If it's not broke, why fix it?
As a northwestern Wisconsin dairy and grain farmer, it’s not often that I make the journey down to the Capitol. I usually reserve my fall trip to Madison as a chance to enjoy World Dairy Expo, but on Sept. 27 I visited to urge our legislators to vote against several disturbing proposed changes to cooperative law.
SB Senate Bill 281, and its companion, Assembly Bill 353, would permit co-ops to make certain changes to their bylaws that are currently prohibited under state law. These changes would apply if a cooperative voted to adopt them.
I represent other farmers on cooperative boards of directors, including the Equity Livestock Sales Association, River Country Cooperative, and Eagle Point Mutual Insurance.
As a farmer I depend on cooperatives to market my milk through Foremost Farms Co-op, my cattle through Equity Livestock Co-op and my grain through River Country Co-op.
I buy all my feed, seed, fuel and fertilizer through River Country Co-op, my electricity through Chippewa Valley Electric Co-op, my property insurance through a town Mutual insurance company (Eagle Point Mutual), my financing through a Farm Credit co-op, and, well, you get the idea.
The cooperative principles are embedded in the Wisconsin ag economy. Each one of these co-ops holds an annual meeting where interested members can review financials and elect members to the board of directors. It’s simple. One member, one vote.
But now, I fear that principle is in jeopardy.
I’ve represented farmers on the Equity Livestock Board of Directors since 2001 and currently serve as the board’s vice president. After reviewing the proposed changes, we have voted to reject efforts to eliminate one member, one vote.
We furthermore support keeping the requirement that voting board members have a financial interest in the co-op. Advisory outside board members is fine, but they should not control members’ equity, and therefore may not vote.
Additionally, we support the 8 percent cap on investment return – which would be eliminated under this bill.
Co-ops are not organized like corporations. But at the end of the year co-ops enjoy the choice of either paying income taxes or allocating patronage to members who then pay income taxes on the earnings. Single taxation.
If Wisconsin approves this bill, which also seeks to allow co-ops like Cooperative Resource International to morph into a more corporate structure, why shouldn’t those entities face the same tax codes as corporations? This bill could jeopardize a key financial advantage of cooperatives over corporations, the principle of single taxation.
SB 281 could also cause members to lose the right to review cooperative records that are more than three years old, including, but not limited to, board meeting minutes, financial records, and possibly even voting records.
I’m also a director on the board of River Country Co-op. Our five-member board of directors is a diverse group that guides a very successful farm supply co-op. Last year our Board President Lee Jensen, who milks 900 cows, stepped down and our new President Randy Mahr took over. He milks 65 cows. One member, one vote seems to be working well in this co-op. The point is this is a classic story of something that’s not broken that the government is attempting to fix. I think both parties can agree on what results this often generates.
On Sept. 13, CHS, a multi-state farm supply co-op, held a director update meeting for Wisconsin’s many smaller Cenex local supply co-ops. Cooperative Network gave a presentation that included this bill. My table included directors from three other Cenex co-ops in my area. In the break following the presentation, I asked what they thought of the bill. They opposed it, with the most memorable quote being “This will be the death of the small farmer.”
Creators of the bill ‘conveniently’ tacked on a number of rural electric co-op provisions, luring legislators to sign on in a show of support for cooperatives. Once this bill is defeated, I hope a new bill emerges focusing on the electric co-ops, which are doing a great job. Their portion deserves a clean bill.
SB 281 comes up before the Senate Elections and Utilities Committee this Thursday, Oct. 12. Please urge our legislators to stand up for our cooperative heritage.
Danielson is a dairy and grain farmer from Cadott and a member of Chippewa County Farmers Union.