This paper examines the role of the “principles of cooperation” in shaping the methods used by farmer cooperative associations for the provision of equity capital by members. Cooperative principles and financing practices based on them are evaluated in the context of some common issues and conflicts among patrons. The characteristics of a cooperative are compared with those of a patron-owned corporation, and two case studies in which patrons chose to organize businesses as patron-owned corporations are discussed. The paper concludes by making recommendations for patron-owned businesses operating within the cooperative framework.


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