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Equity Redemption: Issues and Alternatives for Farmer Cooperatives

Author

Listed:
  • Cobia, David W.
  • Royer, Jeffrey S.
  • Wissman, Roger A.
  • Smith, Dennis Paul
  • Davidson, Donald R.
  • Lurya, Stephen D.
  • Mather, J. Warren
  • Brown, Phillip F.
  • Krueger, Kenneth P.

Abstract

Cooperatives are under increasing pressure to redeem the equities of former and overinvested patrons. This report discusses the issues concerning equity redemption and describes alternative equity redemption plans and methods that can be used to improve or facilitate redemption. Trade-offs between cash patronage refunds, redemption, and growth are examined, and methods for distributing cash benefits to patrons are compared. Legal and tax aspects and board responsibilities are reviewed, and the influences of federated cooperatives and lending institutions are considered. The impact of proposed mandatory redemption programs is evaluated, and procedures for adopting a voluntary redemption program are detailed.

Suggested Citation

  • Cobia, David W. & Royer, Jeffrey S. & Wissman, Roger A. & Smith, Dennis Paul & Davidson, Donald R. & Lurya, Stephen D. & Mather, J. Warren & Brown, Phillip F. & Krueger, Kenneth P., 1982. "Equity Redemption: Issues and Alternatives for Farmer Cooperatives," Research Reports 180969, United States Department of Agriculture, Rural Development.
    • Handle: RePEc:ags:urdbrr:180969
    DOI: 10.22004/ag.econ.180969
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    File URL: https://ageconsearch.umn.edu/record/180969/files/agCoopService-023.pdf
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    References listed on IDEAS

    as
    1. James G. Beierlein & Lee F. Schrader, 1978. "Patron Valuation of a Farmer Cooperative under Alternative Finance Policies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 60(4), pages 636-641.
    2. Hulbert, Helim H. & Griffin, Nelda & Gardner, Kelsey B., 1958. "Revolving Fund Method of Financing Farmer Cooperatives," Farmer Cooperative Research Report (FCRR) 315958, United States Department of Agriculture, Economic Research Service.
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    Cited by:

    1. Royer, Jeffrey S., 2016. "Assessing the Ability of Rural Electric Cooperatives to Retire Capital Credits," Journal of Cooperatives, NCERA-210, vol. 31.
    2. Royer, Jeffery S., 1987. "Cash Flow Comparisons Of Two Methods Of Allocating Cooperative Pa Tron Age Refunds," 1987 Annual Meeting, August 2-5, East Lansing, Michigan 270120, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Zvi Lerman & Claudia Parliament, 1993. "Financing Growth in Agricultural Cooperatives," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 15(3), pages 431-441.
    4. Jeffrey S. Royer, 2019. "Measuring the cost of capital in cooperative businesses," Agribusiness, John Wiley & Sons, Ltd., vol. 35(2), pages 249-264, April.
    5. Parliament, Claudia & Lerman, Zvi & Fulton, Joan R., 1990. "Performance of Cooperatives and Investor-Owned Firms in the Dairy Industry," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 5, pages 1-16.
    6. Royer, Jeffrey S., 2022. "Comparative Performance of Cooperative Equity Retirement Plans," Journal of Cooperatives, NCERA-210, vol. 36.

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    Keywords

    Agricultural Finance;

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