Group Title: history of the Cotton Producers Association
Title: A History of the Cotton Producers Association
CITATION PDF VIEWER THUMBNAILS PAGE IMAGE ZOOMABLE
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00097714/00001
 Material Information
Title: A History of the Cotton Producers Association
Physical Description: xv, 446 leaves ; 28 cm.
Language: English
Creator: Dimsdale, Parks Biggers, 1934-
Publication Date: 1970
Copyright Date: 1970
 Subjects
Subject: Cotton -- Cooperative marketing   ( lcsh )
Marketing thesis Ph. D   ( lcsh )
Dissertations, Academic -- Marketing -- UF   ( lcsh )
Genre: bibliography   ( marcgt )
non-fiction   ( marcgt )
 Notes
Thesis: Thesis - University of Florida.
Bibliography: Bibliography: leaves 439-444.
Additional Physical Form: Also available on World Wide Web
General Note: Manuscript copy.
General Note: Vita.
 Record Information
Bibliographic ID: UF00097714
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: alephbibnum - 000554420
oclc - 13404323
notis - ACX9260

Downloads

This item has the following downloads:

PDF ( 15 MBs ) ( PDF )


Full Text










A HISTORY OF THE COTTON PRODUCERS ASSOCIATION
















By
PAIRKS B. DIM\SDALE, JR;.


A DISSERTATIO)N PRI5ENiTED TO THE GLtDUA~TE COUNCIL OF
THE UNIVERSITY O)F FLORIDA
IN PARTIAL FULFILLMENTi OF THE REQUIIREMENTj FOR THE
DEGRIEE OF DOCTOR OF PHILIfOPHY















UNIVERSITY OF FLORIDA



































...to the Dixie farmer

and those dedicated to his service













ACKN~OWLEDIEDGMNT


The author wishes to express his deep appreciation

to the members of his supervisory committee, Dr. J. Donald

Butterworth, Dr. P~alph H. Blodgett, Dr. John H. James, and

Dr. Joseph MI. Perry. A special word of appreciation is

due Dr. Butterworth for his helpful counsel and guidance,

and to Dr. Perry who gavle generously of his time and of-

fered much valuable advice and encouragement.

The Executivies of The Cotton Producers Association

as vell as manyl CPA managers and employees have cooperated

in every respect with the author. Especial thanks go to

the Executive Vice President and General Manager, C.

Wesley Paris,for his initial interest and subsequent as-

sistance in completing a history of the organization. To

the other officers who devoted time and effort in providing

Information and access to all types of data, it is hoped

that this study will provide sufficient reward.

Undoubtedly, this work would never have been

completed without the technical assistance and moral sup-

port of the author's wife, Dorothy. Moreover, in a way

that only parents with two children under the age of three

can understand, the help given by David and Lee has made

the task even more challenging.











The time and skills of manry people including faculty,

staff, and students were kindly furnished in the several

phases of this effort. One among these, Mrs. Jill Allen,

typed much of the preliminary manuscript and helped solve

some of the problems which invariably occur In preparing a

report such as this. Mrs. Carolyn Lyons also deserves

special thanks for her assistance in preparing the final

copy.

Despite the varied and extensive help gi-:en in this

study, no one can be blamed for errors of commission or of

omission except the author. Therefore, the conclusions,

opinions, and other aspects of this work are solely his.















TArBLE OjF LCONTEIITS


Page

ACENirWLEDGM EITS ................. ................ ..... ill

LIST OF" TABLES ....................................... vill

LIST OF FIGURES ...................................... xiv


Chapter

I. IN:TRODUCTION~ ................................. 1

An Overvice ............................... 1



Crganiaation of the 3tkdy ................. 6

II. COOPEP.ATIVES:ES EnrVPSIROME;IT ANHD
DEVELOPMENT ............................... 10

ihra3~ic:Lcitice; ~ of o~JFPertiVi s ........... 105
Devel:op4ent of "coopd:rativerP ............... 15
Oganiza;-tion'l of; i:LoeraUtiEr .............. 28
Legal Framewdiork: for Coo3~PertineC .......... 31
Coonom~iJ F JIronmenlBt for Ag~riCu~tltur
in: the Peri~od fromi Lor:lJ 'ar~ I to
t::e Formatilon; or' CPA~ .................... 4
J7Eor:!i FaP1rmer Attup:: t3 Crgan;Ze ....... 42

III. FOUNDATION YEARS: 1936-1937 TO
1939-1940 ................................. 51

ObjectLver of Organization ................ 51
Building a Solid Founidation ............... 52
Th:e Board of' Directore .................... 56
The Off-zer of Secretary and

1936-1940r ............................... 65

Improvedd Cotton narketing ................. 69
The Objctives of Local
Organ~isations ........................... 72










TABLE OF CONTEN!TS--ContinueLcd


Chapter Page

III. I'olume of~ Busin;ss aznd Ne't ,'!argin ........ 78
Look~ing Towed the F:uture~ ............... 80

IV. A PERIOD OF GROWTH ANlD CHAUGE:
1940-1941 TO 1944-1955 ................... ,-4

Expanded Ser~vi ces .. . .. . .. .
M~ulIti-l ivisic ai OpraFrt;; ons ............. 92
inange o0 Name ........................... uu0
reed Dirtrtibution ............ 1i00
Dietr'libti on2 of FarZ) SIIPpliSe . .. .
Growth Accelerates ....,,................. 11;
Insurt,; ne Opere:(on;~~ ...................... 123

V. RESOURCES FOR EX~PAIISION: THE PERIOD,
1945-1950 .............................,,..1

Deveilopmen:' t Humin re.;souc ..... 137
Division22l AcSrrtivi Durrins TIs:;
Period~ .........,................ 146
Contin;ued .ccelerated~ Gree~t; ............. 155

VI. DIVERSIFICATIONI: 1950-1951 THROUGH
1955-1956 ......,,...................... 158

Greater Race7~ o~ Activities .............. 158
Mlarketing~ pperatJionS ........... 160
Poultry! ilark:eting Di;'ision ......... 8
Purchasing Dlviisio ................... 191
Fin3acial Condition .,.................. 190
The, Fkture .............,,,............... 199

VII. EXPANlSION ANID GR.OiTH bY IERGER;:
1956-1957 THPOUGH 1960-1961 .............. 202

Greaiter Service to, fa~lmer ............... 2702
Peanut Divicion ..................... 204
Pou it,.ry Mal.k2t in;g .. . . . . . 212
Opjeratio,; of o~ther' l:arketing3
Division; ........................ 220j
Purchasing Division ...................... 2-'8
Personnel ih.~iangs............ 235
Headquartere Burildi,;: Conlstructedz ........ 242
Additional fi~nncing Sought ......... 22










TABLE OF CONTEIITS--Contined: l


Chapter Page

VIII. PLANDINGlj AND REORGANICATIO:I TO MEET
OPPORTUNITIES: 1961-1962 THROUGH
1967-1969 ................................ 249

Fo-us oni ;Lj";LrLrgaiato and Nanag;emIt ..... 249
D'5Ivisiona : l Atl~ :Ivity . . .. . . 254
Changes1~ Ir: Opear;i:s Malrzaoement..... 256
Facil~itU ExpansionI ................... .... 265
Adm~i~t~tivstrtv ;srvics ................ 297
RZEearchl Acrt;LvitiJE ..................... 297
Firnancingp Ex~pansioLn anld ResearchI ......... j300

MrketiP~ngI Effrtsi! ....................... 310
Inurnc Opertion .......................... 318


IX. SURMARY AND CONCLUSIONS ..................... 321

Sunnrari . . . .. . . . . 321

Suggdestios for Further Iivaetigation ,.... 337


Appendices

A. STATISTICS ON COOPERATIVES ..,................ 340

B. AGRICULTURAL STATISTICS ..................... 345

C. LEGAL ASPECTS OF ORFGANIIZArTIONl ...........-... 358

D.SAMPLE ORGANIIZArTION FORMS PRESENITLY
IN1 USE ................................... 385

E. DATA 01 OFFICERS ............................ 405

F. CPA AGENCIES ................................ 419

G. AGREEMENTS WITH OTHER COOPERATIVES .,......... 426


BIBLIOGRAIPHY ........................................ 439

BIOGRAPHICAL SKETCH ................................. 445














LIST OF TABLES


Table Page

3-1 Membe~rship of The Georgle Cotton
Producers Association, 1936-1937
to 1940-1941 ................................ 57

3-2 Names and Pesidences of Original
Directors of The Cotton Pro-
ducers Association .......................... 59

3-3 Production of Cotton In the States
of Georgia and Alabama for the
Years 1929-1940 ............................. 66

3-4 Volum~e of Cotton Majrketed, INet tlargins,
Total Assets and Facility Investment,
1936-1937 to 1939-1940, of The
Georgia Cotton Producers
Association ................................. 79

3-5 Condensed Balance Sheet of The Georgia
Cotton Producers Association at
June 30O, 1940 ................................ 82

-1 Production of Cotton in the States Of
Georgia, Alabama, South Carolina,
and Florida for the Years
1940-1945 .............................. 87

4-2 Tonnage of Mlixed Fertilizer and
Fertilizer Mlaterials Distrib-
uted by The Cotton Producers
Association, 1940-1941
through 1944-1945 ....................... 101

4-3 Tons of Feed Distributed by The
Cotton Producers Association
in Years 1942-1943 through
1944-1945 ........................... 104

4-4 Membership of The Cotton Producers
Association, 1940-1941 through
1944-1945 .. .. . . . . . .. 115


viii










LIST OF TABLES--Conti'ued


Table Page

-1-5 V'olume~ of Business and Niet M~argin
by Dil'isions of The Cotton
Producers ;sosoiation,
1940-1931 through
1944-1945 ................................... 118

4-6 Comparatives Su~imary Balance Sheets
of The Cotton Producers Associ-
ation for Each of the Years,
Julne 30, 1941 through
June 30, 1945 ............................... 122

4-7 Investment in facilities, at Cost,
by the Div'lslons of The Cotton
Producers Association for the
l'ears Ending June 30, 1941
through June 30, 1945 ....................... 123

5-1 Volume of Business and Ilet Mlargin
by Divisions of The Cotton
Producers Association,
1945-1946 through
1949-1950 ................................... 148

5-2 Total Assets and Facility Investment
by Divisions of The Cotton Pro-
ducers Association for the
Years 1945-1946 through
1949-1950 ................................... 156

6-1 Production of Cotton In the States
of Georgia, Alabama, South
Carolina, and Florida for
the Years 1946-1960 ......................... 161

6-2 \'olume of Grain Nlarketed by CPA In
the Years 1951-1952 through
1955-1956 ................................... 168

6-3 Corn Production for Grain in Georgia,
Alabama, and Florida, 1947-1956 ............. 170

6-4 Pecan Production in the States of
Georgia, Alabama, and Florida
for the Years 1950-1960 ..................... 175










LIST OF TABEiS--Cotinuedr


Table Page

6-5 Purchasing DIji'sion Volume by Major
Departments for Fiscal Years
1950-1951 through 1955-1956 ................. 193

6-6 Volulme of Eusiness and INet Mrglrin
by Divisions of The Cotton
Producers Association,
19:0-1951 through
1955-1956 .................................,, 197

6-7 Total Assets and Facility Inv~estment
by Di-visions of The Cotton Pro-
ducers Association, 1950-1951
through 1955-1956 ........................... 198

7-1 Companies Included in the Georgia
Peanut Company Ownership Group
at the Time of Me~rger with
C"PA, 1956 ................................... 105

7-2 Sunmm-ary of Marketing Operations for
Grain in the Fiscal Years
1950-1951 through
1957-1958 ................................... 221

7-3 Purchasing Division V'olume by Mlajor
Departments for Fiscal Years
Ending June 30, 1956 and
June 30, 1961 ............................... 230

7-4 Volumie of Business and Cet M4argin
by Divisions of The Cotton Pro-
ducers Association 1956-1957
through 1960-1961 ........................... 245

7-5 Total Arssets and Facility In-vestment
by Divislonss of The Cotton Pro-
ducers Association 1956-1957
through 1960-1961 ........................... 227

8-1 Total Assets and Facility' Investment
by Divisions of The Cotton Pro-
ducers Association 1961-1962
through 1967-1968 ........................... 267











LIST OF TABLES--ir t inledd


Table Page

8-2 CPA Hatcheries in Operation on
June 30, 1968 ............................... 282

6-3 Status of Loans Ouitstanding by~
Types~r and by Di.isions of The
Cotton Producers Association
on March 20, 1968 ........................... 302

8-4 Condensed Balance Sheet of The
Cotton Producers Association
at June ?3, 1968 ............................ 303

8-5 Sales Volume, Net Hlargins, and Ilet
Worth of The Cotton Producers
Association in the Years 1937
to 1968 ..................................... 305

8-6 Distribution of Patronage Refunds
for the Fiscal Years, 1965-1968 ............. 308

8-7 Patronage Refund Rates by the
Purchasing Division for the
Fiscal Year Ended June 30,
1968 ........................................ 310

8-8 Volume of Business and Het Miargin
by Div~~isios of The Cotton Pro-
ducers Association 1961-1962
Through 1967-1968 ........................... 313

8-9 Ojfficers of The Cotton States
Mutual Insurance Company,
June 30, 1968 ................... ........... 320

A-1 Estimated Number and Percentage
of Marketing, Farm Supply and
Related Service Cooperatives
for Soecified Periods 1925-
1926 to 1966-1967 ........................... 341











