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CE1
Cooperative Essentials
Introduction to Cooperatives
Unit: Cooperative Essentials
Lesson Title: Introduction to Cooperatives
Standards
CRP.04.01. Speak using strategies that ensure clarity, logic, purpose and professionalism
in formal and informal settings.
ABS.01.03. Devise and apply management skills to organize and run an AFNR business
in an efficient, legal and ethical manner.
ABS.04.01. Analyze characteristics and planning requirements associated with
developing business plans for different types of AFNR businesses.
ABS.04.02. Develop production and operational plans for an AFNR business.
CCSS.ELA-Literacy.L.11-12.1 Demonstrate command of the conventions of standard
English grammar and usage when writing or speaking.
CCSS.ELA-Literacy.L.11-12.2 Demonstrate command of the conventions of standard
English capitalization, punctuation, and spelling when writing.
CCSS.ELA-Literacy.SL.11-12.1 Initiate and participate effectively in a range of
collaborative discussions (one-on-one, in groups, and teacher-led) with diverse partners
on grades 11–12 topics, texts, and issues, building on others’ ideas and expressing their
own clearly and persuasively. CCSS.ELA-Literacy.SL.11-12.5 Make strategic use of digital media (e.g., textual,
graphical, audio, visual, and interactive elements) in presentations to enhance
understanding of findings, reasoning, and evidence and to add interest.
CCSS.ELA-Literacy.SL.11-12.4 Present information, findings, and supporting evidence,
conveying a clear and distinct perspective, such that listeners can follow the line of
reasoning, alternative or opposing perspectives are addressed, and the organization,
development, substance, and style are appropriate to purpose, audience, and a range of
formal and informal tasks.
CCSS.ELA-Literacy.W.11-12.2 Write informative/explanatory texts to examine and
convey complex ideas, concepts, and information clearly and accurately through the
effective selection, organization, and analysis of content.
CCSS.ELA-Literacy.SL.11-12.3 Evaluate a speaker’s point of view, reasoning, and use of
evidence and rhetoric, assessing the stance, premises, links among ideas, word choice,
points of emphasis, and tone used.
Page 2
Cooperative Essentials CE1 Introduction to Cooperatives
Student Learning Objectives
Slide 2 in CE1 Introduction to Cooperatives Lesson Objective
After completing the lesson on introduction to cooperatives, students will demonstrate their
ability to apply the concept in real-world situations by obtaining a minimum score of 80% in a
mock MIC Speech Contest.
Enabling Objectives
As a result of this lesson, the student will…
1. Define cooperatives and identify their guiding principles. 2. Record the early history of cooperatives and describe the future directions of
cooperatives. 3. Explain the three different ways to categorize cooperatives. 4. Describe the benefits and challenges of forming a cooperative and build a cooperative
governance system. Time: Approximately 120 minutes
List of Resources
International Co-operative Alliance. (2015, January). Co-operative Identity, Values & Principles.
Retrieved from http://ica.coop/en/whats-co-op/co-operative-identity-values-principles
Liebrand, C., & Wadsworth, J. (2016, January). Cooperative Statistics 2014. Retrieved from
http://www.rd.usda.gov/programs-services/all-programs/cooperative-programs
United States Department of Agriculture Rural Development. (2011, April). Understanding
Cooperatives: Cooperative Business Principles. Retrieved from
http://www.rd.usda.gov/files/CIR45_2.pdf
Wadsworth, J. J., & Eversull, E. E. (2012, November). Co-Ops 10: An Introduction to
Cooperatives. Retrieved from http://www.rd.usda.gov/files/cir55.pdf
List of Tools, Equipment, and Supplies
CE1 PowerPoint Presentation
CE1 Activity Sheet and Evaluation Packet
Note cards or small sheets of paper for review activity
Magazines
Scissors
Tape or Glue
Flip Charts
Markers
Page 3
Cooperative Essentials CE1 Introduction to Cooperatives
Poster Board
Sticky Notes
Key Terms
Slide 3 in CE1 Introduction to Cooperatives
The following terms are presented in this lesson (shown in bold italics): Cooperatives
Cooperation
Governance
Patronage
Page 4
Cooperative Essentials CE1 Introduction to Cooperatives
Interest Approach: Use an interest approach that will prepare the student for the lesson.
