Author: John Park

Why do some cooperatives flourish while others continually struggle? The factors of success are not entirely obvious when the weather is great, crops are bountiful, and prices are favorable, because all cooperatives can thrive in such conditions. However, as economic and competitive pressures mount, small difficulties in board behavior can lead to poor firm performance.

I suggest that the very best board of directors typically share five important practices. An excellent board will:

1. Represent both the members and the cooperative
2. Provide examples of personal and organizational integrity
3. Promote loyalty among board members and the members
4. Develop a culture of continual learning
5. Establish a vision and strategy to guide management

Your board’s adherence to these practices will help develop a quality of resilience that will see you through turbulent economic circumstances. 

1. Represent both the members and the cooperative

An exceptional cooperative board represents the interests of the members while simultaneously protecting the assets of the cooperative. 

Your cooperative was initially formed to fill an economic need of the members. Perhaps it was cost savings from economies of scale, the provision of needed market services, or to combat unfair market power. Regardless, your cooperative exists to meet the needs of the members. But it must first exist if it is to help them. Your cooperative is a business, and like any business its continued existence is based on its ability to extract economic value from its competitive advantages. In short, it must be profitable. Members need to be reminded at times that they are investors in a business, and not participants in a discount club. Investors receive a share of profits, but only when profits have been made. When a board chooses to redeem member investments without the use of current year profits, they are essentially deciding to liquidate a portion of cooperative equity. It is the responsibility of the board to represent the members’ interests as both customer and investor. The cooperative comes first in performance, and members come first in purpose.

2. Provide examples of personal and organizational integrity  

An exceptional cooperative board adheres to a code of ethics that promotes a diverse culture where all can be heard without fear of punishment or retribution. 

A cooperative is one-part business and one-part social group. Therefore, it is not surprising that each cooperative has a different culture or manifestation of its customs, attitudes and behaviors. At the most basic level, this culture reflects the needs and desires of the members, but it won’t flow through the company if the directors fail to define this for management and employees. In this light, the board can greatly influence the ethical behavior of employees by modeling integrity in the boardroom. Ethical behavior of board members includes standards of honesty, integrity, dependability, and confidentiality. Board conversations are not to be shared outside of the boardroom. A good rule of thumb is that when items from board meetings are shared with the public, it should be done collectively by the entire board or by the chairman speaking on behalf of the board. Additionally, a characteristic of a flourishing cooperative is diversity. The cooperative must recognize the value and importance of all its members regardless of gender, age, ethnicity, or size of operation. Differences in personalities and backgrounds provide new perspectives that will drive creativity and ultimately, better strategy. A board that is trying to grow membership among a certain type of producer, would be aided by having that group represented on the board. 

3. Promote loyalty among board members and the members

An exceptional cooperative board fosters loyalty to the cooperative through accountability to one another, transparency to the members, and their personal business transactions. 

Meetings of the board of directors should be focused on providing direction to management, setting policy, establishing strategy, and overseeing the proper and effective use of assets. Each meeting should add to the progress of ones that came before. A thoughtfully prepared agenda helps the board to focus their limited time on director responsibilities and avoid the temptation to spend time on managerial decisions. Meeting minutes and agendas help board members to be accountable to one another through follow up on assignments and effective use of their time. 

Loyalty thrives on trust. For a board to be viewed as trustworthy to its members, it must be candid, both among board members and (to the extent possible) with the public. An exceptional board treats boardroom discussions with strict adherence to confidentiality. It is possible to be both transparent (by sharing what you are doing) and confidential (by not sharing intimate details of discussions and decisions). Members will respect the honest answer “I can’t talk about that.” Sensitive issues that need to be shared with members or the public should be done by the board as a whole or by the chairperson speaking on behalf of the board. Finally, board members themselves need to be prime examples of loyalty by doing as much business as possible with the cooperative. 

4. Develop a culture of continual learning 

An exceptional cooperative board is continually learning about board duties, the operation of their business, and the trends impacting their industry. 

