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Fertilizer dilemma
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bsfarms
Posted 11/24/2021 08:54 (#9338344 - in reply to #9336984)
Subject: RE: Fertilizer dilemma



south central WI
MiradaAcres - 11/23/2021 13:59

They have to be scared out of their wits of laying in a bunch of high priced product, then have to eat it as the wholesale price erodes.
They can always sell it below cost to the co-op members.  IMHO if the co-op is always profitable and paying a dividend, they are over charging their members for products and services since that is where the profit comes from.  Co-ops are created because there is a need for product/services that are not readily available or competitive for the members, the coop that is always paying a dividend is not really making the product/service market competitive since they are making money.  I f the co-op loses money on the fertilizer and does not pay a dividend for a few years, it really is not a big deal; the only time it is a big deal is if the co-op goes broke because of getting upside down in the market.

I hear guys telling me all the time I should do business with such and such co-op since they always pay a good dividend.
My question to them is: "Would you pay 15% more at Menards so you could get an 11% rebate?"
Most say: "No, the rebate is less than the extra expense."
To which I reply: "No different than paying the co-op 10% more to get a 5% dividend."
I would rather pay 95% all of the time and occasionally get a dividend vs paying 105% all of the time and always getting a 5% dividend.



What happens if my coop has the same price as everyone else and still pays an 8% dividend? They are involved in an ethanol plant and also have some convenience stores that make a lot of profit. Not all coop profit is from overpriced farm products.

Same with Farm Credit, or whatever the local branch is called. I don't think I can get a lower interest anywhere else (friends have told me what they are paying). Last year my dividend check came to a sizeable amount of money, maybe 10-20% of my interest paid in.
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