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RESEARCH EXAMINES PATRONAGE REFUND PREFERENCES AMONG COOPERATIVE MEMBERS
Jun. 20, 2012
Source: Kansas State University news release
Cooperatives offer numerous benefits and advantages to their members, and a recent research study suggests that preferences among members for one benefit in particular, patronage refunds, could have important implications on a cooperative's business plan.
"Patronage refunds are a unique cooperative benefit," said Brian Briggeman, director of the Arthur Capper Cooperative Center and associate professor with the Kansas State University Department of Agricultural Economics. "The decision from the cooperative's board of directors to distribute back a portion of profits to patrons requires much consideration. If too much patronage is refunded, then the cooperative's financial position may be compromised; but if too little or none is refunded, then patrons may take their business elsewhere. Also, patrons may have their own thoughts about how their refunds should be structured."
Briggeman examined cooperative members' preferences for patronage refunds. Through a survey of member-borrowers with Farm Credit of East Central Oklahoma, preferences for higher cash patronage refunds versus lower fixed real estate loan interest rates were assessed.
"The results suggest that strong preferences do exist among member-borrowers," Briggeman said. "Though this particular study focused on a financial cooperative, the results have implications among nonfinancial cooperatives as well, such as agricultural cooperatives, not to mention implications for additional research."
To learn more about the patronage refund preferences discovered in this study, download the executive summary offered through the Arthur Capper Cooperative Center's fact sheet series at http://www.accc.ksu.edu/ACCCFactSheetSeries_FarmCreditPatronage_May2012.pdf.
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