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Business LibreTexts

Preface

  • Page ID
    4238
  • When I was growing up, as the oldest of 12 children, my parents did a lot of business with the “co-op.” In this case, the co-op was Farmers Union Cooperative Oil Association of South St. Paul, which later became River Country Cooperative and remains a thriving business in east central Minnesota. It was the only business where my parents had credit. My parents had actually purchased common stock in the co-op in the late 1960s, which, as I discovered later, is unusual since most members are allowed to earn their way into a farm supply cooperative without having to formally purchase common stock. Our family had no credit cards and no home equity line of credit in the 1960s and 1970s. The fact that we lived from one paycheck to another meant that having credit at the co-op was a blessing, provided the account was paid off promptly every month, which it was. The co-op was where we purchased gas and where the car got fixed. Tires, batteries, oil filters, dog food, and other goods were bought at the co-op. And every year my family received a patronage refund. The co-op had operations in three counties and the nearest location was almost 15 miles away.

    We banked with a credit union and insurance was done with a mutual insurance company. My cousin, on whose farm we worked, was a member of three farm supply cooperatives and his insurance was in a township mutual insurance company. Childhood photos would invariably have someone in my family wearing a red Cenex (now part of CHS, Inc.) or green Land O’Lakes ball cap. Both were cooperatives. I worked at the co-op for four years; my brother later worked there, and ultimately became General Manager at a farm supply cooperative in Washing-ton state. My Aunt Maureen (known as Peg) was an executive secretary at what was then the St. Paul Bank for Cooperatives, and would relate her experiences there over a 30-odd year career. As children, we did not understand what a cooperative or mutual was. We knew that gas might be less expensive just down the road and did not require a 15-mile drive to get there! But it was just the way things were done at our house.

    As I attended graduate school at the University of Minnesota and then Purdue University, and began a career in academia at Kansas State University and now back at the University of Minnesota, I began to work within a network that involved frequent engagement with cooperative directors, managers, employees, and other stakeholders, including academics, accountants, attorneys, lenders, and state cooperative council leaders. I began to better understand the network of agricultural and consumer cooperatives and mutual insurance firms in our economy. None of my undergraduate classes in the business school discussed cooperatives. In fact, for one of my classes in which I was required to discuss a company’s annual report, I chose to discuss a firm that happened to be a cooperative. My professor intoned in a professorial voice that “Cooperatives were a socialistic idea” and promptly gave me a C. Historically, colleges of agriculture, rather than colleges of business, were home to collegiate courses on cooperatives.

    Cooperatives and mutuals are just a different form of business. Once you start looking closely, you begin to appreciate the extent to which they exist throughout the world. Like any business, they exist to make a profit and make their members—who are customers—better off by providing a product or service. The differences lie in how income is distributed, how they are financed, and how they are owned by members. All of these concepts are discussed in this book.

    For a number of years, I have been asked to write a textbook on cooperatives and mutuals. I have chosen to write an introductory textbook. Over the past ten years, we have seen many retirements of faculty who taught courses on cooperatives and provided many educational programs to directors and employees. The popularity of such courses has resulted in new faculty being hired who do not have the deep institutional knowledge that other instructors had developed over a long career. There are also new courses being taught in colleges and universities where there was no such course taught previously. Thus, I have chosen to write something for students who are taking their first course in cooperatives. An extensive set of teaching materials with detailed lessons plans, case studies, and information, accompanies this textbook; these materials should be useful for instructors and students.

    I owe a great deal of gratitude to my parents for exposing my siblings and I to the cooperative and mutual form of business. My colleagues in the U.S. Department of Agriculture USDA NCERA 210 Multi-State Coordinating Committee of Land Grant University Faculty Focused on Research on Cooperatives have been a valuable sounding board for me. In particular, Phil Kenkel and Greg McKee have been great sounding boards for this textbook. I owe a lot of thanks to my long-time friend and colleague from Kansas State, David Barton, who was involved in the last textbook written on cooperatives in 1989 and kept a set of materials available for others to use over the years. And I owe much to my co-instructors who help teach the law school class on cooperatives and mutuals at the University of Minnesota. Chris Kopka, Tom Pierson, and Dave Swanson have deepened my knowledge of mutuals and cooperatives.

    Most importantly, I am deeply indebted to the thousands of directors, managers, employees, and stakeholders of cooperatives and mutuals who have educated me about their businesses over the past 25 years. This education has occurred through programs offered by state cooperative councils, cooperative annual meetings, regional workshops such as the Farmer Cooperatives conference and California Center for Cooperative Development education program, and the activities of the National Council on Farmer Cooperatives. I have had the opportunity to lecture or work in more than 100 countries, with much of this work related to cooperatives or mutuals. The issues are the same no matter where one goes! The relationships among all of these individuals have helped make my career very rewarding. My job involves a great deal of public-private partnerships with these individuals and I am very blessed with this network. I also want to thank to Jerry Ryan and the employees and producers of Arrabawn Co-op in Nenagh, Ireland, who provided my students and I an up-close look at Irish cooperatives as part of their study tour. I have led more than a dozen student agricultural study tours in Latin America, Australia and New Zealand, and South Africa, and cooperatives were an important stop for my students.

    Cooperative leaders had the foresight to create various endowments at a number of universities to ensure that faculty teach courses in cooperatives and create new knowledge about cooperatives. In that spirit, the CHS Foundation and CoBank have graciously helped provide funding in the development and editing of this book and its materials. I could not have done this without their help. Finally, I would remiss if I did not thank Kansas State University and University of Minnesota for allowing me to teach, research, and conduct extension and outreach programs on cooperatives as part of my career. It has been a great career choice for me.