22 BULLETIN 1414, IT. S. DEPARTMENT OE AGRICULTURE 



capital stock usually limit the number of shares that can be held by 

 one member, or provide that each member shall have but one vote 

 regardless of the number of shares of stock of the organization he 

 may own. In nonstock associations, each member has but one vote. 



It is a principle of cooperation, that the marketing organization 

 set up by a group of producers shall be created and operated to 

 furnish its members economical and efficient marketing service. It 

 is not operated to make a profit on invested capital, other than a 

 fair return for the use of such capital. There should be no conflict 

 between the interests of the stockholders or owners of the business, 

 as such, and the members or patrons, as such. There is none when 

 each member contributes equally to the capital investment of the 

 association, or when such contributions are proportional to the uses 

 each member makes of the facilities of the organization. The re- 

 strictions on the ownership of stock, and limitations of the voting 

 privilege of common stock are intended to avoid conflicts of this 

 kind. If the interests of the stockholders become paramount for any 

 reason, the cooperative features of the organization are in danger 

 of being destroyed. 



In small associations, the board of directors is usually elected by 

 the direct vote of the membership at the annual meeting. This 

 is not usually possible, however, in large centralized organizations 

 on account of the extent of the territory over which the association 

 operates. The members either vote by proxy, or elect a certain 

 uumber of delegates from defined districts within the territory to 

 represent them. The members of a federation are the affiliated 

 associations. Each local organization either sends a delegate or 

 representative to the annual meeting of the federation, or elects 

 directly one or more directors to the central board. Federations 

 that market fruits and vegetables seem to be about equally divided 

 between these two plans. 



CONTRACTS 



An important consideration in forming a cooperative marketing 

 association is whether a contract between the members and the 

 organization shall be used, and the form that shall be employed. 

 The majority of fruit and vegetable marketing associations have 

 contracts with their members. Reports received from 604 associa- 

 tions show that 390, or 64.6 per cent, required their members to sign 

 a crop contract, and 214, or 35.4 per cent, had no contracts in force. 



Especially when an association is first formed a contract exerts 

 a steadying influence and definitely defines the obligations of the 

 association and its members. Furthermore, a cooperative associa- 

 tion, like any other business organization, must make plans in ad- 

 vance of the marketing season. The association must have an 

 assured volume of business in order to plan effectively. This it 

 can not do, if every member is free to withdraw from the organiza- 

 tion at any time. 



Whether the contract should be for a long or a short period, and 

 whether dissatisfied members should be allowed to withdraw at 

 certain times during any year is a subject on which there is no 



