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Wholesale Supply Co-op

Businesses Horizontally coordinate to integrate UPSTREAM to source the products they will sell at their stores ACE hardware

Consumer Co-op

Consumers coordinate horizontally to integrate UPSTREAM to establish a retail business from which they purchase the products they prefer Davis Food Co-op

Patronage refund

Income remaining in co-op after deducting all expenses is distributed in proportion to patronage. Basically a refund, most opt to leave a portion in the co-op and allocated to the member's equity account in order to keep co-op in good financial state. At least 20% must be distributed as cash and can also be called a patronage return. It is directly related to the user-benefit principle. NOT taxable income

Marketing Co-op

Producers coordinate HORIZONTALLY to integrate DOWNSTREAM to process and market their production or labor Blue Diamond

Marketing cooperative always integrate

downstream and sometimes integrate upstream as well as ALWAYS downstream

Consumer/Supply cooperatives always integrate

upstream

Advantages of Pooling

1) Risk Sharing 2) Improved Marketing 3) Increased Market Power 4) Quality Control 5) Economies of Scale

Cooperative's Board of Directors reponsiblities

1) Assess the co-op's financial and management's performance 2) Determine the equity program and patronage allocations

Disadvantages of Pooling

1) Delayed Payments 2) Loss of individuality 3) Less Flexibility 4) Managerial Expertise

To be eligible to operate under Capper-Volstead Act

1) Operated for mutual benefit of its members 2) Must not deal in nonmember products greater than member products ONE OF THE FOLLOWING 3) No member is allowed more than one vote 4) Does not pay dividends on stock/capital in excess of 8%

Capper-Volstead Act

1) Permits farmers to get together to collectively market their products 2) Protects the general public against possibility of undue price enhancement due to monopoly positions