Teachers often develop approaches for their unique class and student situations. A possible
approach is included here.
Slide 4 in CE1 Introduction to Cooperatives
Cooperative Business Structure: Recall the business structures from the Agriculture
Management, Economics and Sales Curriculum lesson AP3. Have students reflect on what they
learned about the cooperative business structure. Write Cooperative on the white board. Based
on what students learned in the previous lesson, ask students to think about the purpose of
cooperatives. Guide students to write additional words on the white board to describe
cooperatives (e.g., unity, member, community, values, etc.).
Once students are done writing their words on the board, assess their understanding of
cooperatives. This will help gage the students’ understanding. If students are not exactly on the
right track say, “I see there might still be some confusion about the purpose of cooperatives, so
let’s dive deeper to learn more about the importance of this business structure.”
If students have a fundamental understanding, only teach pieces of this lesson as seen fit.
Page 5
Cooperative Essentials CE1 Introduction to Cooperatives
Summary of Content and Teaching Strategies
Objective 1: Define cooperatives and identify their guiding principles.
Teaching Strategies Related Content
1. Review the words on the board from the
Interest Approach. From there have
students determine the definition of a
cooperative. This would also be a good
time to utlize the chart created in AP3 to
show reiterate comparisons between the
different types of business structures.
Slide 5 in CE1 Introduction to Cooperatives
2. Hold an open class discussion. Guide
students to name organizations, clubs, or
athletic teams that believe in the same
cooperative concept to achieve a “common
goal.”
3. In order to reach that common goal,
cooperatives first have to meet the needs of
several groups.
Slide 6 in CE1 Introduction to Cooperatives
4. Facilitate a discussion about why
cooperatives would be formed.
Slide 7 in CE1 Introduction to Cooperatives
5. Ask students if they realize cooperatives
are a part of their daily lives. Write down
on a sheet of scratch paper what
cooperatives you think you’ve encountered
in the last 24 hours.
6. Share students’ list and reveal other items
they may have not thought of previously.
Define Cooperatives:
A business owned or controlled by the
people that use its services and whose
benefits are derived and distributed
equitably on the basis of use and
ownership.
This is in contract to other legal
structures where ownership,
control and benefits are based on
level of financial investment
An autonomous association of people who
voluntarily cooperate for their mutual
social, economic, and cultural benefit
Overall, it is based on the concept of
cooperation to achieve a “common goal.”
Cooperatives meet many groups’ needs, but
typically focus on meeting the needs of one of
these groups:
Consumer Needs (electric, credit union,
housing, farmers)
Producer Needs (farmers, fisherman)
Employee Needs (employment, employee
ownership such as Mondragon)
Other Cooperatives Needs (purchasing
shared services for other co-ops)
Reasons for forming cooperatives:
Founded to provided a missing service
Used to avoid monopoly power
Reduce overall risk in a company
Achieve economies of scale
Perform a combination of input
procurement, service provisions, and
product marketing
Daily use of cooperatives:
Electricity
Page 6
Cooperative Essentials CE1 Introduction to Cooperatives
7. Show students common examples of
cooperatives and see if they recognize
them.
Slide 8 in CE1 Introduction to Cooperatives
8. Solicit ideas regarding cooperatives
specific to the state of Missouri. There are
many to choose from, but here are a few
examples.
Slide 9 in CE1 Introduction to Cooperatives
9. Have students to visit
http://www.mic.coop/mic%20coops.html
to learn about more Missouri Cooperatives.
Guide them to look at 6 different
cooperatives’ websites and write their
mission statements or share two interesting
facts about the cooperative in CE1.1.
10. When finished, students should share the
mission statement for the cooperatives they
researched.
11. Share with students that, “in order to
uphold their mission statements,
cooperatives need to have set standards.”
