1. 1 New Generation Cooperatives: Managers’, Directors’, And Owners’ Responsibilities Gary Brester Dept. of Agricultural Economics and Economics Montana State University AGBE 445 Co-op Business Principles & Practices Spring 2014

2. 2 OUTLINE 1.Overview of New Gen Cooperatives 2. Management Responsibilities 3.Director Responsibilities 4. Owner/Grower Responsibilities 5. Questions

3. 3 Motivation 1.$2 Billion Of Investments 2.Lots Of Publicity 3.Rural Development? 4.Value Added Agriculture? 5.Risk Management? 6.USDA Resources

4. 4 New Generation Cooperatives 1.They Are Different From Traditional Cooperatives 2.Capitalization 3.Rights And Obligations To Deliver 4.Stock Is Tradeable 5.But, Should Not Be Considered Similar To Other Tradeable Stocks a. Why Are IOFs Ignoring This Opportunity? b. Rationale Is Usually Market Access

5. 5 What Do The Following New Gens Have In Common? 1.South Dakota Soybean Processors 2.Pro-Gold 3. Spring Wheat Bakers 4.North American Bison 5.Walton Bean Co-op 6.Bushel 42 Pasta 7. Century 21 Alliance

6. 6 OUTLINE 1.Overview of New Gen Cooperatives 2. Management Responsibilities 3.Director Responsibilities 4. Owner/Grower Responsibilities 5. Questions

7. 7 Management Responsibilities 1.Fiduciary Responsibility To Owners a.Protect Investment  Sustain Business Entity b.Maximize Returns On Investment  Higher Beet Prices  Patronage Refunds  Growth In Price Of Delivery Rights

8. 8 Management Responsibilities 2.For Cooperatives, Must Optimize Grower-To-Sales Issues a. Price Of Delivery Rights b. Financial Condition  Strong Balance Sheet  Annual Net Income c. Making Delivery More Costly d. Unnecessary Harvest Costs e. Unit Retain Management Plan

9. 9 Management Responsibilities 3.Develop/Implement The Strategic Management Business Plan a.Monitor Progress b.Solve Problems 4.Hire Employees 5.Evaluate Employees 6.Reward Employees 7.Fire Employees

10. 10 Management Responsibilities 8. Provide Leadership a.Communication b.Understand Problems c. Listen d.Quick Action e. Explain Decisions f. Realize How People View Decision-Making

11. 11 Management Responsibilities 9. Foster Trust a.Why? b.Because Trust Is More Difficult To Create Than Money  And Much Easier To Lose c.Actions Foster Trust/Distrust d.No Place For Arrogance  Fosters An “US” vs. “THEM” e.Communication  Listening/Oral Comments  Newsletters

12. 12 Newsletter Topics 1. Quarterly/Easy To Create a. Human Interest b. Regional Crops/Issues c. Sugar Prices/Policy/Branding d. Share Prices/Open Cooperative e. Harvest/Pile Conditions f. Removal Of Pilers g. New Piling Policies  New Heat Rules  Why Is 18 Days Optimal?

13. 13 OUTLINE 1.Overview of New Gen Cooperatives 2. Management Responsibilities 3.Director Responsibilities 4. Owner/Grower Responsibilities 5. Questions

14. 14 Director Responsibilities 1.Manage ONE Employee: CEO a.Hire/Retain/Replace Decisions b.Develop Written Annual Goals c. Evaluate CEO Performance Annually  Provide Written Performance Evaluation  Reward Good Performance 2. Work With CEO To Develop Strategic Direction

15. 15 Director Responsibilities 3. Educate CEO Regarding Grower Concerns a. Must Communicate The Relative Importance Of Various Concerns 4. Provide Owners With Explanations Of Decisions a. Recognizing That Some Decisions/Reasons Cannot Be Made Public b. Directors Serve An Important Education Function

16. 16 Director Responsibilities 5. Seek/Attend Management Education 6. Request Outside Help As Needed a. Ex-Officio Members b. Use Consultants On Specific Matters 7. Submit Themselves To Evaluations 8. Must Be Seen As Unbiased

17. 17 OUTLINE 1.Overview of New Gen Cooperatives 2. Management Responsibilities 3.Director Responsibilities 4. Owner/Grower Responsibilities 5. Questions

18. 18 Owner/Grower Responsibilities 1.Growers Must Realize That They Are No Longer On An Island a. They Are Part Of A Group Effort b. Sometimes Have To Sacrifice As An Individual To Contribute To The Whole c. This Requires Strong Leadership In Return

19. 19 Owner/Grower Responsibilities 2. Growers Must Follow The Rules a.Pre-Defoliating b.Loading Trucks If Hot c. Hauling Mud d. Beginning Harvest On-Time e.If The Rules Are Bad, Get Them Changed 3. Ask Questions a. Demand Reasonable And Logical Answers 4. Must Participate In Education

20. 20 QUESTIONS?