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FARMERS gOMWW AT BITAIL. PRICIS .... 



a way that it would tie these local co- 

 operatives together and bring to the 

 community additional benefits to be 

 derived from large corporate organiza- 

 tion. 



The corporate set-up which the farm- 

 er ordinarily uses is a little different 

 from that commonly used in the cities. 

 The farmer likes the cooperative way 

 of using the corporation. The ordinary 

 corporation entering its business field 

 does so generally for profit. Its profits 

 are distributed on the basis of capital 

 investment. Its control is based largely 

 on capital investment. 



Under the cooperative set-up, the 

 return on capital is limited. In a true 

 cooperative, the return for invested 

 capital cannot be more than 8 per cent. 

 It may be considerably less than 8 per 

 cent. When the fixed return has been 

 paid on invested capital, then any 

 amount of earnings, aside from possibly 

 reasonable reserves, are allocated in the 

 form of stock or certificates or cash to 

 the members in proportion to the 

 business they have done with the co- 

 operative. In virtually all other re- 

 spects, the cooperative resembles the 

 general corporation very closely. ' 



The cooperative must serve its mem- 

 bers. It must always be a leader in 

 its field. Therefore, it must be aggres- 

 sive and progressive. Farmers are the 

 one economic group that buy most of 

 the material they use in a retail market 

 and sell most of their products in a 

 wholesale market. This is contrary to 

 the conventional way of doing business. 



The general policy of cooperatives 

 operating in Ilhnois is to sell at the 

 going price. Earnings or savings are 

 refunded to the member in proportion 

 to the business he has done with the 

 concern. 



In a marketing cooperative, the or- 

 ganization again should merchandise 

 quality products. For the most part, 

 our marketing cooperatives buy the prod- 

 uct from the farmer and take title to it. 

 They pay the going market price ex- 

 cept in some instances, they make the 

 market. 



A year or so ago Illinois Livestock 



Marketmg Association opened a couple 

 of new cooperative concentration points 

 in the western part of the state, iheir 

 bid to the farmer for livestock was 

 good enough that it raised almost im- 

 mediately the price level 50 cents to 

 75 cents per hundred pounds live 

 weight of hogs. The difficulty this co- 

 operative had was taking care of all hogs 

 that were offered. The margin has nar- 

 rowed as competitors were forced to 

 higher prices. 



Our cooperative creameries, when 

 they started operation in Illinois, 

 raised the going price level to a con- 

 siderable extent. Sometimes, the farmer 

 member of these cooperatives is in- 



FARMCRf Sold at wholisaue priced... 



dined to measure his marketing co- 

 operative by the amount of cash 

 dividend he receives. This is an 

 erroneous conception of the cooperative 

 on his part. He should also take into 

 consideration the increase in the mar- 

 ket level. 



If the cooperative raised the market 

 level of butterfat a nickel a pound, 

 or as in the case that has been cited 

 on hogs in western Illinois, the farmer 

 marketing through old-line competition 

 benefited as well as the farmer market- 

 ing through the cooperative. The mar- 

 keting or purchasing cooperative can- 

 not just be a standby organization. To 

 force competition to do what is right, 

 it must have the active and aggressive 

 support of its members. 



There may be times when competi- 

 tion will attempt to squeeze out a co- 

 operative. Unless members come to its 

 rescue, they may lose the very thing 

 that they set up and financed to serve 

 them. So in addition to the cooperative 

 serving the member and making it 

 profitable for him to be a member, the 

 member himself must exercise some 

 degree of loyalty toward that coopera- 

 tive for its protection. 



Many cooperatives operate on narrow 

 margins. Sometimes these narrow 

 margins are brought about by the co- 

 operative itself. Under such conditions, 

 it must have able management and it 

 must have volume. The supplying of 



\olume becomes the responsibili.y of 

 the member. 



There is one other responsibility 

 which both the member and the co- 

 operative organization itself must as- 

 sume. Local cooperatives often operate 

 at a disadvantage when in competition 

 with old-line corporations that operate 

 over a wide expanse of country. The 

 old-line can raise prices in the vicinity 

 of the local cooperative. They can 

 lower them elsewhere where such com- 

 petition is not in the picture. 



With a monopolistic trend in the 

 combining of local corporations into gi- 

 gantic organizations and with a monop- 

 olistic tendency on the part of 

 organized labor, farmer cooperatives 

 have no choice except to merge and 

 cooperate for their own advantage. One 

 of the hardest jobs I have ever en- 

 countered is to get cooperatives to co- 

 operate. Many managers and many 

 boards of directors of local cooperatives 

 will not cooperate, in the way they ex- 

 pect their farmer members to cooperate 

 with them. 



Large cooperatives closely knit and 

 commanding tremendous volumes of 

 business, operating on relatively narrow 

 margins, must come into the picture if 

 the full use of the corporate structure 

 is going to be made available to the 

 rank and file of farmers. Illinois farmers 

 now have the opportunity to make wide 

 use of the corporate structure. 



eoT FA«tMCA« FINAIXV " GOT WIJE .' • 



Membership of the Illinois Agri- 

 cultural Association is now above 

 155,000. Cooperative marketing and 

 purchasing organizations of one kind 

 or another are available to most of these 

 members. Some of these local coopera- 

 tives need merging. Many of them need 

 closer tie-ins with their statewide and 

 regional cooperatives. Such understand- 

 ing is necessary on the part of members 

 to bring about the reorganization that 

 is necessary if our cooperatives are to 

 be of the greatest value and render the 

 greatest service to their members and 

 to agriculture as a whole. 



DECEMBER, 1948 