Facilitate a discussion after having students
think about an organization, sports team, or
another business that has set standards or
guidelines to maintain. Ask questions like,
“What groups can you think of that have
set standards? What are those standards?
Why do you think these groups use these
Cell Phones
Internet
Food
Gasoline
You may recognize these cooperatives…:
ACE Hardware Store
Welch’s
Sunkist
Ocean Spray
Land O’ Lakes
Dairy Farmers of America (DFA)
Missouri specific cooperatives…:
MFA Oil
MFA Incorporated
FSC Financial
Farmers Cooperative Services, Inc.
Farmers Cooperative Elevator Association
Show Me Ethanol LLC
Show Me Energy Cooperative
Mid Missouri Energy, Inc.
Ray-Carroll Country Grain Growers, Inc.
CoBank
Ag Processing Inc.
Associated Electric Cooperative
Dairy Farmers of America
Page 7
Cooperative Essentials CE1 Introduction to Cooperatives
guidelines or standards?”
12. If needed, help students relate this to FFA,
“In FFA we have a guidelines and
standards we need to maintain in order to
help the organization move forward and be
successful. Without these standards, we
may not be the nation’s largest youth
organization.”
13. Explain that cooperatives work the same
way. They have principles that guide them
towards their common goal. Let’s explore
these principles.
14. Guide students to write the related content
in their Guiding Principles of Cooperatives
graphic organizer in CE1.2.
15. Explain that there are three main buckets
such as: user-owned, user-benefitted, and
user controlled that the 7 principles of
cooperatives fall in to.
Slide 10 in CE1 Introduction to Cooperatives
16. Let’s explore each of these pieces more
closely.
Slide 11-14 in CE1 Introduction to
Cooperatives
Guiding Principles of Cooperatives:
3 Pillar Model
User-Owned
o Cooperative is owned and financed
by those who use the cooperative
User-Benefitted
o Cooperative provides and
distributes benefits to users based
on their use
User-Controlled
o Cooperative is controlled by those
who use the cooperative
7 Principle Model
Voluntary and Open Membership
Membership is open to anyone
without discrimination
Some memberships are closed by
design and others accept members
as needed
Membership is voluntary
Democratic Member Control
Controlled by members who set
policies and make decisions for the
cooperatives
Representatives are elected to
serve the membership
Voting rights are based upon the
set-up of the cooperative
One member, One vote
Democratic process
Page 8
Cooperative Essentials CE1 Introduction to Cooperatives
17. After the conclusion of the principles
section and students have completed their
graphic organizations, ask students to share
two facts about the principles, and what
they find most interesting on a scratch
piece of paper and wad it up.
18. Once students have their items written on
scratch paper, have them make them into a
ball. Then, guide students to throw them
into the air. Have students pick up the
scratch paper ball closest to them and share
it with the class.
Member Economic Participation
Members make financial
contribution to cooperative
Surplus allocation is determined by
members
Autonomy and Independence
Member-controlled
Self-controlled
All actions of the cooperative are
acted upon on terms that maintain
member control and cooperative
independence
Education, Training, and Information
Members, elected officials,
managers and employees are
trained so they can contribute to
the cooperative
Educated in order to be able to
educate others on the nature of
benefits of cooperatives
Cooperation Among Cooperatives
Whether local, regional, national or
international, cooperatives work
together to serve members and
strengthen their cooperative
Concern for Community
Work to sustain their local
community through policies
approved by members
Community involvement through
scholarships, services, and
donations
Objective 2: Record the early history of cooperatives and describe the future
directions of cooperatives.
Page 9
Cooperative Essentials CE1 Introduction to Cooperatives
Teaching Strategies Related Content
1. To gain a better understanding of
cooperatives, have students conduct a web
search to discover the history of
cooperatives. Have students use CE1.3 to
conduct their web search. Share that
students can even create a timeline on their
activity sheet if they would prefer.
