This past month we were honored to deliver $1,087,591 in age 65 equity checks to our patrons. I am proud that your cooperative is delivering on its promise to those that own the company. I am a firm believer that farmer owned cooperatives have to do three basic things:
1. Deliver the products and services that our owners want and need at competitive pricing.
2. Reinvest in assets, people and technology to serve the owners into the future.
3. Return profits in the form of cash.
For many years I believe co-ops did pretty well at the first two, but not so well at returning the profits in the form of cash. At UFC, I am very proud that we are performing well in all three areas.
I want to remind you that we have two equity pools at UFC, the first being our age of patron pool. This is equity that was earned before the formation of UFC. This pool is based on the age of the patron. Our intention is to return this equity to our patrons when they turn 65. The second pool is our revolving equity pool. This pool is designed to return equity based off the year it was earned, with it being revolved as new equity is gained. The goal of this pool is to build adequate equity to run the company and return equity quicker than the age of equity pool. I am proud to report to you that we have revolved all the equity that was earned in 2001 to our patrons, regardless of their age.
I would be remiss if I didn’t address that equity in your cooperative is risk capital that is needed to fund the operation of the business. That being said, we always manage your company from a balance sheet perspective. All equity redemption decisions made by your board of directors are made with the long term health of the company taking precedence.
Revolving age based equity at 65, having our revolving pool paid through 2001, paying a high percentage cash patronage, and reinvesting $34,856,226 in assets over the past five years are a great example of how a cooperative can, and should, operate when we work together.
I am convinced that your ownership of an ag supply and marketing cooperative will be even more valuable in the future than it has been in the past.
I thank you for your support and am excited to serve you going forward.