Historic, archived document Do not assume content reflects current scientific knowledge, policies, or practices. 2 ' , § e : ~ a P ; ' : " = : ‘ F Lh ’ 4 e 1 : e : ‘ u : ‘ il = - Jj a t - 5 2 = - : . 7 2) i - “ : J oy 4 P v ‘ : ‘ ~— . ‘ ~ - ' - : = : = ’ . 4 ‘ by 4 i . - 1 ) Jf ' 5 x ‘ ‘ 7) F - : | : 5 \ _ ‘ ‘ a i — i ; a 1 7 } / = 4 m re es : . i ‘ t s : “7 i ie i ‘ ig “Ne ee S s “= " UNITED STATES a DEPARTMENT or AGRICULTURE DEPARTMENT CIRCULAR 407 | Washington, D. C. January, 1927 | MEMBERSHIP RELATIONS OF COOPERATIVE ASSOCIATIONS: (COTTON AND TOBACCO) J. W. JONES Agricultural Economist, Division of Cooperative Marketing, Bureau of Agricultural Economics and O. B. JESNESS Head, Department of Markets and Rural Finance, Kentucky Agricultural Experiment Station CONTENTS Page Page etre tereg eee) eee 1 | Satisfaction of members with asso- Plan and method of organization-_-~_ 3 Clations 2-0 32 FS ren eae 11 Membership. problems__________-~-- 3 Some sources of dissatisfaction____~ 14 Source of data and method of col- Field service in centralized coopera- RR oe SEE ES re 4 PIV CRD Bees oO ae eS ees 24 Ideas prevailing among members re- Sources of informatione —= 22 26 garding marketing associations_~— fir) -Goneclisions 420 r 3s se eee ee 27 INTRODUCTION Organization of the present large-scale cooperative marketing associations in the South was begun during the fall of 1920. The movement developed rapidly and within three years such organiza- tions had been perfected in each of the principal cotton-producing States and in the three principal tobacco-producing regions. The cotton-marketing associations usually limited membership to a single State, but the tobacco associations covered parts of several Southern States which produced a similar type of tobacco. This cooperative marketing movement was initiated at the first meeting of the American Cotton Association held in Montgomery, 1This circular is based on a study made by the Bureau of Agricultural Economics in cooperation with the agricultural experiment station of the University of Kentucky. Mr. Jones was an assistant in marketing at the Kentucky Agricultural Experiment Sta- tion when this study was made. Acknowledgment is made of the assistance rendered by the departments of agricultural economics of the Oklahoma Agricultural and Mechanical College and of the North Carolina Agricultural and Mechanical College. 25422°—27 1 2, DEPARTMENT CIRCULAR 407, U. S. DEPT. OF AGRICULTURE Ala., April 18 and 14, 1920. A plan for the organization of large- scale cooperative marketing associations, similar to that of certain dried-fruit associations in California, was advanced at that meeting and was favorably received by a majority of those in attendance. After they returned home many of the delegates began to advocate such organizations for cotton producers within their own States.” By the end of 1925, 14 State-wide cooperative cotton-marketing as- sociations had been formed and had attained a total of 296,970 memberships. Soon after the interest in centralized cooperative associations fér marketing cotton had been aroused, the tobacco markets of the Carolinas opened with much lower prices than had prevailed in the previous year. Tobacco producers in this territory—many of whom were also cotton producers—became interested in applying the same plan of organization to the marketing of tobacco. Conse- quently, an organization committee was selected to perfect plans for a tobacco cooperative marketing organization covering the producing areas of North Carolina, South Carolina, and Virginia. At a joint meeting of the organization committee and representa- tives of the cotton growers of North Carolina in January, 1921, plans were formulated for conducting membership campaigns simulta- neously for the two organizations. ‘The joint campaign was carried on during 1921 and was completed early in 1922. More than half the tobacco producers of the three States became members of the Tobacco Growers’ Cooperative Marketing Association. But the Burley tobacco growers of Kentucky, West Virginia, Ohio, and Indiana were the first to complete a membership campaign for a tobacco-marketing association covering the Burley producing area. The 1920 Burley crop had sold for less than half as much per pound as the 1919 crop. As a result of these low prices, several protest meetings were held and various remedies were suggested. An organ- ization was proposed for the purpose of withholding the crop from market and promoting a “cut-out” in 1921, but this did not materialize. A meeting of representatives from the Burley tobacco-producing section was called in Louisville, Ky., in March, 1921. The meeting was attended by representatives from other tobacco sections and by delegates from the Kentucky Farm Bureau and the Farmers’ Union. The plan of the centralized cooperative marketing associations was explained at this meeting, as it had been explained at the meeting of the American Cotton Association in Montgomery, and was ap- proved by resolution as “sound in principle.” Committees appointed to formulate plans for organization soon afterward approved the plan and contract advocated at the March meeting, and a member- ship campaign began in the Burley-producing section. By Novem- ber 15, 1921, contracts had been signed by 55,617 growers, estimated to represent over 75 per cent of the 1920 production in the four States, and the association proceeded to