Copies of this publication may be obtained upon request, while a supply is available, from the Director of Information and Extension Farm Credit Administration, Washington, D. C. Operating methods and policies. Drafting the organization forms.. Appendix A-Suggested organization forms Waiver of notice of first meeting of members. Waiver of notice of first meeting of directors. Minutes of first meeting of members. Minutes of first meeting of board of directors. Organizing a by S. D. Sanders Cooperative Bank Commissioner Farm Credit Administration FAR ARMERS organize cooperative associations to perform many services for them. Marketing associations sell the growers' products and fre. quently prepare, process, and transport them to market. Purchasing associations engage in the purchase, manufacture, and distribution of farm supplies for the benefit of their farmer-members. Farm business service associations provide electricity, irrigation, insurance, and other services for their members. Producers have saved large sums of money by handling their business through their own organizations. But other important benefits, such as more modern facilities and improved services, may come also through cooperative activity. Cooperatives have taken the lead in standardizing products, in obtaining better methods of preparation, and in improving quality. Such services as these result in larger returns to the members and also are of material benefit to the consumers. Cooperatives, like other business enterprises, are as different as the various conditions under which they are developed. Only general considerations may be laid down that apply to all types of associations. This circular is designed to focus attention on some of the more common factors pertaining to the organization of farmers' business associations. No attempt will be made to discuss each type separately. Groups of farmers planning to form an association should have technical advice from those experienced in the services to be rendered, and in the organization and operation of cooperatives, as well as competent legal counsel. State and Federal agricultural agencies may be of assistance. Various publications designed to assist groups of producers interested in forming a cooperative may be obtained on request from the Farm Credit Administration, Washington, D. C. NOTE.-Acknowledgment is made of the assistance of Hugo W. Druehl in preparing the text material and of L. S. Hulbert and Charles Oliphant, of the Legal Division in drafting the organization forms. Kwring the expertet romme of business and the approximate eet of wipating the nexwary land. auldings, and equipment the next point to be covered in the committee's wires the amount of capital required. Adequate provision should be made not only to inance the acquisition of facilities, but also for operating capital. It is important to consider the sources from which the required capital may be okazined. It should be borne in mind that the more the producere invest in their association. the more they will feel responsible for ita suoras, and the more independent the association will be of outside financial assistance. However, it is often necessary for the association to borrow funds to supplement those supplied by producers. Several sources usually are available from which the farmers organization may borrow money. among which are private agencies and the banks for cooperatives. It is the committee's task to analyze the various sources of funds with a view to recommending the agency which can supply financing most nearly suited to the needs of the association. In determining how much capital will have to be supplied by members for facilities, it is helpful to recall a provision of the Farm Credit Act of 1933, as amended, which provides that a bank for cooperatives may not lend a cooperative association funds to finance facilities in excess of 60 percent of the value of the collateral offered. This, then, may serve as a guide and generally the producers should plan to put up initially at least 40 percent of the cost of the facilities. Operating capital in addition to this should also be provided for. ESTIMATED OPERATING COSTS The farmer is deeply concerned with the problem of costs since all expenses of handling, processing, or selling reduce his income. Before deciding to organize, the potential members and directors should have a working knowledge of the probable costs of conducting the business. Publications of colleges and of Federal and State governmental agencies often supply information which reveals typical costs of certain businesses. It is important that the cost information assembled by the committee be accurate so that members may not be led to expect savings that are impossible. The probable costs, as estimated by the committee, should be compared with the existing charges to determine whether any considerable savings will be possible. Cooperatives have been organized to cut costs where it was later found that when volume was divided with existing agencies, costs in the area tended to rise. |