Profitability is found through sustained competitive advantage. Competitive advantage is found by individuals who are constantly improving their understanding of their business and the industry in which it operates.  The very bestcooperative boards make it a high priority to receive continuing education to stay current with business skills, strategies, and industry trends. A board can set itself apart from others by devoting time for training at each board meeting. Outside experts can offer a few minutes of thought-provoking discussion that may lead to breakthrough strategies. The review of internal documents like employee handbooks, bylaws, and corporate policies may lead to best practices that protect the cooperative from legal liabilities. Continual efforts focused on board education will demonstrate to members and legal authorities that the board is striving to fulfill its fiduciary duties. 

5. Establish a vision and strategy to guide management

An exceptional board of directors provides vision and strategy while letting the manager manage. 

Sometimes, the most difficult task for directors is to step aside and let management do their job. It is the duty of a director to establish the vision and mission of the firm, to determine strategy to achieve that mission, to set objectives and goals dictated by that strategy, to oversee the acquisition and use of assets, and to monitor the performance of the firm. 

To do this, the board hires a general manager or CEO and contracts professional services (like auditors and lawyers) related to the monitoring and administration of the firm. That is where the operational duties of the board stop. Managers have the responsibility to establish budgets, use the firm’s assets to achieve stated objectives, monitor day-to-day operations, set short-term goals, hire and fire employees, and establish levels of pay and bonuses. In other words, decisions on the operation of the cooperative or the use of its employees are the sole responsibility of the manager. If the board is making these decisions for the manager, they not only put the cooperative at risk by ignoring the hired expertise, but they also take time away from their fiduciary and strategic responsibilities. 

Directors, then, have the responsibility to establish strategy. An exceptional board of directors will discuss strategic issues in every board meeting and periodically dedicate themselves to more intense strategic planning. 

Representation, integrity, loyalty, education, and vision are the hallmarks of an excellent cooperative board. By adhering to these qualities and being true to the role of directors, a truly exceptional board will be poised to lead their cooperative to achieve sustained competitive advantages and new heights of profitability.

---

Park, John. “The 5 Practices of Boardroom Excellence.” Southern Ag Today 5(47.5). November 21, 2025. Permalink

You have been elected to the board of directors, and now what? Gaining some confidence as a new director can be as simple as asking important questions. This is a brief dive into your fiduciary duties and role as a director of a cooperative with a focus on the questions you should be asking. But first, what are fiduciary duties?

Fiduciary Duties

In simple terms, a fiduciary is someone who is entrusted to act on behalf of another. As a director of your cooperative, you have been given authority to act on the behalf of cooperative members. There are specific duties associated with this role. Some of them include:

The Duty of Loyalty

Acting in unity with the best interests of the cooperative and its members.

The Duty of Care

Exercising reasonable care, skill, and diligence in carrying out your responsibilities.

The Duty of Good Faith

Acting honestly and fairly in your dealings with the cooperative and its members.

The Duty of Confidentiality

Keeping confidential all information related to the cooperative and not using that information for personal gain.

Your role as a director

Your role as director is to represent the interests of the cooperative members, and to represent the interests of the cooperative itself. As a director, your role is limited to a few general things.

1. Hire and evaluate a manager (and then get out of the way).
2. Establish policies to protect the cooperative, its assets, and its employees.
3. Engage professional services needed by the cooperative such as a lawyer or auditor.
4. Ensure accountability for the proper use of cooperative assets.
5. Provide strategic direction.

Some questions for self-reflection

Let’s consider some questions that might help you stay aligned with your fiduciary and board responsibilities. During board discussions, you might ask yourself: 

1. Is this a topic for board discussion, or is it the responsibility of management?
2. How will this decision affect our members?
3. Is this decision fair to all members?
4. Do we fully understand the facts about this issue?
5. Have we verified this information?
6. Is there anything about our decision that might have the appearance of something illegal or unethical?
7. Is this something that should not be discussed outside the boardroom?