LIST O3F TABLES-~,o:-Cotinued


Table Page

A-2 Estimated M~embership of Mlarketing,
Farm Supply, and Related SerVicee
Cooperatives 1925-1926 to
1966-1967 ................................... 342

-3Estimated Gross Dollar V'olume of
Business of Marketing, Farm
Supply, and Related Serv~ice
Cooperatives 1925-1926
to 1966-1967 ................................ 344

B-1 Average Annual Georgia Price of
Cotton Lint for Crop Years
1925-1967 ................................... 346

B-2 Cotton Production in Designated
States for Selected Years
Between 1930-1967 ........................... 347

B-3 N~umber of Chickens on Farms in
Designated States, 1920-1945 ................ 348

b-4l Cattle and Calves on Farms In
Designated States,
1920-1945 ................................... 349

B-5 Gallons of Mlilk Produced in
Designated States,
1919-1944 ................................... 350

B-6 Eggs Produced (in Dozens) in
Designated States,
1919-1944 ................................... 351

B-7 Broiler Production In Designated
States for Selected Years
between 1930-1967 ........................... 352

B-8 Peanut Production in Designated
States for Selected Years
between 1930-1967 ........................... 353










LIST OF TA~BLES--Cocntinue


Table Page

B-9 Pecajn Production In Designated
States for Selected Years
between 1930-1967 ........................... 354

B-10 Soybean Production in Designated
States for Selected Years
b~etw;een 1930-1967 ........................... 355

B-11 Corn Production in Designated
States for Selected Years
between 1930-1967 ........................... 356

B-12 W~inter W~heat Produc~tion In Desig-
nated States for Selected
l'ears between 1930-1967 ..................... 357

F-1 CPA Agencies Distributing Farm
Supplies at June 30,. 1968 ................... 420


X1ll














LIST OF FIGURES


Figure Page

2-1 Estimated number of farmer cooperativesle
for selected years from 1925-1926 to
1966-1967 ................................... 25

2-2 Estimiated membership in farmer sooperativres
for selected years between 19'5-1926 and
1966-1967 ................................... 26

2-3 Estimated gross business volume of
marketing and farmi supply coo~per-
ati'-es for selected rears between
1921 and 1966-1967 ........................... 27

3-1 Organization structure of The Georgia
Cotton Producers Association, june j0,
1940 .....................................- 83

4-1 Aerage annual Georgia price or cotton
11nt for crop yeaars, 1940-1946 .............. 85

4-2 Organization structure of The Cotton
Producers Association on June 30,
19415 .. . . , . . . . . 125

5-1 The C'ooperativv e Management Teami ............. 142Z

5-2 Supply volume by principal category
of farm supplies for fiscal years
Junez 30, 19411 through June 30, 1951 ......... 150j

6-1 Commercial broiler p~roduc-tion In the
states of Georgia and Alabama for the
years 19441 -19i 0 . . . . . . .. 18-1

6-2 Organization structure of The Cotton
Producers Association on June 30,
1956 .. . . .. , .. . . .. . 0










LIST OF FIGURE5--Continued


Figure Page

7-1 Organization structure of The Cotton
Producers Association on January 1,
1960 ................,,,..................... 241

S-1 Organization structure of The Cotton
Producers Association on June 30,
1968 ........................................ 255













CHAPTER I

IJT PRODUCT ION~





The Cotton Producers Association (CPA) which began

under the most adverse internal and external operating

conditions in 1933 as a small cotton marketing association

has become one of the 500 largest industrial corporations

in the United States.t CPA now represents some 150,000

farmers and is almost as diversified as agriculture itself.

This agricultural cooperative manufactures and processes

feed, seed, fertilizer, pesticides, animal health products,

and other farm supply items and distributes them through

Farmers' Mutual Exchanges located predominantly' in the

four-state area of Georgia, Florida, Alabama, and South

Carolina. Its Gold Kist divisions are engaged in the

marketing of cotton, grain, pecans, peanuts, poultry and

livestock on a world-wide basis. As this analysis was

being made, a soybean processing facility was being con-

structed, an egg production and marketing program was being


IThe Cotton Producers Association was ranked (by
sales volume) 312 in the 500 largest industrial corporations
based on 1968 operating year information. This represented
an improvement in ranking from 36ho h ai f16
sales data. Source: Fortune, May 15, 1969, p. 178.


- 1 -





i


planned, and a program for producing and processing catfish

was being implemented. Moreover, as one of the largest and

most successful farmers' cooperatives, its methods and pol-

icies are widely imitated both at home and abroad.

These are but a sampling of the many accomplishments

achieved by this organi:ation in its short, but active and

prosperous thirty-five years of existence. Mistakes and

disappointments are also a part of this history. These

resulted in part because the cooperative not only began

operations in an area where the cooperative form of organ-

ization had been largely unsuccessful for the farmer, but

also because much of Its development has represented a

pioneering effort.

That this organization succeeded where earlier

cooperative attempts by Georgia farmers had failed, may

very well be attributed in large measure to the vision and

resolute determinationr of David W~illiam (ID.r.) Brooks and

to those he Intersesed In his ideas. The belief of D.w.

brooks, greatly intensified by the agricultural depression,

was simply that the onlyl way to improve the lot of these

farmers wJas to emphasize better production practices and

marketing efforts. Moreover, he was convinced that those

farmers who developed their own marketing systems for their

farm products were in a better position to improve their

economic circumstances than those, more numerous at the time,





who did not concern themselves with these aspects of

enterprise. This belief, coupled with his unequaled abil-

ity to convince farmers of its relevancy to their problems,

was of great importance in making CPA an enduring reality.

Combining this with his talent and good fortune in sur-

rounding himself with dedicated associates, capable of

implementing his ideas through sound business practices

into a workable organization unit, a company history of

unique and Interesting proportions unfolds. The history

of The Cotton Producers Association is an abundant record

of the contribution of a business institution to the eco-

nomic and social life of the Deep South. It is a striking

example of what agricultural cooperatives can do.


Hrypothesis


The investigation of the organic growth of this

cooperative in its thirty-five-year history is the subject

of this work. The story of the organization progresses

from meager beginnings to world-wide operations. Here is

precisely the mixture of material from which a sharpened

sense of business history can be acquired.

Specifically, the organization, administration,

and operation of this enterprise from its inception up to

June 30, 1968, will be examined. Those important internal






1


factors affecting the organization such as policy, control,

and resources as well as pertinent envlironmrental conditions

will be considered as they~ are appropriate. In accomplishing

this analysis, each aSpect~ of the development of the as-

sociation will be approached from the basic point of view

that The Cotton Producers Association was formed in re-

sponse to a recognition on the part of D.W. Brooks and the

other founders that there was a need to cooperate formally

in meeting production and marketing problems of the farmer.

Mlore precisely, the hy~potheses that have guided

this study are:

1. that The Cotton Producers Associationn was
created to meet critical needs of the farmer
in the producing and marketing of agricultural
products;

2. that this philosophy has been paramount in the
subsequent policy decisions leading to the ex-
pansion and integration efforts of the coop-
erative and remains so today;

3. that this organization of farmers, unlike mrany
of Its predecessors has been able to success-
fully educate its membership to this philosophy,

4. and, therefore, many of the organizational and
developmental aspects of The Cotton Producers
Arssociationr should be more widely applied to
the cooperative form of organization wherever
possible.


Research Methodology


At the base of the sources and materials utilized

in this analysis are the formal and informal records






- 5 -


maintained by the cooperative and to which the writer has

had virtually unlimited access. These sources include the

usual business records and reports, as well as the public

and private correspondence and other written communications

of the key officials of the cooperative. Additionally, all

publications by or for the firm are utilized to the extent

that they are relevant.

On this informational base, personal interviews

were held with all of the major officers of the corporation.

Numerous department managers, facility managers, and other

employees whose viewpoint was felt to be relevant to phases

of the study were also interviewed. These interviews were

conducted during the winter and spring of 1968-1969. Their

value can scarcely be overstated in that almost without

exception the present officers have been with the organ-

ization since early in Its development. Additionally, some

of the original personnel of the organization, particularly

D.WJ. Brooks, were available for discussions. C.W~. Paris,

the present Executive Vice President and General Manager,

has been with the organization virtually throughout Its

entire history. He and other officers of CPA made it pos-

sible for the writer to inspect first hand a representative

sampling of the diverse facilities during the periods in

which the personal interviews took place.






- 6 -


Finally, secondary sources outside the firm

including legal documents and general information relative

to the conduct of the cooperative form of organization have

been used. Reports of State and Federal agencies, partic-

ularly those of the Farmer Cooperative Service, U.S. De-

partment of Agriculture, have provided valuable data.


Organization of tne Study


While there are several approaches that might be

utilized to develop a comprehensive study of CPA, the ap-

proach to be followed here is essentially chronological in

nature. In view of the dynamic nature of the developments

in this cooperative, it appears that such a procedure will

enable a better perspective to be achieved. Furthermore,

inasmuch as there are overriding areas of concern,or of

attention, throughout the history which delimit phases of

growth, such a means of presentation is not only convenient,

but more meaningful.

Therefore, Chapter II treats aspects of the envi-

ronment into which CPA was introduced. This is done by

examining the characteristics and development of cooperatives

in the United States and by briefly discussing the existing

legal framework for cooperatives. The economic conditions

of the period are also summarized in order to show the





7


critical need for some typFe of effort on thre part of farmers

to improve their relative position. A brief history of the

organization in the period, 1933-1936, concludes the chapter.

Chapter III is devoted to the problems and efforts

of the founders of the association in becoming an established

part of the agricultural economy of G3eorgia. The pattern of

development of CPA begins to emerge as the period ends with

the year, 1940.

Chapter IV explores activities of the organization

during the period of Wlorld War II, 1941i-1945. Despite the

problems of a wartime economy, the purchasing activity; of

the association was implemented during this period. Manu-

facturing of fertilizer was also begun during this time.

The Influence of the association was extended as it began

providing purchasing services as well as the marketing of

cotton.

Chapter V deals with the crucial activity of

developing the manpower which was to provide the human re-

sources for future explosive growth and integration of

activities. Up to the time that this period ends, 1950,

initially the existence and subsequently the growth of the

organization caused major attention to be placed on organ-

ization matters.

Chapter VI is a study of the diversification which

took place between 1950-1956. Numerous marketing services





- 8


for a number of other commodities were added to the original

cotton marketing service. It was also during this time that

an integrated broiler operation was instituted.

In Chapter VII, covering the years from 1957 through

1961, mergers and substantial facility expansion are dis-

cussed. It was during this period that the complexity of

the organization became highly apparent to management. Also,

one of the major problems in the recent history of the co-

operative, the peanut merger, occurred during this time.

The last seven years, 1962-1968, are the subject of

Chapter VIII. Much of the progress and activity of this

period is directly traceable to the manpower development

and facility expansion of earlier periods. It is also a

period of time when the organization takes on more of an

appearance of large-scale enterprise. During this time the

originator of the idea, D.W. Brooks, and the majority of

the original management group turn over the responsibility

for a multimillion dollar cooperative to those who have

grown up in the organization.

Concluding analysis and comments form the subject

matter of Chapter IX. Additionally, from the history up

to this time it should be apparent that The Cotton Pro-

ducers Association is not without plans for the future.

Therefore, it seems appropriate to outline in this section











those programs to the extent permitted without -iolating

any confidences.

It is obviously impossible to do more than high-

light the many aspects of the development of The Cotto~n

Producers Association. In relating the history of the com-

pany, a major objective will be to reconstruct the circum-

stances under which the major policy decisions have been

made. Yet, back of th-ese decisions is the~ business organ-

i-ation managed by individuals who must decide all matters

necessary to operate a going concern. Therefore, in ad-

dition to being a history of an industrial corporation, It

must also be a history of people.













CIrAPTE~R II

C"OOPERATIV'ES: RIOETADDVLPET


Char-eteristiessj ~ofcopratives


The term "cooperati:ve" is a generic one, covering

many efforts of people working together. The concern here,

however,, Is with certain formal institutions engaged in

marketing farm produce, purchasing farm supplies, supplying

production or consumption services, and supplyilng production

or consumption credit to members of the agricultural com-

munity. The aim of such formal cooperation is to bring to

farmers the benefits of permanent and efficient business

organization, in ways and to degrees, that individuals or

transitory cooperati.e arrangements are unable to accomplish.

They seek to accomplish this goal through economies of scale

in production, marketing, and organi-ation.

The many and varied ways in which this formal coop-

eration has been achieved in agriculture are the result of

peculiarities of commodity, of region, or of the founders

of the cooperatives. Yet, in all instances, agricultural

cooperation in the United States places special emphasis

on meeting the economic needs of farmers in marketing prod-

ucts, obtaining production supplies, and securing the many


- 10 -






- 11 -


services needed in farming operations.' The voluntary

joining together of physical, financial, and human resources

is implied to achieve this goal. According to Joseph G.

Knapp, Administrator of the Farmer Cooperative Service,

U.S. Department of Agriculture, when a group of individuals

establish a cooperative, they have in mind certain distinc-

tive purposes, as follows:

They seek to obtain services for themselves at
cost: not to obtain profit from rendering services
for others.
They try to render the greatest financial benefit
to their members as users- not to maximize profit for
owners as distinct from users.
They distribute amounts remaining after payments of
the costs by doing business among those who are served
by the cooperative in proportion to their use of its
services; not in proportion to their investment in
the enterprise.
They plan to have an organization that will be
controlled by its patron-members (each of whom ordi-
narily is allowed a single vote); not by the owners
in proportion to capital contributed.'

