Author: John Park

When speaking to a newly elected director of a cooperative about the challenges they face, I often hear about the typical stresses of responsibility, understanding the cooperative’s financial statements, and, occasionally, comments about board meetings. Sometimes directors view board meetings as an unpleasant task that lasts longer than necessary, lacks focus, full of information without discussion, and generally, does not seem to accomplish anything meaningful. “Why,” they ask, “did I need to interrupt my busy schedule for something that could just as easily been handled with an email?” If this sounds like your experience, I suggest that you are missing out on perhaps the greatest tool your cooperative has for achieving competitive success. Here are four tips to get your cooperative’s board meetings back on track.

1. Know your duty and stick to it.
2. Build connections with other directors.
3. Take the agenda seriously.
4. Speak with one voice.

Know your duty and stick to it.

The responsibilities of a director are often summarized with the phrase, “fiduciary duties”. These duties refer to the trust cooperative members place in their directors to act in good faith on their behalf in an ethical, legal, and prudent manner to the benefit of the cooperative. Your duties as a director are to provide strategic direction, financial oversight, and to set organizational policy. The board is responsible for the hiring and compensation of only one employee, namely the general manager. Any board discussions that address specific managerial decisions, like hiring, raises, inventory, or pricing are in danger of taking the meeting off topic, distracting the board from their true responsibility, and needlessly spending time on decisions that should be left to management. 

Build connections among directors.

A good board meeting thrives on properly focused discussion. However, it is common for some directors to say nothing at all during meetings. This might be due to their personality, a lack of confidence, a lack of familiarity in the topic, or even the participation of another outspoken and highly opinionated director. In any case, silence is not in the best interest of the board. One key to promoting discussion is to create connections among the directors. The psychological or emotional risk from speaking in a group setting is lessened as personal relationships and trust are strengthened. Connected directors not only ask more questions and make more comments, but they are also better listeners. Perhaps the best suggestion for building connections among your board members is to participate in a board retreat or strategic planning session. 

Take your agenda seriously.

One thing that is a frustration to new directors is that meetings don’t start or end on time. To help directors be fully engaged during meetings, you must respect their time. If you find that friendly conversation (which builds connections!) is delaying the start of your meeting, try putting social time on the agenda prior to the start of the meeting. Then, start on time. Some other things to consider – are directors invited to add to the agenda? Do directors see the agenda in the days prior to the meeting? Are times listed on your agenda? If your meeting is going long, do you suggest tabling discussions for the next time, or with group consensus, extend the meeting? The agenda is the best tool for keeping the board on schedule and focused. A proper agenda is set by the board with the help of management. 

Speak with one voice.

Some boards that I work with proudly claim they have complete unity on all decisions. These same board members will also freely admit that they have plenty of disagreements during board meetings. When handled with respect and conscious conduct, disagreements and debates are a healthy part of the board decision process. Not all items require a unanimous vote, but they do require unity once a decision has been properly made. When board members leave the meeting and need to converse with members or the public, references should be about what “the board” decided. Confidentiality is required for board unity. Directors who share board conversations outside the board room or openly criticize board decisions undermine the trust of their fellow board members and destroy open conversation during board meetings. 

What has been described here is a board culture that is conducive to conversation, respect, inclusion, trust, and overall better decision making. Meetings in such a culture will be more productive and leave directors feeling energized, not deflated. Your board chair plays a critical role in leading the board in these efforts. 

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Park, John. “4 Tips for Better Board Meetings.” Southern Ag Today 3(16.5). April 21, 2023. Permalink

Photo by Pixabay: https://www.pexels.com/photo/white-wooden-table-with-chairs-set-416320/

On occasion, I am approached by a group of producers who have a business idea that is too big for any one producer to achieve. Their first thought is “we need a cooperative.” Their second thought is often “what is a cooperative, and how does it work?” Simply put, a cooperative is a business that is jointly owned by its customers. It operates much like any other business; however, its ownership and distribution of profits is based on an individual’s use of the business. Cooperatives are an integral part of our agricultural system and help to guarantee market access and manage risk for agricultural producers. They benefit their communities by helping profits to remain in the local economy. 

