• TABLE OF CONTENTS
HIDE
 Cover
 Title Page
 Table of Contents
 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: Its Bulletin new ser
Title: Co-operative agriculture in Florida
CITATION THUMBNAILS PAGE IMAGE ZOOMABLE
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00002903/00001
 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
Physical Description: 148 p. : ill., forms ; 23 cm.
Language: English
Creator: Timmons, Doyal Edgar
Florida
Florida -- Dept. of Agriculture
Publisher: Dept. of Agriculture
Place of Publication: Tallahassee Fla
Publication Date: <1960>
Edition: R[ev.]
 Subjects
Subject: Agriculture, Cooperative -- Florida   ( lcsh )
Agriculture, Cooperative -- Law and legislation -- Florida   ( lcsh )
Agriculture, Cooperative -- United States   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
non-fiction   ( marcgt )
 Notes
General Note: First written in 1948 by D.E. Timmons.
General Note: "R-January 1960".
 Record Information
Bibliographic ID: UF00002903
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: aleph - 001962925
oclc - 00009502
notis - AKD9602
lccn - a 68007621 //r89
 Related Items
Other version: Alternate version (PALMM)
PALMM Version

Table of Contents
    Cover
        Cover
    Title Page
        Page 1
        Page 2
    Table of Contents
        Page 3
        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
    Organizing farmers for business
        Page 93
        Page 94
        Page 95
        Page 96
        Page 97
        Page 98
        Page 99
        Page 100
        Page 101
        Page 102
        Page 103
    Federal and state laws governing cooperative corporations
        Page 104
        Page 105
        Page 106
        Page 107
        Page 108
        Page 109
        Page 110
        Page 111
        Page 112
        Page 113
        Page 114
        Page 115
        Page 116
    Lifeblood of a cooperative
        Page 117
        Page 118
        Page 119
        Page 120
        Page 121
    Florida statutes on cooperatives
        Page 122
        Page 123
        Page 124
        Page 125
        Page 126
        Page 127
        Page 128
        Page 129
        Page 130
        Page 131
        Page 132
        Page 133
    List of florida cooperatives
        Page 134
        Page 135
        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
Full Text
Revision of
GRICULTURE
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PARTMENT OF AGRICULTUI I


BULLETIN NO. 92 R January 1960
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)
DEPARTMENT OF AGRICULTURE Tallahassee, Florida NATHAN MAYO, Commissioner




CONTENTS Cooperative Agriculture in Florida
Pager
INTRODUCTION................................................................ 5
CHAPTER IQuestions and Answers ............................ 13
CHAPTER IICooperative Terms .................................. 34
CHAPTER IIIOrganizing and Incorporating .............. 39
CHAPTER IVSuggested Organization Forms .............. 48
CHAPTER V- Agricultural Credit ......................____________ 78
CHAPTER VIOrganizing Farmers for Business............ 93
CHAPTER VII Federal and State Laws ........................ 104
CHAPTER VIIILifcblood of a Cooperative ................ 117
CHAPTER IXFlorida Statutes on Cooperatives .......... 122
CHAPTER XList of Florida Cooperatives .................. 134
This booklet was first written in 194!i L>y D. E. Timmons, former Marketing Economist of the Agricultural Extension Service at the University of Florida. It has recently been revised through the cooperation of Jack Shoemaker, Information Specialist of the Bureau of Immigration, and Dr. E. W. Cake, Marketing Economist at the University of Florida. Much of the information found in the booklet was obtained from the Farm Credit Administration, U. S. Department of Agriculture, County Agents in Florida, The Columbia Bank for Cooperatives, The Attorney General's office of the State of Florida and various members of agricultural cooperatives throughout Florida.




Introduction
There are various kinds of cooperation. We arc concerned 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 arc 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 docs 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 the agricultural commodities which they produce or purchase the farm supply materials and services they need.
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 organization. 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.


As far back as 1913 George W. Russell, Editor of the Irish Homestead magazine, said to the American Commission when meeting in Dublin:
"Economic power means civic power. A dual control of agriculture is intolerable. Farmers must control agriculture by business cooperation. Farmers arc manufacturers 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 dependent 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 citizens were home-owners. Therefore, it is the road to a cataclysm to ignore the welfare of the material supporters of the nation.
Too great a drift from the farm 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 arc cooperating in this country herewith is submitted a report of the Farmer Cooperative Service, U. S. Department of Agriculture.
Current figures of net worths of all cooperative associations, both purchasing and marketing, are available only in the form of a statement of figures indicative of farmers' financial interest in various types of cooperatives. Attention is specifically directed to the fact that in these figures effort has been made to avoid duplication of net worths of overlapping associations.
Estimates by the Farmer Cooperative Service, based on financial statements of the cooperatives available in their files,


show the following amounts as representing farmers' investment interest in marketing and purchasing associations:
Jan. 1. 1940 Jan. 1, 1947
* Marketing Associations.... $256,000,000 Purchasing Associations.... 74,000,000 Service Associations..................................
$513,000,000 296.000,000
Jan. I, 1956
$1,400,000,000 774,000,000 8,900,000
TOTALS ................ $330,000,000 $809,000,000 $2,182,900,000
Statistics of Farmers' Marketing, Purchasing and Service Cooperatives, 1956-57 by Anne Gessner. Farmer Cooperative Service. U. S. Department of Agriculture.
As indicated above, net worth figures from the U. S. Department of Agriculture represent farmers' interests in cooperative associations. Total volume of business for 1957 amounted to a gross value of $13,500,000,000. They represented a farm cooperative movement which has grown to consist of 9,872 marketing, purchasing and service associations, according to the Farmer Cooperative Service. Officials of the U. S. Department of Agriculture say that "Cooperatives are the people's best protection against monopoly control of business."
In addition to its many cooperatives, Florida has developed a unique agency for marketing farm products. It has 19 State Farmers' Markets. These were built cooperatively by the state and the citizens of the communities where they arc located. They furnish places where farmers and buyers meet and trade directly. Farmer cooperatives rent space on several of these markets. Different details arc followed in different parts of the state to meet conditions. The markets arc owned and managed by the state but policy making is left largely to local advisory committees of farmers. Enough charges arc made to meet all overhead expenses, so the markets will not be an incumbrance on the state. All buyers must pay cash or show license that they


arc bonded. There arc no stockholders to draw dividends. These markets handle vegetables, fruits and livestock to the value of more than $48,000,000 annually. Nine livestock pavilions furnish accomodations 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 approximately 30,000 semi-monthly.
FARMER COOPERATIVES IN THE UNITED STATES
Farmer Marketing, Purchasing and Service Associations, 1956-57 Figures from U. S. Department of Agriculture, Farmer Cooperative Service
Number Est. Membership Est. Business
Marketing Cooperatives ............6,267 4,120,515 $10,098,854,000
Purchasing Cooperatives ............3.371 3,489,295 3,144,478,000
............ 234 61,920 234,573,000
TOTALS ................ ............9,872 7,671,730 $13,477,905,000


ESTIMATED BUSINESS IN SPECIFIED COMMODITY AND SERVICE GROUPS OF MARKETING. FARM SUPPLY, AND RELATED SERVICE COOPERATIVES. 1956-57'
Gross business
Cooperatives of all local
Item handling and regional
cooperatives
Number Amount $1,000
Products marketed for patrons
Beans and peas (dry edible) ............ 73 31,660
Cotton and cotton products .............. 607 542,860
Dairy products .................................... 1,917 3,299,003
Fruits and vegetables ........................ 756 1,057,035
Grain, soybeans, soybean
meal and oil .................................... 2,701 2.587.883
Livestock and livestock products .... 601 1,295,424
Nuts ...................................................... 106 130.169
Poultry products ................................ 681 118.885
Rice ...................................................... 61 165.010
Sugar products .................................. 66 286.262
Tobacco .............................................. 37 199.586
Wool and mohair ................................ 284 30,957
Miscellaneous1 .................................... 225 51.090
Total farm products .................... 37.0 1 7 1 0.098.854
Supplies purchased for patrons
Building materials ............................ 1,501 117,161
Containers and packaging
supplies ............................................ 1,044 55,270
Farm machinery and equipment .... 1.843 101.683
Feed .................................................... 4.499 1,078.132
Fertilizer .............................................. 4,143 433,873
Meats and groceries ............................ 971 57.022
Petroleum products ............................ 2,794 845.858
Seed .................................................... 3,791 137,108
Sprays and dusts
(farm chemicals) ................................ 2.334 57.190
Other supplies .................................... 4,529 261,181
Total farm supplies .................... "7.406 3.144.478
Receipts for services
Trucking, cotton ginning, storage, grinding, locker
plants, miscellaneous ...................... "5,334 234.573
Total business .............................................. ;9.872 13.477.905
'Preliminary.
'Includes forest products, fur pells, hay, hops, nursery stock, lung oil, and other farm products not separately classified.
r-Ii realise many cooperatives do more than one type of business, these totals are less than
the number that would he obtained by adding the number of cooperatives handling individual items or performing individual services.


