4 BULLETIN 1095, U. S. DEPARTMENT OF AGRICULTURE. 

business policy may be doomed to failure. It is obvious that the ) 
board should be composed of men with an understanding of sound 
business principles. . 
MARKETING CONTRACTS. 
In cooperative milk-marketing organizations it has been found 
desirable for the business relations between the producers and the 
organization to be clearly defined in a marketing contract. By the 
terms of such contracts the producers agree to deliver to the organi- © 
zation all the milk produced on their farms, except that required for 
farm or household use. The organization in turn agrees to sell and 
distribute the producers’ product and to make returns therefor in © 
accordance with specific provisions of the contract. Such contracts © 
tend to give greater stability and permanence to the organization. 
METHODS OF FINANCING. 
Rather large investment in buildings and equipment are required 
in cooperative milk plants for the proper handling of milk and milk 
products. Definite methods of financing must be worked out care- 
fully and adapted to the form of organization to be employed. Co- 
operative milk-marketing organizations may be financed either with 
or without capital stock. In nonstock organizations the necessary 
capital may be obtained from membership fees, cash payments for 
certificates of indebtedness, or from loans made by the members, 
while in organizations with capital stock the necessary capital is 
secured by selling shares of stock. Cooperative milk-plant organiza- 
tions usually have been formed with capital stock, as producers are 
more familiar with this method. An equitable plan adopted by some 
organizations requires each producer to purchase shares of capital 
stock in proportion to the number of cows milked or the amount of 
dairy products to be marketed at the plant. 
In some organizations both common and preferred stock have been 
issued. Preferred stock ordinarily is entitled to dividends before 
any are paid on the common stock. The dividends on preferred 
stock usually are cumulative, and it is customary to withhold voting 
privileges from stock of this class. The plan of using both preferred 
and common stock may be advantageous in some organizations, es- 
pecially where it is necessary to sell stock to others than the mem- 
bers and the producers wish to retain control of the organization 
through ownership of common stock. However, it should be borne 
in mind that all the preferred as well as the common stock of asso- 
ciations that desire to come within the scope of the Capper-Volstead 
Act must be held by producers. 


