Uphold Democracy in Wisconsin!
Defend Membership Control of Your Co-op!
Plans are afoot to radically change cooperative law in Wisconsin, undermining the democratic control of members and enabling outside investors to take-over co-ops for their own private profit.
What are the values of a cooperative?
Cooperatives are based on the values of self-help, self- responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility, and caring for others.
What are the principles of a cooperative that make a coop such a unique business?
1.) Voluntary and Open Membership; (open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political, or religious discrimination); 2.) Democratic member control – one member one vote; 3.) Member economic participation - members contribute equitably to, and democratically control, the capital of their co-operative; 4.) Concern for Community; 5.) Education, Training, and Information; 6.) Cooperation among Co-operatives; 7.) Autonomy and Independence – cooperatives ensure democratic control by their members and maintain their co-operative autonomy.
Any substantial deviation from these fundamental principles has proven fatal to cooperatives and detrimental to their farmer members
What happens when corporations take over cooperatives? Cargill took over a cooperative sweetener plant in North Dakota. It was designed to work with sugar beet growers. But the day the cooperative plant opened, the price of sweetener took a huge tumble. No one could prove any connection. Cargill now runs the plant and calls the shots. Dakota Pasta was very successful cooperative. Management convinced the board to sell shares to raise money. They converted from a co-op to a corporation, but the sale did not reap the benefits that were promised investors.
What does the proposed rewrite of the co-op law do?
The bill creates a new type of cooperative - the “unincorporated cooperative association” (UCA). This new entity would be called a cooperative and enjoy the tax advantages of a cooperative, but could be controlled by up to 70% outside investors and outside money. The bill allows bylaws changes by the board, not the membership and, with a simple bylaws change, the cooperative can convert from an existing cooperative to the new UCA. Selection of directors may not be made by the membership. Compensation of the board can be made by the board, not members. Investors, not patron members can gain up to 70% control of the board. Directors can reduce the earnings returned to the patron members to only 30%. This is not what a cooperative is all about.
Why is the proposed rewrite of the co-op law a bad idea?
We do not need another rewrite of the co-op law. Our state statute is innovative and flexible. It was substantially rewritten in 1995 and many ‘new generation cooperatives’ are thriving under its structure. The proposed co-op law cuts the heart out of the member controlled cooperative. This proposed law attacks every principle of a cooperative – it is not open, democratic, member controlled, using member money, nor independent of outside interests. It does not promote education, community or local control.
The supporters of the proposed change say that they are simply adding another layer to the coop law and that this would not change the way existing co-ops operate. What do you say?
The proposed law would allow any cooperative to convert to an “UCA” with a simple bylaws change. Efforts are underway at the federal level to change the federal tax code to allow cooperatives to convert with no penalties. The author of the bill, Mark Hanson, publicly stated before the U.S. House of Representatives’ Agriculture Committee on Oct. 16, 2003, that “most cooperatives…are seeking to reorganize into an entity without restrictions, typically an unincorporated association. ” Following the reorganization, any corporation, anywhere in the world could capitalize and control any U.S. cooperative. The bill is sold as a way to raise capital for cash starved cooperatives, but outside capital will only be attracted to successful, profitable cooperatives. Outside capitalization of cooperatives will skim off the best cooperatives, and not help those that are struggling. The plan will ignore the mission of the cooperative to provide the best quality products and services to their members, not the highest returns to their investors.
How can we strengthen our co-ops?
First, we must oppose the widespread tyrannical take over of cooperatives by outside or foreign interests. We need to strengthen the existing cooperative law to require a majority vote of all members before any reorganization can occur. The coop law must limit the use of the word ‘cooperative’ to only those entities organized under existing cooperative law. And we must educate farmers and all coop board members that they must take responsibility for running their cooperatives and not leave important decisions on governance and control to coop managers or outside investors.
Don’t let this happen to your co-op!
- Educate yourself and others about this threat to Wisconsin’s proud co-op legacy
- Write to your local paper about the values of co-ops and why they are so unique
- Contact the governor’s office and your WI state legislators to demand that they defend the integrity of our state’s co-op law from corporate corruption.