While the foregoing description contains the more frequently

mentioned elements used in defining an agricultural co-

operative, it should be pointed out that many definitions

have been formulated. Some of these are more inclusive:

others seek to emphasize particular aspects of cooperation


'U.S. Department of Agriculture, Farmer Cooperative
Service. Farmer~ Cooperatives in the Uniitedi States, Bul-
letin 1, 1965, p. 4.

2JOSeph G. Knapp, Farmers in Business (Washington,
D.C.: American Institute of Cooperation, 1963), pp. 5-6.





- 12 -


such as economic, social, or legal phases. For purposes

of the analysis undertaken in this work, the following

definition will be used:

An agricultural cooperative is a business organ-
ization, usually incorporated, owned and controlled
by mewhjer agricultural producers, which operates
for the mutual benefit of its members or stockholders,
as producers or patrons on a cost basis after al-
lowing for the expenses of the operation and mrain-
tenance and any other authorized deductions for
expansion and necessary reserves.'

There are more elaborate or differing definitions

given by McCarth.,z Phillips,' Stanton,' and others.s

These writers generally subscribe to the view that a non-

cooperative organization, be it a household, a proprietor-

ship, a partnership, or a stock corporation, is defined as


'L.S. Hulbert and Raymond J. Mischler, Legal Phases
of Farmer Cooperatives, Farmer Cooperative Service, U.S.
Department of Agriculture, Bulletin 10, 1958, p. 2.

ZE. Jerome McCarthy., Basic Narketing: A H'anagerial
Approach (Homewood, Illinois, Richard D. Irwin, Inc., 1964),
p. 515.

'Richard Phillips, "Economic Flature of the Cooper-
ative Association," Jouirnal of Farm Economics, Vol. 35
(February, 1953), pp. 74-87.

4William J. Stanton, Fundoametals of Narketing
(2nd ed.; New York, Mc~raw-Hlill Book Company, 1967), p. 599.

SSome of the other authors who have commented on
these features of cooperatives are: Frank Robotka, "A
Theory of Cooperation," Jour~nal of Farm Economics, Vol. 29
(February, 1947), pp. 93-114; Raphael Trifon, "The Economics
of Cooperative Ventures--Further Comments," Journal of
Farm Economics, Vol. 43 (May, 1961), pp. 215-235; and Peter
Helmberger and Sidney Hoos, "Cooperative Enterprise and
Organization Theory," Journal of Farm Economies, Vol. 44
(May, 1962), pp. 275-290.





- 3


an acqluisitive economic unit wJhich strives toward economic

individuality or differentltianon Their contention is that

a cooperative~ is not such an acquisitive~ economic unit.

Rather, the cooperative is an aggregate of such units, each

of which retains its individjuality as an acquisitive economic

unit. Whi~ile this Is a well-conc-eived theoretical distinction,

it, at times, becomes difficult to apply In practice.

In reality,. organi-ations that are generally con-

sidered to be successful agricultural cooperativesE tend

more toward becoming acquisitiv.e economic units in themselves

and ask; that the Indivridual rriat-ers of the cooperative fore-

go some of their individuality~ so that the organi-ation may'

continue to growr. However, any' ad-antage of success wlhiCh

may result in the process may be said to eventually accrue

to the individual members. It may well be that too much is

made of such a distinction in that, in mranyl instances, the

cooperative is no different from the noncooperative organ-

ization. The board of directors and the general manager

represent the members In their entrepreneurial and deci-

sion-making responsibility in a manner not unlike that

found in the investor-oriented enterprise. Fur thermore ,

decisions on economic and social matters necessary to the

continued successful operation of the firm are made in

much the same way; that is, decisions are rendered in





- 14


consideration of, and for the benefit of, the group of

members or the stocklholder r of the firm and not onrly for

themselves, be they patrons or investors.

It is entirely possible that cooperatives that have

succeeded have done so, in part, because of the recognition

that cooperativ.es are a distinctive~ form of private business.

According to Ed1Jin G. Nourse, cooperatives differ from other

forms of organization principally in hou: theyl perform the

entrepreneurial function.' coursee feels that the dlirect

participants In the cooperative form of business suppl;

both the exploratory and directional functions, as well as

the capital and, therefore, dispense with the entrepreneur

In the usual sense.' Arll of the other differences are of

relati:vell minor importance unless they: are inflated beyond

their proper proportions, in which case they then place

unnecessary restrictions on the management functions of the

enterprise. This leads to suboptimization of resources and

interferes wJith the aim of cooperatives which is, in short,


'For a more complete statement of his nlews, see
his article, "The Economic Philosophy of Cooperatives,"
Famercan Foonomic Review, December, 1922, and his book,
The Leal Scotuz of' Agr::i-i~tur~~ al. Jooperabflon 1927. D.W.
Brooks was much influenced in his ideas about founding a
cooperative by writers of this time such as Nourse, as
w~ell as by accounts written Of agricultural Ccperation
in Europe.

H~ourse, "The Economic Philosophy of Cooperatives,"
p. 90.






-15


to provide for other groups in the economy some of the

economic benefits enjoyed by' other large-scale private

enterprise.


Developmentn of Co~oprati've


The agricultural cooperatives in existence today,

8,125, with memberships of over six and one-half million

and net business voalume (excludes intercooperati:ve business

transaction) of $16.6 billion,, are the result of ovecr 150

years of cooperative activity in the United States.' The

exact date of the first cooperative in the United States

is subject to much debate, which seems to have resulted

largely from differing interpretations as to wJhat constitutes

a cooperative in a formal sense.' Donald F. Blankertz


'The figures given are all preliminary estimates for
1966-1967 year as reported In an article by Bruce L. Swanson,
"Cooperative Business Continues Upward Surge," Neve for
Frmrer Co~operativesa,Vol. 35, No. 12 (M~arch, 1969). Cor-
responding statistics which are complete for the year 1965-
1966 show 8,329 cooperatives engaged in marketing, farm sup-
ply, or related services. Memb~erships totaled 6,826,275
and net business volume was 515.6 billion.

'Those interested in exploring this matter of the
inception of formal cooperative forms of organization are
referred to: Donald F. Blankertz, Wor'keting Cooperancesa
(New Y'ork: The Ronald Press Company, 1963), pp. 79-98;
Alice Lowrie Jewett and Edwin C. Voorhtes, Agrizultural
Cooperatives: Streigth in Unity (Danville, Illinois:
The Interstate Printers and Publishers, Inc., 1963), pp.
22-26; and Joseph G. Knapp, "Are Cooperatives Good Business?"
Harvard Businces Review (January-February, 1957), pp. 200-204.






- 16 -


reports two co~operative attempts prior to the nineteenth

century and some increasing activity along these lines In

the early? 1600's.'


;ice and Scope

There is apparent general agreement that, in the

latter part of the nineceanth century, ~coopratives; were

still few in number and small In ;sie and effect. In the

majority of Instances they w.ere local in nature, f~inanced

by the sale of stock to members and nonmembers. Some others,

hojwever, we~re rnincorrporated. The legal status of these

early ventures remained to be determined.

One ex~ception to the small sizre and local nature

of cooperatives was the Patrons of Husbandry, or the Grange,

as it was more commrronly known. Farmers had been Increasingly

restless and frustrated by the diminishing share of national

income accruing to the agricultural sector of the economy.

The Grange became, for many farmers, a means of expressing

this dissatisfaction. It has been estimated that this

organization experienced a peak membership of 850,000 In

1975, made up of more than 20,000 granges throughout the

United States.' While its founder, Oliver Hudson Kelley,


BElankertz, I:arkeiEngi Cooperatioce~, p. 81.

ZChester WJ. Wright, E'conomic History~ of the Urnited
~tatEsl (Ne~w Yorkr: M4cJraw-HIll Book Company', Inc., 1949),
p. 507.






- 17 -


envisioned the Grange as a means for the social and

intellectual improvement of the farmers of the nation,

the farmer memb~ters quickly subverted his objectives for

economic and political goals. While there were some

instances of limited success in the East and South, efforts

to improve economic conditions through the establishment

of cooperative stores were largely unsucessful. Howe-er,

in the area of cooperative marketing of farm products, the

results achieved by the Grange were somewhat more satisfy;ing

to the members.

An ever-increasing attention to political activities

by the Grange may~ have been vrery important in accounting

for the rapid decline in men33ership and In numbers of

chapters after 1875. MIany of its farmer-memblers were much

more concerned with immediate payout from their association,

rather than the less directly affective political achievements

of the Grange. Ilevertheless, the appearance and rapid accept-

ance of this organization by thousands of Farmers no doubt

exerted an influence on the degree and scope of subsequent

agricultural cooperative efforts. Perhaps the following

summary best expresses the influence of the Grange:

In spite of its business failures and its limited
political success, the Grange succeeded admirably in
certain respects. It taught the farmers the lesson
of self-help and proved to businessmen that the farmer
could lash out in protest. On the other hand, it gave
the farmer more respect for the businessman. The many
failures of cooperative enterprise showed the farmers
that middlemen indeed filled a vital and useful function.





-18


Socially, the Grange helped to break do:-*n the dreadful
isolation that had bred backwardness and superst~titio
among rural people. It encoural~ed reading and public
apeaking on the part of many, farmers, thus broadening
them intellctually. In all, the Grjane had an Jp-
lift~ing influence on the lives of hundreds of thousands
olf farmers.1

As the Grange declined In prominence, other national

groups made their appearance. The pjarmers' Alliance was

one such organizations dating from the late 1880's. Ic, like;

its contemporaries, was concerned with the economic and

social problems of the farmer. YIet, the return of business

prosperity to the farmers in the last few years of the

nineceenth centurl. and the first two decades of the twentieth

Jenturr resulted in a decline In cooperative~ acti~vity on a

national scale. M4any coope~rativ~es were, however, formed in

the period from 1890-1920. They were largely local in

nature and concerned, for the most part, with the marketing

of com~modities.


2routh of Cooperativesd

In 1890 there wlere about 1,000 active cooperatives

of which approximately 75 percent dealt exclusively in

dairy products.' By 1920, the total number of active

cooperatives ex~ceeded 14,000, with about 12,000 of them


'Ijonald L. Femmnerer and C". Clyde Jones, Amerizan
tEconomic .9iatord (thy. Yiork: McGraw-Hill Ecok Company, Inc.,
1959), p. 43.

'U.S. Department of Agriculture, Farmer Cooperatiess
in the United States, p. 54.





-19 -


being marketing associations.' A4t this time, the major

geographic areas of zcoperative acti.ity did nrot include

the Southeastern section of the coun~tr:. to any. siqrniiica~t

degree. Rather, major Impetus for this growth had been

concentrated in the M~idwetst, Par Welst,and to somie e:-:tent

in the Southwest. Mu~ch of the growth Of farmer cooperati-.es

in this period waas generated by their successful operations

due, in part, to the fav~orable economic conditions for

agriculture during this time. Mlroreover, the knoswledge

required to m~ak;e such .entures effecti. :-.as becoming mrorE

widespread. Activity on the part of both Prcsidents

Roosevelt and Wilson during this period w~as also a fac-ill-

tating factor. In 1908, President Theodore PRoseve~lt

created the Counrtryl Life Commisiision wh~ilch- took an interest

In cooperatives. President Wioodrow Wlilson in 1913 sent a

com~mission to Europe to study cooperation jnd report Its

findings. The wJork. done by this group subjsequently~ led to

the formation of the Farm Credilt Syste~m.

Such efforts were Important In that they pro-vided

much needed assistance in understanding the comple.-itles

of planning, organizing, and directing the cooperati-e

form of enterprise. Management of the ejril ooperative

attempts was on a pioneering basis of trial and erro.

Mlany of them were poorly organize-d, de'void of any concerted


L'bid., p. 54.






s~j


planning effort, and plagued by the fact that farmers had

no understanding of the significance and complexity of

production controls. Even so, each succeeding step In

the development of the cooperative form of organization

contributed to management knowledge. Perhaps one of the

m~agor accomplishments w:as the recognition that management

needed a uniform pattern for operation. The Rochdale

principles furnished such a framework.

Some of the more important cooperative formations

around the turn of the century Included, In the 1890's,

the California State Raisin Growers Association, Presno;

the Hood Riv.er Fruit Grov:ers Union, Hood R~iver, Oregon;

and the Southern California Fruit Exchange, which later

became the California Fruit Growers Exchange, and is now

known as Sunkist G~rowers, Inc., Los Angqeles.'

In the early years of the present century, the

Farmers Educational and Zooperati-e Union of Amerlca was

begun In Texas as an outgrowth of the Farmers' Alliance

experience. It placed major emphasis on economic activities

from the outset. At one time the Farmers Union, as it was

more commonly known, w~as active in Texas, Louisiana,

Arkansas, and Mississippi. Since then it has become

especially active in Oklahoma, Kansas, Nebraska, Colorado,

North and South; Dakota, Minnesota, Montana, and Wisconsin.2


I~bid., p. 57.

I~bid., p. 57.