2. To begin their search, have students use the
following sources:
http://www.mic.coop/index.html
http://www.rd.usda.gov/files/cir55.pdf
3. Answers for discussion can be found in
CE1.3 Key.
4. Assign each student one area they
researched in CE1.3 and have them
summarize key points in an elevator speech
format in under 60 seconds to another
student
5. Explain that like any other business
structure, cooperatives are constantly
evolving. Ask students, “Why do you think
cooperatives have to continue to evolve?”
Solicit responses from the class.
6. Reveal reasons cooperatives are constantly
evolving. Write these on computer paper
and hang around the room. As the papers
are hung, facilitate a more in-depth
discussion about the reasons.
Slide 15 in CE1 Introduction to Cooperatives
7. Cut apart examples in CE1.4 prior to class.
Evolutions and Future Directions of Cooperatives
in Missouri…
Reasons cooperatives are constantly
evolving
Technology changes: cooperatives
can help make new technology
more affordable
Industry consolidation: co-ops can
create competition in areas where
monopolies form
Vertical Integration: offering co-op
members new ways to market their
products and helping new
industries evolve
Meeting Member’s Evolving
Needs: Offering a new service to
meet changing member needs
Regulations: offering new services
due to new regulations
Page 10
Cooperative Essentials CE1 Introduction to Cooperatives
Once the reasons cooperatives are evolving
have been discussed, give each student an
example or multiple examples. Have
students review the reasons placed around
the room, and try to determine under which
their example(s) falls. Place their example
accordingly.
8. Review students’ placement of the
examples and continue the discussion
about how cooperatives are evolving.
9. Reference DFA.pdf on curriculum website
during this discussion.
Technology changes: cooperatives can help make
new technology more affordable
Example 1: An agricultural co-op delivers
farmers the most technologically advanced
corn, soybeans, gain, sorghum, rice, wheat,
and forage seeds
Example 2: A local cooperative invests in
precision agriculture technologies
Industry consolidation: co-ops can create
competition in areas where monopolies form
Example 1: Forming a telecom co-op in
areas where there may be only one provider
Some milk marketing cooperatives began
as a result of proprietary markets refusing
to buy milk from dairymen at certain times
of year or simply paying very low prices.
Vertical Integration: offering co-p members new
ways to market their products and helping new
industries evolve
Example 1: Open a new market for corn by
building and operating corn ethanol plants
Example 2: Land O’ Lakes and DFA
manufacture and sell value added products
such as cheese, butter and other dairy
products rather than only selling milk
Example 3: AGP sells a variety of
innovative products from soybeans and the
farmers own the soybean processing plants
Specific examples of how DFA has joint
investments in a number of other well-
known brands
Meeting Member’s Evolving Needs: Offering a
new service to meet changing member needs
Example 1: Rural Electric Cooperatives
increasing speed of Internet with fiber
delivery
Example 2: MFA developing/ selling a new
seed variety or chemical to farmers to
Page 11
Cooperative Essentials CE1 Introduction to Cooperatives
increase yield
Example 3: DFA has developed a Member
Savings Network with outside service and
product suppliers to increase profitability of
member farms
Regulations: offering new services due to new
regulations
Example 1: Evolvement due to USDA/EPA
regulations with GMOs in seed.
For example, to give members
access to the latest technologies
MFA provides elite genetics
through MorCorn and MorSoy
brands. As part of this service, the
cooperative not only develops
varieties with improved traits
through the use of licensed GMOs
that have U.S. approval, but also
monitors foreign market approval
to be certain that varieties will be
accepted in domestic and foreign
markets.
Example 2: Regulations on antibiotics in
feed
USDA and FDA have stringent
regulations on the use of
antibiotics in feed. Through the
cooperative, farmers can keep
abreast of these complex, changing
regulations to be certain their
animal production practices meet
the guidelines. MFA also works to
develop new and alternative
products to help the farmers meet
these needs.
Objective 3: Identify the three types of cooperatives.