Some questions to improve board discussions

The best boards are the ones that engage in a lot of discussion. If your board meetings feel repetitive, or methodical, or if you feel like your board is in a rut, simply approving what is presented, consider asking some of these questions.

1. Does this support the mission of the cooperative?
   1. Why does our cooperative exist?
   2. What does our cooperative do better than competitors?
   3. Why should someone be a member of our cooperative?
2. What are the financial trends of our cooperative, and how do they compare to our industry?
   1. Are we profitable?
   2. Are we efficient?
   3. Are we adding value to member investments?
   4. Are we taking unusual risks (including the status of our accounts receivable)?
   5. Are we replacing and protecting assets?
3. What are the forces that impact profitability in our industry, and how can we counteract them?
   1. How can we avoid price competition with rival firms?
   2. Is it likely that new firms could enter our industry?
   3. Could our core business be replaced by firms or technologies from other industries?
   4. Do our suppliers have power over prices?
   5. Do our buyers have power over prices?

The most common advice that veteran directors offer new directors is to ask lots of questions. It’s natural to feel reluctant to ask questions. Maybe you are embarrassed to ask something simple, or you are afraid to appear inexperienced. But your questions are likely in the minds of others as well. The answers to these questions will generate discussions that strengthen board connections and overcome groupthink. The questions presented here will help new directors to become more confident in their duties, and boards to become more progressive and effective. 

---

Park, John. “Asking the Right Questions: Fulfilling Your Duty on the Cooperative Board of Directors.” Southern Ag Today 5(41.5). October 10, 2025. Permalink

Arguably, farmer-owned cooperatives are the lifeblood of agriculture in the United States. They help agricultural producers to overcome a lack of market power, guarantee access to markets and services, and improve overall financial well-being from ownership of the supply chain. As long as American agriculture is composed of a relatively large number of small producers of undifferentiated commodities, cooperatives will remain a needed part of the industry. But what, in turn, is the lifeblood of your local cooperative? Members! 

A cooperative is a business that is owned and controlled by the people who use it. More than just customers, these members have responsibilities to their cooperative that relate to use, ownership and control, and finance. The success or failure of a cooperative hangs on proper attention to these responsibilities. 

I. Use

Cooperative members have a responsibility to use their cooperative. Cooperatives strive for greater volume of business to help them achieve profitable economies of scale. A member’s use of their cooperative sounds like the easiest of responsibilities to fulfill. However, many cooperative owners have difficulty with this. I believe the problem is that they haven’t fully adopted the owner mentality. They see their relationship with their cooperative as just another customer opportunity, meaning that when short term price opportunities arise, they quickly abandon the business that they own in favor of a competitor. This then leads many cooperative managers to exclaim, “There is no member loyalty today”.

The lesson? Members need to remember that their ownership of the cooperative represents future profitability, more stable returns, access to needed markets and services, and general protection from powerful buyers and sellers that are not invested in their future. Cooperative managers must also learn – members have no incentive to be loyal if the only benefit you offer them is based on price. Successful cooperatives also pursue excellence in customer service and product quality and will continually educate members on the value of cooperation. 

II. Ownership and Control

Cooperative members have a responsibility to exert the rights of ownership and control over their cooperative. Each member of the cooperative is an owner and should understand their cooperative in all aspects – its structure, bylaws, policies, operations, legal obligations, and financial status. Occasionally, I am approached by an individual with a great idea for a business and who thinks a cooperative business structure would be best. Most of those cases fail to progress when we discuss member-ownership and control. 

Cooperatives are formed by members based on their needs. Members incorporate the business – not management. Members elect directors, define the mission of the cooperative and establish bylaws and policies. Although members hire a general manager to operate the business and manage employees, they are still involved in controlling the business by providing direction, serving on committees, expressing opinions, and voting on significant changes to the cooperative. 