- 1 -


Other major c-ooperati:es formed during this time

Include: the Cah~fornia Waslnut Growers Ajssociation,

Los Angeles; Poultrymen's Cooperativee Assciation,

Riverside, California; the forerunner of Sun-Mlaid Raisin

Growers Association, Freano, Callfosrnla; and what is now

known as the Western Farmers Association, Seattle,

bashington.' Furthermoi~re, immediate ly follo;;inlg o'rld

Wdar I, the Ohio r001 Growers Cooperativel Association,

ColumbJus; the Mlaryland Tobacco Growers Association,

Baltimore; and the Eastern States Farmiers Exchange,

headquartered in W~est Springrield, Miassachusetts, were

among significant cooperativess formed.- In 19'0, the

Cooperative Grange League Federation Exchajnge, Inc.

(G.L.F.) was established with headquarters in Ithaca,

NJew Yrork.'


Influenices ol -cooperattive Ci~Der opmen

By the post-!!orld !ar I business depression, the

Aaron Sapiro era that emphasized cooperatives as a means

of giving farmers control of crops in the marketplace was


'Ibld., p. 57.

;Ibid., p. 57.

'Undated pamphlet received by mail from Ag::ay, Inc.,
Syrracuse, Nlew York. In 19641, G.L.F. a.-d Eastern States
Farmers Exchange merged to form Agway', Inc. Syracuse~,
New York. In 1965, the Pennsylvania Farm Bureau Cooperative
Association merged with Agway, Inc.





- 22


underwa'.' This era began at a meeting in Mlontgomery,

Alabama in A\pril, 1920, at which time Sapiro presented

ideas that influenced the course if ocoerative development

through emphasis on commrodity associations operating over

extended geographical areas.? Up to this time, a local

association had usually been the focal point in the

organizing of farmer cooperatives. The Sapiro program

suggested orderly commodity marketing through the formation

of state or regional single-commodity cooperatives, each

controlling enough of its respective crop to be a decisive

factor in price determination.

Ilot all of the cooperatives formed during this time

followed the Sapiro form of centralization, which, in

effect, is an elaboration of the independent local coop-

erative~. Some organizations established in the period

began as a federation of local cooperatives. One of the


'Aaron Sapiro, an attorney by training, is perhaps
one of the most controversial individuals ever to be a part
of the agricultural sector of the United States economy.
His ideas on the legal aspects and financing of cooperatives
were imrportanrt contributions. For a complete review of the
man and his ideas, see the article by Grace H. Larsen and
Henry E. Erdman, "Aaron Sapiro: Genius of Farm Co-operative
Promotion," The M!-iiSciPPi Valley, Hlstorical Review, Vol. 49,
No. 2 (September, 1962), pp. 242-268.

ZR. H. Montgomery, The Cooperative Pattern in Cotfon
(New York: M4acmillan Co., 1929), p. 31.










more notable of these ~as the uinnesota Cooperati'.'s

Creameries Assoc~iatins, Inc., the predecessor of Land

O'Lakes Creamerles, Inc., E-linneapolls, rllnnesotj..

From the inception of: tne economiic depression of'

the 1930's to the end of Wojirld W~ar II, there were a number

of forzc and eve~ntss which lef~t their mark~ on coope~ratio-es.

Since- this period signals the beglnnlng of~ Thei Cotton

Producers Association, man:. of tnese factors will be

subsequently discussed as they speclfically a~ffeted this

organi=ation. It does seem appropriate at this point,

however, to Indicate the general nature of the cooperati-:e

movement as CPA began operations..

During the period from the early 1930's to the end-

of World Wasr II, there wJas gro rth both In '.oclume of member-

ships and of busin;ss of farmer cooperatives.. As the jize

of the organizations grew, mrore comrple:. operations became

comm~onplace and there was increasing recognition of the

importance of sound4 business principles. nlec during this

period, the incidence of comb~ined marketing and purc-hasinJ

services greatly increased, thereby~ creating new! and mrore

demanding situations calling for more efficient management

and control. Processing of farm products and the manufacture

of farm supplies by cooperativ'es became more wjidespread.


'U. S. Department of Agriculture, Farmer Copeatve
in the United States, p. 58i.






-24-1


CPA, as it will be later seen, was a regional pacesetter

in these further services for its membership.

Figures 2-1 and 2-2 sumrmarize the trends in number

of cooperatives and total membership for selected years

since 1925. Data on these aspects of cooperative

development prior to those years are not complete. It

is eident from these figures and their supporting tables

contained In Appendix A that there have been sizeable

changes over the period shown. The number of cooperatives

reached a peak in 1929-1930, and have shown a steady decline

since that time. Reorganizations involving mergers, con-

solidations, and acquisitions have had an important

influence on this downward trend in the total number of

cooperatives. Memblerships in cooperatives increased to

1951-1952, and have decreased steadily since that time,

reflecting the decreasing number of farmers in the United

States. The membership decline is slower than the decline

in number of farmers in the United States, as more farmers

join cooperatives and as present members 3oin other coop-

eratives. The gross business volume of these cooperatives

has been increasing steadily throughout the period for

which data are available. Increases in both volume of

farm products marketed and farm supplies purchased have

led to these advancing volume totals. Figure 2-3 sumrmarizes

volume growth from 1921 through 1967.








- "5 -


--t --5


,~ a 'I



; L*7 *







u". u", r







L--








r Y-. 4 rl

YG J. U *1 *
--a 1 iuC 1,.
N M F
-. c. 1 .


0)~~- ,-- C 9 :~








I ~ ~ ~ ~ c. -) 17L 1:T
.--1 r- *- 7. 'h.


