Accelerated Genetics are an AI company operating in 30 Counties throughout Wisconsin as well as parts of Iowa, Minnesota and Illinois.
Over time as they grew to take in more area and more members their Board size grew to 34 as well due to a regulation in their bye laws which stipulated that a District and a Director was needed for a given number of members. The bye-laws were changed and today there are 10 Directors each representing a district. If they had not changed their bye-laws they would now have 66 Directors.
Co-operative members elect 1 Delegate to represent every 20 members during the Annual County Division meetings. The representatives in each County meet 3 times a year to provide feedback. Each County Division elects a County Chair annually.
Directors serve three year terms. Directors are elected by all the Delegates in their District (each District contains two or more counties). The Delegates meet separately in their given Counties but the meetings are held on the same night to co-ordinate voting via telephone.
If no candidate receives over 51% of the vote in the first round then the candidate with the least number of votes is eliminated and further rounds are held until a candidate receives over 51% of the vote.
Directors have a maximum tenure (term limit) of 12 years.
Herds persons may also hold office. Two of the current County Chairs are herds persons.
Those holding positions in State Government cannot serve as Directors.
In addition a member cannot be elected to the Board if they do not purchase a minimum of 80% of their semen from the Co-op.
Capital Structures of US Cooperatives
A member joins a co-operative the day they start trading with it. Traditionally no capital is required up front.
At the end of the year capital is divided into two sectors:
1. Profits obtained by trading with members
2. Profits obtained by trading with non-members
In the case of Accelerated Genetics sales of semen to areas outside their “domain” are considered to be external.
These non-member “external” profits are taxed as regular corporate profits and the remainder (after tax) is placed in retained earnings. These would only be distributed to members in the event that the co-operative was dissolved.
Profits allocated by trading with members are not taxed at the “corporate” level. These profits are apportioned to each member in proportion to their economic participation in the co-op.
Co-operatives must pay out a minimum of 20% of each year’s allocated profits out in cash. Allocated profits not paid out in cash are added to the members revolving equity account. Some co-ops have a policy of paying this out after 10 years i.e. members would be getting 1999 equity paid back now. The period of time can be much longer than this.
Co-operative members must declare and pay tax on 100% of their share of allocated profits. Accelerated Genetics have a policy of paying out 30% of allocated profits as higher rate taxpayers are taxed at around 30%.
When a member leaves the co-operative (stops trading) he no longer has a vote, however he is not entitled to get his equity back until death.
Accelerated Genetics have a policy of paying out retired former members who have reached the age of 65.
Monday, August 10, 2009
Nuffield Travels
These blog entries detail my travels across the United States as I complete my Nuffield Farming Scholarship on Leadership and Capital Structures of Dairy Co-operatives.
Tuesday 4th August 2009
Met up with Tom Lyons at the Wisconsin Department of Agriculture.
He was formerly General Manager of an AI & milk recording co-operative, which has grown steadily as mergers where conducted with neighbouring co-operatives. He presently works as a consultant for the Wisconsin Department of Agriculture.
In the US the dairy co-operatives handle 75% of the milk. Dairy Farmers of America (DFA) on their own account for 34% of the milk.
The Provisions on the Capper-Volstead Act which was passed in 1922 protect co-operatives from the provisions of US Anti-Trust legislation. However DFA have been accused of breaching Anti-Trust regulations by manipulating the Chicago Futures & Derivatives markets. A new management is now in place at DFA and is cleaning up its Act.
50% of milk produces in the United States goes into the liquid market. While private companies (such as Deans and Kraft) are involved a wide range of dairy products, the involvement of private companies (including PLC’s) is greatest in the liquid sector.
Dairy co-operatives tend to struggle to secure finance compared to the PLC’s as dairy farmers (and in some cases the farmer Directors) are always pressing for the highest possible milk payout in the short term. (Long term strategy looses out to short sightedness and political expediency).
During the Great Depression of the 1930’s. Franklin D. Roosevelt set up two principle co-operative organisations.
Rural Electric Co-operatives. These provided electricity to rural areas, they are still in existence today.
The Farmer Co-operative Bank. This evolved into the Farm Credit system. Part of this also provides finances for Co-operatives.
Co-operatives need to balance the needs of their members with the needs of their staff. Co-ops unlike plc’s are not able to offer stock options.
The area that Co-operatives need to improve most urgently is Strategic Planning. He suggest an annual strategic planning session separate from the main board meeting this should then feed into the budget and plan of work for the year.
The long term view should always be taken and wherever possible decisions put up for discussion at this months Board meeting should not be taken until the following month. Decision by email should be avoided unless absolutely necessary
Tuesday 4th August 2009
Met up with Tom Lyons at the Wisconsin Department of Agriculture.
He was formerly General Manager of an AI & milk recording co-operative, which has grown steadily as mergers where conducted with neighbouring co-operatives. He presently works as a consultant for the Wisconsin Department of Agriculture.
In the US the dairy co-operatives handle 75% of the milk. Dairy Farmers of America (DFA) on their own account for 34% of the milk.
The Provisions on the Capper-Volstead Act which was passed in 1922 protect co-operatives from the provisions of US Anti-Trust legislation. However DFA have been accused of breaching Anti-Trust regulations by manipulating the Chicago Futures & Derivatives markets. A new management is now in place at DFA and is cleaning up its Act.
50% of milk produces in the United States goes into the liquid market. While private companies (such as Deans and Kraft) are involved a wide range of dairy products, the involvement of private companies (including PLC’s) is greatest in the liquid sector.
Dairy co-operatives tend to struggle to secure finance compared to the PLC’s as dairy farmers (and in some cases the farmer Directors) are always pressing for the highest possible milk payout in the short term. (Long term strategy looses out to short sightedness and political expediency).
During the Great Depression of the 1930’s. Franklin D. Roosevelt set up two principle co-operative organisations.
Rural Electric Co-operatives. These provided electricity to rural areas, they are still in existence today.
The Farmer Co-operative Bank. This evolved into the Farm Credit system. Part of this also provides finances for Co-operatives.
Co-operatives need to balance the needs of their members with the needs of their staff. Co-ops unlike plc’s are not able to offer stock options.
The area that Co-operatives need to improve most urgently is Strategic Planning. He suggest an annual strategic planning session separate from the main board meeting this should then feed into the budget and plan of work for the year.
The long term view should always be taken and wherever possible decisions put up for discussion at this months Board meeting should not be taken until the following month. Decision by email should be avoided unless absolutely necessary
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