Engel Workshop: Evolving Reliance on Non-Member Business
Many agricultural cooperatives—both multi-purpose and marketing—are experiencing an increase in their non-member business. Non-member transactions are defined as either those that arise internal to the cooperative’s traditional patron business lines but conducted with member-ineligible entities, and those that are sought through expansion or growth external to the cooperative’s historical business units. In some cases, non-member business expansion may represent an explicit growth strategy to support an existing and less growth-oriented member business. Generating profits from non-member business may be seen as an opportunity to support member business lines and provide greater member-level benefits. Yet, a growth strategy around non-member business has implications for cooperative patronage, equity management, and investments. It creates the potential for a new tension between boards and management.
This workshop will explore legally, financially, and from a cooperative philosophy perspective, the questions implicated by the evolving reliance on non-member business. Among these are:
1. What are the growth strategies and rationale around non-member business that cooperatives are exploring?
2. What are the qualities/characteristics required of non-member investments sought? Is the investment criteria different?
3. What role do non-member business lines play in value creation at the cooperative and member levels? What are the impacts to patronage and equity redemption?
4. Is there a “tipping point” beyond which it is unsustainable to subsidize member benefits and business units with non-member business?
5. Typically, cooperatives have been viewed as ‘anti-speculative’ in that they seek a limited role for capital. Does this hold for non-member business? Is this changing?
6. Can the cooperative principles be maintained
Participants will not register, it will be personal invite only by Dr. Jacobs.