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Huge Hoosier Co-op Breaks Tradition With Equity Redemption

Older stockholders receive $600,000 collectively.

One knock on the co-ops of old was that while those who did business with them received stock, it typically couldn't be redeemed until the person died. The stock became part of his estate which his heirs could redeem. One of the largest co-ops in the Midwest, headquartered in Indiana, has set out to change the way co-ops do business by issuing checks to redeem equity to older patrons while they're still leaving.

Laurel Mann, communications director for Co-Alliance LLP, says $600,000 in redemption payments were recently sent to farmer members. Co-Alliance is the limited liability partnership formed by four separate so-op entities over the past two years in hopes of gaining efficiency by working together.

Original member co-ops in Co-Alliance LLP include Midland CO-op, Danville, itself a conglomeration of many other smaller county co-ops, IMPACT Co-op, a similarly-structured organization to Midland, only based in Frankfort; LaPorte County Co-op, with holdings reaching across the Michigan line, and Frontier Co-op.

Some 565 shareholders were allowed to redeem long-standing equity credits they had received over the years, Mann notes. The credits accrued as they did business with one or more of the four organizations, or in some cases, the organization's predecessors.

Equity credits are not the same as patronage refunds. When the co-op is profitable, it returns patronage checks to all members, based upon decisions by the board of directors. How much each member gets is based upon how much business he did with the co-op that year.

Instead, equity credits are often held by shareholders. Historically, they're redeemed after the shareholder dies. ASO redeeming over a half million dollars in equity credit, not just issuing patronage refunds for a successful year, is certainly big news among those who understand co-ops and how they have traditionally operated.

The goal to be able to redeem equity to this existent was set by the partnering co-ops earlier this year. The partnership's strong financial position and commitment to loyal members made it possible to meet the goal and redeem equity for long-standing - but still living - shareholders, Co-Alliance executives note.

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