handle the 1921 crop. Growers of dark tobacco in western Kentucky and Tennessee were organized in 1922. There was less demand for organization in this section than was manifested in the Burley or in the Carolina-Vir- 2For a brief account of the beginning of the cotton associations see U. S. Dept. Agr. Bul. No. 1892, ‘‘ Cooperative Marketing of Cotton,’ 1926. MEMBERSHIP RELATIONS OF COOPERATIVE ASSOCIATIONS 3 ginia districts. The price of dark tobacco did not advance so much prior to 1920 as did the price of some other types, nor did it fall so low in the ensuing period of deflation. But the successful han- dling of the 1921 crop by the Burley association and the impetus of the wave of organization that was sweeping the country carried along the movement in this section during the summer and fall of 1922. By October 31, 1922, about 56,000 contracts, estimated to cover approximately 6624 per cent of the 1922 production, had been ob- tained by the organization committee. PLAN AND METHOD OF ORGANIZATION These cotton and tobacco cooperative marketing associations were all organized on the same general plan with only minor changes adapted to the commodity handled. The ideas emphasized in pro- moting these associations were: (1) Sufficient volume of the product under the control of a single association, or cooperating associations, to assure systematic marketing and to make the organization a factor in price determination; (2) a long-term, irrevocable contract which, it was believed, would assure the associations the stability and per- manence necessary to cope with the situation. Farmers generally believed that prices were unsatisfactory because the farmers were not organized. A marketing association control- ling a large volume of the crop was regarded favorably as a means of overcoming this disadvantage. The irrevocable contract was emphasized as a means of holding the farmer whose enthusiasm for the organization might wane after he became a member. Many farmers joined the association without an adequate knowl- edge of the results that may reasonably be expected from a marketing organization. Probably some joined because of misconceptions cre- ated at the time, but conditions were serious, and it was no small task to organize State-wide associations or regional associations extending into several States. The service to be rendered by the association was relied upon to correct misunderstandings. MEMBERSHIP PROBLEMS During the first year of operation, most of the large-scale cotton and tobacco associations found that the contract did not insure de- livery of the crop by all members. Two cotton associations, with membership contracts covering more than 300,000 bales, received the first year of operation 91,239 and 135,912 bales.* The tobacco asso- ciation operating in the Carolinas and Virginia received during the first year much less tobacco than the management had counted on. The Burley Tobacco Growers’ Cooperative Association had only a nominal number of contract violations the first year, but there has been a slight increase in violations each succeeding year. The Dark Tobacco Growers’ Cooperative Association and the Tobacco Growers’ Cooperative Association (the Carolina-Virginia organization) had a decided increase in the number of contract violations each succeeding year of operation. Violations and evasions of the contract have been due to several causes. Credit conditions in this area and a common method of _ *See footnote 2, 4 DEPARTMENT CIRCULAR 407, U. S. DEPT, OF AGRICULTURB financing production by means of the crop mortgage, which prevents the grower from completely controlling the marketing of his crop, doubtless constitute the most general cause of violations. Other im- portant causes have their origin in misunderstandings on the part of the member regarding the operation of the association, dissatisfac- tion with the method and management, and the weak morale existing in varying degrees among the members of all the associations. The attitude of the members toward the organization presents serious problems for the solution of which there is little accumu- lated experience. These problems arise largely out of a lack of un- derstanding by members of the principles of marketing, of the prin- ciples on which their organization is based, and of the problems which it encounters in operation. So far as the membership problem is concerned, the important point is not so much what the facts are as what the members think they are. This study of membership relations was undertaken to determine the causes of weak membership morale, dissatisfaction with the asso- ciations, and contract violations. Factors that may contribute to weak morale in the future were included in the study. The study was begun in November, 1925, and the field work was completed in April, 1926. SOURCE OF DATA AND METHOD OF COLLECTION Four associations were selected for study in the belief that their problems are representative of the membership problems of the centralized cooperative associations in the South. These were among the first to be organized and their experience is similar to that of other associations in the South handling like commodities. The contract period of none of these associations had expired at the time the study was made, and all were confronted with the necessity of securing renewals of their contracts, if they were to continue to operate. Each of these associations