Teaching Strategies Related Content
1. Explain that there are three major ways
categorize cooperatives
Slide 16 in CE1 Introduction to Cooperatives
2. Further explain that while cooperatives can
be separated by location, governance
There are different ways to categorize
cooperatives…
Cooperative coverage/ location
Area/ geography served
Governance system
Membership structure
Function or services provided
Page 12
Cooperative Essentials CE1 Introduction to Cooperatives
system, and services provided they do not
always fit neatly into one bucket.
3. Refer students back to the Missouri
Institute of Cooperatives webpage under
the “Cooperatives” tab. As the following
topics are discussed, students can begin to
determine which cooperatives fall into
which categories.
4. Explain that when it comes to cooperative
coverage and location, there are either local
or regional cooperatives. Reveal the
difference between the two.
Slide 17 in CE1 Introduction to Cooperatives
5. Have students review the list of
cooperatives on the webpage and identify
three examples of local cooperatives and
three examples of regional cooperatives.
Record these on CE1.5.
6. Have students share their thoughts and
reveal the other examples not mentioned.
7. Share with students that in terms of a
governance system, there are three
categories – centralized, federated and
mixed. Share the difference between the
three, have students find examples and
record them on CE1.5.
Slide 18 in CE1 Introduction to Cooperatives
8. Have students complete a pair share to
compare answers to this portion of CE1.5.
9. Explain to students that cooperatives have
a variety of functions and services they
provide.
Slide 19 in CE1 Introduction to Cooperatives
Cooperative Coverage/ Location
Local Cooperatives
Serves a particular community, set
of counties, or state
Approximately 40 to 50 local ag
cooperatives in Missouri
Another 40 to 50 rural electric or
telephone cooperatives
Multifunctional regional cooperatives
Serves multiple regions, states, etc.
Missouri is served by 12 or more
regional ag and farm credit
cooperatives
Governance System
Centralized
Single senior management team
and one board
Farmers or individual consumers
are the direct members of the
cooperative
Federated
Have other cooperatives as
members
Combined
May have farmers as direct
members and also have local
cooperatives as members
Function or Services Provided
Financing
Energy
Agricultural Input Cooperatives
Bargaining Cooperatives
Commodity-based Agricultural
Page 13
Cooperative Essentials CE1 Introduction to Cooperatives
10. Direct them to this portion of CE1.5 and
again have them find examples of each on
the MIC webpage. Students may need to
go beyond the use of MIC’s webpage
(although this should be the first resource)
as not all types of cooperatives are
represented in the membership.
11. Have students join in triads to share
answers.
Cooperatives
New Generation Cooperatives
Urban Cooperatives
Purchasing Cooperatives
Insurance Cooperatives
Telephone Cooperatives
Objective 4: Describe the benefits and challenges of forming a cooperative and
build a cooperative governance system.
Teaching Strategies Related Content
1. Ask students, “Based upon what we’ve
discovered about cooperatives, what are
some of the benefits people might see to
forming a cooperative?”
Slide 20 in CE1 Introduction to Cooperatives
2. Follow up by asking the students, “While
there are a number of benefits to forming a
cooperative, like any business, there are
challenges. What do you think are some
challenges that may arise in forming a
cooperative?”
Slide 21 in CE1 Introduction to Cooperatives
3. Unveil the PowerPoint slide and compare
with list established during class
discussion.
Slide 22 in CE1 Introduction to Cooperatives
4. Discuss each benefit and challenge.
The benefits and challenges to forming an
agricultural cooperative…
Benefits
Access to quality services and
supplies
Increase clout in marketplace
Share in earnings
Political action
Local economy enhanced and
Page 14
Cooperative Essentials CE1 Introduction to Cooperatives
5. There are commonalities among
cooperatives. Let’s discover some of the
most recognizable practices.
Slide 23 in CE1 Introduction to Cooperatives
6. Ask students if anyone knows what a
patronage refund is.
7. If students are familiar with the refund
system, ask students if any of them have
received a patronage refund.
Slide 24 in CE1 Introduction to Cooperatives
8. Explain that some students may already
receive a patronage refund through their
SAE projects.
