Why do I have to fill out an Account Application?
The Ottawa Coop is required to have account application on every customer that it does business with. A common statement heard is "All I do is sell you grain so why do I need to complete?" The Coop bills grain storage 2 times per year and thus every customer ends up having some type of charge balance on their account for some period of time which dictates the need for the signed application.
How do I become a member of the Ottawa Coop?
Any person with an agricultural interest can become a member of the Ottawa Coop by completing a membership application and returning with a check for $50 which is the purchase of 1 share of common stock.
What is the benefit of being a member of the Ottawa Coop?
Any person can do business with the Ottawa Coop, but only members get to participate in the earnings generated by the Ottawa Coop. Additionally, members get to vote at the annual meeting which is normally held The first part of December.
How are the earnings allocated back to the Members?
At the end of the Ottawa Coop's year which is August 31, a computation is made following accounting guidelines to determine how much of the business was generated by Members vs. Non-members and this dictates the amount available to allocate back to the members. The income generated from Non-members is taxed at the Ottawa Coop level. The allocation is currently made in two different forms of patronage - Qualified and Non-Qualified. The Non-Qualified allocation is based on the amount of stock (non-cash) patronage that the Ottawa Coop receives from larger cooperatives that it transacts business with. The Non-Qualified allocation is a 100% stock allocation with no check being issued and is not taxable to the member until it is redeemed in the future. The remaining amount of allocation is Qualified and is distributed in both stock and a check. 100% of the Aualified allocation must be reported as income by the member on their tax return even though only a portion is received in the form of a check (currently 40%). Each member will receive a 1099 form in January with the amount of taxable income which is reportable on their tax return.
When can patronage dividends be redeemed?
There are currently 3 different ways that a member's patronage dividends can be refunded. First, upon death all patronage dividends can be redeemed if application is made. Second, the board can at their discretion vote to redeem part of the patronage dividends. Lastly, if a member no longer has an agricultural interest they can apply to get their patronage dividends redeemed.
What is the benefit of doing business with a Coop?
Cooperative is a unique business model with some huge advantages. Receiving patronage from earnings generated is one benefit. Supporting the Coop generates the funds necessary to continue offering the best services with the best equipment and best employees. This support ensures the longevity of a successful organization which provides a majority of the needs of each farmer from selling of agricultural products and services to purchasing of grain.
Why does the Coop have to generate profits?
It takes millions of dollars to finance the operation of a cooperative. This requires a strong financial relationship with a banking organization. Banking organizations dictate several financial requirements in order to continue financing the operation and expansions.
Why can't unused prepay be refunded in form of a check?
IRS guidelines dictate how prepayments must be handled. When the prepayment is originally made the customer is allowed to use this amount as a deduction on their tax return. Due to this treatment the IRS does not allow any unused portion to be refunded in the form of cash or a check since a deduction for this payment has already been claimed. Any unused prepayment will be applied as a credit to the customer's account and this credit can be used towards future purchases or prepayments.