operates over an entire State or parts of more than one State. The number of members of these asso- ciations ranges from 35,000 to 108,000. Two of the associations — market tobacco and two market cotton. Members of each association were interviewed as to their opinions regarding their association, their reasons for joining, the benefits and services obtained, and their criticisms of the organization. A questionnaire was used and the answers of the member were written down by the interviewer with the understanding that the informa- tion would be considered confidential as to the identity of the source, and would be used only for making a report on the causes of mem- bership satisfaction and dissatisfaction. The questionnaires were assembled and tabulated and are used as a basis for this circular. For convenience of reference each association studied is designated by a number used throughout the circular. Membership problems arise from many sources. The schedule was intended to provide data for study of the different problems now faced or to be faced in the future by these centralized organiza- tions. The schedule was made up to obtain information on the following subjects: Members’ ideas of the purposes, possibilities, and Saye MEMBERSHIP RELATIONS OF COOPERATIVE ASSOCIATIONS 5 limitations of cooperative marketing associations; degree of satisfac- tion and anticipations realized; causes of dissatisfaction ; understand- ing and appreciation of marketing services performed by the associa- tion; and knowledge of the association and its operations. The questions relating to each of these subjects were not placed together, but were distributed throughout the schedule. This was done to reduce the possibility that previous questions or answers would suggest answers to questions which followed. The purpose of the interview was to find out what the members actually thought, and it was desired to avoid, so far as possible, suggesting the answer to any question. If an answer was not readily forthcoming, the interviewer did not press the question, or wait for the member to think up an answer, but passed to the next question on the schedule. This occasionally resulted in failure to obtain answers to some questions. It is be- lieved, however, that sufficient data have been obtained from each member to furnish a definite idea of his attitude toward his asso- ciation. IDEAS PREVAILING AMONG MEMBERS REGARDING MARKETING ASSOCIATIONS Ideas regarding the purpose and possibilities of cooperative mar- keting associations differ in popular discussion and doubtless differ among members of the same organizations. Differences are revealed in reasons for joining, expectations, and ideas regarding the possi- bilities and limitations of cooperative associations. Answers to the question, “ What was your main reason for joining the association? ” are to be found in Table 1. TABLE 1—Replies to question, “What was your main reason for joining the association? ” Members reporting Reply Association | | Total L stk 2 3 | 4 | | | | | Number| Number, Number, Number Number nes weraces tices <8 em ee Ae ee ae 50 61 | 6 65 236 Hew prices at time of organizabion= => _===__ 9o oe Fe Ly ee eee Zz 23 eeeaiisned with Cxisting System > >." . tee eat Oe | 2, 4 7 31 44 PIONS 16eR POOR TIE oe a a ee 1 20 33 21 75 Pickelntfaviiers OTgani7zaliGus 4.26 Ss Se ee | Nl Oe eT 8 9 29 (UE ce eS SS ale See ee a ica aie 18 23 | Ee 55 | feces Sed fae a Meine 2 aaa FAG WI. een re 0 - | | 108 122 | 133 | 462 The answers shown in Table 1 indicate that desire for higher prices was the dominant motive of the members in joining the asso- ciation. ‘This is to be expected because cooperative marketing is a business enterprise that is undertaken to make more profitable the farming operations of the cooperating farmers. The large propor- tion of members of association 4 who answered, “ Dissatisfied with existing system,” probably may be explained by local conditions in 6 DEPARTMENT CIRCULAR 407, U. S. DEPT. OF AGRICULTURE the territory served. Cotton growing is a relatively recent industry there, and the marketing machinery may not have been so well established as in other parts of the Cotton Belt. The answer, “ Low prices at time of organization,” was given by a number of the mem- bers of association 1 probably because of the severe price decline which led to the organization of this association. The answer, “Thought it a good thing,” would seem to have no significance beyond suggesting a possible lack of definite expectation. Members of associations 1 and 4 were asked, “ What other reasons for joining?” ‘The answers are given in Table 2. TABLE 2.