Patronage Refunds Research Articles

Management of Employees’ Cooperative of the State Universities and Colleges in Region

The study assessed the management of employees’ cooperative of the state universities and colleges in Region 1. Specifically, it was directed to determine the 1.) the level of the management of employees cooperatives in SUC’s of Region 1 along the a.) cooperative governance and management in terms of organization and registration, membership, administration, responsibilities, rights and privileges, capital property and funds, allocation and distribution of net surplus and b.) cooperative operations in terms of voluntary and open membership, democratic member control, member economic participation, autonomy and independence, education, training and information, cooperation among Cooperatives; and concern for the community, 2. level of outputs of the employees' cooperatives of SUC’s in Region I along a.) for the cooperative in terms of generation of more productive services, increases of volume of business operations, improvement of facilities and assets and better employee benefits and b.) for the members in terms of increase in income, patronage refund and interest on share capital, 3. level of impact of the level of effectiveness of employees cooperatives of SUC’s in Region I along a.) for the cooperative in terms of internal and external factors and b) for the members in terms of improved quality of life, increase in household income, average increase in savings deposit, acquisition of properties and assets and improvement/renovation of house.

Perkembangan Usaha Koperasi Simpan Pinjam Indonesia dan Faktor yang Mempengaruhinya Periode 2013-2020

This study aims to analyze the development of Indonesian Savings and Loans Cooperatives (SLC) during the period 2013-2020 and the trend of business performance in the future. This research is a description of development of the average credit, income, and patronage refund of Indonesia SLC during that period. It also analyze the trend of its development using trend analysis, analysis of the effect of credit on income, and analysis of the effect of income on patronage refund of Indonesia SLC. The data used in this study is survey data obtained from Savings and Loan Cooperatives Statistics 2014 to 2021, which were published by the Central Statistics Agency (BPS–Statistics Indonesia). The results of the analysis show that during the period 2013-2020 there was a fluctuating average credit, income, and patronage refund of Indonesia SLC with a relatively low trend of future developments. There is a significant effect between the average credit and the average income of Indonesian SLC and a significant effect between the average income and the average patronage refund of Indonesia SLC.

Status of Small Farmers in Onion Value Chain in San Jose City, Nueva Ecija

The case study generally evaluated the onion value chain of Kaliwanagan-San Agustin Farmer Producers Cooperative (KALASAG-FPC). Specifically, (1) to described the organizational profile of KALASAG-FPC in terms of history, purpose, structure, programs or services and resources; (2) mapped out the specific value chain of onion of KALASAG-FPC; (3) identified key players, their roles and specific activities, within the KALASAG onion vertical coordination; (4) assessed the economic status of cooperative farmer members involved in vertical coordination in terms of their productivity and profitability; and (5) identified areas for improvement and recommend ways to improve them. Direct interview with the use of designed survey questionnaire for onion farmers, traders, storage operator, and institutional buyer were used to trace the specific value chain for onion of KALASAG-FPC. Descriptive analyses were employed to determine the inefficiencies in the value chain of onion. Cost and return analyses were done to compare the profitability of cooperative farmer members and non-members. The KALASAG-FPC was registered at the Cooperative Development Authority (CDA) on October 14, 2008, located at Barangay San Agustin, San Jose City, Nueva Ecija. The cooperative membership started with 30 members/cooperators in 2008 to 69 at present (2018), comprised of 53 males and 16 females. The KALASAG-FPC organizational structure has six existing committees: audit and inventory, election, education and training, credit and collection, conciliation, and ethics. There are seven Board of Directors (BOD) and 10 staff. The major commodity and activity of the cooperative include onion production and marketing. Credit and marketing are the primary services offered by KALASAG-FPC to the members. KALASAG-FPC supply the farmer members with farm inputs to grow onions. Onion farmers/producers are the main players in the value chain. Their main role is to produce marketable onions to KALASAG-FPC. The cooperative as assembler is also referred to as the supplier that is responsible for hauling, sorting, weighing, storing and peeling of harvested onions from the farmer members. One of the major roles of the assembler (coop) is to ensure that the required volume and quality are maintained. KALASAG-FPC as a trader is responsible for the procurement of 40% harvested onions of the farmer members wherein the price per kilo is based on the prevailing market price in the community. Institutional buyer (JFC) is the player where onions are delivered by KALASAG-FPC. The cost and return analysis in onion production showed that the cooperative farmer members recorded higher net income and ROI with P15,066.78 and 31.82%, respectively, as compared to non-member with P12,560.64 and 26.47%, respectively. It was also revealed that cooperative farmer members had higher yield compared to non-members with 3,320 kg and 2,609 kg, respectively. In the average production cost per kilo, non-farmer members obtained higher with P18.19 as compared to cooperative farmer members with P14.26. It is an advantage being a member of the cooperative wherein the interest of production loan is 10% lower than the non-member. The members also obtained estimated patronage refund amounting to P11,869.75.

