Patronage: Beyond Price, Quality and Service When you do business with a non-cooperative, all profi ts go back to the company or its investors. But here’s the co-op diff erence: When you do business with your local cooperative, you have the opportunity to receive patronage based on earnings from the products you buy, grain you sell and services you use. Each year, your local cooperative board determines how patronage will be distributed, usually as a percentage of cash and equity certifi cates. Just as with cash patronage, local boards decide how equity will be paid out to members, so it varies from co-op to co-op. Typically equity is based on member age or purchase year and equity payments stay local. For fi scal 2015, CHS recorded earnings of $781 million. As a result, this year it will distribute an estimated $519 million in cash patronage, equity redemptions, preferred stock and dividends on preferred stock granted by the CHS Board of Directors. That’s $2.7 billion returned to owners over the past fi ve fi scal years, an annual average of $544 million. Since its inception, CHS has returned $3.6 billion in cash to its members. That money stays in local communities. A Win-Win Proposition Jim Morken, general manager of CHS Farmers Alliance in Mitchell, S.D., believes that co-ops off er their members one of the few win-win opportunities in the volatile world of agriculture. “We help each other, and when our members succeed, we succeed,” he says. How does his co-op keep this equation in balance? By off ering cutting-edge agricultural products, services and technology; by maintaining a staff with stellar expertise; by adapting to serve the needs of both younger and older producers; and by having board members who provide local input and help make decisions that are relevant in the co-op’s “own backyard.” Co-ops succeed by getting involved. “We’re a vital part of the rural setting. In our communities, we’re often the largest employer in town,” Morken says. “We provide a good place to work. Our people are active as coaches and fi refi ghters, in their schools and churches, and much more.” And co-ops succeed by being fi nancially sound. “We strive to earn our members’ business every day,” says Morken. “But there’s another benefi t to doing business with us: patronage. Over the past fi ve years, we’ve paid out $10 to $12 million in cash, and if you include equity, it’s closer to $30 million. That’s signifi cant.” ME THAT A N M A N E Which of these companies and organizations are cooperatives? If you indicated all are cooperatives, you’re a co-op pro. There are nearly 30,000 cooperatives in the U.S., serving more than 100 million Americans and spanning industries from electricity and food processing to agriculture and banking. U.S. co-ops provide more than 2 million jobs and generate sales of more than $650 billion annually. 14 MARCH/APRIL 2016 CHSINC.COM