Equity Redemption: Issues and Alternatives for Farmer Cooperatives
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Cooperatives are under increasing pressure to redeem the equities of former
and overinvested patrons. This report discusses the issues concerning equity
redemption and describes alternative equity redemption plans and methods
that can be used to improve or facilitate redemption. Trade-offs between cash
patronage refunds, redemption, and growth are examined, and methods for
distributing cash benefits to patrons are compared. Legal and tax aspects and
board responsibilities are reviewed, and the influences of federated cooperatives
and lending institutions are considered. The impact of proposed mandatory
redemption programs is evaluated, and procedures for adopting a voluntary
redemption program are detailed.