i'~u- 4 < lC,

~~~ O o


I II I






N~ 3 a a

e--4 .--





- 6 -


r3 r-










M L





I I r :- C
.--s --1 L* .--
-P 1 -i .





I I~i
0 1~r
"I J. .






1~ ~ Ij UU







~~ ~-r




CC J. .1

.-- -- a.-1 .

ur-
C oa~'-?
0 p


I 1
0' f rs "a .3,-






-27


C r










11




L1







-- *
















s o i.,



i O



,1. J


Ci r


ra -v
01 L
E ,

"F


I I ~ l l II I - I

O a5 o m a O O v N 0
N r-t r-1 rl M r













the increased em~phasis on sound op~erations and3

long-range dev'elopmenti from-i the time of the Great Djepression

was fajcilitated by organizations and events of the ralaediately

preceedring perlod, as Llelll as by' those cccurring during that

rime. These fators r~eulted f~romr a recognition on the part

of government, cooperjtivec leaders, and many farmers, of a

need to~ dev.elopF j rnore congenlall en'.ironmrent within which~

cooperati'.e CrgajniZ izatin and dev'.elopmelnt might ftake place.

This was necessary because so many pro~blrms extended beyond

the sphere o~f activity of individual associations.

O3ne of the mljoor general farm organlzations that

sought to provided such an atmosspnerei, by stimulating

business cooperation among fajrmelrs, was the Am~ierican Farm

Bureau Federation. In the 1920's, through Its various state

and county affiliates, the Farm Bureau became an acti'.'e

influence and participant in the organization of cooperatives.

In additionr to assisting in the planning and organizing of

cooperati'-es, the Amrrerican Farm Bureau Federation often

assumed ex~1penSes connected with preorganization activilties,

and, In some instances, furnished the initial capital.

Ordinarily, the newly organized cooperativ.es repaid the

funds so adv'anced. Presently, many of these cooperatives,

initially~ sponsored by the Farm Bureau, prov-ide marketing,

as well as production supplies and ancillary services.






-29 -


Snat ionl 3'al OrgaIn t ons

During the latter part of the 1920's, two national

organizations appeared. These were the American Institute

of c'ooperationr (AIC), and the National Council of Farmer

Cooperati-re Associations. Both of these groups have been

dedicated to efforts aimed at improving the economic

situation of farmers across the nation.

The AIC was formed in 1925 to promote research and

to provide information relative to the activities of

cooperation, particularly In the legal, economic, and

sociological phases. The institute serves as a clearing-

house for information and is a primary disseminator of

information of concern to farmer cooperatives. It is also

an important vehicle for contact among cooperators, educators,

business and professional groups, and governmental officials.

Cooperative leaders at the 1929 meeting of the

Amrerican Institute of Cooperation created a new organization,

originally known as the National Chamber of Agricultural

Cooperatives. Later in the samre year, the name was changed

to the National Cooperativ~e Council, and in 19410 again

changed to its present name, the National Council of: Farmer

Cooperatives. The function of this organization centers

mainly around the promotion of agricultural cooperativ~es

to government agencies and others, but it also serves as a





jlj


means for efficient comimunication bett~een cooperativess

andJ the legal and political env:ironment.

The C'oope~rative league of the U.J.A., which w;as

orgajnized in 1916, mlak~in3 It the oldest: of the national

organizations, should also be mentioned. This organization

Is a national federation of all types of cooperatiies. It

functions~ mainrly' in the areas of education of cooperatives

in sound management practices and in educating the public

to the benefits that may be derived, from cooperativee

organi-ation.

While it Is inappropriate to discuss themi

specifically in this work, there are many national commodrity~

organizations whose alms are largely economic and educa-

tional, which have~ contributed to a more favorable climate

within which cooperativess might organi-e and prosper.

Moreover, there are State Councils, organizations composed

of cooperativ~es within a state, which serve cooperatives

on the state le'.'l.

This belef synopsis of the organization and

development of cooperative~s is by no means exihaustive,

but Is sufficient to show the growth of cooperatives up to

the time that The Cotton Producers Association began

operations as well as to Indicate the general trends of

cooperative activity beyond that time. In subsequent

chapters, specific developments in cooperatives will be

examlned as they relate to CPA.






- 1


The Federal and State laws under which cooperatives-

no. operate speifyi~ the rights and d4uties of such organiza-

tions rather clearly. Mo~reo-er, thE Federal income tjx

status of cooperati-es has been clarified by statute and

by regulations. There were several noteworthy steps taken

in building this legal foundation during the period

1920-1940. The following discussion of the legal aspects

will be confined mainly to Federal legislationr inasmuch

as considerations of the various State acts would be ourtside

the scope of this brief revie~w. It should be poinrted out,

however, that the majority of states accepted a standard

cooperative act, the Bingham Act of Kcntucky:;, in '.arious

modified forms. This act in its several forms ser:ed as

enabling legislation f~or the organi-ation of a cooperativel

form of business. As will be subsequently discussed, The

Cotton Producers Association was incorporated undEY such

an act, specifically the Cooperativei marketing Act (Geiorgia).

as amended.

The major legislative acts of national concern to

agricultural cooperatives rest on the base lawr, the


'~he discussion of Federal legislation relating to
cooperatives was drawn largely from publications of the
Farmer Cooperative Serv.ice, particularly FCS Eulletin 1,
Farmer Cooperatives in the United S~ate;, pp. 14-2-2.





- 32 -


Capper-S'olstead Act, which specific~ally sanctioned f~armer

sooperatives that met certain requirements.' This act,

passed In 1922, is often referred to as the Magnj Carea

for agricultural COOperati'ves. Essentiall:, this law

pronded3E that persons engaged In the production of jgrl-

cultural products may' act together In associationss, with,

or wiithout, capital stock, for collective marketing, and

further that such orgasnizjtions may h~ave associations in

comm~on. Under this law, marketing co~operati.es may' enter

into aglreemenrts that bindi their melmbers- to exclusive'

dealing and the;' may' make agreements that are tantiamlount

to~ price fixingl so long'3 as the Secre~tary of Agriculture

hias no reason to balleve that prices, by such action, are

dr;iven to an unduly high levr-l. While the Clayton A-t,


LFor an agricultural cooperative to come within the
Capper-Volstead Act, It must be composed of

...persons engaged In the prodJuction of agricultural
products as farmers, planters, ranchmnen, Sairymaen, nut
or fruit growers; must operate on a mutual basis for the
benefit of its members as producers; and must conform to
one or both of these requirements:

*no member of the association may have more than one
v'ote, or

*the association may not pa: dividends on stock: or
membe~jrshipp capital in excess of B percent per year,
and miust not deal in the products of nonmenaber3 to
an amount greater in value than that handled by it
for mrembers.

For further information, see: 7 U.S.C. 291-292.






jj


1914,' guaranteed that nonstock agricultural associations

would not be considered in violation of antitrust laws,

this law clarified the rights of farmers to form marketing

cooperatives without regard to organizational form. Such

assurances were needed inasmuch as numerous cooperatives

were harassed by a series of antitrust suits in State

courts.'

An important second piece of legislation was passed

in 1926 by Congress under the title of the Cooperative

Mlark~eting Act.) This act provided for a division of

cooperative marketing In the U. S. Department of Agriculture.

More specifically, in terms of the Act, such a division was

to be established to provide service to cooperatives and

their federations in the cooperative marketing of agri-

cultural products, including such related activities as

processing, warehousing, manufacturing, storage, as well

as the cooperative purchasing of farm supplies, and any

other appropriate cooperative activities.'


'See Section 6 of the Clayton Act, 15 U.S.C. 12.

'Andrew W. MlcKay and Martin A. Abrahamsen, United
States Department of Agriculture, Farmer Cooperative Service.
HeLpinig Far'mers Build Coopera~tives, Circular 31, June, 1962,
p. 78,

37 U.S.C. 451-457.

Ilt is interesting to note that while there were,
by this time, a number of purchasing associations In
existence, and while this Act refers to cooperative





31


This legislation ser.ed to strengthen and formalize

research and educational assistance to cooperatives w~hich

had been performed for se'.eral years bl' the Departmelnt of

Agriculture. This formalized division was operated as

the Cooperatile Research and service Division of the Farm

Credit Associatio~n from 1933 to 1953. The separation of

this actiVity from the Farm Credit Administration in 1953

was in partial recognition of the need to expand education

and research efforts and to indicate further the degree of

Inv~olvement with cooperatives on the part of the United

States Department of Agriculture. The agency, k~nown from

that time as the Farmer Cooperative ServIce was, in 19i1,

grouped with other agencies In the Department of AgJriculture

under the direct responsibility of the Assistant Secretary

In charge of Conservation and PRural Development.

This agency has been active in the conduct of

studies In the history, organization, and business methods

of cooperatives in the United States and in other relevant

areas of cooperation. Furthermore, the staff is available

to advise groups interested in the formation of associations,

as well as to provide statistics and forecasts of relevant

agricultural activities to existingg cooperatives. Mluch


purchasing of farm supplies, the official title of the Act
only specifies marketing. This was due to opposition on
the part of competitive trade to purchasing associations
which, despite waning opposition to marketing associations,
continued strong at this time.










research and education activilty' oth;-rwiSe beyond the scope

of the inrdiv'idual cooperative is made avrailable by this

agency of the Federal governmaent.l

The passage of the AgJricultural :iarke:ting ;ict of

119 29stablished the Federal Farm board. Under this ;-.ct

the Board was given the task~ of encour~agingl the organization

of farmers into e~ffctive cooperativess and- of promoting the

establishment and financing of such cooperativesj. TIhis ;-.ct

also nuthor12Gd a re'.O1V.'ng fund of $500 million wlhiCh,

among other things, was to assist cooperati-es and to

establish government-owned commodciity stabilization

corporations.

Between 1929 and 1933, the Divijlon of C-ooperaci:e

Marketing operated under this Board and outside the ]uris-

diction of the Djepartment of Agriculture. Wlork writh ctoop-

eratives was conducted by this division under independent

agencies until it was reunited wJith the DepFartmient of

Agriculture when the Farm Credit Admlnlstration became

a part of the Department of Agriculture in 1939.

Despite the failure of the stabilization operations

of the Farm Doard, services to cooperative~s were in many

respects successful. Mlany larger cooperatives or federations


'For a complete summuary of the evolution of the
Farmer Cooperative Servicce, see the publication by Andrau WJ.
McKay and Martin A. Abrahamsen, HeliFng Fa.=mers Build
Cooperatives.





-36


of cooperatives were established. Some progress in the

coordination of marketing cooperatives was made, but much

remained to be done.

Legislation to deal with the credit needs of

farmers has been of Importance to cooperatives in general

and to CPA in particular. A system of twelve intermediate

credit banks was not used to the extent expected, possibly

because during this time farmers were unable to provide

either the capital or the leadership to establish their

own credit institutions to use the facilities that had

been created. In partial recognition of this fact, the

Farm Credit Administration was created in March, 1933, and

in June of that same year the Farm Credit Act of 1933 was

passed.'

This Act authorized the formation of local credit

cooperatives by farmers to make operating capital readily

available to them. These cooperatives were known as pro-

duction credit associations (PCA). Initial capital and a

special staff to assist in the organization of these groups

was also provided to farmers. The capital provided was to

be gradually retired by the farmer-users. Thus a retail

outlet for short and intermediate terml credit available

through the Federal intermediate credit banks was established.


'Farm Credit Act of 1933, 48 Stat. 31.






- 7 -


In addition to providing a means of ob~taining

credit for f~armrers, this A~ct also pro\.ided for the organi-

ration and capitalization of thirteen banks for cooprertives..

a section of the A~ct gave recognition to the specialized

needs of farmers' icooperatives. On Deceak~er 31, 1968, the

last fi-e of the thirteen banks for cooperative; rectred

the remiainingj stock owned by the Federal Gol'ernment and

all thus became completely owned by their borrow.ers.'

These banks, in serving ov~er 3,000 membetrr cooperatives, are

said to provide an estimated 60 percent of all credit

presentlyl used by farmer cooperatives in this courntry.r.

As will be seen, the regional bank atilized for financing

by CPA, the Cojlumb3le Bank for Coope~rativess Columirr aj

South Carolina, has been an important source of financing,

particularly in the early~ history of the cooperative w;hen

alternative sources were not readiily availablee'


1W. R.. Hoag and R. H. Prickson, "Am~ierican Farmers
Now Own $12 Billion Bianking Sjystem," Hear fcr Farmer Corp-
eraltives, Farm~er COOpertive'i Service, U.S. Department or
agriculture, Vol. 35, ;No. 12 (MaJrch, 1969), p. 3.

"Ibid., P. 15.

)On Decemrber 31, 19607, the summary balance sheet
of the Columrbia Bank for Cooperati'/es showed loans outstanding
of over S139 million, about 553 million, or 38 percent of
which, was owed by CPA. At that statement date cooperative
investment in the bank was over 510.5 million, of which
$4 million was held by CPA.






35


There are other important Federal statutes which

specifically mrention farmer coolperati'.es. Brief menrtion

of them should adequately show the congressional policy

that has evolved with respect to cooperatives.

The Packers and Stockyards Act, enacted in 1921,

provided for public regulation of commission men on

stockyards and requires that the legal rates that are

established be collected and retained.' There is a

section in this law which stipulated that this requirement

shall not prohibit a cooperative of producers from making

bou:c fide~ returns to members on a patronage basis of the

excess earnings on their livestock. This is subject to

any regulations which the Secretary of Argricultulre may

establish.

The Robinson-Patman A4ct, 1936, Section 4, states

that limitations on price discrimination shall not prevent

a cooperative association from returning to its members

the net earnings of surplus resulting from its trading

operations in proportion to their usage of the association

facilities and services.'

The Securities Act of 1933 refers specifically to

cooperatives in that it exempts securities issued by a


'7 U.S.C. 20j7.

215 U.S.C. 13b.






33


farmer cooperative if the organization meets certain

requirements outlined in the Internal PRevenue Code.'

The Agricultural Mlarketing Agr;eement Act of 1937

reaffirms that the Secrocary of Agriculture should recognize

and encourage those producer-owned and producer-controlled

cooperative assoclationrs which are in conformity with

policy set forth In existing Acts of Congress.

The Federal income ta:- status o~f cooperativ~es

is presently defined by the Internal PRevenue Code of 1954,

as amended by the Revenue Act of 1962. Those farmer coop-

eratives qualifying under section 521 of the Code normally

operate so that they haves little or no taxable income.

Nearly one-half of the existing associations do not

qualify, thus they are liable for income tax on receipts

devoted to the payment of a return on capital, and on

receipts which are not paid to patrons as true patronage

refunds in the manner set forth in the Code.' The Cotton

Producers A:ssociation is a qualified cooperative. Since

the matter of cooperatives and taxes is frequently a


'15 U.S.C. 77c.

?U.S. Department of Agriculture, Farmer Coo'pera~tives
in the United Sectic, p. 19. For specific details of the ta:-
status of cooperatives, the pertinent sections of the Inter-
nal PRevenue Code of 194: relating to marketing and supply
associations are 521, 1381, 1382, and 1383. The latter
three sections comprise Subchapter T of the Code added oy
the Revenue Act of 1962.






- 40 -


sriticism leveled at such organizational forms, It should

be remarked that this discussion relates only to Federal

Income ta:-es. Indeed In terms of total tases paid by

cooperatives, particularly CPA, they are, in some counties

In which they operate, am~ong the largest tax payers. More

discussion of this will occur In a subsequent section of

this work.


Economic E :L'dro rac : t for' Ar]iT.Cutltre CN thec Period
from~ Worild; :.ar IT to the Formattion of CPAl


The purpose of this section is to indicate the

general nature of the economic env~ironment for agriculture

in the period just preceding the formation of The Cotton

Producers associationn. Arlso, the conditions facing the

organi-ation in Its formative years willl be surveyed.

World War I caused an Irimmediate expansion of

agriculture in the United States. Such prosperity, born

of war, was only temporary. The war-encouraged growth in

the agricultural sector, combJined with scientific and

technological progress, greatly increased productivity.