NUMBER OF COOPERATIVES BY STATES Local marketing, purchasing and service associations handling farm supplies during 1956-57
State Marketing Purchasing Service Total
Alabama.......... 18 27 3 48
Arizona........... 10 2 0 12
65 52 1 118
California......... 399 44 6 449
Colorado.......... 71 39 2 112
Connecticut....... 14 15 3 32
Delaware.......... 5 11 0 16
Florida............ 86 17 1 104
Georgia........... 35 43 4 82
63 34 0 97
320 165 36 521
Indiana........... 70 73 3 146
531 154 5 690
Kansas............ 258 102 2 3G2 88
Kentucky......... 38 50 0
48 7 2 57
Maine............ 10 11 0 21
Maryland......... 13 44 6 63
Massachusetts..... 17 20 2 39
Michigan.......... 113 109 16 238
911 348 24 1,283
Mississippi........ 79 59 4 142
Missouri.......... 80 180 1 261
Montana.......... 90 84 1 175
Nebraska.......... 239 162 9 410
4 0 0 4
New Hampshire... 7 2 1 10
New Jersey........ 32 35 3 70
New Mexico....... 29 2 2 33 410
New Y'ork......... 142 263 5
North Carolina..... 32 58 9 99
North Dakota..... 379 138 9 526
Ohio.............. 179 103 10 292
Oklahoma......... 161 35 2 198
88 38 1 127
88 91 5 184
Rhode Island...... O 0 1 3
South Carolina... 14 18 4 36
South Dakota...... 215 103 1 319
56 82 2 140
452 68 20 540
Utah.............. 50 17 1 68
Vermont.......... 16 6 9 31
Virginia........... 63 78 5 146
Washington........ 121 71 1 193
West Virginia...... 49 24 3 76
Wisconsin......... 489 281 9 779
Wyoming.......... 16 6 0 22
United States..... 6.267 3,371 234 9,872
Source: "Statistics of Farmer Cooperatives 1956-57" by Anne L. Gessner, Farmer Cooperative Service, U.S. Dept. of Agr. :


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 dominate 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 independent marketing).
It cannot monopolize supply or prevent all competition.
It cannot succeed if a majority of its members arc disloyal.
It cannot wave a magic wand and remove all the difficulties in production and distribution.
It cannot change sorry culls No. IVs to A grade or No. Is.
It cannot make the weatherman cooperate even if farmers limit the acreage.
THINGS A COOPERATIVE CAN DO It can standardize and help stabilize production.
It can advertise and widen distribution and develop new markets.
It can improve grade, pack and containers.
It can help to improve distribution between existing markets.
It an buy collectively.


It can combat the evils of "contract" farming or "vertical integration" if the co-ops arc allowed to do the contracting and integrating.
It can finance marketing operations.
It can maintain favorable relations with the trade by conforming to the highest ethics in business.
It can hire men who believe in cooperation and fire men who don't.
It can be a democratic instead of an autocratic movement.
It can employ skilled salesmanship as co-op directors and members become enlightened enough to pay the necessary salaries.
It can assemble the commodities and resources of its members.
It can employ expert graders and packers.
It can eliminate competition between local organizations.
It can decrease wasteful practices.
It can more easily secure shipping point inspection.
It can collect claims, improve quality, form pools.
It can help to avoid gluts and famines.
It can make cheaper credit possible.
It can make for cooperative production.
It can make for cooperation in preparation for market.
It 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.


CHAPTER I
Questions and Answers
By D. E. Timmons
(Former Marketing Economist at University of Florida)
1. O. 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 Agricultural Cooperative Act of Florida gives such associations legal status and defines their purposes and powers.
2. O. WHAT ARE SOME OF THE ADVANTAGES FARMERS HAVE FOUND FROM COOPERATIVE ACTION?
A. Farmers use cooperatives to process, store and market their produce and to purchase supplies and services. Cooperative processing plants prepare their crops, livestock, and livestock products for market. Marketing associations are used to obtain for their members the highest possible price for their products, quality considered. The cooperative purchasing or service association, on the other hand, assists its members in obtaining their farm supplies and services at the lowest possible prices. Cooperatives 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 arc 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 consumer, cooperatives encourage consumption and expand markets. Working together for mutual helpfulness makes a better citizenship.


3. O. WHO MAY ORGANIZE A COOPERATIVE
UNDER THE FLORIDA COOPERATIVE MARKETING ACT?
A. Under Florida law three or more persons engaged in the production of any agricultural products, or three or more cooperative associations, may form a non-profit cooperative association.
4. O. WHAT IS THE FIRST STEP THAT SHOULD
BE TAKEN BY A GROUP OF AGRICULTURAL PRODUCERS CONSIDERING THE ORGANIZATION OF A COOPERATIVE?
A. At a meeting of producers, cooperative marketing or purchasing or service should be thoroughly discussed as it applies to the commodities under consideration 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 cooperative 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 depended 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 aggressive 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 incorporating 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 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 articles of incorporation. These articles, after being signed by the incorporating directors and acknowledged before a notary public, are sent to the Secretary of State, Tallahassee, Florida. (Suggested articles of incorporation which should be revised to fit local conditions, may be found in this bulletin.) Issuing and delivering the charter usually requires only a few days, if the articles of incorporation of the association are submitted in proper form.
7. O. IS THERE ANY COST TO OBTAINING A
CHARTER ?
A. A fee of $13 is required by the Secretary of State for filing the Charter, sending a certified copy to the association and making the necessary records. This fee should accompany the articles of incorporation when sent to the Secretary of State at Tallahassee.
8. O. 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 association 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 membership meeting called for that purpose. After approval by members, one copy must be signed by all the incorporators and filed in the minute book of the association.
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 contemplating the organization of new cooperatives and to help them draw up


proposed charters, by-laws, marketing agreements with members, and other necessary- papers. Contact your County Agent to arrange for this service.
9. Q. WHAT OTHER FORMS NEED TO BE PREPARED AND WHEN?
A. Most marketing cooperatives need a marketing agreement or contract to sign with all members. Usually this must be drawn up and signed with members before the cooperative can start doing 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 raising 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 records of all funds received and disbursed should be kept from the very beginning so that they


will Ik: understandable 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 preserving these important records.
12. O. WHO MAY BECOME MEMBERS?
A. An association may admit as members all persons engaged in the production of agricultural products. One cooperative, as an organization, may hold membership in another association.
13. O. WHAT IS REQUIRED OF A MEMBER?
A. The requirements for membership are determined 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 binding the member to handle all or any specified part of certain agricultural products through the association.
14. O. HOW MUCH STOCK MAY ONE MEMBER OWN?
A. The Florida law states: "No stockholder of an association organized under this chapter (meaning Chapter 618, Florida Statutes 1941), except an association organized under this chapter or an association as defined 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?


Fruityord of the Florida Citrus Canners Cooperative in Lake Wales
A. "No member in any association without capital 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."
Hi. Q. MUST STOCK PURCHASES OR MEMBERSHIP 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 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 WAREHOUSES, 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 certificates for this first capital they provide. In most instances, this capital raised to begin with is not enough. Additional capital may be acquired by retaining, or borrowing 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 capital 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 "Revolving Fund Certificates" or "Certificates of Indebtedness."
19. O. WHAT IS MEANT BY "ROTATING CAPITAL"?
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 indebtedness, 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 of stock or certificates of equity. In this way the members 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, arc gradually paid off as the new capital becomes available. This plan has much to recommend 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 cooperatives to send all patrons a statement on a prescribed Bureau form at the end of each fiscal year, who have had $100 or more allocated to them by the cooperative as a result of the years operations. The regulation on this reads as follows: "Patronage Dividends. Any corporation allocating amounts as patronage dividends, rebates, or refunds (whether in cash, merchandise, capital 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 correct 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 corporation (including any cooperative or nonprofit corporation 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 supplement G."
"Effective Date.The amendments made by subsections (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 arc 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. O, is a possible source of credit for Florida cooperative associations. 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, w7ith 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, Columbia, S. C.
23. O. CAN A COOPERATIVE HANDLE PRODUCES
FOR PERSONS WHO ARE NOT MEMBERS?
A. Yes, as long as the nonmember business does not exceed in value the business done with members However, it is


the policy of most cooperatives to keep the amount of nonmem-ber business as low as possible. Regular patrons, if eligible, should become members.
24. O. 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 association 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. O. HOW WOULD THIS PLAN WORK IN THE
CASE OF A COOPERATIVE CITRUS OR VEGETABLE PACKING PLANT?
A. Each producer has deducted from his sales proceeds an amount sufficiently high to cover the expense. At the end of the season, after all expenses, such as salaries, labor, fuel, repairs, depreciation, insurance and taxes, arc 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 payment to members may be withheld for payment of principal and interest installments. For these amounts withheld, each member will receive stock, certificate of equity, or book credit. In this way the capital of the association is built up. From any cash remaining, the directors 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-


bers as a cash patronage dividend, or as cash in redemption of revolving fund certificates or other certificates, based on the amount of business each has done with his association.
26. O. 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 arc returned to members in proportion to their purchases. Price cutting at the time supplies arc delivered disturbs business and has led to disastrous price wars. Selling at regular market price enables associations to return larger patronage refunds.
27. Q. DO COOPERATIVES EXTEND CREDIT TO
MEMBERS?
A. "AH 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 hardship on the patrons. Directors often instruct the manager to extend credit in such cases, but to require payment monthly or 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. O. 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 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. O. 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. O. 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 following this practice, are acting in good American business tradition.
31. O. ARE THERE OTHER BENEFITS THAN PA-
TRONAGE 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 manufacturers 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. O. WHO DETERMINES THE BUSINESS POLI-
CIES OF A COOPERATIVE?
A. The affairs of the association are managed by 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 membership for its consideration and action.
31: (.). WHAT PROTECTION HAVE MEMBERS FROM DISHONEST EMPLOYEES?
A. The Florida law itself (again meaning Chapter (>18, Florida Statutes 1941) docs not specifically and mandatorily require that all officers or employees handling funds or property be adequately bonded. However, no code of by-laws for a cooperative association organized under Florida law would
Largest volume egg marketing cooperative in Florida


be considered at all sufficient unless it contained a mandatory requirement that such officers and employees be adequately bonded. Nearly all associations in Florida have such a provision in their charters.
34. Q. WHAT PROTECTION HAVE MEMBERS
AGAINST INEFFICIENT MANAGEMENT?
A. Managers of cooperatives arc 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 arc 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 unhealthy 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 questions 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 conflicting interests? Has he a near relative engaged 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 membersand beget public confidence? Is he progressive enough to keep the association moving-aheadyet conservative enough to avoid unwise expansion?


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' cooperatives only. In fact, cooperatives pay taxes on the same basis as comparable businesses owned by partnerships 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. Approximately one-half of the farmers' cooperatives in the nation have obtained exemption from federal income tax.
37. Q. WHAT REQUIREMENTS MUST AN ASSOCIA-
TION MEET TO BE EXEMPT FROM FEDERAL INCOME TAXES?
A. Briefly stated, a cooperative must meet the following requirements to qualify for a letter of exemption 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 capital 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.


