Files
Abstract
Agricultural cooperatives, like other cooperative firms, face a wide
array of choices in how they distribute and retain profits. These choices
impact the cooperative’s solvency, liquidity, and cash flow as well as
each member’s cash flow and realized return from the cooperative.
Taxation at both the firm and the patron level further complicates the
picture. In recent years the availability of the Domestic Production
Activities Deduction (DPAD) has impacted the profit distribution of
many agricultural cooperatives (Barton, 2011). While cooperative CEOs
and boards of directors appear to be astute in analyzing the tax and cash
flow implications of profit distribution alternatives, it is not clear whether
they understand the impacts on the members’ return from the
cooperative. This paper explicitly examines that question using financial
data from 10 case study grain and farm supply cooperatives in Oklahoma