Exploring Cooperative Leadership

Cooperatives, as member-owned and controlled enterprises, are led by a board of directors who are integral to the operation’s success. If you’re considering joining your co-op’s board of directors – or even if you have served as a director for many years – it is important to recognize the responsibilities inherent in board leadership.

Basic Responsibilities of Co-op Directors

A cooperative board of directors is generally responsible for the affairs of the co-op. For example, under Ohio’s cooperative business statute, “all of the authority of an association shall be exercised by or under the direction of the board.” In a cooperative, the board is generally elected from and by the membership, meaning that directors are also co-op members although some cooperatives may have non-member directors.

A specialist from the U.S. Department of Agriculture conceptualized the responsibilities of cooperative directors as “seven circles,” including:

  1. Representing members, including understanding members’ needs and assessing whether the cooperative is meeting those needs.
  2. Establishing policies that guide the operation of the co-op, including both long-range and specific policies.
  3. Hiring and supervising management, often with direct involvement in hiring and supervising top management such as a general manager or chief executive officer.
  4. Acquiring and preserving assets, including establishing policies relating to assets such as oversight and accounting systems as well as monitoring financial performance.
  5. Preserving cooperative character by ensuring the fundamental character of the enterprise follows co-op principles.
  6. Assessing the cooperative’s performance, including financial performance, but also performance related to fundamental objectives like member benefit.
  7. Informing members with a recognition that members are the owners of the cooperative and accurate and complete information helps ensure they make informed decisions.

As directors carry out these important functions, or delegate responsibility to the co-op’s officers and managers, they are expected to uphold basic legal standards because they are considered fiduciaries who have legal duties to the cooperative, the co-op’s members, and the co-op’s other directors. While the concept of fiduciary duties is broad, at the most basic these duties generally require that directors act in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner they reasonably believe is in the best interests of the co-op. As two co-op attorneys summarized, these duties require that directors:

  • show up,
  • be prepared,
  • protect the board’s process,
  • disclose conflicts,
  • don’t compete with the cooperative, and
  • don’t breach confidentiality.

Exploring Board Leadership Opportunities  

If you are contemplating joining a co-op board, whether through the encouragement of a neighbor, an invitation from a colleague, or after exploring ways to give back to your community, you likely have multiple questions.

As we learned above, directors play a vital role in leading their cooperatives, taking on various legal duties and other responsibilities. As you explore the opportunity to serve on a co-op board, it is important to consider whether you can effectively uphold these duties and responsibilities.

The following questions, based on recommendations for individuals considering corporate board leadership from the American Bar Association’s Corporate Director’s Guidebook, may help as you think about the opportunity.

  • Do I have sufficient time to diligently perform the duties required of a director? For example, do I have scheduling conflicts with the board’s regular meeting schedule? Do I have sufficient scheduling flexibility to respond to unexpected needs?
  • Do I have skills and experiences that allow me to meaningfully participate as a board member?  Are there special skills I should develop to participate in board activities more fully?
  • Do I have a sufficient understanding of the cooperative’s business to be effective as a director? How can I further develop this understanding?
  • Do I have confidence in the cooperative’s current senior management and directors?
  • Do I have a compelling interest in engaging in board leadership?

The Importance of Co-op Principle 5: Education and Training in Co-op Governance

Co-op members exploring future board leadership, and directors who have led their board for many years, can benefit from ongoing education and skill-building. In fact, as cooperative directors face increasing public and legal scrutiny, there is an increasing awareness of the important role of ongoing education and training for directors. Two legal scholars explained, “Directors are now expected to have more than a passing understanding of financial statements, their fiduciary responsibilities to the cooperative, and other essential items.”[1]

Whether you prefer to learn through reading, in-person teaching, or connecting with peers, there are many resources for co-op members and directors to build their governance knowledge and skills. You can ask your co-op leadership what type of training programs they provide for directors, whether they are members of organizations that provide cooperative education, or whether they partner with co-op educators. You can also explore publicly available resources on your own. Below are a few great places to start!