5. Patronage records must be maintained and permanently preserved.
6. Purchasing or farm supply associations must not sell supplies to nonmembers who arc also non-producers (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 cooperative in principle.
Many of the difficulties between cooperatives and the Bureau of Internal Revenue come from failure to answer correspondence and make prompt reports. 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 EXEMP-
TION FROM FEDERAL INCOME TAXES?
A. While cooperatives meeting these requirements arc eligible for exemption from federal income taxes, this exemption must in all cases be sought. Application 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 FED-
ERAL 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


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-MEMBERS
BE MADE IN THE FORM OF BOOK CREDIT TOWARD THE PURCHASE OF VOTING STOCK OR ACQUIRING MEMBERSHIP?
A. Yes, the Treasury Department has ruled that patronage refunds may be credited to the nonmcmber until he pays for voting stock or pays his membership dues, and >till meet the requirement that the association deal with members and nontnembers alike.
41. O. WHAT IS THE REASON FOR EXEMPTING
COOPERATIVES FROM THE FEDERAL INCOME TAXES PAID BY MANY OTHER CORPORATIONS?
A. A cooperative acts as the agent for the patron. Produce is processed or marketed or supplies are purchased for the member. The association deliberately undcr-pays the farmer for his produce or overcharges him for his supplies and services. The cooperative contracts with its patrons to refund the amounts withheld, after paying the costs of doing business 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 transactions. It is a well established principal of law that an agent, as such, is not liable for tax on funds he temporarily holds in trust for the principal. The difference between 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 sav-


ing possible, while the profit dollar of the commercial enterprise very properly goes to those who invested their capital in the business.
42. Q. IS THE COOPERATIVE MOVEMENT ANTAG-
ONISTIC TO DEMOCRATIC GOVERNMENT?
A. A cooperative is simply a democratic way of doing business and thrives best in democratic soil. In England and Scandanavian countries, where cooperatives have operated for a century, authorities find the cooperatives a steady influence in times of unrest.
43. Q. WHAT IS THE ATTITUDE OE THE FEDERAL
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 cooperatives may be organized and the powers they may exercise. 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 LI. S. Department of Agriculture, to develop facts and information 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 Business of the Iiousc of Representatives contains the following paragraph:
"The enactment and rccnactmcnt of section 101 (12) and (13) of the Internal Revenue Act appears to represent a continuing attitude on the part of the Congress that the maintenance of a sound agricultural economy is necessary" for the prcs-


ervation of the national well-being. It has now become an established national policy co-cxistcnt 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 business 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 houss arrangements; railroads have cooperative provisions for operating union stations and the interchange of cars. Many other examples could be listed.
45. Q. WHAT FUNDAMENTAL RIGHTS DO MEM-
BERS HAVE WHICH COOPERATIVE DIRECTORS 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 arrangements between the members and the cooperative.


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.
."). Hold directors and officers who fail 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. O. DO MANY COOPERATIVES FAIL?
A. Some do, as a matter of course. Some should never have been organized. Others arc launched with insufficient educational work among the members. Taken 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 cooperative failures were as follows:
(a) Difficulties in management high overhead, inadequate accounting, speculation, friction among board members, etc.
(b) Difficulties in membershiplack of necessary information among members, inexperience of farmers in cooperating, promises of big refunds unfulfilled, etc.
(c) Financial difficulties-under-financed by members, 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 organization, failure of members to patronize the business, over-


expansion uf facilities, changes in production of crops and livestock, etc.
(e) Defective legal organizationfailure to incorporate, neglect in observing the terms of the charter, by-laws and contracts, etc.
A honey cooperative in Umatilla.


CHAPTER II Cooperative Terms
The meaning of words and phrases frequently used in connection with cooperatives
ASSOCIATIONThis 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 arc distributed according to patronage. There is a wide variety of services performed by cooperatives, such as packing or canning citrus fruits, handling and marketing vegetables, processing milk, purchasing feed, seed, fertilizer 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 A% or 5%. It represents a "reasonable wage" for capital and not profit on investment. Distribution made on patronage is often called a "dividend" but "refund" is a more accurate term.
MANAGER The executive head of a cooperative, employed 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 and holders


of common stock in associations organized 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 farmers1 cooperative and participate in its control.
MEMBER EQUITIES Is a term often used in financial 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 cooperative and the cost of doing business.
ONE MEMBERONE VOTEIs a rule generally followed in farmers' cooperatives in elections and deciding 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 cooperative. 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 commercial 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 services it purchases for them. The


patronage refund is a means of returning these accumulated under and over payments to the rightful owners. "Refund" describes this operation better than "dividend" or "rebate."
PROFIT Is a term often applied to the net margins accumulated in a cooperative. Non-profit associations naturally do not make profits for themselves, but they make profit for the farmers by increasing the net returns from produce processed and marketed and reducing the net cost of farm supplies purchased.
REVOLVING CAPITALA method of increasing capital by-leaving patronage refunds or retains in the cooperative and issuing evidences of indebtedness to members for a certain number of years or until a certain amount of capital is acquired, after which each years current margins are used in retiring 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 equityeach refer to investment in the cooperative's capital structure. Common stock usually carries the voting-right while other evidences of investment do not.
ANOTHER DEFINITION OF A COOPERATIVE
A cooperative corporation is one in which the members 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.


Clipping from "Grain Producers News"
A COOPERATIVE FAILS
WHEN producers have more confidence in private marketing agents than in the management of their own cooperative.
WHEN its purposes and plans arc 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 acting upon rumors destructive to the organization without first getting an explanation from headquarters.
WHEN the management believes that a cooperative is immune from all the rigid, exacting rules which guide all business undertakings.
WHEN members arc not given the "truth and nothing but the truth" about the operation of their organization.
A COOPERATIVE SUCCEEDS
WHEN members have sufficient confidence in their association 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 circumstances.
WHEN members ignore rumors, always seeking the facts of the business.




CHAPTER III Organizing and Incorporating
The first thing that one, who is called upon to form an agricultural cooperative association, should ascertain 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 organized, 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 efficient basis. Many cooperatives have been organized where the amount of farm products produced in the territory, 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, meetings arc 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 initiating an association may obtain information that will help them in making further plans.


An organization agreement is the means, usually employed 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 organized. Farmers do not like to join associations that figuratively or actually arc 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 concerned arc 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 sec that the purposes of the association 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 amending the articles of incorporation.
One of the important factors that should be considered in organizing a cooperative association is the basis on which the members will be entitled to vote in meetings of the association. Most cooperatives are organized on the basis of one man. one vote. Cooperative leaders regard this method of voting as the


preferable one for cooperative associations.
Associations that arc operating over a wide territory frequently provide for voting by mail on certain questions, and it is believed desirable to include in the organization 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 association 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 association 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 interested 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 marketing 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 clearly specify the terms and conditions under which the association will function with reference to the com-


modity in question. Purchasing associations ordinarily do not enter into contracts with their patrons, although it is believed that there would be advantages in a purchasing 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 association in connection with or on account of business done hy 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 association 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, fn the case of non 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 arc 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 ordinary business corporation. An ordinary business corporation is naturally and properly concerned with the selling of goods to its customers at a profit and then distributing 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 corporation, 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 cooperative, it must strictly account to each of its patrons, members and non members alike, 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 noncoopcrative business enterprise should be


carefully and meticulously spelled out in the organization papers of an association.
The provisions obligating an association positively to account to its patrons in the form of cash or credits, or certificates of some character for all amounts furnished by them over and above their share of the operating and maintenance costs and expenses are entirely consistent 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. Provisions of this character should provide for the refunding 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 nonstock association, the statutes generally provide that the articles of incorporation shall state the basis for determining the proper rights and interests of members. An additional reason for obligating 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 association to obtain exemption from the payment of federal income taxes.
Again, if the articles of incorporation provide, as they frequently do, that the property rights and interests of


all members are equal, an inequitable distribution of assets in liquidation would result unless each of the members did an equal amount of business with the association. Moreover, the cooperative statutes generally require an association to pay a member, who has been expelled 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 obligations, are excluded in determining property rights and interests, it will ordinarily mean that, on the withdrawal of a member, an association 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 interests of a member should be paid to him in due course when such amounts arc revolved. All that is said is that a withdrawing member should not, because he has withdrawn, 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 certificates of some kind would not be assignable by the patrons. 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 revolving 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, and about half of


the agricultural cooperative associations 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 income 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 association 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 excluded 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 association 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 discretion relative to the payment of such refunds, or dividends. 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. Tn affirming this decision the Circuit Court of Appeals said:


"In order to be a true cooperative, however, the decisions 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 articles of incorporation, its by-laws, or some other contract."
Filling machines at a citrus concentrate canners' cooperative in Lake Wales.


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 associations are included, as well as several other forms needed for non-stock association use. These forms however may be adapted to the use of stock associations by contacting an attorney, by contacting the office of the Secretary of State, Tallahassee, or hy securing a copy of the book, "Legal Phases of Cooperative Associations/' by L. S. Hulbert, Bulletin No. 50, Farm Credit Administration of the U. S. Department of Agriculture. Additional 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. A booklet entitled "Organization Forms for Farmer Cooperatives" is available by writing to the Columbia Bank for Cooperatives, P. O. Box 1493, Columbia, S. C.
The fundamental cooperative principles discussed in the text, such as democratic control, the revolving-fund plans of financing, adequate reserves, and equitable distribution of earnings, are reflected in the forms.
Since these forms arc general in character, the services of an attorney7 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.


