Becoming a Co-op Board Influencer

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Dr. Keri JacobsAs women in agriculture are increasingly highlighted through the media, nonprofit organizations, and companies, the places their influence is missing becomes clearer.

“It's really obvious as you look across the landscape in Iowa–and this is true in other states as well–that ag boards struggle with how to engage women in co-op governance,” says Keri Jacobs, assistant professor in Iowa State University’s Department of Economics.

At a recent Women in Ag Leadership conference in Ames, Iowa, hosted by Iowa State University Extension and Outreach, Jacobs and two female cooperative board members, Sue Tronchetti of Landus Cooperative and Susan Voss of Farm Credit Services of America, shared their experiences with the audience of women in agriculture.

“We provided participants with the basics of cooperative governance by explaining why it is such an important role for producers to engage in, by demystifying the elections process, and by listing some of the primary board responsibilities,” explains Jacobs.

Is serving on a cooperative board of directors a good fit for you?

While serving on a cooperative board includes a lot of a responsibility and time commitment, Jacobs assures producers they aren’t expected to know it all from day one.

“I think any new board member feels overwhelmed. There's a lot of information you're asked to process, and you don't really, at that point, understand how all the information fits together or what you're supposed to do with it,” Jacobs says.

Farmers shouldn’t let fears of asking questions or being embarrassed keep them from pursuing leadership, Jacobs says. “Any new board member should know that they are coming on to the board and the first several years, for sure the first year, will be spent learning and asking questions. What I would add to that is the rest of the board, who has more experience, benefits a lot by the questions that the inexperienced people ask.”

Unique perspectives offered by young or female producers can create rich dialogue in the board room. Often members who aren’t the primary operator of the farm work off farm, giving them an advanced skillset to bring to the table. It takes creative minds of all types to form the best solutions to the challenges co-ops face.

Taking on a new role may also help individual farmers in unexpected ways, Jacobs explains. “I think one of the biggest benefits to serving on the board is that farmers learn about the industry and the co-op’s operation and financial management, and that insight helps them as they manage their own operations and in other aspects of their own careers and lives.”

What is a cooperative?

As background, Jacobs shares her expertise on cooperatives from an academic perspective. Due to the Capper-Volstead Act in 1922, farmers began to legally form organizations to act collectively. This helped producers gain more even footing with their trade partners by allowing them to voluntarily organize to produce, handle, and market farm products.

The Capper-Volstead Act established four requirements of agricultural cooperatives: 1. An organization must have one member, one vote, or limit dividends on nonfarmer equity to 8%. 2. The member business must be greater than nonmember business. 3. All voting members must be agricultural producers. 4. The association must operate for the benefit of its members.

What is cooperative membership?

Jacobs points out that sometimes farm women don’t see themselves as agricultural producers and, therefore, assume they can’t be part of the cooperative, especially as a leader. “That is not necessarily true,” Jacobs says. “Co-ops have taken steps to clarify that the membership voting share, which also gives the ability to serve on the board, can belong to anyone named on the certificate. It can belong to the primary operator, the secondary, or third.”

Another requirement that is often misunderstood is membership. To be on the board of directors, you must be a member.

“If you're doing business with a cooperative, check to see if you are a member. A lot of people think that because they are selling grain or buying inputs, they're a member. That may not be true. So first check to see if your operation, your family, or you are a member of the cooperative,” Jacobs says.

After confirming that you or someone on the farm is a member, check with the cooperative to see how the voting share is designated. In many cases, it can belong to either spouse, if they are the primary, secondary, or tertiary operator.

“If the membership vote can belong to either spouse and if you want to serve on the board, you simply need to speak up and let it be known that you want to run,” explains Jacobs. “It is usually just a matter of letting the board nominating committee know that you would like to be considered or would like more information about the process and requirements.’”

How are cooperative board directors elected?

Seats on the board of directors are typically up for election every three years and are vacant when long-serving members reach the term limits (if the co-op has them) or choose to phase out and retire. A member interested in having a seat on the board of directors reaches out to the nominating committee. “The nominating committee consists of co-op members who are not on the board as well as some from the current board of directors,” Jacobs explains.

The nominating committee may also seek out people who would be an asset to the board of directors. “Often the nominating committee will, when seeking to fill board seats, ask ‘Who are our members who do significant business with the co-op? Who are good producers whose input we could use on the board? Who is a good producer in the area that we're not doing business with, and do we want to seek their input and perspective?’” Jacobs says.

Once a member is nominated and vetted by the committee, that person can be elected by peers to fill the position. In Iowa, the board cannot elect, or remove, directors form the board – that right is reserved for the membership of the cooperative.

Each cooperative’s board structure is detailed in its articles of incorporation and bylaws. It is common to have a seven- to 15-member board, with three- to four-year terms. Some cooperatives have at-large and district-based board seats, and others have term or age limits for their board members.

What are the responsibilities of a cooperative board director?

As a director, a producer is on a team dedicated to representing the membership and overseeing the business of the cooperative. The board hires the CEO or general manager (GM) that reports back to them. From there, a CEO or GM hires midmanagers and other staff to handle operations, administration, human resources, and safety. At the end of the day, everyone is accountable to the membership.

Leading that chain of command, it is the board’s responsibility to make decisions for the cooperative. The board’s choices should be guided by objectives and policies it has established. The board also votes to approve programs and plans for the business.

Board members are in charge of going to the membership with changes that require their approval and consulting with the hired GM. For example, in Iowa, the board must get the permission of the membership to change or amend the articles of incorporation.

As the important decisions are made, board members act as stewards of the cooperative’s assets for members, creditors, and the community the business serves. For example, the board is responsible for understanding contracts the co-op enters into and reviewing insurance coverage. It is critical they seek experts for audits and legal guidance as they navigate these processes.

To ensure the perpetuation of the business, it is essential the board hires and retains an excellent manager or CEO. With the long-term health of the organization in mind, it’s important to maintain a diverse board, always preparing and developing new people to step into a director role. Planning for transition and change is a key responsibility of the board. Facilitating positive member relationships and educational opportunities is critical.

As with any leadership position, it is important that producers elected to the board of directors represent the co-op and its members well in the community. The board of directors should plan annual meetings to communicate their decisions with the membership.

Many of these tasks will be handled at regular monthly meetings or in smaller committees. Farmers seeking a board position must be prepared to commit to this schedule, at times spending several hours in the board room. Outside meeting times, a director should take time to become familiar with financial statements and reports.

More details about the role on a specific co-op’s board can be found in the articles of incorporation and bylaws. A farmer elected to a director position should know those documents well.

Successful Farming at Agriculture.com
Natalina Sents
12-19-2017

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