Cooperatives generally form out of an economic need to correct shortcomings in the market. In general, agricultural producers form cooperatives for various reasons:

• Reduce costs through volume purchasing
• Obtain market access to more buyers
• Improve bargaining power when marketing commodities
• Obtain products and services that might not otherwise be available
• Improve quality of offered products and services
• Improve income through activities that add value to commodities

Cooperation, then, is a strategy that agricultural producers jointly employ to achieve their business goals. However, this strategy comes with added complexity to manage. Further, it isn’t a solution for a poor business plan. A cooperative is a business with a joint ownership structure. Its success is subject to the economics of the business and its approach to the competitive environment. For those who are interested in forming a cooperative, you might ask yourselves a few pertinent questions.

• Do we have a business plan?
• What volume is required for profitability?
• Will we have enough members to provide the needed volume of business?
• Is this product or service already provided in the market?
• Who are our competitors, and how might they react?
• Is the cooperative necessary to combat the market power of our buyers or sellers?

Your Extension professional can help you think through these issues. 

Further Reading

John Park. “The Question of Cooperation” Field & Fiber, Spring/Summer 2021, Plains Cotton Cooperative Association. https://pcca.com/article/the-question-of-cooperation/

John Park, Jonathan Baros, Rebekka Dudensing. 2009. “Communicating the Value of Texas Cooperatives.” Roy B. Davis Cooperative Management Program, Texas A&M AgriLife Extension. https://agecoext.tamu.edu/wp-content/uploads/2013/08/Communicating_Cooperative_Value.pdf

Park, John. “Should We Form a Cooperative?“. Southern Ag Today 2(39.5). September 23, 2022. Permalink

Recently, a great deal of concern has been expressed about challenges resulting from the conversion of agricultural land to non-agricultural use. On the whole, the challenges from a loss of farmland might seem benign given increases in productivity, but on a local level these changes can be devastating to agribusinesses whose volume is tied to crop acreage. Nationally, approximately 4% of working land (including land used for crops, grazing, timber, and wildlife management) has been lost to non-agricultural use over the last twenty years. However, the problem is stronger in Texas and the south and along coastal areas. 

Mainly the problem stems from increased land values, which provide greater incentives to sell or subdivide agricultural land. This might be especially problematic when we consider that the demographics of the farm population is skewed toward an older generation looking to retire or provide an inheritance. Land values continue to increase with trends toward urbanization fueled by population growth. The Texas population has increased 42% since 2000, compared to 18% growth for the entire United States in the same time.

Data from the Texas A&M Natural Resources Institute shows that the losses in working land are primarily in crop land and grazing land. Anecdotally, cooperative managers in coastal Texas report that much of the land lost from agricultural production was good productive farmland. Reportedly, much of the decision to sell land has been from landowners, not farmers. 

Cooperatives being impacted by these trends have basically four strategic alternatives:

1. Restructure or downsize
2. Exert greater control over land use
3. Gain economies of scale through consolidation
4. Expand into new markets

A successful strategic response may incorporate one or all these alternatives. They each have their merits. Restructuring or downsizing recognizes that the cooperative may have assets that are no longer providing an adequate return. However, this strategy on its own seems to admit defeat. Some cooperatives in the citrus industry exert greater control over the land use by offering grove management services, thus providing landowners the motivation and expertise needed to keep land in production. Mergers and acquisitions are likely when there are economies of scale to be gained. However, for mergers to be a successful strategy, cooperatives must engage in these discussions while there is still value in both organizations. The cooperative that waits until there are no other options will not be an attractive partner for a merger. Finally, a cooperative could reinvent itself to meet the changing demands of members and the needs of new customers. This will require an evaluation of the mission of the cooperative and its value proposition. This is perhaps the most difficult of the strategic options, but also the choice with the greatest potential benefit. Changes in land use may come with new market opportunities. For example, some working land has been converted from crop land and grazing land to wildlife management, including hunting leases. These landowners will likely have some needs similar to farmers. The land is still there. Its use has changed. The successful cooperatives will be those that can remain relevant to the business opportunities around them. 

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Park, John. “Agricultural Land Conversion a Concern for Cooperatives.” Southern Ag Today 1(50.5). December 10, 2021. Permalink