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 supplies. Ordinarily, such an association would not use a marketing agreement which would bind its members to patronize the association, revolving funds would be obtained by including, in the sales prices, margins for the purpose of accumulating such funds, rather than by making deductions from sales proceeds. Certain other changes should be made also.
APPLICATION FOR CHARTER FOR NON-STOCK COOPERATIVE ASSOCIATION
To the Governor and Secretary of State of the State of Florida:
The following named persons, whose postoffice address is as follows, to-wit:
NAME POSTOFFICE
have proposed to organize a cooperative association under Chapter 618, Florida Statutes, and hereby declare that if granted a charter for such cooperative association that the business of said association shall and will be conducted under the provisions of said Chapter 618. Florida Statutes. That said organizers file herewith a statement setting forth the purposes for which such cooperative association is organized, and declaring the manner and method which will be pursued in the conduct of the business of such cooperative association.
The name of association is to be...................................................................
Purpose of Organizing Association.This Association is to be organized under this Chapter for the purpose of engaging in any cooperative activity in connection with the producing, marketing and selling of agricultural products; or with the growing, harvesting, preserving, drying, processing, canning, packing, grading, storing, warehousing, handling, shipping, and utilizing such products; and the manufacturing and marketing of the byproducts thereof: and in connection with any of the activities mentioned herein, the manufacturing, selling and supplying of machinery, equipment and supplies; and in the financing of any of the above enumerated activities; and in performing or furnishing business and educational services,


on a cooperative basis for those engaged in agriculture as bona fide producers of agricultural products or in any one or more of the activities specified herein.
The principal place of business shall be.......................................................
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.
The rights and interests of the members of this association shall be such as are set forth in the by-laws, copy of which are filed herewith.
The incorporators shall constitute the Board of Directors for a period ol one year from date of incorporation.
Wherefore, it is prayed that Letters Patent be granted to those incorporators in pursuance of the provisions of said Chapter 618. Florida Statutes.
Signed and sealed at................................. this................day of................
A. D. 19............. ............................................................(Seal)
............................................................(Seal)
............................................................(Seal)
............................................................(Seal)
............................................................(Seal)
APPLICATION FOR CHARTER FOR JOINT STOCK COOPERATIVE ASSOCIATION
To the Governor and Secretary of Slate of the State of Florida:
The following named persons, whose postofficc address is as follows, to-wil:
NAME POSTOFF1CE
have proposed to organize a joint stock cooperative association under Chapter 618, Florida Statutes, and hereby declare that if granted a charter for such cooperative association that the business of said association shall and will be conducted under the provisions of said Chapter 618, Florida Statutes.
The name of association is to be.................................................................
Purpose of Organizing Association.This Association is to be organized under this Chapter for the purpose of engaging in any cooperative


activity in connection with the producing, marketing and selling of agricultural products: or with the growing, harvesting, preserving, drying, processing, canning, packing, grading, storing, warehousing, handling, shipping, and utilizing such products: and the manufacturing and marketing of the by-products thereof; and in connection with any of the activities mentioned herein, the manufacturing, selling and supplying of machinery, equipment and supplies; and in the financing of any of the above enumerated activities: and in performing or furnishing business and educational services, on a cooperative basis for those engaged in agriculture as bona fide producers of agricultural products or in any one or more of the activities 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 incorporation.
The capital stock shall be $................................divided into shares of
$............................each.
Number of directors........................................................................................
Wherefore, it is prayed that Letters Patent be granted to those incorporators in pursuance of the provisions of said Chapter 618, Florida Statutes.
Signed and sealed at............................. this....................day of .................
A.D. 19............. ............................................(Seal)
............................................(Seal)
............................................(Seal)
............................................(Seal)
............................................(Seal)
OR(JANIZATIOX AGREEMENT
We, the undersigned, all of whom are residents of the Slate 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 association at............................................, Florida, with (or without) capital stock
under the laws of the State of Florida, and to acquire suitable facilities therefor.
The undersigned, each for himself and collectively for the express benefit of and for the association to be organized, and in consideration of


the premises and of the subscriptions of others to agreements identical herewith, hereby covenant and agree with each other as follows:
(1) The association shall be organized with suitable articles of incorporation and by-laws, by an organization committee consisting of the following persons:
NAME ADDRESS
If any member or members of this Committee shall resign or be unable to act, the remainder of the Committee may elect a successor to fill any such vacancy, or the Committee may increase its membership if deemed necessary.
(2) The organization Committee shall keep a full, true, and detailed account of all receipts and of all expenditures of every kind, and shall have such accounts audited and render a written report thereof to the Hoard of Directors of the Association, when organized, and shall thereupon turn over to the Association any balance remaining in its hands, free of obligation. If an Association is not organized, such unexpended balance shall be prorated among those who contributed to the organization fund.
(3) The amount of the capital stock shall be................................dollars
($............................). divided into................shares of common stock, each
of the par value of........................dollars (.?....................), and....................
shares of preferred stock, each of the par value of............................dollars
($........................). (This provision omitted if Association organized without capital stock).
(4) The undersigned agree to purchase and do hereby subscribe for the amount and kind of capital stock set opposite our respective names, and agree to pay for same as follows:
(Here insert plan of stock payment to be used)
(5) If. on or before..................................... 19............. bona fide subscriptions from acceptable parties to the common and preferred stock of
the Association shall equal the sum of....................dollars ($....................).
and producers of........................................................whose annual production
thereof for sales purposes aggregates at least............................................have
agreed to execute marketing agreements covering their crops of................
............................, the organization Committee shall forthwith proceed to
file the articles of incorporation and to have the organization of the Association completed: subject, however, to the foregoing conditions only, the undersigned agree that their signatures hereto arc irrevocable and they so agree in order to induce others to sign this or similar agreements for their mutual benefit.


(6) Acceptance of this agreement by the Association shall be deemed conclusive upon the mailing of notice to that effect to the undersigned, at our respective addresses listed hereon, and such notice shall be conclusively established by the affidavit of the secretary of the Association. Upon receipt of such notice, the undersigned shall promptly tender to the Association the respective amounts subscribed for common and preferred stock, or the initial payments required thereon.
(7) The undersigned represent that the average annual acreage of ................................harvested and the average quantity of........................produced annually for sales purposes during the past....................years are set
forth opposite our respective names.
(8) The undersigned agree that we will become members of the Association, when formed, and will execute marketing agreements, the terms of which 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 Shares Acres Quantity
SIGNATURE ADDRESS Common Preferred Harvested Sold
ARTICLES OF INCORPORATION
OF....................................................................
(A .Non-stock Corporation)
We. the undersigned, all of whom arc residents and citizens of the State of Florida, engaged in the production of agricultural products, do hereby voluntarily associate ourselves together for the purpose of forming a cooperative association, without capital stock, under the provisions of Chapter 618. Florida Statutes.
ARTICLE I
The name of the association shall be the..................................................
........................................Association.
ARTICLE II
The association is formed for the following purposes:
To acquire and/or bundle and market the......................................... or
any of the products derived therefrom, of its members and to engage in


any activity in connection with the producing, gathering, harvesting, receiving, assembling, handling, grading, standardizing, packing, processing, transporting, storing, financing, advertising, selling, marketing and/or distributing of any................................................delivered by its members or
any of the products derived therefrom and in connection with the purchase or use by and/or for its members of supplies, machinery, and/or equipment, all in any capacity and on any cooperative basis that may be agreed upon.
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 Article 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 promissory 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 therefor.
(c) To acquire, own, and develop any interest in patents, trade-marks, and copyrights connected with or incidental to the business of the association.
(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 arc or hereafter may be in existence.
(h) To have and exercise, in addition to the foregoing, all powers, privileges, and rights conferred on ordinary corporations and cooperative marketing associations by the laws of this State and all powers and rights incidental or conducive to carrying out the purposes for which this association is formed, except such as are inconsistent with the express provisions of the act under 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 or restrict in any manner the general powers which may by law be possessed by this association, all of which are hereby expressly claimed.


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 fust
elected board of directors................(Number) shall be elected for 1 year:
....................(Number) for 2 years: and....................(Number) for 3 years:
and thereafter all directors shall be elected for 3 years. The names and addresses of those who arc to serve as incorporating directors until the first annual meeting of the members or until their successors arc elected and qualified are:
NAME ADDRESS
ARTICLE VII
Section 1. This association shall not have any capital stock, but shall admit applicants to membership upon such uniform conditions as may be prescribed by the 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 shall 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 beat-to the total patronage of all members with the association. New members admitted to membership shall be entitled to share in the property of the association in accordance with the foregoing general rule.
In testimony whereof, we have hereunto set our hands this....................
day of.
19


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 foregoing instrument, and he acknowledged to me, that he executed the same as his free and voluntary act and deed for the uses and purposes therein set forth.
Witness my hand and official seal the day and 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 which it may exercise are set forth in the articles of incorporation of the Association.
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 directors.At the first annual meeting of the members of the association, directors shall be elected to succeed the incorporating 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 directorship for the ensuing term. Insofar as feasible, directors shall be chosen to represent fairly the various producing


sections in the area served by the association. Directors shall hold office until their successors have been elected and qualified and have entered upon the discharge of their duties.
Section 3. Election of officers.The board of directors shall meet
within................(............) days after the first election and within..................
(............) days after each annual election and shall elect by ballot a president, vice president, secretary, treasurer, (or a secretary-treasurer), and such other officers as the board deems necessary, each of whom shall hold office until the election and qualification of his successor unless earlier removed by death, resignation, or for cause. The president and vice president only need be members of the board of directors.
Section 4. Vacancies.Whenever a vacancy occurs in the board of directors, other than from the expiration of a term of office, the remaining directors shall appoint a member to fill the vacancy until the next regular meeting of the members.
Section 5. Board meetings__In addition to the meetings mentioned
above, regular meetings of the board of directors shall be held (monthly, quarterly, or semi-annually) or at such other times and at such places as the board may determine.
Section 6. Special meetings__A special meeting of the board of
directors shall be held whenever called by the president or by a majority of the directors. Any and all business may be transacted at a special meeting. Each call for a special meeting shall be in writing, signed by the person or persons making the same, addressed and delivered to the secretary, and shall state the time and place of such meeting, and the matters to be acted upon.
Section 7. Notice of board meetings.Notice of the regular or special meetings of the directors shall be mailed to each director at least
....................(............) days prior to the time of such meeting unless waiver
notice is signed by a majority of directors.
Section ii. Compensation.The compensation, if any, of the members of the board of directors and of the executive committee, shall be determined by the members of the association at any annual or special meeting of the association: Provided, however, That no member of the board of directors, other than one who is acting as an officer of the association and receiving a regular salary therefor, shall receive compensation or allowance for services rendered the association for more than thirty (30) days in any one year, exclusive of the periods for which compensation is paid for attendance at directors' meetings, or at meetings of the executive committee.
Section 9. Quorum.A majority of the board of directors shall constitute a quorum at any meeting of the board.
ARTICLE III Duties of Directors
Section 1. Management of business.The board of directors shall


