Yardsticks For a 

 Sound Co-op 



lAA President Shuman Lists: 



1. Need; 2. Sufficient Capital 



3. Good Management: 4. Adaptability; and 



5. Fit in with General Farm Organization 



Keynote speakers at the American Institute of Coopera- 

 tion are shown here left to right: Ezra T. Benson, 

 member^ Countil of Twelve, Chur€h of Jesus Christ, Sa/f 

 lake City; lAA president Charles B. Shuman and Dr. 

 Karl D. Butler, retiring president of the American In- 

 stitute of Cooperation. 



FIVK yardsticks for nieasurinn; tlic 

 soundness of farmer-owned ro-op- 

 eratives were outlined liy, Cliarles 

 15. Shuman. president of »tlie Illi- 

 nois Aprricultural Assoriqtion. iti 

 late August before the Americian Insti- 

 tute of Cooperation at the l,ni\ersity of 

 Wisconsin. Madison. Vt is. 



In his address entitled ''I'uildinji for 

 the Future." he pointed out that quite 

 generally the farmer's idea of the func- 

 tions and olijectives of a cooperative 

 are quite different from the ideas of 

 social reformers and idealists who look 

 ujjon the cooperative movement as a 

 means to some end. Most farmers, he 

 said, consider their co-ops as essential 

 farm tools with a completely useful 

 function. 



''The first test."' President Shuman 

 said, "that I would apply to a coopera- 

 tive or privately-owned business is 

 whether or not there is a real and con- 

 tinuing need for the services offered. 

 This survey must he factual and realistic 

 and not based on what farmers should 

 want but rather on the services for 

 which they are willing to pay. 



"Strict application of this test.'' he 

 said, "will not hamper the future ex- 

 pansion of farmer cooi)eratives as there 

 remains an abundance of areas and 

 fields of activitv where existing monop- 

 olistic practices provide a real need 

 for cooperative action." 



His second point posed the question: 

 ■'Has an adequate capital structure been 

 pro\ided?" In other words, is the co- 

 o]) properly financed? "During recent 

 years of constantly increasing price 

 levels." he continued, ''it has been easy 

 to neglect financial jilanning. Vtith the 

 return of more uncertain economic con- 

 ditions, it will be suicidal for any co- 



operative to neglect this fundamental 

 of good business."' 



President Shuman pointed out that 

 the farmers in Illinois have long be- 

 lie\ed that the soundest cooperati\es 

 were financed by farmers themselves 

 from their own funds through pur- 

 chase of |)referred stock. ''A coopera- 

 tive."" be said, "that builds its financial 

 structure solely or even largely upon 

 earned or 'loyalty' cajiital may easily 

 spend more time and money in its mem- 

 bership relations efforts than the added 

 interest cost to an organization with 

 greater ownership lovalty." 



His third safeguard pointed to the 

 importance of a strong, experienced, 

 jirogressive management. 'The future 

 |)rogress of cooperatives will depend to 

 a great extent upon the placing of 

 projier emjihasis on two fundamentals 

 of good management liy boards of di- 

 rectors and administrators. First, the 

 cooi)erative exists only to serve the 

 membership and not for the benefit of 

 anv employee and secondly, continua- 

 tion of an employee in a position to 

 which he is not suited is not in the self 

 int<Te<t of tlie individual concerned." 



His fourth (>rinciple called for man- 

 agement sensitive and adaj)talile to 

 changing conditions and needs. Amons 

 the valualile aids to good, manaGrerfient 

 with which our cooperative leaders are 

 becoming familiar. Shuman said, in- 

 clude retirement plans, personnel de- 

 partments, job evaluation and descrip- 

 tion, internal auditing, uniform account- 

 ing and controls, business engineering 

 surveys, job efficiency tests, and func- 

 tional organization charts. 



'"Like a new farm tractor." he said, 

 "the successful cooperative of the future 

 will need constant repair, moderniza- 

 tion, and alteration. Membership use 



and [)atronage will continue at a satis- 

 factory level only if the cooperative 

 continues to improve service and an- 

 ticijiates the needs of its patrons. 



"Mv fifth yardstick for measuring the 

 fitness of a cooperative to build into the 

 future is somewhat ajiart from the more 

 tangible business factors [)revioiisly dis- 

 cussed. While not yet generally rec- 

 ognized, it is my conviction that the 

 most successful farmer cooperatives of 

 the future will be parts of a coordinated 

 pattern for a better agriculture rather 

 than a sjiecial interest or commodity 

 group tending to split into segments. 



"More and more, agriculture is be- 

 coming a minority group in our nation. 

 We cannot afford to stand alone in 

 small commodity or sectional groups. 

 .As big government grows bigger and 

 as labor and business groups organize 

 more solidly it becomes increasingly 

 important that agriculture speak with 

 one strone voice. Farmers will cer- 

 tainly insist that their cooperative busi- 

 ness organizations be closely coordi- 

 nated v\illi their general farm organiza- 

 tion. 



■"Perhaps these few examples will 

 sufTice to illustrati" that building for the 

 future is not alone a matter of exact 

 formula. The future of our farmer co- 

 operatives will more and more depend 

 upon the quality of our b-adership. \^'e 

 can no longer depend solelv upon the 

 momentum of idealism and evangelism. 

 Our contiruied progress will be earned 

 by building on men and ideas plus 

 loyalty. I am certain tliat with a [iro(>er- 

 ly trained leadership insisting upon 

 maintaining the ideal of service to 

 farm ()eople our coojieratives will grow 

 and prosper through the afiplication 

 of sound business jtrinciples bv men 

 who are not afraid of new ideas." 



OCTOBER, 1949 



9 



