Economics 332 - Cooperatives
Course
Administration
Spring 2009 - TR 12:40-2, 1012 Coover
A. STAFF
1. Instructor: Dr. Ron Deiter
Room 174 Heady Hall
Office Phone: 294-5436
E Mail: rdeiter@iastate.edu
Office Hours: MWF 1, TR 2
2. Department Chair: Dr. Arne Hallam
266 Heady Hall
294-5861
B.
There is NO required textbook. However, various recommended publications by the USDA Rural Business-Cooperative Service related to course topics are available on the internet (note CIRs = Cooperative Information Reports). These readings can be accessed through the link on our class homepage or directly at http://www.rurdev.usda.gov/rbs/pub/newpub.htm. Reading follow-along notes to be posted by unit on our home page is required.
C. OVERVIEW
Cooperatives play a major role in agriculture. Cooperatives, on behalf of farmers, are actively involved in marketing agricultural products, selling agricultural inputs, furnishing credit, and providing services such as electricity. Yet, there are many misconceptions and misunderstandings about agricultural cooperatives, including which businesses are cooperatives, how are they organized and controlled, how are they taxed, and how are they financed. This course will address these issues.
The course is designed for students who currently or in the future may have to evaluate a cooperative as a marketing alternative or as a place-of-work alternative. It is designed for students who may find employment with a firm that competes with a cooperative. Ag Business majors are able to use this course as a restricted free elective to meet area of emphasis requirements in agribusiness management, farm management, agricultural sales, and agricultural finance. Outside speakers will be used to enrich the class and will include a local cooperative manager, a local cooperative board of director member, and a representative of a regional cooperative.
The
traditional lecture method will be used to present key material. In addition, a significant amount of time
will be devoted to a variety of teaching methods that are intended to enrich
the students' learning experience as well as reinforce or bring added relevance
to topics being presented in class.
These methods include 1) outside speakers such
as cooperative managers and board of director members, 2) videotapes dealing
with actual cooperatives or cooperative issues, 3) in-class participatory
exercises, and 4) role-playing, board of director assignments. To
learn and benefit from all of these methods of information delivery, class
attendance will be necessary.
D. SPECIFIC COURSE LEARNING OBJECTIVES
Specific desired learning ‘competencies’ by course topic are listed below in the tentative topic outline.
E. GENERAL COURSE OBJECTIVES
1. To provide students with an economic overview of cooperatives, with emphasis on agricultural cooperatives.
2. To inform students of how people can and do use cooperatives.
3. To help students understand and evaluate important cooperative issues especially legal, finance, and taxation.
4. To provide students with the opportunity to meet cooperative business leaders.
5. To acquaint students with how cooperatives are organized and operated.
F. SPECIFIC CASE STUDY OBJECTIVES
1. Understand the different types of issues/decisions involving cooperative boards.
2. Learn and apply the scientific decision making process to solving problems.
3. Experience and learn how to work more effectively with others in a group or team setting.
4. Improve students’ critical thinking skills (including reasoning and analysis).
5. Improve students’ communication skills (including written, oral, and debate).
6. Apply and learn how to improve time management skills by completing a number of assignments by predetermined deadlines.
G. GRADING
Each student's course grade will be determined (at his or her preference) according to one of two options:
Option A Option B
(percent of total grade) (percent of total grade)
Item
Hourly Exam #1% 25 30
Hourly Exam #2% 25 30
Term paper (or final exam)% 15 0
Board of Director Assignments % 25 30
A, CP, & Q %* 10 10
100 100
*A = attendance, CP = class participation, Q = quizzes.
At the end of the course, letter grades will be assigned in the following manner:
Each student's weighted percentage as a % of maximum possible pts (Option B)
Letter OR
Grade Percent of the top student's weighted percentage (Option A)
A 90
A- 87
B+ 83
B 80
B- 77
etc etc
H. OTHER COURSE POLICIES OR PROCEDURES
1. The 10% part of your grade for A, CP, and Q is based on:
1) attendance at meetings of your board and for lectures,
2) scores on any in-class quizzes or exercises,
3) fellow board member evaluation comments and
4) questions asked in class (of either instructor or class guests)
5) contributions made to discussions in class.
Without any reason to add or subtract points, each student will likely receive a ‘participation’ score of 87-90%. Above-average scores will likely be in the 90-95% range; below-average scores will likely be 85% and below.
There will be no excused absences except for a) other sanctioned University activities with advance written notification or b) family emergency or personal health reasons with written verification. In all of these cases, the written communication must be from a third party.
2. Doing a term paper and taking the final exam are both optional. If a student chooses to do neither, his/her course grade will be determined according to grading option B.
3. Make-up exams or assignments will not be given unless advance arrangements have been made with the instructor. Exam #1 is tentatively scheduled for Thurs., Mar. 5, Exam #2 will be Thurs., Apr. 30 and the optional final exam is at 9:45 a.m. on Fri., May 8.