The most successful cooperatives educate members about operations and the ways that the cooperative engages in business. Boards of directors often take a tour of their cooperative’s operations and come away surprised at their increased knowledge that inspires better board decisions. 

III. Finance

Cooperative members have a responsibility to finance the cooperative for the purpose of conducting operations. They are not responsible for financial returns. Profitability remains the responsibility of management. Members are responsible for ensuring the business has the necessary capital to form and operate the business. This is done initially through the purchase of a share of voting stock (which gives the rights of membership). One-time investments may also be used when forming the business or expanding into new services or product lines. Ultimately, the most important means for members to finance their cooperative takes us back to use, or patronage. The greater the patronage, the greater the cost efficiency of the cooperative. It should be noted that members are responsible in sharing losses just as they are in sharing earnings. 

Members make the cooperative successful. Through use, ownership and control, and finance, members are the lifeblood of their local cooperative. 

---

Park, John. “Members Are the Key to Cooperative Success.” Southern Ag Today 5(17.5). April 25, 2025. Permalink

The annual evaluation of the general manager is a clear duty of a cooperative board of directors. It’s a very important task. An evaluation of the general manager is an opportunity to revisit the direction and performance of the cooperative. When done correctly, the evaluation process will strengthen ties between board and manager and align management with board objectives. Here are three recommendations for improving the manager evaluations at your cooperative.

1. Evaluate What Matters Most

One challenge of manager evaluation is that potentially, there is a lot to evaluate. Further, some of the manager’s duties might be hard to evaluate or observe. If you choose criteria based on the functions of management, you might develop a list like this:

Planning

• Actively and accurately assesses competitive forces
• Makes timely adjustments to the changing business environment
• Helps to craft a successful strategic approach
• Develops and implements effective timelines and goals
• Budgets for current and future operating needs
• Ensures cooperative resources are available and ready for customer use

Organizing

• Effectively hires and trains high-quality employees
• Assigns resources to their best use
• Delegates managerial duties effectively
• Plans and accommodates organizational growth

Leading

• Motivates employees toward excellence
• Cultivates board relations
• Communicates with members
• Promotes the company vision
• Mentors and grooms future managers

Controlling

• Reports financial results in a clear and timely manner
• Monitors cooperative performance
• Appropriately adjusts budgets throughout the year
• Makes staffing changes when needed
• Conducts employee evaluations and gathers employee feedback

Further, you can consider the manners in which the manager conducts their self. The manager’s personal skills, attributes, and competencies might also be important. Additional criteria might include the following:

Interpersonal

• Communication Skills
• Listening
• Empathy
• Emotional Intelligence
• Working with Others
• LeadershipMentoring
• Friendliness
• Technical
• Industrial Knowledge 
• Marketing
• Equipment Operations
• Software Knowledge

Conceptual

• Abstract Thinking
• Problem Solving
• Adaptability
• Analysis
• Diagnosing Problems
• Forecasting and Predictions
• Decision-making

One solution to organizing all these potential criteria is to consider the stewardships of the manager. Every cooperative manager has responsibilities toward the operations of the cooperative, the board, and the members. To help further, consider if your evaluation criteria are focused on the mission of the cooperative. In doing this, better questions begin to emerge:

Cooperative

1. Recruits, trains, and retains quality employees. 
2. Maintains and protects the functionality of cooperative assets.
3. Demonstrates result-driven use of cooperative funds.
4. Focuses on cooperative mission.

Board

1. Provides frequent and thorough reports of cooperative financial condition.
2. Communicates market opportunities and risks in a timely manner.
3. Interprets market conditions affecting financial performance.
4. Informs board of potential legal threats and conflicts of interest.

Members

1. Actively recruits new membership.
2. Is knowledgeable of individual members and seeks their input.
3. Promotes the mission of the cooperative to members.
4. Is focused on customer service.