This, ov'er and above increased foreign competitionr on the

return of peace, set the stage for two decades of exceedingly

difficult years for the Amlerican farmer.

While the majority; of sectors of the economy

recovered relatively quickly from the short economic

recession which occurred not long after the conclusion of






- 1 -


World War I, agriculture did not ev.er fully recov~er. Since

the Initial efforts of The Cotton Producers Association

were confined to aspects of the cotton industry, it is

relevant to examine that industry more closely.

From the standpoint of cotton producers, their

industry was not highly prosperous even during the war

years. In the years following 1920, the cotton industry

experienced little, if any, prosperity. To this point,

Melvin T. Copeland remarked in his report on raw com~rmodity

trends:

In the three-year period, 1911 to 1913, the
United States produced 64 percent of the raw cotton
output of the world, and raw cotton was the major item
in this country's export trade. In 1936, the world
cotton crop was the largest ever gro;Jn, but the United
States supplied only 37 percent of the total.'

Viewed from the position of the cotton farmer of

Georgia, one of several shifts which substantially altered

the raw cotton situation was most damaging. This, of

course, was the expansion of the cotton growing industry

further West, particularly into Texas and Oklahoma. The

farms here were adopting new and more efficient methods of

cultivation and harvesting on average acreages of 160 to 320

as compared with ten-acre patches in the old cotton country.2


'Plelvin T. Copeland, A R-v Commodity Revolution,
Graduate School of Business Administration, Harvard
University, Business Research Study Nlo. 19, 1938, p. 16.

I~bid., p. 17.





-1:


When this Is combirined with increased foreign production

and the growth of the rayon indrstry;, the cotton farmer of

the Deep South faced difficult times. Hlore aspects of the

economic situation faced by the farmer in Georgia will be

e:-:plored in ex~amiining the beginning of The Cotton Producers

Asjcciation.


Geong,a.a F-a,~irs .:ttempt t~o Organ -'


As early; as 1922, attempts to market cotton

cooprertively in Georgia were underway. In that year,

the Georgia Cotton Growers Cooperati'.e Arssociation wajs

formed to market the cotton crop of farmer members in the

state.

This organization, In Its early years, pooled

all cotton and made ad'ances to the farmer members on a

basis of about 70 percent of prevailing market price for

the commodity at the time of deliv'eryr to the association.

Attempts to market the cotton in an orderly fashion were

made with the farmer members to receive the average pool

price for the season. The pool plan would work to the

satisfaction of the membet~rs so long as the price of cotton

was rising over the course of the season, because a higher

price would be obtained at the time of sale than would have


LThe following discussion is based largely on
an interv~iewr held with D. W. Brooks, February 13, 1969.






- 3


been received at the time of delivery to the association.

However, with a generally~ unfavorable commlodity market,

as has been mentioned, prices generally declined during

the marketing season. This was largely true from 1923 to

1933, the period of operation of the Georgia Cotton Grovears

Cooperativle Arssocsiationr. This, of course, meant that the

farmer participating in the pool received an average price

that was lower than that which he would have received if

he had sold his crop Immer~diately after it was harvested.

I-tembers were naturally dissatisfied with this actuation and

this was evidenced by a decreasing volume of cotton handled

until 1926. In that year an optional pool arrangemr~ent was

offered. This plan proved to be acceptable to members be-

cause they could have their cotton sold and receive their

proceeds on any date which they selected. while this

limited the flexibility of the association somewhat, it

did enable an increase in volume handled to the point that

relatively effective marketing practices could be followed.

Yet cotton prices continued to decline as did other farm

prices. (Average cotton prices in the state of Georgia

for the years 1925-1967 are contained in Appendi:- B,

Table B-1.)

The Federal Farm Board was organized in 1929, as

earlier discussed, in an attempt to stabilize farm prices

and develop cooperation among farmers. It announced that






41


it would lend money to cooperatives so that they could mak~e

advances to merrhiers for their cotton crop. The rate was

around 16 cents per pound, a rate slightly below the price

received for the 1928 crop. Yet prices continued to decline

and the association could make sales of the cotton only at

a loss.

The Georgia Cotton Growers Cooperative Association

became a member of the newly organized American Cotton

Cooperative Association, headqluarteredl in New Orleans,

Louiniana, In 1930. There were other state cotton marketing

cooperatives as members of this group, which had as its

purpose the financing, hedging, and selling agency for the

member associations. Declining prices continued and the

Federal Farm Board was unable due to a reduced budget to

continue its established lending levels.

As was mentioned, with the change of admrinistrationr

in 1933, the Federal Farm Board was succeeded by the Farm

Credit Administration. In that same year, a portion of

the members of the Georgia Cotton Growers Cooperative

Association filed a petition for receivership. The price

of cotton to the grower had now dropped to five to six cents

a pound. The association has Issued more than $500 thousand

in revolving fund certificates which were never capable of

redemption because all of the assets of the association

were pledged to the Federal Farm Board. Thus, with no






- 45-


assets, the Georgia Cotton Growers Cooperative Association

ceased operations in 1933.

During the years of operating troubles of that

organization, a young agronomy instructor at the University

of Georgia was starting a career which was to touch

thousands of farmers over the years and to influence the

agricultural economy of the Southeast. That he was well

prepared for his work is Indicated in a numbiler of ways.

D. W. Brooks was the son of a farmer and his early years

on the farm at Roylston, Georgia, brought him into contact

with the variety of problems associated with the producing

and marketing of cotton. He challenged many of his

advisers when he announced that he would like to study

agriculture at the University of Georgia. These, after all,

were the days when farming and farmers were well versed in

the traditional farming practices that had been handed down

from father to son. Indeed, he did attend the University

and received both his B.S. and M.S. degrees in Agriculture

after which he taught there for three years.

His concern for the farmer was greatly Intensified

by the agricultural depression. He knew what the conditions

were and he, by virtue of having, as he says, "attended

school with or taught every county~ agent in the State,"

received regular reports on the steadily worsening situation.

By the 1930's, desperate times began for the Georgia farmer.





- 46


As brooks says agaln and again, "All the farmer was

producing was po-verty." Per capital farm income in the

state dropped to only S72 a year; the price of cotton to

a nickel a pound.

Having studied w~ith keen interest the experience

of European cooperative ventures and farmer cooperatives

on the west Coast, Brooks felt that the farmers could

improve themselves only by better production methods and

by the development of their own efficient marketing systems.

i1hen a few of his farmer friends, some of whom had been

members of the ill-fated Georgia Cotton Growers Cooperative

Association, asked him to help them do some of the things

that he had been telling them about for se-'eral years,

Brooks had to make a choice.

The decision had to be a painful one and he

sought the counsel of his wife and his friends. There were

many who advised him against such a course of action,

including his immediate superior at: the University. In

fact, to make his decision more difficult, he was offered

a promotion to associate professor. Additionally, there

were offers,certainly more attractive financially, to go

into business for himself. Yet, ultimately seeking and

receiing assurances from his wife, he decided that It was,

as he said, ". . too late for talk-teaching. Do-teaching

will be a lot faster."





17


Hav.ing made this decision, he and five farmers met

In late 1933 in a Carrollton, Georgia, w~arehouse to get

underway what was Liltimrately The Cotton producers

Association. Brooks was made the general manager of this

new organization which had no starting capital. It Is a

source of pride to him and an evidence of his dedicationr,

that Brooks declined the $5,000 salary which his ''partners"

suggested. He says that he told them that, "A4 sure way

to go broke is to start off paying me that kind of money.

I'll start at $2,400 per year." This was less than half

the proffered salary from the declined teaching promotion.

This new association, the Georgia Cotton Coop-

erative Association, headquartered in Atlanta. As evidence

of the impatience of Brooks to get underway, the association

was incorporated under Delaware laws where the charter could

be obtained In one day as contrasted with the thirty-day

period required to obtain a Georgla charter. The organi-

zation im~-mediately began receiving cotton. Because it hadr

no operating capital, arrangements were made with the

American Cotton Cooperative Association (A~CCA to finance

its operations and to let this fledgling organization

participate equally with other mermb~ers on a patronage

basis In any savings obtained by the ACCA. In exchange

for this aid, the cotton received by Georgia Cotton Coop-

erative Association would be delivered to the ACCA at the

same price that had been advanced to farmer members.





- 48 -


It is natural that resistance would have been

met by this new organization, if for no other reason than

the problems associated with earlier group efforts. The

drive for new merrbers was carried on by Brooks on a day and

night basis. By day he supervised activities of the new

organization and by night he spoke to groups of farmers,

a pattern he and his management team were to establish

and maintain throughout the development and growth of this

business. His early efforts resulted in the association

handling nearly 40,000 bales of cotton in its first year

of operation, at a savings which permitted the paymrrent of

a small cash patronage refund.'

The next two seasons, 1934-1935 and 1935-1936,

brought further gains both in cotton marketed and in

membership. In 1934-1935, cotton volume was about twice

that of the first year in operation or in excess of

75,000 bales.; Such savings as were realized In these

two years were retained in the association to provide

working capital.

During these first years, survival was the

important goal. The association had no capital or

facilities. Because of the nature of its relationship


1From financial records of The Cotton Producers
Association.


'From records maintained by the cotton division


of CPA.





with the ACCA, essentially operating as its agent, there

was no real opportunity to accumulated the amount of capital

necessary to implement those programs which would aid the

farmer. Yet, during these first years of operation, an

even better appreciation of the scope of the task that had

been undertaken was obtained by actual e:-perince in the

field. M~oreov'er, the nucleus of an admninstrativ.~e organi-

zation began to materialize. Indeed, the first emp~lo:ees

of the association know better than anyone how far and

how fast the association has developed, despite what

seemed at times to be insurmountable obstacles. Additionally,

they know the value of the dedication and the indefatigable

drive of D. bl. brooks. Those were the principal assets on

which the organization relied in its attempts to sur-ive.

In 1935-1936, it w~as decided for several reasons

that the Georgia Cotton Cooperative Association should

operate under a Georgia charter of incorporation. Since

it was not legally possible to transfer the assets and

membership from one associatioon to another, the Djelaware

corporation was liquidated and all farmers paid on a

patronage basis all of the net margin that had been

accumulated. This amounted to reimb~ursing farmers the

amount of fifty-three cents per bale of cotton as a

liquidating dividend.l


'From financial records of the association.





-50 -



Concurrent Laith this liquidation in June, 1936,

the sucessor organization, The Georgia Cotton Producers

Association L:as formed. Its problems and attaironrents are

the subject of Chapter III.













C"HAPFTRFi III

FOUIJDATIONI YCARS: 1936-1937 TO 1939-1940





It has been said that, "cooperatives are born of

adversity."' Whinle such a statement contains an element

of truth regarding the beginnings of The Cotton Producers

Association, it cannot be said that the organization has

always reacted only. to the pressures of immeirdiatr problems.

D. W. Brooks and the other policy makers of CPA have con-

tinually recognized the larger problems facing the farmrer

in the Southeast. Brooks, like other prudent businessmenr,

put sound and sophisticated thinking Into the organization

from its inception. Recognizing full well the dire economic

conditions facing the Georgia farmer, he knew, at the same

time, that unless the association wias soundly~ concetvedd and

adequately financed, It would never be equal to the task~ of

assisting the farmer on a long-range basis. From the outset

this was the objective of the founders of CPA.

This broad objective of increasing economic returns

to the members of the group appears to be common to the


'Exact source unk-nourn, but widely quoted in the
literature on cooperatives.


- 51 -






-52 -


majority of agricultural marketing cooperatives. Related

goals sought for its members by the management of The Cotton

Producers Association included an increased standard of

living, price stability, reasonably priced inputs, improve-

ment in technical methods of production and distributiGD,

maintenance of the family farm, and improved bargaining power.

Whnle these goals include social and cultural elements, they

are closely linked and instrumental to the overall objective

of increased economic returns to the memrbership.


Bulding a Solid Foundation


Yet In these critical first years of the organization,

little in the way of accomplishment of such seemingly un-

attainable objectives was patently obvious. The successes,

while quite important in long-range terms, were limited to

the gaining of experience in the cooperative form of organ-

ization, in developing a nucleus of competent personnel, and

bringing into the membership farmers who had faith in, and

determination for, the organization to succeed.

Perhaps one of the more important and favorable

outcomes of this early cotton marketing activity, despite

the fact that it did not present the opportunity for accu-

mulating working capital, is summed up by S. H. Burns, one

of the founders of CPA.






- 3


M~r. Brooks [had] said he :would take th~e iob [of'
managing the cooperative]~- if he could advanced the farme~r
the~ full market price for his co~tton at th~e time h-
turned it o-'.*r to the association . L.'s did pretty,
wecll advancing farmers the market~ price for their
cotton at the time the;y delivered It. We~ did business
on the square in Carrollton [Georgia], like the other
cotton buyers. You k~nowr--..'e found clut one thing in a
hurry--the other buyers had to pay' the farmer whart hi~s
cotton w:as worth, and non-mecmbers werea getting as much
for their cotton as makrlers. Our association was
helping all farmers get more for their cotton.'

The Georgia Cotton Producers Arssociation wdhich wa~s

chartered under Georgia law in June, 1936, started lik~e its

predecessor, witn no assets and no memb~ers. Wh:rile a new

board of directors was elected, the same management and

personnel were retained from the liquidated, Delaware char-

tered, Georgia Cotton Cooperativ~e Association. The new

association became a member of tne American Cotton Coopera-

tiv~e Association (ACCA) under the same arrangements in effect

for Its predecessor. During the perica 1936 to 1940, in the

marketing of cotton, the organization operated as an agency

for ACCA and was, therefore, reinbursed actual operating

expenses. This, of course, precluded any opportunity for

accumulating net margin from that activity.


Conditlons of Nemsbership~

The Georgia Cotton Producers Association, as it was

to be known until the corporate charter was amended in


'"S. H. Burns Carrollton, Georgia Coop Grandaddy,"
Dirzi Co-op NVews, Vol. 1, No. 12 (July, 1951), p. 6.





October, 1943, changing the name to The Cotton Producers

Association, wjs a cooperative~ corporation organized under

the Cooperative Marketing Act (Georgia), as amended. It

was inc-orporated as a non-st~ock organization In wh!ic~h members

were no~t required to pay a membership fee or mrembership does.

Any producer of agricultural products or cooperative asso-

ciation of such producers was eligible to applly for mrember-

ship and subsequent to approval by the board of directors

become a membe~r. Each indi-'idual meltjer and member asso-

clation was entitled to one vot~e in the control and affairs

of the association. This one vote per member prov.islon has

remained throughout the history of the organization.

Specifically in regard to eligibility for mexiter-

ship, the byrlaws' of the Association provide that:

A;ny person, firm or corporation engaged in the
production of fsrmr commrodities, Including livestock and
poultry, including the lessees and tenants, or the les-
sors or landlords, of land used for such production,
providedd such lessors or landlords receive all or part
of the rental in farm products, and any cooperative
association organized under the cooperative marketing
laws of this (Georgiar or any other State, may be ad-