4. If you cannot remain (seated and quiet) until a lecture is dismissed by the instructor, please make advance arrangements with the instructor. Standing up, leaving the classroom, talking, talking on a cell phone (please turn off) etc. while the lecture is in progress is distracting to other students and the instructor and will not be tolerated.
5. A class home page on the web will be set up for our class. To find our homepage, from the ISU homepage, click in order on 1) Departments, 2) Academic Programs, 3) E and Economics, and 4) Spring 2009 classes. Course information of likely interest to students will be periodically posted. More information on this will be provided in lecture.
I. TERM PAPER
Any topic for a term paper is suitable as long as it deals with a cooperative subject matter. An outline of the term paper and identification of the topic is due Thur., Mar. 26. The student should not change the topic of his/her term paper after the outline is turned in, unless the instructor consents. The term paper should be between 10 and 20 double-spaced, typewritten pages and is due Tues., May 5. Term paper grades will be computed on the following basis:
content-topic 50%
organization 20%
neatness-spelling 5%
documentation 5%
outline 5%
originality 5%
writing style 5%
promptness 5%
J.
TENTATIVE TOPIC OUTLINE,
Unit 1 The Cooperative Form of Business (1/12 - 2/3)
Topics: Alternative Business Organizations
Cooperative Terms and Principles
Cooperative Ownership and Control
The Economic Need for Cooperatives
Future Role of Cooperatives
CIR #45, Sect. 14, How To Start A Cooperative
Competencies: 1. Identify and explain the unique aspects or distinguishing principles of the cooperative form of business versus the investor-owned corporation.
2. Explain the differences between a dividend and a patronage refund.
3. Explain who owns and controls a cooperative.
4. Distinguish a federated cooperative from a centralized cooperative.
5. Identify economic needs that might justify the establishment of a cooperative.
6. Identify economic factors that are likely to be key factors in determining whether or not a newly formed cooperative will be a success.
7. Explain the relevance of the Rochdale Pioneers to cooperative principles.
Unit 2 The Operation and Management of a Cooperative (2/5 - 2/26)
Topics: Cooperative Board of Directors
Cooperative Management
CIR
#11,
CIR
#11,
CIR #61, The Circle of Responsibilities for Co-op Boards
Competencies: 1. Distinguish among decisions typically made by members, the board of directors, and the manager in a cooperative.
2. Identify qualifications for serving on a cooperative's board of directors.
3. Identify and discuss the major issues regarding the election of cooperative boards of directors.
4. Learn the process of making decisions as a member of a cooperative board of directors.
Unit 3 Cooperative Identification (3/3 - 3/24)
Topics: Regional and National Cooperatives
Marketing, Supply, and Service Cooperatives
Service Organizations
Cooperative numbers, market shares, mergers
Competencies: 1. Identify the names and major activities of the largest
2. Identify cooperative market shares in various agricultural markets.
3. Explain the different types of agricultural cooperatives.
4. Describe the major activities of the Iowa Institute of Cooperation and other cooperative service organizations.
Unit 4 Cooperative Finance (3/26 - 4/7)
Topics: Sources and Uses of Cooperative Funds
Equity Redemption
CIR #55,
Competencies: 1. Explain the different sources of cooperative capital.
2. Explain the different uses of cooperative funds.
3. Identify assets and liabilities that are unique to a cooperative's balance sheet.
4. Explain what is meant by equity redemption.
5. Identify reasons why cooperatives need to redeem equity.
6. Compare and contrast alternative methods of equity redemption including the revolving fund method and the base capital method.
7. Discuss legal restrictions on cooperative
equity redemption in
Unit 5 Cooperative Legal Issues (4/9 - 4/16)
Topics: Federal Legislation with Emphasis on Antitrust
State Legislation
Competencies: 1. Identify and explain major provisions of the Sherman Antitrust Act and the Capper Volstead Act that relate to cooperatives.
2. Identify activities that marketing cooperatives can and cannot legally perform.
3. Explain the major provisions of Chapter 499 in the Iowa Code that relate to cooperatives.
Unit 6 Cooperative Taxation (4/21 - 4/28)
Topics: Taxation of Retained Earnings
Taxation of Qualified Allocations
Taxation of Nonqualified Allocations
Taxation of Dividends
521 Cooperative Taxation
Competencies:
1. Explain how the net earnings of an ordinary cooperative are taxed.
2. Compare and contrast the taxation of a 521 cooperative versus a non-521 cooperative.
3. Identify the conditions that must be met in order for patronage refunds to be qualified.
4. Explain the tax implications of cooperative loss allocation.
K. DIRECTOR ASSIGNMENT FRIDAY DUE DATES
#1 1/23 #4 2/27 #6 4/17
#2 1/30 #5 3/27 #7 4/24
#3 2/13