74. BULLETIN 1370, U. S. DEPARTMENT OF AGRICULTURE 
competitively. As a result of shipping all surplus sirup out of a given 
community to a cooperative warehouse or canning plant, the local 
price for canned sirup may be increased, thereby furnishing an incen- 
tive to certain small producers to remain outside the cooperative asso- 
ciation and sell their entire output locally. This situation has arisen 
several times. If there is a real surplus of sirup in the locality and a — 
genuine need for a distributing organization, however, this situation 
is of little consequence. . 
Besides obtaining the cordial cooperation of a large percentage of 
all producers within the sirup area and their loyal support under all 
conditions, the cooperative plant needs good business management. 
Similar enterprises have frequently failed from lack of capable man- 
agement, when all other conditions were favorable. A common 
fault in the initial stages of cooperative enterprises is the lack of 
comprehension of the competitive nature of the business and failure 
to provide the managerial ability demanded. 
lt is desirable that cooperative associations be incorporated in 
order that they may acquire a distinct legal status. More than two- 
thirds of the States have enacted special laws for the incorporation 
of cooperative associations. Some of these laws provide for organi- 
zations formed with capital stock; others provide for the nonstock 
form. Both forms usually provide that each member shall have only 
one vote, regardless of his financial interest in the organization, and 
that dividends shall be paid on the basis of patronage after a certain 
percentage of the net earnings has been set aside to create a reserve 
for contingencies and, in case of a capital-stock organization, to pay 
a reasonable rate of interest upon capital invested. 
By-laws, in which definite working plans are outlined, should be 
adopted. The initial capital required to finance a cooperative organ- 
ization will depend on the size of the plant, scale of operation, and 
plan of financing. By judicious use of a reasonable amount of work- 
ing capital and the employment of bank credit, the expenses of opera- 
tion can be met until returns from sirup sales are received. With the 
placing of cane sirup, on December 2, 1924, on the eligible list of 
commodities storable under the United States warehouse act, the 
financing of the product while in storage has been simplified and made 
readily possible. Under this law the Secretary of Agriculture is 
authorized to license public warehousemen. The receipts which such 
licensed warehousemen must issue are uniform in their terms and are 
preferred by bankers generally as security for loans on stored agri- 
cultural products. 
Although producers have been accustomed to sell their sirup for 
cash and receive payment in full at the time of sale, in a cooperative 
association a system of pooling the returns from all sales is desirable. 
Pooling means the averaging of returns for products sold during a 
given period, or for certain shipments, so that producers of sirup of 
the same quality and grade will receive the same price as soon as all 
of the sirup has been sold. In order to make pooling systems suc- 
cessful, uniform and effective grading must be strictly observed. 
This plan serves to a certain extent to equalize returns for sirup and 
to protect the individual members from possible loss resulting from 
1s A copy of the United States warehouse act and the regulations for storing sugar-cane sirup thereunder, 
as Well as additional detailed information, may be obtained from the Bureau of Agricultural Economics, 
U. S. Department of Agriculture, Washington, D. C. 