have general supervision and control of the business and the affairs of the association and shall make all rules and regulations not inconsistent with law or with these bylaws for the management of the business and guidance of the members, officers, employees, and agents of the association. They shall have installed an accounting system which shall be adequate to the requirements of the business and it shall be their duly to require proper records to be kept of all business transactions.
Section 2. Employment of manager.The board of directors shall have power to employ or to authorize the employment of a manager and such other employees as may be deemed necessary, and to fix their compensation. The manager shall have charge of the business of the association 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 responsibility for the rustody of any of its funds or negotiable instruments to give adequate bonds. Such bonds 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 directors shall provide for the adequate insurance of the property of the association, or property which may be in the possession of the association, or stored by it, 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 each 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 the 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 the cost of. and income from, sales and the gross income or loss from each of the commodities handled during the period; (3) an itemized statement of all expenses for the period under review.
Section 5. Agreements with members__The board of directors shall
have the power to carry out all agreements of the association with its members in every way advantageous to the association representing the members collectively.
Section 6. Depository.The board of directors shall have the power to select one or more banks to act as depositories of the funds of the association and to determine the manner of receiving, depositing, and disbursing the funds of the 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 signing such checks and the form thereof at will.
Section 7. Membership certificates__The association shall admit to
membership only those eligible applicants who have paid the prescribed


fee of........................dollars ($............), and who have met all other conditions for membership prescribed by the board of directors. The board of directors shall cause to be issued appropriate certificates of membership.
ARTICLE IV
Duties of Officers
Section 1. Duties of president..-The president shall (1) preside over all meetings of the association and of the board of directors, (2) call special meetings of the board of directors, (3) perform all acts and duties usually performed by an executive and presiding officer, and (4) sign all membership and revolving-fund certificates, and such other papers of the association as he may he authorized or directed to sign by the board of directors; Provided, however, That the board of directors may authorize any person to sign any or all checks, contracts, and other instruments in writing on behalf of the association. The president shall perform such other duties as may be prescribed by the board of directors.
Section 2. Duties of the vice president,In the absence or disability of the president, the vice president shall perform the duties of the president; Provided, however, That in case of death, resignation, or disability of the president, the board of directors may declare the office vacant and elect his successor.
Section 3. Duties of secretary.The secretary shall keep a complete record of all meetings of the association and of the board of directors and shall have general charge and supervision of the books and records of the association. He shall sign all membership and revolving-fund certificates with the president and such other papers pertaining to the association as he may be authorized or directed to sign by the board of directors. He shall serve all notices required by law and by these bylaws and shall make a full report of all matters and business pertaining to his office to the members at the annual meeting. He shall keep the corporate seal and the book of blank membership and revolving-fund certificates, complete and countersign all certificates issued, and affix the corporate seal to all papers requiring a seal. He shall keep complete membership and revolving-fund certificate records. He shall act as secretary of the executive committee. He shall make all reports required by law and shall perform such other duties as may be required of him by the association or the board of directors. L'pon the election of his successor, the secretary shall turn over to him all books and other property belonging to the association that he may have in his possession.
Section 4. Treasurer.-The treasurer shall perform such duties with respect to the finances of the association as may be prescribed by the board of directors.
Section 5. Other officers.Any other officers elected by the board of directors of the association shall have such duties as may be prescribed by the board.
ARTICLE V Executive Committee
Section 1. Powers and duties.The board of directors may in their


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 following 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. lie shall, so far as practicable, endeavor to conduct the business in such a manner that the members will receive just and fair treatment. The manager shall deposit all money belonging to the association which comes into his possession in the name of the association in a bank selected by tin- 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 expenses of the business in the manner and form prescribed by the board of directors. Upon the appointment of his successor, the manager shall deliver to him all money and property belonging to the association which he has in his possession or over which he has control.
Section 2. Duty to account__The manager shall be required to maintain his records and accounts in such a manner that the true and correct condition of the business may be ascertained therefrom at any time. He 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 kind 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 bv the board of directors.
ARTICLE VII
Members .and Patrons
Section 1. Qualifications of members__Any person, firm, partnership,
corporation, or association, including both landlords and tenants in share tenancies, who is a bona fide producer of agricultural products in the territory in which the association is engaged in business may become a member of the association by paying the membership fees, and meeting such other conditions as may be prescribed by the board of directors. The membership certificate shall be in 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


board of directors shall find that a member has ceased to be a producer
or that such member has 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 membership 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 shall be entitled only to payment or credit for the equitable appraised value of his property rights and interests in the association, as conclusively determined by the board of directors. 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. Xonmembcr patrons.-The association may transact any authorized business with nonmembers provided that the total value of business transacted by the association with nonmembers in any fiscal year shall not exceed the total value of business transacted with its members. Xonmembcr 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 allocation of a nonmember patron equal to the membership fee, if such patron is eligible for membership in the association and is approved by the board of directors.
ARTICLE VIII Revolving Capital
Section 1. Revolving-fund certificates.The association is authorized to issue and sell to members and others revolving-fund certificates, of a character hereafter described, for the purpose of raising capital funds with which to engage in business, and in order to further the cooperative character of the association and to provide a means whereby its current and active patrons will finance the association thereafter. The association is authorized to issue revolving-fund certificates evidencing deductions made pursuant to agreements and /or patronage dividends, which are, in whole or in part, so paid, at the end of each fiscal year. Funds arising from 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 deemed necessary by the board of directors from time to time and for revolving such capital, and such fund or funds derived from any other source shall, when, in the opinion of the board of directors of the association such funds are not necessary for the proper financing of the operations of the association, be devoted to the refunding of the oldest outstanding series of revolving-fund certificates. Such certificates may contain such other terms and conditions not inconsistent herewith as may be prescribed from time to time by the board of directors of the association. Such certificates shall be issued in annual scries, each certificate in each series upon its face being identified by the year in which it is issued; and each series shall be retired fully or on a pro rata basis, only at the discretion of the board of directors of the association, in the order of issuance by years as funds arc available for that purpose. Notwithstanding any of the foregoing provisions, the board of directors shall have the power, from time to time


and at any time, to pay off or retire or secure a release or satisfaction of any revolving-fund certificate compromising or settling a dispute between the bolder thereof and the association.
Such revolving-fund certificates shall bear such rates of interest and only such rates of interest (in no event to exceed 6 percent per annum) as the board of directors of the association in its sole discretion may from time to time prescribe without any obligation on the part of the board of directors and the association to pay interest on such certificates. A record of all holders of revolving-fund certificates shall be kept and maintained by the association and such certificates shall be transferable only on the books of the association and no transfer of certificates shall be binding upon the association unless so transferred. All other debts of the association, both secured and unsecured, shall be entitled to priority over all outstanding revolving fund certificates. Upon the dissolution or winding up of the association in any manner, after the payment of all other debts, all outstanding revolving-fund certificates shall be retired in full or on a pro rata basis without priority before any liquidation dividends arc declared on membership certificates or on account of property rights and interests.
Section 2. Reserves.The books and records of the association shall be kept in such a manner, by years, that the amount carried to reserves, which have the status of capital, accruing from patronage of each patron of the association may be ascertained at any time. Whenever in a given year the operation of the association results in a net loss, such loss, to the extent that reserves are available, shall be charged against the same and they shall thereby be reduced accordingly. The board of directors shall prescribe the basis on which the reserve contributions of patrons by years shall be reduced on account of any such loss, so that it will be borne by the patrons on as equitable a basis as the board of directors find practicable. Whenever in the 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 years, the oldest unexhausted reserve contributions of patrons. Upon the dissolution or winding up of the association in any manner, after the payment of all debts, including revolving-fund certificates, any balance remaining over shall be distributed ratably in the following order and manner in the liquidation of (a) unexhausted reserve contributions, (b) membership certificates, and (c) property rights and interests.
ARTICLE IX Meetings
Section 1. Fiscal year.The fiscal year of the association shall commence on the first day of....................and end on the last day of.....................
Section 2. Annual meeting.The annual meeting of the members of
the association shall be held in the town of........................................, Slate
of Florida, at 10:00 o'clock A. M., on the................day of............................
of each year, or on any date which the board of directors shall designate at least 30 days in advance of the date specified above.


Section 3. Special meetings.Special meetings of the members of the association may be called at any time by order of the board of directors, and shall be called at any time by the president upon the written
request at least................(................) percent of the members, provided,
however, that in no case shall the required number of signatures of members to such a request be less than........................(................I.Thc request
shall state the time, place, and object of the meeting.
Section 4. Notice of meetings.Written or printed notice of every regular or special meeting of members shall be prepared and mailed to
the last known post office address of each member not less than................
(................)days before such meeting. Such notice shall state the object or
objects thereof and the time and place of meeting. No business shall be transacted at special meetings other than that referred to in the call.
Section 5. Absentee voting__Voting by proxy shall not be permitted
but absent members may vote on specific questions other than the removal of directors by ballots transmitted to the secretary by mail, and such ballots shall be counted only in the meeting at the time in which such vote is taken, provided that all members, pursuant to action by the board of directors, have been mailed an exact copy of the motion or resolution upon which such vote is taken, and a copy of the same is forwarded with and atached to the vote of the member voting.
Section 6. Quorum.....................(............) percent of the members
shall constitute a quorum for the transaction of business at any meeting of the association except for the transaction of business concerning which a different quorum is specifically provided by law or by these bylaws; but in the event a quorum is not present such meeting may be adjourned from time to time by those present until a quorum is obtained.
Section 7. Order of business__The order of business at the annual
meeting shall be:
(1) Roll call.
(2) Proof of due notice of meeting.
(3) Reading and disposal of minutes.
(4) Annual reports of officers and commitees.
(5) Election of directors.
(6) Unfinished business.
(7) New- business.
(8) Adjournment.
ARTICLE X Allocation and Distribution of Income
Section 1. Allocation of income.- At the end of each fiscal year, the board of directors shall allocate the net income of the association, as shown on the annual report of the auditors, in the following order and manner:
(a) General reserve.An amount of the net income equal to not less
than....................(............) percent thereof shall be set aside for the purpose
of establishing, building up, and maintaining a general reserve of not less


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 be set aside for the payment of interest, if any, on outstanding revolving-fund certificates, as determined by the board of directors.
(c) Patronage allocation.The net income remaining after provision for reserves and interest, if any. on revolving-fund certificates shall be allocated to each patron in proportion to his patronage of the association during the fiscal year. In computing patronage allocations, the board 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 allocations determined in the manner provided in section I (c) hereof shall b:: distributed in the following order and manner:
(a) Membership fees of eligible nonmembers.From the amount allocated to each nonmember patron eligible for membership in the association and approved by the board of directors therefor 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 complied 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 these bylaws shall be issued to the members and patrons therefor.
(c) Cash distribution____The remaining balance of the patronage allocation of each patron may then be distributed to him 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 indebtedness of such patron that may be due the association.
ARTICLE XI Miscellaneous Provisions
Section 1. Bylaws printed.After adoption these bylaws, preceded by the articles of incorporation, shall be mimeographed and a copy thereof shall be delivered to each member and to each person who may become 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.


