by the great urban industries. He interchanges his prod-
ucts with those of other lands till all the nations of earth
are linked together into one stupendous whole.

History is a voice forever sounding across the centu-
ries the interpretations of man. Opinions alter, manners
change, creeds rise and fall, but the law of cause and
effect is written on the tablets of eternity.

To trace the law of cause and effect in the past for
future guidance is a task of civilization. Present condi-
tions are the composite reflection of the operation of
this law. Present tendencies are prophetic, and to prop-
erly interpret is to be forearmed and empowered to direct
the course of history.

The farmer of today is going through a period of
transition, economically, industrially and financially.
How to adjust his methods, habits, and business to the
changing order is one of the difficult problems of the day
which he alone can solve.




COOPERATIVE AGRICULTURE IN FLORIDA 95

The consumer furnishes the demand for production.
He pays for.

(1) Cost of production.

(2) Cost of distribution.
131 Profits of production.

(4) Profits of distribution.

(5) Waste of production.

161 Waste of distribution.

The ability to consume is gauged by the power to
earn. When so much of the consumer's earning power
goes to defray the expense of waste his consuming power
is curtailed and the market he can furnish the producer
is lessened. It behooves both the producer and consumer
to eliminate waste.

The best statistics obtainable inform us that produc-
tion and distribution are about equal factors in establish-
ing the retail price to the ultimate consumer. We know
that this can be greatly cheapened by the producer as-
suming a larger share in the task of distribution along
lines demonstrated to be practical, efficient and economi-
cal by the larger distributing concerns of the leading
nations of the world.

There are two general divisions of business methods:
(1) Individual.
(2) Collective.

The individual method has been followed almost uni-
versally from the very earliest to very recent times. The
development of modern machinery, the corporation and
the trust has eliminated this method in the larger affairs
of the business world. There is no individual distribu-





96 DEPARTMENT OF AGRICULTURE

tion by those who hire for wages. They do not own the
things they produce. The distribution is undertaken by
the firm or company owning the output. The workers in
a shoe factory think not of marketing the shoes they
produce. This is done by the factory owners; not as in-
dividuals either but by distributors under the direction
of the owners.

The same is true of the manufacture of machinery,
furniture, vehicles, mining, etc. A railroad has service to
sell but the ones who perform the individual service on
the road or trains are not the ones who set the price. This




















Young catl business in Gldes h thriin ret.






Young cattle business in Glades has a thriving market.




COOPERATIVE AGRICULTURE IN FLORIDA 97

is the woik of the corporate body endowed by law with
the powers of personal entity.

When farming is done on the bonanza scale the same
process of marketing is followed: The individual worker
sells nothing but his service; the corporation sells for all
the workers and pays a stipulated wage to them.

When the ownership and operations is on the small
scale the business is at a serious disadvantage in compete
ing with the larger business, both in power to handle a
distributing system and in economy of operation. This
brings the farmer of tomorrow face to face with the al-
ternative of collective marketing among the small farm-
ers or gradual retreat before the corporation farmer.
The corporation has superseded the individual in all other
lines Even if corporation farming were outlawed it would
not do away with the need of collective distribution.

We need only to study the cooperative movement, as
it is now progressing on both sides of the sea, to see its
possibilities and understand the details oi its principles
What we do is mostly a matter of choice but the conse-
quences of what we choose to do are meted out to us
with cold precision as destiny swings the pendulum of
time

CORPORATE BUSINESS
There are three methods of conducting corporate
business'

1. The ordinary joint-stock method
2. The co-partneiship or profit-sharing method;
3. The cooperative method.

Let us take them up in the order named and study
the essential qualities of each. The process of securing a
charter is the same in all three kinds.





DEPARTMENT OF AGRICULTURE


The first was originally the only kind organized. This
class has but one purpose: the welfare of the stockholder.
All net profits are considered the rightful property of
the stockholders. The voting power is lodged in the
shares. The shareholders may vote for the board of di-
rectors or other officers. The voting power may belong
exclusively to the holders of common stock or may ex-
tend to the preferred stock. It may have both preferred
and common or all may be common. It may have a vot-
ing board which has all the voting powers. In either
case the profits go to the stockholders. Most of our in-
dustrial corporations are of this kind. The defense of
this type of corporation is that those who assume the
risk of failure and have their money invested are due
whatever returns the business may net.

The second class of corporations-the profit-sharing
-goes one step further and allows a certam percent of
the profits to go to the employes in addition to their
wages, the bonus to be pro rata, based on the salary or
wages of each. This is calculated to tie the employes
to the company and encourage the "spirit of the shop"
till strikes will be a thing of the past This plan is cal-
culated to make the employes feel that they are getting
a square deal and they will have no desire to destroy the
business that gives employment and gives them all that
the profits will justify. This plan is coming in favor with
quite a few large employers.

The third kind of cooperative corporation goes still
one step further and includes the three absolutely essen-
tial factors in the operation of any business: the stock-
holder, the employee and the customer. Neither is more
important than the other and neither should have all the
benefits of success. In the distribution of profits the
cooperative corporation limits the profits that go to the
stockholder just as profits are limited to a bond holder.
After paying expenses the stockholder is a preferred
creditor up to the rate which is established as the rate


98





COOPERATIVE AGRICULTURE IN FLORIDA


of dividend or interest on stock. Next come the em-
ployes and customers. The employes get a certain per-
cent pro rata, based on the earnings of each. The re-
mainder goes back to those furnishing the business. If
it is a mercantile business the refund goes to the pur-
chaser of goods in proportion to value of purchases by
members. Outside customers get the same rebate as
members, which may be credits till they amount to a
share, and then a share may be issued, which may then
make the outside customer a member. If it is a selling
association, commissions are charged to cover expenses
and a reserve; when this has reached a specified standard
the profits are returned to those buying the supplies, to
each according to the profits yielded by his purchases.

In the control, it is usually one man- one vote re-
gardless of the number of shares owned. In a few In-
stances the members vote according to the volume of
business furnished-so much business counting a vote.
The same principles apply whether the articles handled
are eggs, poultry, livestock, dairy products, fruit, vege-
tables, wheat, cotton or what not. Farmers' Exchanges
never deal in futures subject to settlement by forfeiture
of margins.

Below we give m definite form the difference between
the relationship that exists between the stockholders, the
employes, and the public when applied to the ordinary
corporation and that relationship when applied to the
genuinely cooperative corporation.

NON-COOPERATIVE CORPORATIONS

There are five fundamental characteristics of non-
cooperative corporations:
1. Organized and operated for profit to the promoters
and stockholders.
2. Grant each share a vote, or limit all voting to a




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