Ag Plus Cooperative Patronage

A cooperative is a business organization that is owned and governed by members who use its products, supplies, or services, rather than by stockholders. Although cooperatives vary in type, membership size, and services, all were formed to meet the specific objectives of members and are structured to adapt to member's changing needs. Cooperatives adhere to a set of seven cooperative principles that guide how the business is run and how decisions are made.

Farmers that are a part of a co-op collaborate on decisions and divide profits equally among all members. Farmer-owned cooperatives either reinvest their profits in the company or provide member dividends. Farm cooperatives play a crucial role in sustaining local economies and communities in rural areas.

The business is operated for profit; it’s how the profit is divided that makes a co-op unique. Unlike most companies where the profits are distributed to stockholders, co-ops distribute profits to member-owners on a patronage basis. Patronage is a method of sharing profits among the members. It is based on how much they purchase and the profitability of the co-op.