ARTICLE XII Amendments
If notice of the character of the amendment proposed has been given in the notice of a meeting, these bylaws may be altered or amended at any regular or special meeting of the members by the affirmative vote of ....................or more of the members present or voting by mail.
We, the undersigned, being all the incorporators of..................................,
do hereby assent to the foregoing bylaws and do adopt the same as the bylaws of said association: and in witness whereof, we have hereunto subscribed out names, this........................day of...................................., 19.........
MEM BERSHIP (!ERTIFICA'I'E
Xo............
............................................................ Association
This is to certify that................................................is a member of the
..............................................................Association, and as such is entitled
to the rights and privileges of membership and is likewise bound by and subject to the obligations and conditions pertaining thereto, all as set forth in the articles of incorporation, bylaws and marketing agreement, now or hereafter in effect. Said member has paitl a membership fee of $...................
This certificate and the membership and rights represented hereby arc nontransferable.
In witness whereof, the......................................................Association has
caused this certificate to be signed by its duly authorized officers and its
corporate seal to be hereto affixed this....................day of............................,
19
(SEAL)
Bv........................................................
President
Attest:
Bv..
Secretary
(It is recommended that these be mimeographed.)


MARKETING AGREEMENT
This agreement between................................................. hereinafter called
...........................and the undersigned, hereinafter called the "Producer."
Witnessed!:
(1) ..........................buys and the Producer sells to............................all
hereinafter referred to as "products," produced by or for him or acquired by him as landlord or lessor and the Producer agrees to deliver all such product at such place or places as........................may direct. This agreement is intended by the parties to pass an absolute title to all such products 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 may become members.
(2) ..............................agrees to make such 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 producers, and to pay over ratably the net amount received therefrom as settlement 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, gathering, harvesting, receiving, assembling, transporting, handling, grading, packing, inspecting, processing, financing, advertising, storing, insuring, selling, 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 directors from time 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 from time to time shall be evidenced by revolving-fund certificates distributed to the Producer by
....................................................., within the discretion of its board of
directors, is authorized to establish, from time 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 earliest reasonable time after harvesting at such places as the Association may direct, and with such identification as may be prescribed by the Association.


(5) Any loss that........................may suffer on account of inferior or
damaged condition of products at delivery shall he charged against the Producer, individually.
(6) The Producer further agrees that..........................and/or the central marketing agency shall have the power to borrow money for any
purpose of............................and/or the central marketing agency on the
security of the products delivered to............................and/or the products
derived therefrom and/or on any evidence of such products or byproducts or cash or accounts arising from the sale thereof and to give a lien cither
legal or equitable thereon, as the absolute owner thereof; and........................
and/or the central marketing agency may grade, pool, or commingle such products and/or products derived therefrom or any part thereof with other products of like color, grade, size, quality and variety; and shall exercise all other rights of ownership without limitation.
(7) In as much as the remedy at law would be inadequate and in as much as it would be impracticable and extremely difficult to determine the
actual damage resulting to................................should the Producer fail to
deliver the products covered hereby, regardless of the cause of such failure, the Producer hereby agrees to pay to the Association for all products delivered or disposed of, by or for him, other than in accordance with
the terms hereof, the sum of....................cents per....................on all products,
as liquidated damages for the breach of this agreement; all parties agreeing that this agreement is one of a series dependent for its true value upon the adherence of each and all of the contracting parties to each and all of the said agreements, but the cancellation of any other similar contract or the failure of any of the parties thereto to comply therewith shall not affect the validity of this contract.
(8) If....................................brings any action whatsoever by reason of a
breach 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 or caused by the litigation, and reasonable, attorney fees expended or incurred by it in such proceedings and all such costs and expenses shall be included in the judgment.
(9) It is agreed that the articles of incorporation and the bylaws, now or hereafter in effect, and this agreement constitute the entire agreement between................................and the Producer.
(10) ........................may enter into agreements with other producers
differing in terms from those contained herein but consistent with the
bylaws of............................without invalidating this agreement, provided
that the Producer at his request may sign a similar agreement as a substitute for this agreement. By signing this agreement the Producer applies
for membership in........................and the signing hereof by........................
shall constitute an acceptance thereof.
(11) ............................or the central agency shall establish or adopt
standards for such products and shall make rules and regulations governing the handling and shipping thereof and shall provide inspectors or


gruders to grade the products; and die 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 delivered hereunder, and if any such products arc 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 terminate it in any year on the last day of the anniversary month in which this 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 prior 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 lien 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 products before any payment is made to the Producer hereunder.
(14) The parties agree that there are no oral or other conditions, promises, covenants, representations or inducements in addition to or at variance 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.F.D. or Street No.)
(Town)
County.
State
Accepted this
day of.
19.............
Association.
By
Its
REVOLVING-FUND CERTIFICATE
Association
Series 19
No
(Date)
Amount, $ This certifies that.....
(Name)


of.
is entitled to receive the amount of
dollars from the
(Name of association)
on account of capital furnished and/or patronage dividends or deductions for revolving-fund purposes as provided in the bylaws thereof, subject to the following conditions:
1. This and other revolving-fund certificates of the same series arc rctirable in the sole discretion of the board of directors, cither fully or on a pro rata basis, but certificates issued in prior years shall be entitled to priority in retirement except in liquidation.
2. The amount stated in this certificate shall bear only such rate of interest, if any, as the board of directors may fix, from time to time, in no event to exceed six percent per annum.
3. This certificate is transferable only on the books of the association.
4. This and other certificates shall be junior and subordinate to all other debts of the association, both secured and unsecured. Upon the winding up or liquidation of the association in any manner, after full payment to all its other creditors, all revolving-fund certificates shall then be retired in full or on a pro rata basis, without priority.
In witness whereof the..................................................................................
has caused this certificate to be signed by its duly authorized officers and
(It is recommended that these be printed on regular stock forms with decorative design edges, etc.)
(name of association)
to be scaled with its seal, this.
day of.
19.
Incorporated in
No......................
Shares
(Name of Association)
(Address)
Common Stock.
Par Value .$
Authorized Capital .$
;......................Shares.
..................per share.
Preferred Stock
Par Value $
Per Share.
Shares.


This certifies that............................................is the owner of....................
shares of common stock, each of a par value of......................................dollars
($................) in the..............................................................................................,
(name of association)
........................................................................, transferable on the books of the
(town and state)
association on the surrender of this certificate, properly endorsed, by the holder thereof, or by an attorney properly authorized, which stock is subject to the following conditions:
(here insert material in Section 1 (a) of Article IV of the by-laws for a stock association.)
Such common stock is subject to the preference given to preferred stock in the articles of incorporation of the association, and the holder hereof accepts the same subject to such preference, and it is also subject to all the other terms and conditions of the articles of incorporation and the by-laws now in effect or hereafter adopted.
The Florida Tropical Fruit Cooperative in Goulds


In witness whereof the said association has caused this certificate to be signed by its duly authorized officers and its corporate seal to be hereunto affixed.
This............................day of.................................., 19...
(President)
ATTEST:
(Secretary)
PREFERRED STOCK CERTIFICATE
Incorporated in......................................................................................................
No................................................. ......................................Shares
(Name of Association)
(Address)
Authorized Capital..........................................
Common Stock............................Shares Preferred Stock....................Shares
Par Value .$........................Per Share Par Value S....................Per Share
This certifies that............................................................................................
is the owner of..............................shares of preferred stock, each with a par
value of................................dollars ($............), in the....................................
(Name of Association)
.................................................., transferable on the books of the association
(Town and State)
on the surrender of this certificate, properly endorsed, by the holder thereof, or by attorney properly authorized, which stock is subject to the following conditions:
(here insert material in Section 1 (b) of Article IV of the by-laws for a stock association) In witness whereof the said association has caused this certificate to be signed by its duly authorized officers and its corporate seal to be hereunto affixed.
This............................day of............................................................, 19.........
President
ATTEST:
Secretary


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 Directors, the undersigned hereby sells, assigns, and transfers unto........................
...................................................., ......................shares of common (preferred)
stock represented by the within certificate, and does hereby irrevocably
constitute and appoint..................................................so 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 alteration 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 meeting of such members at..................o'clock................(a.m. or p.m.), on the
....................day of............................, 19........, at................................................
(place of meeting)
in...................................................................., for the purpose of adopting by-
(town and state)
laws for the government of the association and transacting any other business that may properly come before the meeting.
Witness our signatures this........................day of........................, 19.........
WAIVER OF NOTICE OF FIRST MEETING OF BOARD OF DIRECTORS
We, the undersigned, being all the directors of.


