Equity Redemption and Member Equity Allocation Practices
of Agricultural Cooperatives
Robert C. Rathbone and Roger A. Wissman
Agricultural Cooperative Service
U.S. Department of Agriculture
It has been nearly 20 years since a comprehensive study of agricultural cooper-
atives’ equity redemption practices was conducted. This report, based on 1991
survey data, provides an in-depth analysis of this unique cooperative practice.
The study evaluates the importance of cooperative principles in carrying out
equity redemption programs and discusses the frequency of use and character-
istics of systematic and special equity redemption programs. The primary
emphasis is on centralized cooperatives, although federated and mixed mem-
bership cooperatives practices are also evaluated.
Key Words: Cooperatives, equity redemption, patronage allocation, per-unit
capital retains, base capital plans, revolving equity plans.
ACS Research Report No. 124
This publication reports the results of a survey of farmer cooperatives conduct-
ed in 1991 and 1992 on current equity redemption practices of agricultural
cooperatives, including how equity is distributed between allocated and unallo-
The information was obtained from a series of questions incorporated in
the Agricultural Cooperative Service’s (ACS) survey of fiscal 1991 financial
results of agricultural cooperatives in the United States. This current information
on equity redemption practices is needed because the last comprehensive
study was conducted nearly 20 years ago. Many changes have occurred in the
intervening years in the financial, operational, and structural makeup of agricul-
The study explores the entire range of equity accumulation and redemp-
tion issues for different categories of cooperatives (commodity type, size, geo-
graphical region, and structure). It also draws comparisons, where appropriate,
to the 1974 study.
Equity redemption practices are at the center of all financial