Join the CFAES Center for Cooperatives and Mid America Cooperative Council for the online training, “Welcome to the Board” on Thursday, September 30 from 10a-12p Eastern time. The interactive training will introduce participants to the roles and responsibilities of cooperative directors and the crucial skills directors use in leading cooperatives. Registration for the training is available at https://go.osu.edu/maccwelcometotheboard.

Explore Co-op Mastery: Beyond Cooperatives 101 online at your own pace. The self-directed platform helps learners explore cooperative governance, taxation, finances, and more using videos, narrated presentations, infographics and more! Explore the platform at https://go.osu.edu/coopmastery

Read Navigating Your Legal Duties: A Guide for Agricultural Cooperative Directors from the National Agricultural Law Center. The guide includes five chapters and reviews topics like fiduciary duties, antitrust laws, securities issues, and risk management tools. Chapters are written to stand alone so readers who want to explore a single topic can skip to the chapter or section of interest. Use the self-assessment at the end of each chapter to explore how the concepts apply in your own cooperative.

 

References

Charles T. Autry & Roland F. Hall, American Bar Association Business Law Section, The Law of Cooperatives 60 (2009).

Corporate Laws Committee, American Bar Association Business Law Section, Corporate Director’s Guidebook 5-6 (6th ed. 2011).

James Baarda, U.S. Dep’t of Agric. Rural Bus. Coop. Serv. Cooperative Information Report 61, The Circle of Responsibilities for Co-op Boards 3-5 (2014).

Hannah Scott & Michael E. Traxinger, National Agricultural Law Center, Navigating Your Legal Duties: A Guide for Agricultural Cooperative Directors 11-26 (2021 https://nationalaglawcenter.org/center-publications/busorg/).

Michael W. Droke, Dorsey & Whitney LLP, Cooperative Business Law A Practical Guide to the Special Laws Governing Cooperatives 57-28 (3d. ed. 2020).

Thane Joyal & Dave Swanson, Precautions and Protections: Summarizing legal responsibilities of cooperative boards, Cooperative Grocer (Mar. – Apr. 2011 https://www.grocer.coop/system/files/legacy_files/precautions.pdf)  

[1] Charles T. Autry & Roland F. Hall, American Bar Association Business Law Section, The Law of Cooperatives 60 (2009).

Foodpreneur Coaching: Crafting a Blueprint to Grow Your Food and Farm Business

The CFAES Center for Cooperatives is working to help businesses keep things moving forward in these difficult times. Marketing is a key aspect to maintaining or growing any business, including food and farm businesses.

The CFAES Center for Cooperatives, OSU Extension Direct Food & Agricultural Marketing Team, and Ohio Farm Bureau in Ross, Hocking, Fairfield, and Pickaway counties are hosting a virtual interactive experience for small and medium food entrepreneurs who are eager to grow their businesses. Foodpreneur School Coaching will give attendees an opportunity to engage with experts in marketing and promoting their local food and farm products, and more, to help them learn strategies to meet their growth goals. This educational opportunity will cover marketing locally raised meat, increasing produce sales, and promoting local food and farm retail products.

Foodpreneur School Coaching will be offered over a three-week span, in three sessions, and will focus on ways to grow food and farm businesses. Entrepreneurs can attend one session that best fits their needs or all three sessions. Each live Foodpreneur Business Coaching virtual session will offer small group coaching from industry and university experts.

The first session, Marketing Local Meat, will be offered on Tuesday, September 15th.  This LIVE Foodpreneur Business Coaching virtual session is for farmers and ranchers seeking to increase local and regional meat sales or explore new market channels for farm-raised proteins and local meat products.

Buckeye Valley Beef Cooperative, a southwest Ohio co-op that markets member-farmers’ beef to retailers and consumers, will share results from a recent research project to assess multiple marketing channels to grow sales. Co-op members will share their experiences marketing local meat throughout the region. Additionally, Dr. Lyda Garcia, Animal Science professor at The Ohio State University, will be available to offer insights and answer participant questions.  Garcia specializes in meat science and manages the OSU Meat Lab.  Through her background in meat industry internships, livestock production, training and research in graduate school, and many other meat related experiences, she seeks to bring product value to the meat industry, producers, and consumers.