Are cooperatives transitioning from cost minimizers to profit maximizers?

PurposeThe purpose of this paper is to examine the optimizing behavior of agricultural supply and marketing cooperatives in the US Midwestern states.Design/methodology/approachThis paper uses firm-level data from CoBank, the primary lender to agricultural cooperatives, to evaluate optimizing behavior of 77 Midwestern agricultural marketing and supply cooperatives from 2014 through 2017. The study uses the data envelopment analysis (DEA) and the weak axioms of cost minimization and profit maximization to identify whether or not a cooperative is following a cost minimization and/or profit maximization objective.FindingsIn contrast to previous research, results provide stronger support for profit maximization as the behavioral objective of agricultural cooperatives instead of cost minimization, especially for larger cooperatives.Practical implicationsTraditional firm theory for investor-owned firms states that businesses seek to maximize profits. Agricultural cooperatives however, could aim to maximize profits so as to redistribute profits back to user-owners as patronage refunds. Or, they could minimize costs so as to lower cost of products sold and services provided to their user-owners. Given users-control the cooperative, knowing the primary objective of agricultural cooperatives will allow for better design of research and education programming.Originality/valueGiven recent changes and consolidation in the agricultural industry among farms and agricultural cooperatives, this study reexamines past work that evaluated the optimizing behavior of agricultural cooperatives. Changes in industry and the necessity to remain competitive from an agribusiness standpoint have resulted in an anticipated shift toward a profit maximizing objective. The value of this study is providing an evaluation framework, using a firm-level comprehensive dataset, that represents the cooperative system.

Determinants of Members’ Output Marketing through their Multipurpose Primary Cooperatives in Hababo Guduru Wereda, Ethiopia

In developing counties Multipurpose primary cooperatives are an ideal means for self-reliance, higher productivity level and promotion of agricultural development. Hence, this study aims to identify the factors affecting members’ marketing decisions through their multipurpose primary cooperatives in Hababo Guduru woreda, Oromia Regional State, Ethiopia. Both primary and secondary data were used for this study. A two stage random sampling procedure was adopted to select four multipurpose cooperatives and a total of 193 sample respondents from the Woreda. Primary data pertaining to the years2017/18 and 2018/2019 was collected from the sampled respondents through semi structured questionnaire. The survey data was analyzed using descriptive statistics and double-hurdle model. About 52.3% and 47.7% of sample cooperative members were users and non-users of cooperatives as marketing agent. Results of the model analysis showed that in the first hurdle, educational status, access to credit, patronage refund, cooperatives price and position in cooperative management committees are played positive and significant role in members’ decision to participate in output marketing through cooperative. In the second hurdle; educational status, farm land size, yield obtained, patronage refund, and farming experience have positive and significant role in the volume of farm product sold through cooperative; while family size, and distance of cooperative from cooperative members residences were found to have negative and significant role. Educational status and patronage refund were found to affect both ‘decisions to participate and intensity of participation in farm product marketing through their primary multipurpose cooperative.

Combining Microfinance and Health in Reducing Poverty-Driven Healthcare Costs: Evidence From the Philippines.

The role of microfinance in alleviating poverty and poor health is significant. Its health programs have been shown to improve healthcare utilization and strengthen a healthcare system. In the Philippines, microfinance's widespread presence is seen as instrumental in achieving the objectives of Healthy Philippines 2022, particularly in reducing poverty-driven healthcare costs. However, little is known on how microfinance can reduce the cost of healthcare services and treatment. Also, few studies that consider the practice of integrated microfinance and health programs in the Philippines have been seen. Secondary data was used to explore the structure and function of microfinance and health initiatives and their influence in mitigating healthcare costs. A review criterion was developed to examine the data using the three key elements identified in Ruducha and Jadhav's framework: organisational arrangement, health products and health outcomes. Findings revealed that most health initiatives are delivered through partnerships and collaboration, could favour a reduction in healthcare costs and protection from out-of-pocket health expenditure. They are designed to operate in three structures—subsidised or outreach, microinsurance and health loans, and patronage refunds. The cooperative's business venture providing pharmaceuticals facilitated access to affordable medicine and offered its members financial viability. Health loans and microinsurance also offered healthcare cost reductions; however, uptakes are low. The study found no data to assess the output of the completed health initiatives. More studies that will evaluate the integrated MFI health initiatives are recommended to further identify gaps, outcomes, or impacts of the program.