9. Explain to students that cooperatives may
also use a limited return on equity capital
as a common practice.
Slide 25 in CE1 Introduction to Cooperatives
10. Cooperatives may also utilize other
cooperatives to provide benefits to
member-users. For example, members at
the local level can own a wholesale grocery
store.
Slide 26 in CE1 Introduction to Cooperatives
protected
Challenges
Number of people involved
Complexity of decision making
Cultural perceptions
Costs to buy-in
Common practices in cooperatives…
Patronage refund system
Refund to members for doing
business with the cooperative
After the fiscal year, a cooperative
computes its earnings on business
conducted on a cooperative basis
These earnings are returned to
patrons/ members as cash/ equity
allocations on the basis of how
much business each patron did
with the cooperative
Limited return on equity capital
Members receive a service not a
monetary return on capital
investment
Most cooperatives don’t pay any
dividends on member capital
Limiting returns on equity supports
the principles of distributing
benefits proportional to use
Cooperation among cooperatives
Ability to pool personnel and other
assets to provide services and
programs on a collaborative lower
cost
Permits members of local
cooperatives to participate in
owning and managing fertilizer
plants, food manufacturing
facilities, power plants, national
financial institutions, wholesale
grocery and hardware distributions
Page 15
Cooperative Essentials CE1 Introduction to Cooperatives
11. Divide students into groups. Give each
group a position: members, board of
directors, officers, committees, and
employees. Have each group do research
on their selected or given position. Tell the
groups to keep their positions secret. The
class will play a guess game at the end.
12. To find information for this activity, have
students use the following link:
http://www.rd.usda.gov/files/cir55.pdf
13. Use the activity sheet in CE1.6 to record
their findings and the content in the right-
hand column to assist student research as
needed.
14. To share what the students learned have
them play 20 questions. Have one group
stand before the class. Guide the
classmates outside of the group to ask
questions to guess the group’s role.
Students must guess the position in 20
questions or less. Also, students must ask
yes or no questions to guess the role, and
cannot ask “Are you members?” or another
role.
15. Share a prize or incentive with the winning
team.
programs, and more
Ability to form agencies in
common to negotiate for better
prices on the marketing of products
through economy of size
Governance, leadership, and operations:
Members
Becoming a member
A single cooperative can
establish its own membership
criteria
Membership is typically based
upon payment of nominal fee
or the annual dollar amount of
business and individual
conducts with the cooperative
or both
Member rights and responsibilities
Adopt and amend the articles
of incorporation and bylaws
Elect and remove directors
Decided whether to dissolve,
merge or consolidate the
cooperative or form a joint
venture with other cooperative
or non-cooperative firms
Make sure officers, directors
and other agents comply with
laws applicable to the
cooperative and with its
articles of incorporation,
bylaws and membership
contracts.
Members role
Patronize the cooperative:
this is a responsibility, and
in new generation
cooperatives an obligation
Page 16
Cooperative Essentials CE1 Introduction to Cooperatives
Be informed about the
cooperative
Be conscientious when
selecting and evaluating
directors
Provide necessary capital
Evaluate performance of
the cooperative
Board of Directors
Hire a competent manager, determine
the salary, outline the duties and
authority of the position and formally
review his/ her performance at least
annually
Adopt broad, general policies to guide
the manager
Develop and adopt long-range business
strategies
Require written monthly financial
reports and operating statements
Direct the manager to prepare reports
before the close of each year
Employ auditor
Plan and conduct the annual meeting
Determine the patronage refund
allocation and/or per-unit retain level
Assure competent legal counsel is
available
Keep a complete record of the board’s
actions
Officers
President
Vice president
Secretary
Treasurer
Committees
May deal with finance, purchasing,
merchandising, and others
Studies in its particular field and makes
recommendations
Large associations may select an
executive committee to perform
general management and oversight
duties as authorized by the board
Managers
Supervise and coordinate, under board
direction, the business activities of the
co-op by managing the people, capital,
and physical resources
Page 17
Cooperative Essentials CE1 Introduction to Cooperatives
16. Explain to students that financing for a
cooperative is critical to cooperative
success.
