Capital & Equity Management Survey Iowa, Minnesota & Wisconsin Agricultural Cooperatives

1. Capital & Equity Management SurveyIowa, Minnesota & WisconsinAgricultural Cooperatives University of Wisconsin Center for Cooperatives March 30, 2006

2. Survey was planned and prepared by the planning committee. Thank you for survey mailing assistance to: • Wisconsin Federation of Cooperatives • Minnesota Association of Cooperatives • Iowa Institute of Cooperatives

3. Survey mailing • 651 cooperatives • 147 returned • 22.6% response rate • 73% were farm supply/grain handling

4. Annual gross income 10 surveys did not indicate whether they were from MN or WI

5. Merger in the last five years

6. Reasons for merger: Top Four Reasons: • Improve profitability • Reduce operating costs • Avoid or reduce duplication of facilities, equipment, services • Strengthen balance sheet

7. Other reasons for merger: • Access additional products or services • Expand economic development • Expand trade territory

8. Did the merger achieve these goals? See comments in handout

9. Average local net margin last 5 years by size of cooperative: Annual gross revenue:

13. Average local margin compared to 5-years ago by size of cooperative: Annual gross revenue:

14. Number of years with negative local net margin by size of cooperative. Annual gross revenue:

18. Capitalization: Percent of total assets locally owned (member equity):

19. Percentage of total assets locally owned (member equity) 5-years ago:

20. Member Equity Allocation

21. Co-ops having preferred stock: • 28 co-ops (21%) had equity held as preferred stock. • For these co-ops, the average percent of equity held as preferred stock was 47%.

22. Changes in equity structure past 5=years: See handout for comments.

23. Percentage of equity held by active and past members and outside investors

24. In past 10-years, has there been changes in percentage of equity held by active and past members and outside investors?

25. Is non-member business an important source for building un-allocated or permanent equity?

26. See handout for comments on equity from non-members.

27. Who receives distribution of earnings?By size of co-op (Million $ gross revenue)

28. Does the co-op have an equity redemption policy? By size of co-op (million $ gross revenue)

29. Equity redemption practices by size of co-op: Annual gross revenue (million $)

33. See handout for comments on equity redemption practices.

34. Years of revolvement & ability to consistently maintain that period

35. With current equity practices, will the co-op be able to fully fund redemption obligations?

36. With current equity practices, will the co-op be able to maintain adequate equity capital for business growth?

37. Do the co-op’s equity redemption practices provide a positive image of the co-op to members?

38. Have active/past members expressed concern with the co-op’s equity redemption practices?

39. See handout for member concerns about equity practices.

40. Were there changes to equity redemption practices in the last 5-years?

41. See handout for comments on changes in equity redemption practices.

42. Cooperatives currently considering changes in equity redemption practices.

43. Change in equity redemption practice being Considered.

44. See handout on discount equity practice being considered

45. See handout on other concerns about equity and equity redemption issues.