2. Include Professional Development

Don’t forget that the manager is also a valuable asset to the cooperative. Your evaluation might include goals for self-improvement of leadership skills or industry knowledge.  The manager might self identify some of these goals as well as other relevant criteria for the cooperative, board, and members. Questions might include:

Manager

1. Mentors employees for future leadership.
2. Exemplifies integrity for the cooperative.
3. Listens to member-owner concerns.
4. Analyzes cooperative performance and suggests needed corrections.

3. Give Evaluation the Time it Deserves

Successful manager evaluation is not an annual event – it is a year-long process. When your board approach to manager evaluation is to invite the manager in to award a bonus, or take them to lunch, or any other solitary event, you are failing to protect the cooperative. Proper evaluation starts immediately following the prior evaluation by establishing the evaluation criteria for the coming year. This is to be agreed upon by board and manager. Monthly board meetings should take time to revisit and assess the evaluation, noting evidence of performance. Executive sessions are useful times to briefly discuss management performance and discuss any needed adjustments to evaluation criteria, or management actions. At the end of the year, the board chair can ask for an evaluation from each board member and the manager.  Doing this will help to elevate the annual evaluation to a constructive process for both cooperative and manager. 

---

Park, John. “Evaluating the Cooperative Manager.” Southern Ag Today 5(5.5). January 31, 2025. Permalink

Cooperatives are formed based on some collective economic need, for example, to combat unfair market power, to gain cost efficiency, or to access supply chain services that might not otherwise be available. Despite their ability to overcome these challenges, a traditionally structured cooperative might have difficulty growing and sustaining a profitable business in certain situations.

Cooperatives that are formed to further process commodities into branded food products have added challenges. For example, a cooperative of wheat farmers that would manufacture and market pasta may face sizeable capital requirements and a require a consistent flow of production. A traditional cooperative model with open-ended commitments from its members may not be geared to these needs. Food processing facilities are designed for a specific capacity and may not operate profitably if forced to purchase unneeded inputs in a surplus year or to operate below break-even in a short crop year. Furthermore, lags and disturbances in the distribution of value-added, branded products may alienate wholesalers, retailers, and consumers, resulting in lost sales and reduced access to retail shelf space.

Does this mean that agricultural producers can’t cooperate in these value-added markets? No, there is an alternative. A “new generation cooperative” differs from a traditional cooperative in a few important ways: 

1. Membership is closed
2. Participation is contracted
3. Member equity is tied to investment, not use
4. Ownership is transferrable and can appreciate/depreciate in value

Closed Membership

Membership in the new generation cooperative is determined by purchasing a limited number of shares. Each share allows its holder to deliver a specified amount of their crop to the facility. The number of shares available is determined by the annual production needs of the facility. The sale of all shares covers the equity investment needed for the cooperative. 

Contracted Participation

The purchase of a share in a new generation cooperative provides the right to deliver a specified amount of a commodity, but also the obligation to deliver the commodity. This ensures the cooperative that it will receive the required amount of input. Members who did not grow enough of the commodity to fill their obligation can make up the difference by purchasing the commodity on the open market. 

Member Equity

Because the cooperative requires the purchase of shares to do business with the cooperative, equity is received up front, and not tied to participation from year to year. This gives the cooperative an added degree of security and resilience.

Value of Ownership

In a traditional cooperative, profits are allocated to members based on their use of the cooperative. A portion of that allocation is paid to the member in cash, and the rest is held by the cooperative in the member’s name. These “book credits” represent the member’s equity ownership of the cooperative and will be redeemed at some unspecified time in the future at face value. The equity investment in a new generation cooperative lies in the up-front purchase of shares. These shares are transferrable at market value.

The new generation cooperative provides an alternate business form that might help groups of producers seeking to enter value-adding industries. Interested groups can contact their lawyer, accountant, or cooperative Extension specialist for more information.

---

Park , John. “What is a New Generation Cooperative?” Southern Ag Today 4(9.5). March 1, 2024. Permalink