(name of association) (town and state) hereby waive notice of a meeting of the directors and consent to the holding of a meeting of such directors at................................o'clock......................
(a.m. or p.m.)
on............................the..........................dav of......................................, 19........,
(day)
at.............................................................. in..........................................................
(place of meeting) (town and state)
for electing the officers of the association to serve during the ensuing year, adopting the form of marketing agreement, and transacting any other business that may properly come before said meeting.
Witness our signatures this....................day of.........................., 19.........
MINUTES OF FIRST MEETING OF MEMBERS
The first meeting of the members of..........................................................
(name of association)
was held at........................o'clock........................, on the............................day
(a.m. or p.m.)
of...................................., 19........, at....................................................................
(place of meeting)
in............................................................. The chair called for proof of notice
(town and state)
of the meeting, whereupon..............................presented a waiver of notice
and consent to hold the meeting signed by all the members of the association, 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 ascertained that all the members of the association were present. The chair reported that the articles of incorporation of the association were filed
on the..........................day of...................................., 19........, at........................
o'clock.........................., in the office of the Secretary of State of Florida and
(a.m. or p.m.)
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 in the minute book. (Sec page............). A draft of proposed by-laws
for the government of the association was presented by................................


and was read to the meeting and discussed section by section and as a whole, and the proposed by-laws were unanimously adopted. Each member affixed his signature to the by-laws and the secretary was instructed to spread the by-laws on the minutes of this meeting.
(here insert record of any other business transacted)
There being no further business to come before the meeting, on motion duly made, seconded and unanimously adopted, the meeting was adjourned.
Temporary Chairman
Temporary Secretary
MINUTES OF FIRST MEETING OF BOARD OF DIRECTORS
The first meeting of the board of directors of the...................................
(name of association)
..........................................., was held at........................o'clock.......................
(town and state) (a.m. or p.m.)
.................., ...................................., 19........, at...........................................
(day) (place of meeting)
(town and state)
Upon convening,..........................................was elected temporary chairman and..........................................temporary secretary of the meeting and
each assumed his office.
The chair called for proof of notice of the meeting, whereupon............
........................................presented a waiver of notice and consent to hold
the meeting, signed by all the directors of the association, which waiver and consent was in the following form:
(here copy waiver and consent form)
Upon roll call of the directors of the Association, the following answered present:
(record the names of all directors present)
The chair ruled that proper and legal notice of the meeting had been given and that a quorum was present and announced that the meeting was open to transact business.
The chair stated that the meeting was called for the purpose of electing officers of the Association for the ensuing year and transacting any other business that might properly come before the meeting.


Upon motion duly made, seconded and carried, the following officers were unanimously elected to serve at the discretion of the board until the time of the first regular meeting of the board to be held as soon as practicable 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 resolution was adopted:
Resolved, that the Executive Committee be charged with the following specific powers and duties:
(state here powers and duties 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 meeting and each in form as follows:
(here insert form of membership certificate)
Upon motion duly made and seconded, the following resolution was adopted:
Resolved that the president and secretary be, and they are hereby, authorized to have printed a sufficient number of copies of the articles of incorporation 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 Association.
Upon motion duly made and seconded, the following resolution was adopted:
Resolved that the marketing agreement, in form as submitted to this meeting, a copy of which appears hereafter, is hereby approved:
(here 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 agreements tendered the association, appearing on the list submitted by the secretary, be accepted, and that the president and secretary be, and they are hereby directed to carry out the terms and conditions of such membership applications and to execute all marketing agreements for and on behalf of the association.


Upon motion duly made and seconded the following resolution was adopted:
Resolved that the..................................bank be selected as a depositary
for the funds of the association.
Upon motion duly made and seconded, the following resolution was adopted:
Resolved that all checks drawn upon the..................................bank, for
withdrawal of funds of the association on deposit therewith, be signed by the treasurer (manager).
Upon motion duly made and seconded the following resolution was adopted:
Resolved that the treasurer (manager) is hereby authorized to receive all funds paid to the association, endorse all checks and other media of
exchange, and deposit the same to the account of the association in........
......................................bank.
Upon motion duly made and seconded, the following resolution was adopted:
Resolved that the Executive Committee be, and they are hereby, authorized to determine the amount of the bond or bonds which the bylaws specify shall be required of all officers, agents, and employees charged by the association with responsibility for the custody of any of its funds or property, and to see that the bonds, as required, are executed and presented for the approval of the Board of Directors.
(Similar resolutions should be adopted, providing for the insurance of the property of the association and any other additional business transacted by the Board of Directors should be recorded here.)
There being no further business to come before the meeting, on motion duly made, seconded and unanimously adopted, the meeting adjourned.
Chairman.


Florida Citrus Exchange, Tampa, Florida


CHAPTER V Agricultural Credit
Credit is available to farmers and their cooperatives through such sources as banks, supply merchants, individuals, National Farm Loan Associations, Production Credit Associations, Banks for Cooperatives and the Farmers Home .Administration.
THE FARM CREDIT ADMINISTRATION
Federal Land Bank 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 exception 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 banks and associations in the Farm Credit Administration do not seek to monopolize the farm credit field by any means.
As of January 1, 1959, the amount of the total farm mortgage debt of the United States held by the Federal Land Banks was 18.4 per cent.
Of the total non-real estate debt held bv institutional lenders as of December 31, 1958, Production Credit Associations held 19.3 per cent.
No units of the Farm Credit Administration have been set up at a time when there was not distress in the country, at least so far as farming and ranching are concerned. The cooperative


system grew out of distinct needs, not needs for the moment "nut 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 important factors, but they did not cause all the troubles. Turn your mind back to the days before the Land Bank System was started, some 42 years ago, and you will recall 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 interest rates themselves. Farm mortgages were all written 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 marketing, purchasing, and service associations.
Farmers' credit cooperatives arc very much like other cooperatives. They, too, are under fire, and it may be just as hot. The attacks on cooperatives in general arc 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 business they do, since such is only a small proportion of the total. It cannot be because of the fact that some of


the units of the Farm Credit Administration still have Government capital, because that capital is intact. As a matter 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 Government money or that they make Government guaranteed loans, because our funds come mainly from the sale of bonds and debentures which are not guaranteed
O
by the Government either as to principal or interest. They arc backed by the notes and mortgages of the thousands of farmers who borrow from these cooperative organizations plus the strength of the cooperative credit units themselves.
It would seem, therefore, that those who arc 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, 1959 farmers and farmers' cooperatives in the United States owned $317 million in the capital stock of the national farm loan associations, production credit associations, and banks for cooperatives. Fanners had an investment of $132.5 million in the capital stock of national farm loan associations and $145.5 million in that of the production credit associations. Farmers' cooperatives had invested $38.25 million in the capital stock of the banks for cooperatives.
As of this same period, 2,689 farmers' cooperatives had


loans outstanding from the 13 banks for cooperatives. These include federated cooperatives so the number of cooperatives served would be much higher. They had $526 million in loans. In Florida, 21 cooperatives had loans of $11.5 million outstanding from the Columbia Bank for Cooperatives on June 30, 1959. In that fiscal year, the Columbia Bank made 39 loans for $29 million to Florida Co-ops.
Farmers in the United States obtained 266,907 loans totaling $1.2 billion from the 498 production credit associations 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 arc 6,588 farmer-members of PCA's in 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.
FEDERAL LAND BANK SYSTEM
The Federal Land Bank System consists of 12 Federal Land Banks situated throughout the United States and approximately 850 Federal Land Bank Associations (known as National Farm Loan Associations prior to December 31, 1959) that provide long-term farm mortgage credit to persons, partnerships and farming corporations that are engaged in farming operations. The Federal Land Bank of Columbia, one of the twelve, serves the states of Georgia, Florida, North and South Carolina, and makes loans through fifty association offices located in this four-state area. Application is made to the local Federal Land Bank Association serving the county in which the land offered as security is located.


PURPOSE OF LOANS
Loans may be used for any agricultural purpose or needs related to the farmer, his family, or his farm, including purchase and improvement of land for agricultural uses and forestry development, purchase of farm equipment and livestock, to erect or repair farm buildings, to pay indebtedness both secured and unsecured, and provide capital funds for farm operations.
LOAN TERMS
Loans may be made for periods of 5 to 40 years but arc generally made for terms ranging from 20 to 30 years. Loan installments may be paid annually or semi-annually on dates selected by the borrower. Any amount may be paid in advance at any time or the loan paid in full before maturity without penalty, interest is charged only for the time the borrower has the use of the. money.
LOAN STANDARDS AND POLICY
Loans arc based on the normal value of farms, citrus groves and tinibcrland, with normal earning power being a principal factor in determining such value. Normal value is determined by appraisal and the loan may not exceed 65c/'( of the appraised value. Small well located and improved part-time farms are eligible for loans where the owner has income from other dependable sources.
FEDERAL LAND BANK ASSOCIATIONS
Each farmer obtaining a land bank loan through a local Federal land bank association buys stock in the association equal to 5 percent of his loan, becomes a member of the association and has a vote in the management (election of directors) of the association. Farmer-members of the 850 Federal land bank associations, which serve every agricultural county in the country, and through which all land bank loans are made, increased their investment in stock in these cooperative credit associations more than $15.5 million in the past


year and on June 30, 1959 owned $132.5 million in stock. Total assets of the associations on this date were approximately $225 million.
Farmers obtained 54,663 loans for a gross amount of $574 million from the 12 Federal Land Banks during the year ended June 30, 1959. On that date farmers had 374,252 loans outstanding with balances totaling nearly $2.3 billion, the largest amount outstanding in the history of the land bank system. The 12 Federal Land Banks" portion of the total farm mortgage debt stood at 18.4 percent on January 1, 1959.
For further information about Federal Land Bank loans in the State of Florida, contact the manager of one of the following eight Federal land bank association offices:
Association Manager
Address
Telephone
Bradenton W. R. May
Gainesville R. W. Bryan
Lakeland E. Roland Fields
Maria nna
Miami
Orlando
111-113 Walcaid Building 3-2051
P.O. Box 686 Bradenton, Florida
622 North Main Street 1'R 6-5484 P.O. Box 32 Gainesville, Florida
2011 New Tampa Highway ML" 2-0853 P.O. Box 1090 Lakeland, Florida
Henry A. Williams 301 North Caledonia Street HU 2-3121 P.O. Box 791 Marianna. Florida
Charles B. Long, Jr.
II. D. Freeman
16 N.W. 26th Avenue NE 1-5110 P.O. Box 665, Riverside Station Miami 35, Florida
Room 7, Church & Main Bldg.
P.O. Box 1567 GA 2-6728
Orlando, Florida
Pensacola Neil P. Johnson
Room 222, Brent Building P.O. Box 908 Pensacola, Florida
Tampa Homer T. Thompson 1314 E. Hillsborough Ave.
Tampa, Florida
IIFmlock 2-4552
35-5461