17. There are a number of financing operations
for cooperative business structures.
Slide 27 in CE1 Introduction to Cooperatives
18. A common form of financing for
cooperatives is direct investment. With this
type of investment, people can buy-in to
the cooperative to gain membership and
voting rights.
19. Transferable delivery rights are a different
way to finance cooperatives. For example,
a local farmer has to deliver ‘X’ bushels to
a grain elevator to make a profit.
20. Solicit responses recalling the purpose of a
patronage fund. Retained margins are
very similar to patronage refunds.
21. Retained margins are also known as capital
Hire, train, supervise, and set
compensation for employees
Oversee the detailed operations of the
cooperative
Furnish information needed for long-
range planning
Represent the cooperative and portray
a positive image to members and
community
Encourage membership and active
patronage
Communicate developments at the
cooperative to members
Employees
Need to understand the purpose and
objectives of the cooperative
Fully perform duties
Understand the relationship to member-
owners
Favorably represent the cooperative
Finance for a cooperative:
Direct investment
Cash purchases of membership
certificates, common and preferred
stock or other forms of equity by
the members
Provides member right to vote
Minor source of equity to a
cooperative
Requirement for most cooperatives
Transferable Delivery Rights
Deliver or buy a set amount of
product to ensure the cooperative’s
volume meets a minimum scale
economy.
In new generation
cooperative ethanol plants,
corn deliveries are needed
to ensure they operate the
processing plant at full
capacity and then the
ethanol and byproducts are
sold at a profit
Page 18
Cooperative Essentials CE1 Introduction to Cooperatives
credits in electric and telephone
cooperatives
22. Per-unit retains focus on volume or value
of business conducted.
Slide 28 in CE1 Introduction to Cooperatives
23. In contrast, non-patronage income
includes all business that is conducted with
people that are not members of the
cooperative
24. To review this section, ask students to
stand up, raise their hands and high-five a
peer. When you see that each student has a
partner, ask a question for them to discuss.
Solicit answers. Then, signal for them to
raise their hands and high-five a different
partner for the next question. Ask the
following questions:
Name two groups involved in the
governance system.
Define patronage.
How can cooperatives gain
financing?
List two benefits of cooperatives.
List two challenges to forming a
cooperative.
What is the role of the Board of
Retained Margins
Patronage allocated equity
Share of the business profits
allocated to an individual member
based on patronage
Retained equity
Portion is paid to member with
balance being held in the
cooperative in member’s name
Overtime this equity is retired or
revolved
When a patron does business with
the cooperative, the patron
receives a financial return for their
business
Per-Unit Retains
Capital investments based on the
number of physical units handled
by the cooperative or on a
percentage of sales revenue
Per-unit retains focuses on the
volume or value of business done
with the cooperative
Non-patronage Income
Business conducted with non-
members on a non-cooperative
basis
Profits from non-patronage income
become permanent equity
Does not need to be retired,
refunded, or revolved
Page 19
Cooperative Essentials CE1 Introduction to Cooperatives
Directors?
What are the members’ roles?
Review/Summary
Slide 29 in CE1 Introduction to Cooperatives
Today we learned that a lot of the services we use daily are provided by various types of
cooperatives at the local, regional, and national level. In today’s business world, cooperatives
offer a different dynamic and structure. Cooperatives are owned and controlled by the people
that use its services, and whose benefits are distributed equitably on the basis of use and
ownership. Overall, it is based on the concept of cooperation to achieve a common goal. To
accomplish this common goal, cooperatives must have a structured governance system that is
guided by the 3 pillar and 7 principles models.
Review:
Slide 30-31 in CE1 Introduction to Cooperatives
Classroom Visit Guide: Get the inside scoop and personal perspective from a local cooperative
leader. Use our Classroom Visit Guide to create an engaging and educational discussion about
the cooperative business structure. This will help your students capture the purpose of
cooperatives.