The second session, Increase Produce Sales, will be offered on Tuesday, September 22nd.  This session will offer insights and best practices for produce growers looking to increase produce sales or explore new market channels such as Community Supported Agriculture (CSA), farmers markets, farm stands, or specialty stores.

Brad Bergefurd, Ohio State University Extension Horticulture Specialist, and owner of Bergefurd’s Farm Market, will share his expertise built over 30 years of experience in produce education, production, and marketing.  Bergefurd’s education and research at OSU has focused on a variety of produce crops, including strawberries, pumpkins, hops, pawpaws, and more, in addition to research and education on marketing innovations like produce auctions.  Bergefurd’s Farm has specialized in growing a variety of produce that is sold through CSA’s, farmers markets, and an agritourism operation.  In the planning of this session Bergefurd stated that, “Produce farmers have many channels of marketing opportunities available today more than ever. Marketing is less expensive, and online options now allow farmers to reach customers in areas they never were able to reach before these marketing channels became available.  It’s all in how you market yourself, so it’s important to get it right”, said Bergefurd.

The third session, Promoting your Local Food, will be offered on Tuesday, September 29th.In this session, educators and industry experts, will discuss how farm and food producers making products such as cheese, salsa, honey, baked goods, and body items, can expand a farm’s offerings  or serve as a standalone business. During the live Foodpreneur Business Coaching session attendees will learn how to expand their sales and build their brand.

A large part of growing any business is effective marketing to keep customers engaged. Christie Welch, Ohio State University Extension Direct Food and Agricultural Marketing Specialist, and owner/operator of Welch Farms LLC, explains that marketing is key to keeping customers engaged with your business, especially in the current environment of the pandemic. Welch shared that, “Customers are craving experiences and seeking the locally produced foods they have come to love.  Because of the rapid changes in how business is conducted while maintaining social distancing, communicating with your customers is more important now than ever.  They want to know what you are doing to keep them safe while still purchasing the local foods they love. Sharing this information in a manner that reflects your brand is key.”

Christie Welch is the owner/operator of Welch Farms, LLC, a third-generation family farm in southern Ohio.  Christie has been involved in the operation since 1992 and during that time, the farm has diversified.  The farm, which began as a dairy operation, has diversified over the years and currently focuses on u-pick plasticulture strawberries.  The farm also sold at several farmers’ markets and Christie served on the board of the Chillicothe Farmers Market Association for seven years.  Direct marketing to consumers is vital to Welch Farms and provides many opportunities to share experiences with other local food producers.

Foodpreneur School Coaching sessions will all be held online and will be offered over a span of three weeks with each session held on a Tuesday evening.  The cost to attend the Foodpreneur School Coaching is $20 per session for Farm Bureau members, and $25 per session for non-Farm Bureau members. There is a separate registration for each session.  We encourage early registration; each session will have a limited number of seats available. To learn more, go to https://cooperatives.cfaes.ohio-state.edu/events or to register for the Foodpreneur School Coaching you can go to go.osu.edu/foodschool2020.  For additional information you may contact Charissa Gardner at gardner.1148@osu.edu.

2nd Bi-Annual Cooperative Law Conference Will Offer Professionals Opportunity to Learn About the Co-op Economy

Conference registration table.

The 2nd Bi-Annual Cooperative Law Conference convened by Advocates for Basic Legal Equity and co-sponsored by the CFAES Center for Cooperatives will be held online on June 5, 2020.

The CFAES Center for Cooperatives is pleased to be co-sponsoring the 2nd Bi-Annual Cooperative Law Conference in our region on June 5, 2020. The virtual conference will be organized around the theme, “The Legal Life of a Cooperative,” and will feature attorneys and developers sharing their expertise on worker co-op start-ups and transitions, cooperative financing, and regional cooperative development strategies. Attorneys, aspiring-attorneys, and others who are interested in learning more about cooperatives and collaborative enterprises will surely find value in the conference’s eight sessions featuring twelve speakers.