PRODUCTION CREDIT SYSTEM
In the last 25 years, farmers and stockmen throughout the country have seen the Production Credit System come into being, grow in service and build financial strength through the investments of its members and accumulated earnings. Organized in 1933, Production credit has resulted in great strides forward for agriculture and the total output of crop and livestock products per man has risen about 70 per cent.
The most important accomplishment of Production credit has been its part in helping the farmers meet their expanding needs for short-term credit. Membership has grown to more than 492,000 because the farmers have found that these associations are filling a definite need in the financing of their operations. A total of SI6.1 billion has been borrowed from the system and losses have been low, only .09 percent of the total cash advanced.
Farmer members owned $132 million of the capital stock of the local Production credit associations as of December 31, 1958, with Government investments totaling $4 million in the 496 local groups. The Farm Credit Act of 1933 authorized the System and provided supplemental capital of $120 million, and within 20 years the members were able to accumulate reserves from net earnings of $110 million.
Production Credit Associations Provide Short and Intermediate Term Credit. They are permanent local cooperative organizations providing dependable short and intermediate 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 stockmen borrow to finance expenses connected with farm production, family needs, or refinancing debts. For example, 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 arc made for any amount from $50.00 up. The amount a farmer or stockman may borrow depends primarily 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.
Intermediate-Term Credit. Loans for capital purposes can be made by production credit associations with maturities up to five years. Examples of loan purposes eligible for this type of financing are the purchase of tractors, farm machinery, automobiles, trucks, water systems, home improvements, farm buildings, irrigation equipment, and other capital investments.
Cost 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 financed are sold. Dairymen and commercial poultrymcn usually pay their loans in installments out of their regular checks for milk, cream, or eggs. Loans for crop production usually come due during the marketing season. Livestock loans usually come due at the end of 12 months, and the unpaid balance at that time can be renewed or refinanced if the loan contract has been complied with and if satisfactory progress has been made. In short, repayments are planned to fit the individual'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 itpay it back when he markets his crops or livestockand 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 S5 for each $100 of his loan. Collectively, the members own all of the voting stock of the association, but each member, regardless of the amount of stock he owns, has only one vote.
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 arc made promptly.
Where to Apply. Applications should be made at the nearest office,of the Production Credit Association serving your section or to its nearest representative.
A farmer's helping handa Credit Association


summary of production credit association oper/vtions-1958
c
number of capital STOCK Summary of Lending C perations
association accumulated loans made i ll'itlC
members f.'iniiiM f lukl'iiK inn
12-151-58 O ii L' owned bv u.s. cov't. lull Wily number amount viiiMiiiuiwi;
bradenton.................... 1 171E) 55595(1 35-1 1)311)1)011 459600g
1 wm 94 1 085 000 2882 000
fanners of s, fla. florida citrus ., Gainesville 118 M 606,490 )66,f)27 65,621) 188 176 1,313100 13118 001) _,,;U.,H'.'l' 5,386,000 6,288,000 7q.i ooo
lakeland...................... 521 258,505 261112 236 3 122000 / s> 1 \\'W 2,351,000
III l?S 21? 533,130 i ii?7 uiio
medio................... northeast..................... iiij85 300,000 140,773 2)3,112 273 132 i,u 111' ,n. 1,287,11(111 2,3/1,000 ''8921 9!l?,lll)|)
north florida............. w 122,03? 1136 1,588,000
lull 300100 2,232,06? 3,632 39,403,000 30,236,(111


SECRETARY-TREASURERS OF PRODUCTION CREDIT ASSOCIATIONS IN FLORIDA
Association Secretary-Treasurer Address Bradenton Wm. C. Grainger
Telephone
Central Fla. John P. Payne
Farmers Chas. B. Long, Jr.
Florida Citrus Al. II. Whitmore
Gainesville Herbert E. Cook
Lakeland Russell D. Willis
Marianna C. Finch Morton
Monticello John S. Elam
Northeast J. E. Dukes
North Florida Aubrey Fowler
1501 Manatee Ave.. East 3-0611 P.O. Box 71 Bradenton, F'lorida
1916 North Orange Ave. GA 2-5800 Orlando, Florida
16 N.W. 26th Avenue NE 4-5110 P.O. Box 665, Riverside Sta. Miami 35, F'lorida
427 South Orange Avenue
P.O. Box 2111 GA 2-3157
Orlando, Florida
620 North Main Street FR 6-5831 P.O. Box 102 Gainesville, F'lorida
1500 New Tampa Highway
P.O. Box 1150 MU 3-3741
Lakeland, F'lorida
Corner Clinton and Hudson 2-3424
Caledonia Streets P.O. Box 330 Marianna, F'lorida
Court House Circle Wyman 7-1415 P.O. Box 307 Monticello. Florida
120 Main Street P.O. Box 328 Palatka, Florida
418 South Ohio Ave. P.O. Box 660 Live Oak. Florida
East 5-3362
Forest 2-2588
COLUMBIA BANK FOR COOPERATIVES
Types of LoansThree 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 by the Director of


Cooperative Bank Service. The commodities 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 cooperative association's own capital funds during times of peak seasonal activity. There are no legal requirements 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 properly.
Facility Loans arc made for the purpose' of financing or refinancing the acquisition of land, buildings, and installed equipment used in the business activities of cooperative associations. The security usually consists of a first lien on the land, buildings and equipment. Except as to loans for construction of storage facilities for agricultural commodities which, under the Agricultural Act of 1949, may be made in amounts not exceeding 80 per cent of the cost of construction, no loan for acquisition of physical facilities may exceed 60 per cent of the appraised value of the security offered and no loan may be made unless the purchase or lease price is considered reasonable. The term of facility loans may not by law exceed 20 years, but generally such loans are made to mature within ten years.
Interest RatesThe interest rates on loans from banks for cooperatives are dependent largely on the cost of money to the banks at the time the loans are made. The maximum interest rate which the banks may charge under the law is 6 per cent per annum. Interest is charged only on the principal balance of a loan from time to time outstanding.
Repayment ProvisionsRepayment plans are adapted to the types and requirements of the enterprises financed. Commodity loans arc generally repaid out of the sales proceeds of


the collateral. Operating capital loans, as a rule, are repaid at the end of the season. In many instances repayment is accomplished by setting aside a certain amount on each unit of product handled by the borrowing association, facility loans are generally repaid in installments over the life of the loans.
EligibilityThe 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, distributing, 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 as producers.
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 not more than 8 per cent a year.
Where to ApplyApplication 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.
Credit StandardsA bank for cooperatives, in extending credit to an association otherwise eligible to borrow, ascertains that the association's organization, management, and business


Home Ml Producers Association, o Cooperative Dairy, Miami, Florida
39


policies are such as to insure the reasonable safety of the loan.
In determining whether a cooperative meets the banks credit standards, the economic need for the organization is investigated. Factors such as the type and stability of production in the area and prevailing market conditions arc analyzed.
Investigation is also made to determine that an association 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 adequate if it is to qualify for a loan from a bank for cooperatives. Such a cooperative must have a capital structure consistent with cooperative principles, designed to provide ultimately the assets necessary to conduct its normal operations. In all cases it is expected that provision will be made for the farmer-member 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 organization has competent management, an adequate accounting system, an efficient plant, and a well-rounded program for development.
ServiceIncident to the granting of loans on a sound business basis, the banks for cooperatives have the opportunity of making their services effective in many ways which are reflected in the sounder operations of cooperative associations. Improved financial and organizational structures, sounder credit policies, better records, more complete audits, and the development of increased director and member interests arc a few of the results of the activities of the banks for cooperatives.


CHAPTER VI Organizing Farmers for Business
The farmer is a manufacturer: The soil, atmosphere, sunshine and showers arc the material to which he applies 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 surplus is the great paramount source of the world's commerce 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 products 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 centuries the interpretations of man. Opinions alter, manners change, creeds rise and fall, but the law of cause and cfTcct 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 conditions are the composite reflection of the operation of this law. Present tendencies are prophetic, and to properly 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.


The consumer furnishes the demand for production. He pays for:
(1) Cost of production.
(2) Cost of distribution.
(3) Profits of production.
(4) Profits of distribution.
(5) Waste of production.
(6) 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 production and distribution arc about equal factors in establishing the retail price to the ultimate consumer. Wc know that this can be greatly cheapened by the producer assuming a larger share in the task of distribution along lines demonstrated to be practical, efficient and economical 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 universally 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 distribution 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. Tins is done by the factory owners; not as individuals either but by distributors under the direction of the owners.
The same is true of the manufacturer 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 is the work of the
Young Cattle business in Glades has a thriving market.


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 competing 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 alternative of collective marketing among the small farmers 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 of its principles. What we do is mostly a matter of choice but the consequences of what we choose to do arc 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-partnership 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.


The first was originally the only kind organized. This class has hut 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 directors or other officers. The voting power may belong exclusively to the holders of common stock or may extend to the preferred stock. It may have both preferred and common or all may be common. It may have a voting board which has all the voting powers. In either case the profits go to the stockholders. Most of our industrial 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 corporationsthe profit-sharinggoes one step further and allows a certain 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 tic the employes to the company and encourage the "spirit of the shop"' till strikes will be a thing of the past. This plan is calculated to make the employes feel that they arc 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 essential factors in the operation of any business: the stockholder, the employe 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 of dividend or inter-


est on stock. Next come the employes and customers. The employes get,a certain percent pro rata, based on the earnings of each. The remainder goes back to those furnishing the business. If it is a mercantile business the refund goes to the purchaser 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. It it is a selling association, commissioners arc 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 manone vote regardless of the number of shares owned. In a few instances the members vote according to the volume of business furnishedso much business counting a vote. The same principles apply whether the articles handled are eggs, poultry, livestock, dairy products, fruit, vegetables, wheat, cotton or what not. Farmers' Exchanges never deal in futures subject to settlement by forfeiture or margins.
Below we give in 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 restricted




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