Economic contribution of capital build-up programs of cooperatives in the province of ilocos sur

This study aimed to determine the economic contribution of capital build-up programs of cooperatives in the province of Ilocos Sur during the calendar year 2018. Specifically, it determined the level of implementation of the capital build-up programs of cooperatives, level of attainment of the economic benefits of capital build-up programs to the cooperative as well as to the members, and the significant influence of the level of implementation of capital build-up programs of cooperatives on the level of attainment of the economic benefits of capital build-up programs to the cooperatives and members. In gathering data, questionnaires were used supplemented with interviews and observations. The respondents comprised of primary cooperatives with ten years and above of operation. The data gathered were treated statistically using mean and multiple linear regression analysis. Conclusions: (1) cooperatives in the province of Ilocos Sur highly implemented capital build-up programs; (2) capital build-up programs of cooperatives had contributed to the improvement of the economic status of the cooperatives and their members; (3) there was a significant influenced of the level of capital build-up programs on the economic benefits of the cooperatives and members along retains, revolving capital, capital share subscription, and deposits. Recommendations: (1) cooperatives should continue realizing and strengthening their capital build-up programs such as mandatory contribution yearly, birthday gift, voluntary contribution quarterly, and popularity contest; (2) maintain the implementation of retains for every approved loan, revolving capital of patronage refund and interest on share capital, capital share subscription every year, and intensify deposits program; (3) cooperatives may look into possible opportunities of expansion and strengthening linkages to government and non-government organization.

Measuring the cost of capital in cooperative businesses

AbstractCooperatives usually cannot employ market‐based methods for valuating equity capital and must rely instead on accounting‐based methods. This paper assesses several approaches for valuating cooperative equity and suggests that the rate of return on equity is an appropriate measure of the opportunity cost of equity because it determines the levels of cash patronage refunds, equity retirement, and growth a cooperative can maintain. Simulations are used to explore the relationship between various measures and the rate of growth and demonstrate that the rate of return on equity is the only measure invariant with respect to changes in the growth rate. Calculations for US cooperatives show that the rate of return on equity results in a higher cost of equity than estimates based on the opportunity cost of funds and confirm that equity is more expensive than borrowed capital. A numerical example illustrates the early redemption of member equities at a discount.

Financing agricultural cooperatives with retained earnings

PurposeThe purpose of this paper is to explore the advantages equity capitalization programs based on retained earnings from patronage sources may provide cooperatives and their patrons that traditional equity financing methods do not offer.Design/methodology/approachThe analysis is based on a model used to assess patron benefits from a cooperative that is financed by a combination of allocated equity acquired from noncash patronage refunds and unallocated equity acquired from retained earnings. The level of patron benefits is represented by the present value of the after-tax cash flow patrons receive from the cooperative, and the model is used to determine the combination of noncash patronage refunds and retained earnings that provides the greatest present value given the levels of those parameters that affect capitalization of the cooperative and the distribution of cash benefits to patrons.FindingsThe analysis demonstrates that only pure plans, i.e., plans based entirely on retained patronage refunds or entirely on retained earnings, will be associated with the greatest present value for any particular set of parameter values. Cooperatives that are characterized by low marginal tax rates and growth rates and whose patrons are characterized by high marginal tax rates and discount rates are those most likely to benefit from equity capitalization programs based on retained earnings.Research limitations/implicationsThe model is based on the assumption of constant parameter values and does not account for the existence of nonpatronage income.Practical implicationsA useful extension of this work would be the development of a decision aid capable of generating basic operating statement and balance sheet data and enabling cooperative decision makers to conduct experiments concerning alternative financing strategies based on retained earnings.Originality/valueThe analysis contained in this paper is based on an explicit model and extends across a broad range of values for various parameters that affect the level, timing, and present value of cash distributions from cooperatives. Because the cash flow received by patrons is determined after the cooperative’s planned equity growth is met, cash flow comparisons are equivalent with respect to the capital provided the cooperative. In addition, the revolving period is endogenously determined.

The optimal capital structure in agricultural cooperatives under the revolving fund cycles

Due to the financial features specific to agricultural cooperatives, the paper constructs a constrained-maximizing model under the assumption that the financial objective of an agricultural cooperative is to maximize the present value of the patron after-tax total income on an infinite time horizon by choosing the dividend rate, the cash patronage refund rate, and the length of the revolving fund cycles. The model is solved numerically in a numerical illustration. In equilibrium, the optimal capital structure is derived for the agricultural cooperative. The effects of the changes in personal tax rates and discount rates are also explored.