mitted be the board of directors as a member of the
a'Ssooation.

The bylaws further provide that:

Any person, firm or corporation eligible to membership
under these blylaws may apply for membership in such


'For further details see the articles of incorporation
and bylaws In Appendix C.





CC


manner as miay~ be prescribed by; the board o~f directorss.
All members shall subscribe to a mark~eting and 'or
purchasing agreement, in a form preeceribed by the board
of directors, or shall sign somle other document which
by~ its terms embllodies by reference the marketrin3 and/or
purchasing agreement then in effect an-i on fi1+ ?ith
the --ecretary of the association. The board of directors
shall prescribe, from time to time, the general marke~ting
and/o~r purchasing agreement then In effect, and shall
cause one copy. the~reof to be~ excuited by the prrsidient,
attested by the secretary, and corporate seal of the
association, to be filed with the sc~retar'.*, and samle
shall be~ the general marketinrg and/'or purchasing agrree-
ment of the association until a now one is properly
authioriied by. the board of directors, eXSC~utFd by' the~
president as aforesaid, and filed with the sicretjry.
The association may~ have~ different contracts wnith; its
members varyi~ng in terms and conditions of the contract
of any member, provided th1 membe:r assent-- therato~; and
such mo~diftcation, variation or alteration shall not
affect the contracts between the association and other
membJers; nor shall the consent of other members he
necessary to effect such mlodification or change.'

The membjership agreements run for a period of ten

years unless canceled in wr~iting by either party. Hwvr

if a member fails to deliver farm prodructs to, o~r purchase

supplies from, the association for a period of three consec-

utive fiscal years, he will be placed on an Inactive list

until such time as he again delivers farm products to, or

purchases supplies from, the association. While a member

is on the inactive list, he, under the terms of the bylaws5,

shall not be entitled to a vote or voice in the affairs of

the association.


'Specimren copies of membership agreements appear
in Appendix Di.






5i


During the period 1936 to 1940, membership in the

association grew steadily to a total membership of over

40,000 individual farmer-membters located in the states of

Georgia and AElabamaj. There were seven member cooperative

associations, predominantly local in scope of operations,

reported In the fiscal year, 1940-1941. Table 3-1 contains

detailed figures of this growth.


Th,- board of D~irZCtors


During this period the Board of Directors consisted

of nine men, one director each from the nine election, or

voting, districts. Members of each respective district

elected a director to serve for a term of three years with

terms staggered so that three directors would come up for

election each year. An allowance not to exceed ten dollars

per day was provided while directors were attending board

meetings; however, there was no actual compensation for

services.'



'According to the most recently amended bylaws, a
copy of which is contained in Appendix C, no compensation
Is paid for services other than reimbursement for actual
e:-:penses incurred in travel by the individual on official
business of the association, along with a per diem of $25,
with a $50 minimum, plus expenses incurred while attending
meetings of the Board or conferences.






























I;d~iviUal: Nlmbe r coope~ra t ive
Ye'arl FarmerC HambereJ1 AsePCeiattion


1936-1937 21,867 ..

1937-1938 32,885 2

1938-1959 35,685

1939-1940 37,007

1940-1941 41,370 6


Source: John H. Lister and Clarence E. Pike, The Cottji:
Producere Aissciation:, Parm Credit Administration, U. 5.
Dept. of Agriculture, Circular C-131, March, 1948, p. 8.


- 7 -


Table 3-1

Membership of The Georgia Cotton Producers
Association, 1936-1937 to 1940-1941






:S


The names and residences of those elected to serve

f~or the first year and wIho were to serve as incorporating

directors until their successors could be elected and quali-

fied are listed in Table 3-2.

Each of these directors was subsequently elected as

the representative from his respective district.




Subsequently the districts which w~ere originally

delineated have been changed as the scope of operations has

been broadened. This has been necessary to maintain the

original intent of equitable representation to members

throughout the territory served by The Cotton Producers

Association. As of June 30j, 1968, there were ten districts

and four corporation districts' which had been added at

various times after the original organization planning.

complete listing of the areas comprising each of these sub-

divislans is contained in the latest amended bylaws of The

Cotton Producers Association in Appendix C.


'The corporation districts, four in numbr5r and
encompassing the territory; served by The Cotton Producers
Association wrere created to provide specific representation
for the cooperative corporations which are merriers of the
Association. The by~law:s provide that: "'a Corporation
District Djirector shall be a duly elected Director of a
cooperative corporation being a member of this Association
and having its principal office within the territorial
limits of the corporation district from which he is elected."




























Roame Reeid5nrc; Countya Suta

5. S. Johnson SIlvesr Creek Floyd Georgle

John F. West Calhoun 3ordon Georgia

5. H. Burns Clem Sarroll Georgia

W. P. Sewell Atlanta Delalb Georgia

George S. Rees Preston Webster Georgia

H. M. Paulk Fitzgerald Ben Hill Georgle

W. C. Hodges Statesboro Bulloch Georgia

J. J. Pilcher W\rens Jefferson Geo~rgia

G. W. Woodruff winder Barrow Georgia


Source: Official records of the Board of Directors, The
Cotton Producers Association.


S'J


Tablei 3-2

Residences of Original Directors of
Cotton Producers Association


!James and
The






i\j


The current bylaws also provide for the election,

In addition to those already discussed, of three directors

at large. In addition to memrbership in the association,

one shall be engaged in the growing of cotton, one In the

growling of pecans, and one in the growJing of peanuts.

Staggered three-:ear terms are provided for in the governing

rules of the organization. Further details on the board

of directors as presently constituted appears in a later

section.


Pvser; and Dutiesr f Direasorn

The powers and duties of the Board as originally

defined in 1936 in the bylaws were:'

Powers of Directors

1. To conduct, manage and control the affairs and
business of the association, and to make rules
and regulations for the guidance of the officers
and management of its affairs;

2. To appoint and remove all officers, agents, and
employees of the association, prescribe their
duties, fixr their compensation, and may require
from them bond in such form and in such amount
as may be deemed necessary.

3. To select one or more banks to act as depository
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 the


'These powers and duties remain the same in the
most recently amended byllaws, a copy of which is contained
in Appendix C.






- 61 -


power to change such banks, and the person or
persons signing said checks and the form thereof,
at will.

4. To join with individuals, firms, partnerships or
other asosoiations or corporations to form a non-
protit cooperative association, with or without
capital stock~, by entering into and executing
agreements or merger or consolidation with an"
such entities, which power shall be exercisable
without prior or subsequent appro..*al by the~ mreibers
of this association.

Duties of Directors

1. To keep a complete record of all its acts and of
the plroceedings of its meetings, and to present
a full statement at the regular annual meeting
of the members, showing in detail the conditions
of the affairs of the association.

2. To cause to be installed such a system of book~-
k~eeping and auditing that each meager may~ knowJ
and be advised from time to time fully concerning
the receipts and disbursements of the association.

3. To appoint a Mlanager, who shall hold office at
the pleasure of, and on terms and conditions
set by it. The manager cannot serve~ in the
double capacity of Mlanager and Director.

4. To carry out the marketing and/or purchasing,
contracts of the association and the grower.'


GeneralZ conduct of 6boar)d

The Board of Directors hold, irmmediately following

the annual meeting of the membership in December of each

year, a regular meeting which has as its main purpose, the

election of officers for the next year. Originally the


'Tak~en directly from the original bylaws of the
organization, a full copy of which is contained in Appendix C.






- 62-


offiers included a president, a vice president, a secretary

and a treasurer.' The latter two officers did not hav~e to

be elected from the membership. Also at this annual meeting,

an executive commiittee of five members,, including the

president and vice president, were to be elected from among

the membership of the board to serve for a period of one

year.'

The board has throughout the history of CPA followed

the practices begun in these early years. Specifically,,

the board has served as a general policy-making group which

has never involved itself in the actual management of the

affairs of the Association on a regular basis. The counsel

and management abilities, first of D. W. Brooks and his

staff, and since June 1, 1968, of C. w. Paris and his staff,

have been relied upon heavily for management of the business

on a daily basis. Perhaps more importantly, however, these

men and their staffs have provided the necessary background

analysis and planning for the development of the association

along orderly and efficient lines. At the same time the

board, by virtue of its composition, has been able to provide

Invaluable advice and recommendations based on each board


'Over the years the number of officers to be elected
has been expanded as will subsequently be shown.

ZUnder the most recently amended bylaws, this five-
member committee includes the president and senior vice
president.






gj


memrber's intimate knowledge of the conditions and needs

of the membership In his district.

The v~alue of the board is further enhanced by its

ability to communicate to farmers, in the respective areas

which are served by each member, greater detail on the

nature and purposes of the v'arious activities undertakecn

for the benefit of the membership. As will be subsequently

seen, this role has assumed more and more importance as

the corporation has expanded and diversified its operations.

Taking into account these various factors, it would

appear that the Board of Directors, as it has been consti-

tuted, would be especially effective not only for its

policy formulation activiities and guidance, but also for

its close identification with the membership. The sharing

of proximity of interest and of location to the members

whom he represents should make the potential contribution

of each board member much greater in many respects than

that of his non-cooperative form of enterprise counterpart.


Thre Offices of Secretaryy and Tecasu2rer~l


D. W. Brooks was elected to the office of Secretary

upon organization of the association and he was to hold

that office as well as the title of General Manager until

his retirement from day-to-day management responsibility






- 64 -


of the organization.' C. B. Funder~urk was elected to

the office of Treasurer by this first board of Directors.

He too, was to be engaged in the active management of the

cooperative until his retirement some tweJnty-nine years

later. Fund~erburk: was experienced in farm organizations

since he had been associated with them from the time of

leaving college at the Georgia Institute of Technology.

It has been remarked by employees of the association and

members alike, that these two men made up a team that was,

in large measure, the reason for the continued existence

of CPA during those early years, when the agricultural

situation in the South was most unfavorable. The team,

as several longtime observers who wish to remain nameless

put it, consisted of Brooks with ideas and indefatigable

drive and Fundereurk with the financial expertise necessary

to get these ideas into practice. While he probably would

not admit it, FunderBurk lent some credence to this obser-

vation when he said with a sparkle in his eyeC "OCur per-

sistence in getting Into something new has kept us continually

short of working capital."- He also made the observation,


'Concise biographical sketches on all of the original
officers active In day-to-day management, as well as infor-
mation on the present officers is contained in Appendix E.

FProm an interview with C. B. FunderBurk on March 24,
1969, in the offices of The Cotton Producers Association,
Atlanta.






65


as have many others in the association, that each newJ

venture was entered at the request of the farmer-members.'


Operations During the Period 7938-:j40


This entire period was characterized by heavy

ef forts to survived. The principals knew that if the co-

operative were to exert a powerful influence on farmers'

incomes and activities, then a solid foundation would have

to be laid In these early years.

Cotton, of course, was the principal single source

of farm income for both Georgia and Alabama during the

early years of organization. It wJas also the principal

single source of farm income in South Carolina when CPA

extended its cotton marketing services into that state

some ten years later. Therefore it is only natural that

the first services offered were cotton marketing services.

Table 3-3 shows the total production of cotton in the


'Wlhile there is much truth in this, the writer
feels that it understates the role of guidance played by.
Brooks, Funder~urk, Paris, the board members and other key
contributors to the rapid expansion and diversif~ication
which have characterized the growth of CPA. Furthermore,
hav.ing spent time with these officers and key employees,
the writer cannot help but venture the opinion that if
"Old D. W.," as some affectionately have called him since
the beginning, explained an idea to the membership, they'
could not help but request that the venture be undertaken.
The active management has served to bring to the attention
of the membership needed or profitable avenues of growth.
This will be demonstrated amply in succeeding sections.







- 66 -


c-, .
OW L0





s






lel







ac~



O >- L ~
c4o



mC O

me~
1 0 ..3




.*3 O L
Ir

.0 I .





.. e- ac
1-. ** o



"s 1J W.
Or T .C m


oo





























. m


aJ c



I o

co E











4 H


O



C -

.4



LO L


c o l







on


.--I r a






S67


states of Georgia and Alabama in the years, 1929-1940.

Some evidence of decreasing total production is seen,

however, production remained close to two million bales

at the end of the period.

Much of this area had been under cultivation for

over 100 years, and In some cases up to 200 years, with

the majority of farmers following the one-crop system of

farming.' This fact, coupled with the failure of the

majority of farmers to follow any soil conserving practices

had led to a general depletion of the soils. Heavy ap-

plications of fertili-,er to most soils are required to

produce optimum results. Cotton, in particular requires

large amounts. The management of CPA recognized that

several programs needed to be implemented to improve this

situation relative to the principal crop of the farmer

in Georgia and Alabama.


Various Progrnam Ndezds by Farmers

These programs, revolving around action taken to

influence economic returns of the membership, can be

classified into the following categories: (1) influencing

the efficiency of marketing; (2) influencing the efficiency

of production; (3) influencing the supply of the product(s):


IJohn H. Lister and Clarence E. Pike, The Cotton
Producers Association, p. 4.






~8


(4) influencing the demand for the product(s); and

(5) Influencing governmental programs at all levels In

terms favorable to long-ruin economic efficiency of product

categories and to the agricultural industry of the region.

Brooks was clearly thinking in terms of such goals

w:hen he told the fledgling cooperative membitership as they

were getting underway that:

He've~ got to get on the profit side of agriculture.
Small farmers like us can no longer make the grade
lust by' producing ra:: materials. To get on an equal
footing with large corporate farms and other big
businesses, we'.e got to pool our resources, buy--
and later manufacture--our oun supplies in wholesale
quantities.'

H~e concluded by~ saying that thel must operate their own

warehouses, feed mills, stores, etc.' One can imagine how

members unable to afford good shoes must have initially

reacted to such daring Ideas. Yret those wrho stayed around,

and they were a numerous and over growing group during

these early years, were to see that such nations were not

only possible, but attainable in a relatively short span

of time. It wajs the intent of the founders of the asso-

ciation to use whatever means, which could be obtained

through group action, to further the improvement of the


A;llen Rankin, "A Super-Farmer Attacks Global Poverty,"
The A:Zanta Journal andl Constitution Nagazine, December 10,
1967, p. 7.

2Ibid.,p. 7.






-69


economic positions of the individual mewhe~rs, without

leveling them off or averaging them down. As one authority

said,writing of the cooperative as a form of enterprise

in this period, "It seeks to deal with society as it is

(rather than to reform it). .. It deals with first

things first, and as it finds them, it leaves big things

until it gets to them. Withal, it is a legal, honest,

and honorable enterprise."'


Improved ~oCotto Marke~tig


The Georgia Cotton Producers Association, taking

first things first, initially concentrated on the cotton

marketing situation. Because of the condition of the

market that prevailed for cotton, the existing inequitable

marketing methods, plus the financial constraints of the

