Wisconsin State Farmer, Nov. 4th, 2005 - Letter to the Editor
Also posted Nov. 11, 2005 on Madison Indymedia (http://madison.indymedia.org/)
By: Jim Goodman
Cooperatives have been a part of business in rural Wisconsin since they were incorporated under the Capper-Volstead Act of 1922. Cooperatives allowed farmers to join together to buy feed, seed and supplies; sell their milk, grain and livestock; protect their farms with fire, wind and crop insurance. Farmers also joined together to start Rural Electric and Rural Telephone cooperatives since no one else had any interest in serving sparsely populated and low profit rural areas. Cooperatives are not, however, limited to rural areas. Health insurance cooperatives, Credit Unions, food cooperatives, housing cooperatives, even a cooperative taxi service can all be found within view of the State Capitol in Madison.
Currently registered under Wisconsin Statutes, Chapter 185, cooperatives are organized to fill specific needs of their members, and adhere to seven cooperative principals (See International Cooperative Alliance). These principals in short, stress the importance of democracy in cooperative structure, one member one vote, and serving the needs of all.
An effort is being made in the Wisconsin Legislature to enact a new cooperative law, AB 327, which would create a new type of cooperative, the “unincorporated cooperative association” (UCA). While traditional cooperatives were funded by member investment with earnings returned to the members, this new entity would be called a cooperative, but could be controlled by outside investment of up to 70%, while requiring as little as 30% of the equity be returned to the members. One member one vote would be replaced by voting authority based on money invested (i.e. more money means more power). Patron votes would also be counted as a “bloc” not as individual votes. Cooperative members would not elect all of the directors, and the board could change cooperative by-laws without member consent.
Cheerleading for AB 327 is the Wisconsin Federation of Cooperatives (WFC) the statewide trade/lobbying association for Wisconsin cooperatives. While WFC should be protecting the best interests of all cooperatives in Wisconsin, it seems that they are more concerned about the lack of new cooperative registrations under WI 185 which means fewer new memberships, and fewer cooperative directors to pay for the director training courses offered by WFC.
Lack of sufficient investment capitol under current cooperative law is cited perhaps the most pressing reason for a new cooperative law. Cooperatives can currently raise outside capital by sales of preferred stock, but earnings for investors are limited to 8%. Only 8%! No wonder big investors aren’t interested in that kind of chump change. Realize however that legal entities already exist for the investment of venture capital (with no limits on earnings), they are called corporations.
At 177 pages, AB 327 will change over 60 Wisconsin statutes and in effect create a legal entity, the UCA, for which there is no need. Investors (both foreign and domestic) will undoubtedly like the idea of new investment opportunities, especially when it means they can have the benefits of a cooperative structure with most of the liabilities placed on the cooperative members. This makes AB 327 a convenient tool for outside investors to suck the profits out of Wisconsin cooperatives, and do away with the progressive idea that people might want to work together for the common good. AB 327 will in effect, make it legal for a corporation to call itself a cooperative; a wolf in sheep’s clothing.
At some point the State Legislature needs to realize that investor profit and business growth is not the ultimate goal of life in Wisconsin. Cooperatives were established to fill needs “investors” were not interested in. While WFC may think it would be beneficial for corporate telecommunications companies to control rural telephone cooperatives, or for Whole Foods to muscle in at Willy Street or Mifflin Street Cooperatives, they are wrong. Members, not money, should control cooperatives. WFC is barking up the wrong tree. Let’s hope AB 327 never finds its way out of committee.
Jim Goodman is a farmer and cooperative member from Wonewoc WI