O regime da distribuição de resultados nas cooperativas de crédito em Portugal. Uma análise crítica

<p>As Caixas de Crédito Agrícola Mútuo, tendo em conta a sua forma cooperativa, não têm um escopo lucrativo, mas um escopo mutualístico, traduzido na promoção dos interesses económicos dos seus membros. Assim, defende-se a inviabilidade do regime de aplicação dos resultados previsto no diploma que regula estas entidades, por este permitir um retorno dos excedentes sob a forma de remuneração de títulos de capital, convertendo-o numa distribuição de dividendos. Invoca-se que a remuneração dos títulos de capital nas cooperativas não constitui uma repartição de resultados, mas um gasto. Por sua vez, os excedentes cooperativos não são lucros e o seu retorno não configura um dividendo..</p><p><strong>Recibido</strong>: 31.05.2015<br /><strong>Aceptado</strong>: 17.07.2015</p>

An equity management and planning tool for cooperatives

Purpose – The purpose of this paper is to describe an equity management and planning tool used by rural electric cooperatives (RECs) and based on the times-interest-earned ratio (TIER). The objectives of the paper are to construct a mathematical model that provides a rigorous foundation for the TIER approach, modify the approach so the rate of return on equity is a function of the cooperative’s equity position, demonstrate how elements of the model can be used by RECs in setting electric rates that will enable them to accelerate the retirement of member equity, and derive a generalized form of the “modified Goodwin formula” that can be used by both RECs and agricultural cooperatives. Design/methodology/approach – Mathematical and graphical expressions of the TIER approach are developed. Simulations are used to demonstrate how RECs can set electric rates according to a target revolving period. The modified Goodwin formula is generalized to include the payment of cash patronage refunds through use of a growth model of an agricultural cooperative developed in Royer (1993). Findings – This paper demonstrates how TIER analysis and the modified Goodwin formula can be used by cooperatives to aid their decisions regarding debt and equity financing and their choices regarding cash patronage refunds, equity retirement, and growth. The paper demonstrates that cooperatives that fail to recognize the functional relationship between the rate of return on equity and the equity position may substantially underestimate the equity position necessary to meet interest coverage requirements and overestimate their ability to grow and retire equity. It also shows that RECs may be able to make substantial improvements in equity revolvement with only modest increases in electric rates. Research limitations/implications – The model developed in this paper has been simplified to focus on fundamental financial relationships. To apply this model, cooperatives may need to modify it to accommodate the complexities of their business operations. Practical implications – TIER analysis can provide a useful equity management and planning tool for both RECs and agricultural cooperatives. It also can be used by lending institutions to assess the financial health of individual cooperative organizations. Originality/value – Constructing a mathematical model that provides a foundation for TIER analysis, modifying the approach so that the rate of return on equity is a function of the equity position, demonstrating how RECs can use the model to set electric rates according to a target revolving period, and generalizing the modified Goodwin formula so it can be used by agricultural cooperatives are all original contributions.

Determinants of the patronage refund decision of Farm Credit System associations

PurposeThe authors aim to investigate what influences a Farm Credit System association to make a patronage refund payment. In particular, they seek to investigate what causes the regional heterogeneity in the patronage refund payment decision. It is unclear whether patronage refunds have been used more as a capital management tool or as a member recruitment and retention tool. This study aims to bring some clarity to this issue.Design/methodology/approachThe authors use an empirical logistic model to estimate the probability of a positive patronage refund payment by a Farm Credit System association, controlling for variables related to the associations' balance sheet as reported in the associations' quarterly call reports.FindingsThe authors find there is evidence that Farm Credit Service associations use patronage refunds as a capital management tool, at least in part. However, they also find that there are still significant regional differences in the patronage refund payment decision even after controlling for variables affecting the associations' balance sheet. The authors conclude that this likely represents member heterogeneity in preferences for patronage refunds versus a discounted interest rate.Originality/valueThe present study is one of the few empirical papers to examine a broad panel of financial cooperatives. Because of this, the authors' paper provides valuable insight into the aggregate behavior of Farm Credit Service associations, particularly into whether they use patronage refunds as a capital management tool, or as a marketing and retention tool.