To truly gain an understanding of this type of business structure, direct the students to ask a
minimum of three questions to the cooperative leader. To gain five bonus points, have students
write down three facts they find the most interesting during the presentation.
Cooperatives Tic Tac Match: Break class into two teams and review the content of this lesson
playing Cooperatives Tic Tac Match online.
Cooperative State of Mind: Give students a pile of magazines. Instruct them to select and cut out
images or text that relates to cooperatives. Have students create a poster with the images or text
they collected. The poster should represent their personal interpretation of the functions of
cooperatives.
When all students are finished, have each share their Cooperative State of Mind Poster. Posters
could also be viewed in an art gallery-type display where pictures are placed around the room
with the artist there to explain his/her work and answer questions. The other students would
browse the gallery. Complete this rotation two or three times until all students have displayed
their work.
Have a final discussion on the similarities seen in all, or most, cooperative posters.
Exit cards: Students will answer the following questions on a note card or small slip of paper and
hand to teacher as they exit:
What did you learn today about the cooperative business structure?
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Cooperative Essentials CE1 Introduction to Cooperatives
What questions do you still have about cooperatives?
Application
Extended Activities
Invite a panel of local cooperative leaders to class to discuss their
cooperative and how they vary, the pros and cons of cooperatives, why
people should become members of a cooperative, etc. Vary the panel in order
to get numerous opinions, ideas, and input. Each student should prepare a
minimum of five questions for the panel. Student will receive five bonus
points for every question they get answered. Students will write a short
summary of what they found most interesting during the panel.
Contact a local member or employee of a cooperative. Schedule a time to
interview the member or employee. Students should ask up to 10 questions
and transcribe the interview. Allow students the opportunity to create a video
with the cooperative leader they decide to interview.
Each student will create a five-minute PowerPoint presentation about the
relationship between their SAE and cooperatives. Students need to list at least
five strong connections between their project and the cooperative business
structure. This can include doing business with a cooperative, similarities
between with guiding principles, governance and leadership systems, future
directions, etc.
Schedule an Agribusiness Tour with your local cooperative for your FFA
chapter to learn about their daily operations and services. Ask to speak to
representatives of the cooperative throughout the tour. Have representatives
share information regarding SAE projects, internships, or scholarships.
Evaluation Missouri Institute of Cooperatives Speech CE1.7
Alternate – Paper-pencil Quiz Evaluation CE1.9
Answers to Evaluation Evaluation CE1.7
Answers will vary. Use the grading rubric provided in CE1.8.
Alternate Evaluation CE1.10
1. D
2. D
3. B
4. C
5. D
6. Answer should include one of the following definitions:
a. A business owned or controlled by the people that use its services and whose
benefits are derived and distributed equitably on the basis of use and ownership.
b. An autonomous association of people who voluntarily cooperate for their mutual
social, economic, and cultural benefit.
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Cooperative Essentials CE1 Introduction to Cooperatives
7. Answers should include three of the following:
a. MFA Oil
b. MFA Incorporated
c. FSC Financial
d. Farmers Cooperative Services, Inc.
e. Farmers Cooperative Elevator Association
f. Show Me Ethanol LLC
g. Show Me Energy Cooperative
h. Mid Missouri Energy, Inc.
i. Ray-Carroll Country Grain Growers, Inc.
j. CoBank
k. Ag Processing Inc.
l. Dairy Farmers of America
m. Other local Missouri cooperatives
8. Answers should include the following:
a. User-Owned
b. User-Benefitted
c. User-Controlled
9. Answers should include two benefits and two challenges
Benefits
a. Access to quality services and supplies
b. Increase clout in marketplace
c. Share in earnings
d. Political action
e. Local economy enhanced and protected
Challenges
a. Number of people involved
b. Complexity of decision making
c. Cultural perceptions
d. Costs to buy-in
10. Answers should include three of the following:
a. Founded to provided a missing service
b. Used to avoid monopoly power
c. Reduce overall risk in a company
d. Achieve economies of scale
e. Perform a combination of input procurement, service provisions, and product
marketing