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Profit Distribution Alternatives for Agricultural Cooperatives

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  • Kenkel, Phil

Abstract

Agricultural cooperatives, like other cooperative firms, face a wide array of choices in how they distribute and retain profits. These choices impact the cooperative’s solvency, liquidity, and cash flow as well as each member’s cash flow and realized return from the cooperative. Taxation at both the firm and the patron level further complicates the picture. In recent years the availability of the Domestic Production Activities Deduction (DPAD) has impacted the profit distribution of many agricultural cooperatives (Barton, 2011). While cooperative CEOs and boards of directors appear to be astute in analyzing the tax and cash flow implications of profit distribution alternatives, it is not clear whether they understand the impacts on the members’ return from the cooperative. This paper explicitly examines that question using financial data from 10 case study grain and farm supply cooperatives in Oklahoma

Suggested Citation

  • Kenkel, Phil, 2015. "Profit Distribution Alternatives for Agricultural Cooperatives," Journal of Cooperatives, NCERA-210, vol. 30, pages 1-23.
    • Handle: RePEc:ags:jlcoop:244027
    DOI: 10.22004/ag.econ.244027
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    References listed on IDEAS

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    4. Royer, Jeffrey S. & Shihipar, M.L. Mohamad, 1997. "Individual Patron Preferences, Collective Choice, and Cooperative Equity Revolvement Practices," Journal of Cooperatives, NCERA-210, vol. 12, pages 1-16.
    5. Claude Ménard (ed.), 2000. "Institutions, Contracts and Organizations," Books, Edward Elgar Publishing, number 1921.
    6. Russell, Levi A. & Briggeman, Brian C., 2014. "Distributing Patronage Income Under Differing Tax Rates and Member Risk Preferences," Journal of Cooperatives, NCERA-210, vol. 29, pages 1-24.
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    Cited by:

    1. Briggeman, Brian & Jacobs, Keri & Kenkel, Phil & McKee, Greg, 2016. "Current Trends in Cooperative Finance," ISU General Staff Papers 3560, Iowa State University, Department of Economics.
    2. Cadot, Julien & Féral, Arnaud, 2022. "Good Co-ops, Bad Co-ops : Financing Cooperatives in Asymmetric Information," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322550, Agricultural and Applied Economics Association.
    3. Cadot, Julien & Féral, Arnaud, 2023. "Cooperative Finance: Signaling Risk with Investment and Retained Earnings," 2023 Annual Meeting, July 23-25, Washington D.C. 335976, Agricultural and Applied Economics Association.

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