The CFAES Center for Cooperatives, along with the Sustainable Economies Law Center, Alliance of Ohio Legal Aids, and Legal Aid of Western Ohio, are sponsoring the event, which will focus on regional efforts in southwest Ohio, but will be applicable across geographies. Attorneys in Ohio will be able to receive up to five hours of CLE credit for the conference (application pending). Registration for the event is $60.

Co-sponsoring the event is another way the Center is helping to build the community of professionals who support cooperatives in our region. In 2019, the Center surveyed attorneys, accountants, and tax professionals who work with cooperative and collaborative enterprises, building a directory to help the cooperative community locate such expertise. Visit the Center’s Cooperative and Collaborative Enterprises Legal and Accounting Directory.

Ready to Grow your Food & Farm Business?

The CFAES Center for Cooperatives, OSU Extension Direct Food & Agricultural Marketing Team, and Ohio Farm Bureau are teaming up to host an interactive experience for small-to-medium food entrepreneurs who are poised to grow their businesses. Foodpreneurs will engage with experts in branding, sales, marketing, and more to learn strategies to meet their growth goals.

Date: Two-part workshop on September 23rd and 30th, 2019

Time: 2 p.m. – 6:30 p.m.

Location: Keller Market House, 134 S. Columbus Street, Lancaster, Ohio 43130

Participation is limited to 30 foodpreneurs. Interested foodpreneurs must apply by 5 p.m. on August 20, 2019. Foodpreneurs will be notified of their selection and scholarship availability by August 22, 2019.

Apply to participate in Foodpreneur School!

 

The cost to participate in Foodpreneur School is $125 per person due by September 9, 2019. Ohio Farm Bureau member price is $75. A limited number of full scholarships are also available.

Questions about Foodpreneur School? Reach out to the CFAES Center for Cooperatives at osucooperatives@osu.edu or 740-289-2071 ext. 111.

MACC Board Succession Planning & Legal Challenges Program Tuesday, August 6, 2019

The Mid America Cooperative Council (MACC) will be hosting a Board Succession Planning & Legal Challenges program on Tuesday, August 6, 2019 at Ag Credit, 610 W. Lytle Street., Fostoria, OH.

Topics on the program agenda include:

  1. Director Roles vs. Management Roles
  2. Steps of Strategic Planning – Visioning, Alignment
  3. Directors’ Legal Challenges
  4. Regulatory Compliance
  5. Succession Planning in the Boardroom
  6. Director Code of Conduct
  7. Case Studies

A featured program speaker will be Phil Kenkel, professor, Agricultural Economics, Oklahoma State University. Kenkle holds the Bill Fitzwater Cooperative Chair and is the editor of the Journal of Cooperatives.  The speaker for the session focusing on legal challenges will be Carolyn Eselgroth, who has practiced law for more than 20 years, assisting with governance, contractual needs, and mergers and acquisitions of agricultural cooperatives, agricultural trade associations, check-off organizations, non-profit organizations, and a variety of farm and other businesses.  Rod Kelsay, Executive Director for the Mid America Cooperative Council will review case studies and discuss succession planning.  During this event, directors will learn ways to build a strong succession plan for their cooperative.

Don’t miss out on this educational and networking opportunity for directors of all cooperative sectors.  The program on August 6 will begin at 8:45 a.m. and end at approximately 3:45 p.m.

The registration fee for MACC members is $210.00, and for nonmembers the registration fee is $365.00.  The registration fee includes lunch.  Scholarships may be available through the Ralph K. Morris Foundation.  For scholarship information, visit:  https://ralphkmorrisfoundation.org/app-guide/

To register for the Mid America Cooperative Council’s Board Succession Planning & Legal Challenges event, or for more information, please visit http://macc.coop/event-registration/?ee=114 or register by email at knowledge@macc.coop and MACC will send you an invoice.