Central Alberta | IH4186 - 6/27/2023 09:12
How a COOP is run by the manager and/or the board of directors. Take two extremes one ran on very tight margins and the other wide margins making more money compared to volume. What's best depends on what side of the coin you're looking at.
Tight margin COOP pays 10-20 cents more for grain and sells inputs (seed, feed, fertilizer, and chemicals) for a few percent less than the area competition. Add to that a updated facility with great harvest hours. Operating on 1% net profit on $100,000,000 in total business. Downside is their patronage is less than what the competition pays. 1 cent on grain and 2% on purchases.
Other, extreme wide margin COOP saves money every way possible. No over time hours during harvest, 5-10 lower on grain bids, charges more for all inputs. The facility could use some work, but the lines are short. Operating on 10% net profit on $10,000,000 in total business. Upside its making lots of money for the volume and paying the highest patronage in the area. 3 cents on grain and 5% on purchases.
Which manager should make the most and where would you rather do business?
Every co-op is different. Some are badly run, and some are excellent. We have one here that is expanding and making money for its shareholders. I've worked for line companies that were much worse run. It all depends on the management and how they're motivated. I've found them to be no different than most private companies. One difference is that there's no owner to scoop windfall profits. |
Just some thoughs on COOP's