Performance de las cooperativas tradicionales: las cooperativas portuguesas de Viño del Duero

<span>Globalization is challenging the very core of cooperative governance and ownership decision, especially in Southern European countries, like Portugal, where a large number of producers are organized in traditional and Mediterranean-style agricultural cooperatives. This paper analyses the effects of governance and control variables related with size over two alternative indicators of performance: revenues transferred to members/patrons and capital structure. The results suggest that these cooperatives have difficulties being sustainable in the more competitive global wine markets, if they follow, essentially, a practice of maximum patronage refund, reducing their capacity to improve leverage and to finance more profitable, but risky, long run investments.</span>

Farm credit member‐borrowers' preferences for patronage payments

PurposeMany associations in the Farm Credit System, which are financial cooperatives, pay their member‐borrowers a cash patronage payment based on the amount of loan volume with the association. In today's competitive lending environment, some Farm Credit associations have offered lower interest rates on new loans but these new member‐borrowers have to forgo their cash patronage payment to receive this new, lower‐interest rate loan. The purpose of this paper is to identify Farm Credit member‐borrowers' preferences for patronage refunds received as a cash payment versus lower fixed real estate interest rates.Design/methodology/approachPreferences for patronage refunds or lower fixed interest rates are elicited from Farm Credit Services of East Central Oklahoma member‐borrowers via conjoint analysis.FindingsResults show that member‐borrowers strongly prefer patronage refunds compared to lower fixed interest rates.Originality/valueThis paper fulfills a need to better understand patronage refund programs within the Farm Credit System.

Factors influencing probability and frequency of participation in merger and partnership activity in agricultural cooperatives

AbstractConsolidation and concentration in agriculture continue to be important topics. This paper uses a binomial probit model to assess the motivations for opportunities and participation in mergers, acquisitions, joint ventures, and strategic alliances in agricultural cooperatives. A Poisson model is also used to investigate the frequency of participation in these activities. Results show that competition, patronage refunds, research and development, and market diversification all affect opportunities and participation. Firm size, placement in the market channel, and research and development activities appear to influence the frequency of participation. [EconLit Categories: Q13, G34.] © 2002 Wiley Periodicals, Inc.

Factors influencing probability and frequency of participation in merger and partnership activity in agricultural cooperatives

Consolidation and concentration in agriculture continue to be important topics. This paper uses a binomial probit model to assess the motivations for opportunities and participation in mergers, acquisitions, joint ventures, and strategic alliances in agricultural cooperatives. A Poisson model is also used to investigate the frequency of participation in these activities. Results show that competition, patronage refunds, research and development, and market diversification all affect opportunities and participation. Firm size, placement in the market channel, and research and development activities appear to influence the frequency of participation. [EconLit Categories: Q13, G34.] © 2002 Wiley Periodicals, Inc.

New Risk‐Management Strategies for Agricultural Cooperatives

challenging agricultural cooperatives: farmers who are members of cooperatives are doubly exposed to economic losses due to catastrophic events. With a regional crop failure, farmers may lose a portion of their profits from lower sales as well as a portion of their patronage refunds, since the co-op may also experience economic losses due to decreased throughput. This issue, which is most significant for value-added processing cooperatives, has largely been ignored, in part because solutions to the problem have previously not been feasible. Ironically, a primary incentive for farmers to invest in and supply to a cooperative is the co-op's ability to mitigate some of the farmers' risk (Sporleder and Goldsmith). The cooperative helps mitigate farm price risk by selling either raw farm products-into markets where and when prices are less variable-or processed products characterized by market prices more stable than commodity prices. However, farm members often fail to recognize the substantial risks to which their cooperative, and thus their invested equity, may be exposed. This has become more of a salient issue with the creation of new-generation cooperatives (NGCs), closed-membership cooperatives that typically require a substantial initial equity investment from farmer members.'

Impact of diversification on agricultural cooperatives in Wisconsin

Agricultural cooperatives often face internal and external pressures to diversify their businesses. Factors associated with a decision to diversify were examined in this study; results suggest that cooperatives that were larger and involved in input supply were more likely to diversify. In addition, the impact of diversification on key performance measures for the cooperatives was examined. Diversification had no statistical association with key performance areas (profitability, patronage refunds, or equity redemption). Diversification was associated with larger membership. On the basis of this study, diversification appears to have a neutral to modestly positive impact on cooperative performance. © 1996 John Wiley & Sons, Inc.

A Model of Cooperative Finance: Comment

In a recent article in this Journal, VanSickle and Ladd (VL) presented an interesting economic analysis of the financial operations of a Section 521 cooperative. They also reported some surprising empirical results that suggested cooperatives should substitute equity capital (stock and deferred patronage refunds) for debt capital when the cooperative members' opportunity cost for capital is 12% and the interest rate for debt capital is between 7% and 10%. Intuitively, one would expect to obtain results that are exactly opposite to those of VL since debt capital has a lower cost than equity capital. Therefore, I believe VL's conceptualization of the cooperative objective should be scrutinized.