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Wyoming Cooperative Model. A Case Study 5 th Annual Farmer Cooperatives Conference November 15, 2002. The Wyoming Cooperative Model. Evolves cooperative structure into new forms Offers flexibility in structure Cooperatives may be organized similar to LLC - PowerPoint PPT Presentation
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Wyoming Cooperative ModelWyoming Cooperative Model
A Case Study
5th Annual
Farmer Cooperatives Conference
November 15, 2002
The Wyoming Cooperative ModelThe Wyoming Cooperative ModelEvolves cooperative structure into new formsOffers flexibility in structureCooperatives may be organized similar to LLCOpportunity for outside investmentCooperative owners are it’s members
– Patron Members– Investment Members
Patron members guaranteed 15% profit distributionWyoming model effective 7/1/01
Cottage Grove CooperativeCottage Grove Cooperative
Core Divisions
Feed GrainEnergy Agronomy
Supporting Divisions
Hardware Stores
Convenience StoresTruck Stop
Heating & Cooling
TransportationServices
Union CooperativeUnion Cooperative
Core Divisions
Feed GrainEnergy Agronomy
Supporting Divisions
Convenience Stores
Tire SalesTransportation
Services
Reasons behind an Reasons behind an Agronomy Joint VentureAgronomy Joint Venture
Enhance profitability – greater ROIExcel in customer service over a large trade
territoryEfficient utilization of people and assetsProduce necessary critical massIncrease purchasing powerMaximum advantage of dealer programs
Events Leading to the Events Leading to the Formation of LandmarkFormation of Landmark
Our supplier, Agrilliance, owned four facilities near our trade territory
Union Cooperative handled the accounting for Agrilliance for a fee
Cottage Grove and Union had earlier developed a joint venture in Precision Agriculture
Agrilliance and both boards met to plan the futureBusiness service manager employed to lead
feasibility study of combining nine agronomy locations
Landmark ContinuedLandmark Continued
Attorney hired to create joint venture agreementWyoming model selected for business structureName selection committee appointedLandmark Services Cooperative organized in
October 2001
Landmark Startup CostLandmark Startup Cost
50% investment by Union and Cottage GroveLandmark is approved for $12 million dollar
seasonal line of creditComputer related expenses exceeded $100,000 Attorney fees - $50,000Consulting fees $5,000Selection of name and logos - $2500Identification of vehicles and facilitiesSearch of General Manager
Operating LandmarkOperating LandmarkNew equipment is purchased by LandmarkPresent facilities and equipment are leased to
LandmarkEmployees are Leased to LandmarkCottage Grove administers human resource
programsLandmark profit stream 60%CG and 40% UnionUnion can increase investment to 50% profit distCG and Union each distribute patronage to growers
Landmark Governance StructureLandmark Governance Structure
Union Director
Union CEO
CGController
CGCEO
Union Controller
CGDirector
Board of Directors
LandmarkGM
Hub Managers
Employees
EdgertonJudaCottageGrove
Evansville
Employees EmployeesEmployees
Computer SystemsComputer Systems
User Group Selected SSI SoftwareInitial learning curveChallenge to setup customers, products, tonnage
taxes, etc.Evaluated and upgraded hardware at all locationsConnected all locations with wide area network
Accounting SystemsAccounting Systems
Blended Cultures between the agronomy locationsAdoption of 5% cash discount programChanged statement due date to the 20th of each
monthDevelopment of fall deferred billing programEmployees initially resistant to changesDevelopment of newsletter to communicate policies
Development of Future joint Development of Future joint VenturesVentures
Wyoming model is favorable for many applicationsEach player should have reasonable profit
expectationsCommunications to customers and employees
should be given high priorityBringing philosophies & business practices together
is a major challenge
ContinuedContinued
Startup costs generally will be higher than budgetedEliminating employee positions may not be as high
as anticipatedPlan for tighter marginsForming Landmark Agronomy Services firmly
positions our cooperative for future success