young cooperative, such a program seemed to offer the

highest use of whatever capabilities the organization had.

Operations in the first year of the successor

organization were confined to the purchasing of cotton as

an agent for ACCA. It was apparent to Brooks and to the

board that, if financing were ev~er to be accumulated for

expanded and more beneficial operations, more than handling

of raw cotton as an agent for another cooperative would

have to be done.


'H. E. Babcock, "Cooperatives, the Pace-Setters in
Agriculture," Journal of Farm Ecoonomcs, Vol. 17, No. 1
(February, 1935), pp. 153-156.






-70 -


Additional services in the form of a cotton warehouse

seemed to be the logical next step. The principal hurdles

to overcome in deciding upon this course of action were

both financial and administrative.


Capital Requirements

The financial problem was handled in part by the

securing of 52,100 from farmers In and around Carroll

County~, Georgia. This rather nominal am1ount, by current

standards, raised largely 55 to $10 from individual farmers

is often referred to as the initial capital of the organi-

zation. Ten-year debentures at a four percent rate of

interest and callable at any time were issued by the

association to subscribing local farmers. Additionally,

notes were obtained from other farmers to a total of

56,500.'

The Citizens and Southern National Bank in Atlanta

loaned money on these farmer notes and the Columbia Bank

for Cooperatives, Columbia, South Carolina, loaned the

necessary balance needed to purchase a fire-damaged cotton

warehouse. The purchase of the warehouse in Carrollton,

Georgia was completed In about thirty days.


1C. B. FunderBurk, "Great Depression Demonstrates
Faith and Determination of Georgia Farmers," Dizie Co-Op
News, Vol. 4, No. 11 (June, 1954), p. 5.

Ilbid.,p. 5.






- 71 -


O~r':an2izatt~ionL Structure~

Administratively, an organization structure had

to be developed to enable servicing farmers on the local

level. This w:a s ccomplished by the organization of the

Farmers Mlutual Harehouse Associationr of Carrollton,

Incorporated, on December 21, 1927.' This local cooperative

was established to operate the cotton warehouse, cte prop-

erty being leased from CPA.

This concept of local organizations was to be the

pattern throughout the development of the association. From

the outset, it has been the policy of CPA to require that

farmers In the area furnish a considerable part of the

financing for a facility, with the assoc-iation providing

the remainder of needed funds to get operations underway.

Additionally, the requirement that a sufficient nrumbr~h of

local producers become actively inv~olved has been the rule.

Without such inv~olvemoent, financial and operativ.e, the

management realized that benefits and progress would not

be as likely to occur. The locally owined and controlled

C~arrollton association was, of course, to be a member~~ of

the Georgia Cotton Producers Association and CPA, in turn,

to be a member of the mutual warehouse association. In


'Taken from a speech by C. W. Paris, then Vice
President and Assistant General Manager of The Cotton
Producers Association, to the Mid-Year Agency Conference,
January 5, 1967.






-72


this w~ay a closer working relationship was assured.

Formali-ation of procedures regarding the nature of the

relationship of CPA to local associations continues along

more lines as other associations are added over the I'ears.

More will be said of this later.





WhFen the Carrollton association began recei-ing

cotton in 1937, it was hoped that two objectives might be

realized. First, CPA felt that the mutual warehouse plan

would provide adequate coo~perativ'e storage service for

itself and local farmers at a savings in storage costs.

Probablyl more im~portantly~, howeverr, was that the warehouse

provided licensed weighing and grading services so that

farmers could be assured of a fair price at the time of

marketing their cotton. The four cotton graders hired,

said Brooks, ". . guaranteed local farmers that they

would receive premium prices for quality cotton."' Prior

to this time, according to Brooks, farmers had received

the price set in the local market regardless of the quality

of their cotton.


'Interview with D. W. Brooks in the Atlanta offices,
March 24, 1969.

'ITbid.






-73


The association did not operate under a compulsory

marketing agreement with farmers. That is, the membJers

were permitted to deal with the organization when it was

to their benefit to do so.' Producers liked this rela-

tionship because the association was functioning in its

capacity to giv~e the cotton farmer some sort of market pro-

tection, in addition to causing marketing practices to

undergo change. N~ot utilizing a compulsory~ market agreement

also allowed CPA to fulfill one of its avowed purposes upon

organization which was that "no farmer would ever be able

to say he had lost money by doing business with The Cotton

Frodci~rk Assocjti~kidR


Complete iotton Marketina Servizes

The opening and successful operation of this 10,000-

bale capacity warehouse made complete marketing services

available to members in this area, including loans and the

services of government licensed classes and w~eighers,

as mentioned. According to S. H. Burns, who was the first

president of the Carrollton cooperative warehouse,

...by the end of the second year [of operations],
the warehouse was hardly big enough to take care of


1..Cotton Producers Association Makes Steady Growth,"
Dirie Co-Op Nees, Vol. 1, Nlo. 1 (August, 1950), p. 4.

Ilbid., p. 4.






-7 -1


the cotton farmers marketsing th~rough- rihe association.
One- time we got so jamm~iEd at the wareh-ouse, and
couldn't take in any, more cotton for a few days,
that the price broke from one-half to one and one-
half cents w~ith no change in the spot markects.l

Brooks also addressed himself to the effect of

a local warehouse operation and to the efforts of CPA on

cotton prices when, in 1950 after a nuake~r of warehouses

wesre In operation, he wrote:

Time and tine again, farmers hav'e found that
when their coopcrative was not in a position to
handle their cotton temporarily:, due to a lack of
storage space or some other such condition, the price
of cotton in their locality would often decline as
much as 55 or e~ven 510 rer bale in thirt. minutes to
an hour w:ith no change in Ne~w York~ futures. Although
it is Iverl difficullt sometimes to show all the good
that farmers do for themselves by working together
cooperati-ely, there Is enough evidence from time to
time to show that the income of farmers has been
raised many millions of dollars ev'en in the cotton
belt through the operation of their own associations.
In addition to performing the marketing service
as outlined above~, the cotton sooperatives have
constantly made the Government loan im~mediately
available to its [sic] mremTbers In towns where a
cotton cooperative representative was present. Since
the beginning of the program In 1936, members of cotton
cooperativess have made hundreds of millions of dollars
as compared to the price which they wJould have received
for their cotton If the loan had not been made readily
available to them w~hen they~ brought their cotton to
town.-



'"S. H. Burns Carrollton, Georgia Coop Grandaddy,"
Dixcic is-op Neus1, V'ol. 1, No0. 12 (July,~ 1951), p. 6.

ZD. W., Brooks, "Your Co-Op and You," Didie io-Op
Neu, Vl. N. 1(August, 1950), p. 2.






- 75 -


Alternatciv; NElthods of MalrkEting OfferoJ

The reference by Brooksc to the government loan

indicates one of the four options or pools which were

available to the farmer in marketing his cotton through the

association. The one to which he referred is known as the

loan pool. The other options are the immediate fixation

pool, the call pool, and the factor pool. A brief de-

scription of each of these follows.'

Loan3 pool.--TrIhe Georgia Cotton Producers Association

began in 1936 and has continued yearly since then to make

a contract with the Commnodity Credit Corporation under which

the association makes cotton loans to its members on the

same basis as cotton loans are made to individual producers

by the government. Under this program the government loan

program has been extended to the members of CPA with the

association acting as agents for its members In delivering

to the Commodity Credit Corporation all unsold cotton.

A farmer, deciding to place his cotton In the loan

pool, delivered the warehouse receipts covering the cotton

to the appropriate representative of the association as secu-

rity for the loan which he received at that time, made on the

same basis as the Commodity Credit Corporation would utilize.


'The description of the options is based on interviews
held with members of management including D. W. Brooks and
P. L. Brauner during Decemrber, 1968 and March, 1969.






10


Under the program the farmer could order his cotton sold

at any time prior to the Government taking title, which

ovJer time has ranged between one and two years.

Patrons of the pocl participated in the savings or

losses of the association on a patronage basis provi~ded the

cotton were marketed by the association during that season,

h~en the association becomes divisionaliz~e, patrons will

share in the savings or losses of the cotton di:ision.
Inne.diate' fiction po.--U~nder this pool, the

farmer delivers his cotton or warehouse receipts to the

association's cotton receiving agent and receices a cash

advance based on the market price of his cottonr as of the

deliv~ery time. Such, advances would normally represent the

full sales v'alue of the cotton on the local market, Title

to the cotton immediately passes to the association. Hedging

is accomplished by the association as soon as is practicable

to protect against price fluctuations. The farmer receives

no further payment until the end of the season wahen the

savings and losses of the association are determined.

C:11 pool.---Under this arrangement, the producer

delivers his cotton or warehouse receipts to the appropriate

CPA representative on the local market. Grade and basis are

determined as of that day as was true in the immediate fix-

ation pool. Since the farmer does not wish to fix the price

on that day, he is advanced full market value less a pre-

determined margin. Title passes to the association and the






-77


cotton is handled the same way as that in the irmm~iediate

fixation pool. Whren the farmer wishes to fix the base price,

he notifies the association where the predeterminEd price is

adjusted t3 the fi:ation price and the farmer is pa~id any'

amount due him. The association then hedges the cotton.

The patron shares In savings of the association just as he

would under the irrmmdiate fixation :jcol.

F..::cr pool.---Under this final option, the farmer

delivers cotton or wajrehouse receipts covering his cotton to

the representati-e of CPA on the local mark-et. He may, if

he so desires, receive an advance of approximately 70 percent

of the local market price at deli.er: time. Under this plan,

title remaining with the producer, the cotton is held until

it Is ordered sold by the membe~r. At the time the farmer

fixes the price of his cotton, the method of settlement used

in the immediate fixation pool is used.

Especially during the earl; years of the organization,

farmers in this region had been accustomed to selling their

cotton for the full market value Imme~diatelly following nar-

vetst. This custom arose and continued primarily because the

great majority of farmers were small operators whose finan-

cial position w~as not sufficiently strong to allow them to

accept a partial advance and wait for the full settlement.

Moreover, this immediate settlement was necessitated due to

the widespread use of crop mortgages for the purchase of






- 8


seed, fertilizer, and other production supplies, the holders

of which generallly forced payment as soon ;s the crop was

harvested. For these reasons the neerr~diate fixation pool

wasvidlyused. They also serve to explain the relatively

low degree of acceptance of the actor pool even when cotton

prices were more favorable to the farmer.


First W'aFJ:~rhoa Associe~tLo i .!!oi:

The Carrollton warehouse performed up to expectations

and served as the model for warehouse associations at Dawson,

Geo~rgia in March,, 19138, Dublin, Georrgia in Septembe~r, 1938,

and LaGrange, Georgia and HawJkinsville, Georgia in late 19410.

Therefore, going into the war years, CPA was still engaged

only In cotton marketing activities, but was providing

complete cotton marketing services through five cotton ware-

houses. Cotton receiving repres;entativess were operating in

Georgia, Alabama, and South Carolina.





Since CPA was still operating as an agent for ACCA

prior to the 1940-1941 season, the association, as such, had

no sales during the years up to that time. Table 3-4i shows

volume of business, net margins, total assets and total

facility investment of the association for the years 1936-

1937 through 1939-1940.








-79


r
Y I
t



















G c
* C:'


C


-






C,
3








r.8







C
C






4E
-5 -










--



.1 ---














'.4
CJu

m G


-
C




C1
Pii

*** L




cr o
rlr 3
r "O
40l
va 11

L0Ci










-s c
9 C










S-4 E
-- O



0~ c

Sr.
O 0

1






(U c


* M


P


N





r




0

















I ~











u3



v ~
0C













M






-80 -


Because of this agency relationship existing during

the period under re-iew, the net margins shown in Table 3-4

resulted from savings on cotton mar:;eting operations through

ACCA, patronage refunds from farmers' mutual warchouse asso-

ciations on cotton stored by iPA, and also savings from

trucking operations of The Georgia Cotton Producers Asso-

ciation. The warehouse associations were the crime reason

for increasing net margins during this period.

While the savings from operations during the period,

1936-1937 to 1939-19401", were relatively meager, 59,903, The

Georgia cotton Producers Association had accomplished several

important results. First, having begun with virtuallyy no

capital, the sum of nearly $10,000 seemed quite substantial.

However, the principal acomplishment would ha--e to be said

to be survival and proof to a numbl-er of skeptles that the

cooperative might succeed. The development of a sound organ-

13atiOnal structure for operating st the local level had

resulted from the experience at 2arrollton and other points

where cotton warehouses had been organized.


Looking Teavrd the Future


The management and Board of Directors could be proud

of the progress that had been made in the four year period,

yet much remained to be done. Brook~s continually insisted

that the organization must borrow all it could to invest in






- 81


improved fertilizers, seeds, feeds, and production supplies

generally, so that other aspects of the farmer's problems

could be remredied.' Some rebelled at such ideas sa;.ing that

a farmer group should concern itself ;.ith immediately problems

of disposing of produce. Yet brcks~ inewi that only b:y im-

proving the p~roduction methods and diverallyinng farmers'

activities could permanent gains be mahde.

Table 3-5 ;how:s the condensed balance sheet of the

o~rganization at June 30j, 19410. It cwas to undergo consider-

able change in the nex:t period as CPAr severed its jgency

relationship with the ACCA and m~oved into purchasing acti--1-

ities.

Figure 3-1 shows the overall organizatijnal structure

of the association at June 30, 1940. From it the hybrid

nature of the orga6niz;tion can be seen; that is, the rep~re-

senting of both Independect farmer menters and member c~oo-

aratives byr the association.


1Interview with Brooks, March 24, 1969.





ii,
IO









J 5.


E
;I

3


p 1-











OO


C -


C
3
LI
Y
33
L, r
~J.
7--r
rl
r.

C ",
1,

r:
c 3
r,
E-
ct

3
C
cl
1 ~
1' c~

ii.~


L LI1
r_ Li
c~O

3 (1)
iljL~

~rJ

~n'l)
C j

Tli
C

L,


-1 J.






















** 3




























I =

d'
*7C C
&1 0r .j.





C4
d'














c r
MI c































Nine Directors Elected f~rom
Hline Election D~istricts


THE GEORGIA COTTONI PP.ODUC~ERS ASSOC'IATIONI

D. H. Brooks C. B. Eunder~urk
Secretary- Treasurer
General Manager


Ojwns



Five Cotton Warehouse s


at
Carrollton, Georgia
Dawson, Georgia
Dublin, Georgia
LaGrange, Georgia
Hawkinsville, Georgia


- 83


Individual
Farmer Mremb~ers


Represented through Local
Boards of Directors


Organization structure of The Georgia Cotton Producers
Association, June 30, 1940


Figure 3-1.













C3HAPPERi I'.

A PERIOD OF GROi'.'TH ArnD CrANrGE:
1940-1941 TO 19?4-1945





The period 19410-1941 through 1944-1945 w~as for the

nation a period of great trial and change. tNaturally the

in.ol.ement of the United States in W~orld Walr II, virtually

throughout this period, affected the growth and d-evelopment

of The G~eorgia Cotton Producers Association. On the one

hand, a nation mobilized for war made great demands on the

agricultural sector and this naturally resulted in an up-

w~ard pressure on prices of agricultural products. The

avecrage annual bale price of cotton for the years 1940-1946

is shou~n in Figure 41-1. On the other hand, existence of

wartime conditions caused shortages of manpower and materials,

both of which were required In large numbers by CPA due to

the sizeable expansion and diversification which was under-

taken during this span of Iyears.

During the war period, cotton marketing services

continued to constitute the principal jctivrity of the

association even though farmers In Georgla, and to a lesser

extent in the region generally, were gradually~ turning to

other crops and activities. The effects of the allotment


-84 -








- 95 -


COI
*0 0, r-
"On






O-




eg cr-



-- **.

D I FI





C -4l


MO C

es C. -


0 40 .@



-4 1 v




C r--I

0 01 Cl =





Q.1








-~ 1
o~ a~ ..




University of Florida Home Page
© 2004 - 2010 University of Florida George A. Smathers Libraries.
All rights reserved.

Acceptable Use, Copyright, and Disclaimer Statement
Last updated October 10, 2010 - - mvs