—Replies to question, ““ What other reasons for joining?” Members reporting Reply Associa- | Associa- tion 1 tion 4 Number | Number Belieiin cooperative marketing 2. _ 29 eh ee oe ee eee ea aera Gio] oe ee Missdtishedtwithold method! ti. 2.5) Ste ees bee ne oe Pa ee 2 |S eee eee Persiaded sto OlMao = 52 oe Seo Soo Da ES Pe AE RL Sn ee 262 22oeeen HWowsprices!or toelpi priceS= ae case Ae eae eee See Nee he eee ech ea ee Bi | apeeeaa Beliehin Coo perationss =2 S225 tees aN 2 ee he Ue es ee eee Sik 2 ee (Locutout che: middlementor Street Prayers a ya 6 Totgetia betterisysten ofsmarketin gs. Lee eek SA shes hoe ONE eh: At See DE eae eel eee | ela ae 8 Stabilize ‘orcontrol markets 4.2 eyo eee Oh an ek ee Moet ee oe ee eee es (eee ge 4 OpNERLCASONS S222 eso oe SSO aS aa Re Bey ene aes es oe Ee Se eee ee eee 17 CIS Gea wats tay ae eR es ae go Ia 18 35 Members of associations 2 and 3 were asked, “ What did you expect the association to accomplish?” Of 108 members reporting from association 2, 50 replied, “ Better prices,” and 38 replied, “ Stabilizing the market.” Of 122 reporting from association 3, 57 replied, “Better prices,” and 34 replied, “ Stabilizing the market.” Other individual answers representing similar ideas were: To secure fair and reasonable living conditions. To put farmers on an equality with other interests. To know the price at planting time. To have some say as to what we get. To do away with speculation. To get a profit from cotton. To get a profit on what we grow. To reduce the number of middlemen. THE IDEA OF MONOPOLY INFLUENCE Some members of these associations believe that their organization is handicapped by a small membership. The way in which they think this handicap works indicates their ideas of the possibilities of a cooperative with larger membership. The questions, “ Do you think a larger membership would im- prove your association?” and, “If so, how?” were asked for the purpose of obtaining information as to the importance placed on the idea of commodity control and possible monopoly influence. The replies are shown in Table 3. ~ MEMBERSHIP RELATIONS OF COOPERATIVE ASSOCIATIONS 7 TABLE 3.—Replies to questions as to influence of a larger membership on the associations Members reporting Question and reply Association Do ~— think a larger membership would improve your association? | Number| Number, Number| Number, Number es 94 110 1 et nr tS ee ee nt oe ey ee 80 19 | 403 Wore ttt. fy tei SM OTE Pee. FO 2 Vo | 5 10 5 8 | 28 RR eat re he a eee ee oe | 4 0 6 2 12 yt TOs ae ie Se Ee | ees Se Oe ee &9 104 121 129 | 443 If so, how? | | | ares TIRE RTILIGN « = 0 532 Se. Fe re Od ee A Sn 64 55 67 68 254 LEE UT ee ee EE Pet. RS ree, 0 0 4 26 30 So fF Sa are ee eee 0 0 14 14 Et eee eee eee eee 110 10 | 20 ~ oo S ple eecoeenen awe. ko. 64 | 55 81 118 | 318 1 Come nearer selling at a profit. Table 3 shows that most of those interviewed believed that a larger membership would improve their organization. Question 2 of the same table shows that this belief is based mainly on the expectation that a larger membership would bring a greater degree of control of supply and price. From this it would appear that the members believe that the possibilities of cooperative marketing le to a considerable extent in controlling the commodity and the mar- ket. The answers from a number of members of association 4 showed that they gave consideration to other possibilities as well. The emphasis placed on price and commodity control is to a consid- erable extent a reflection of the arguments employed during the organization of the associations. The characteristics of the commodity and its market need to be kept in mind in considering membership relations. Tobacco differs markedly from cotton. its outlets are more limited as relatively few buyers take a large proportion of the crop. It lacks the highly organized markets existing in the cotton trade, and market quota- tions according to grade are not available. Under such circum- stances bargaining with buyers is one of the main purposes of a cooperative marketing association, and control of a considerable volume of the product is an important factor in bargaining. Through these means an association may expect to obtain a price justified by market conditions, but it can not expect to receive any price that may be arbitrarily fixed. The different types of tobacco are fairly well localized in their production, and the organization of a considerable proportion of the growers of a given type is not difficult. Cotton, on the other hand, has well-organized markets where large numbers of buyers and sellers are represented. The influences of supply and demand make themselves felt in these markets. Quota- tions by grade are available. A much larger number of growers and a wider area are involved than for tobacco. Commodity control 8 DEPARTMENT CIRCULAR 407, U. S. DEPT, OF AGRICULTURE would be more difficult to obtain. There is, therefore, considerable difference between the two commodities. The questions, “ Has the association helped the outsider?” and, “Tf so, how ?”, were included to throw further light on the influence credited by members to their organizations. Table 4 shows that of 316 members reporting, 294 believed that their associations had been of help to outsiders. In answer to the question, “If so, how has the association benefited outsiders?” 96 members of association 1 replied that the market had been improved or the price made higher, 85 members of association 3 reported that this had been true in the fall at least, and 83 members of association 2 declared that the market had been stabilized. TABLE 4.—Replies to question, ‘‘ Has the association helped the outsider?” Meinbers reporting ———— Reply Association —| Total 1 2 3 41 Number| Number| Number| Number| Number 96 88 110 SACS ae oa ee ea A el eT Sy et ee Bn 96. se" 88rl pee OR =e Se 294 NORE SAE A OER i Pk AER AP ES Se ie een eek SS Rod Ae Ee eS Op | sree 14 Doub tek Bee Oe al DE ae ee ee 2 3 3a eee se Bee 8 Total's: *© festa ge bP EE ES PER. ey He sats 98 100 Ocha) ees & ie 316 1 Question not asked of members of this association. These answers show a preponderance of opinion among members that the associations have increased the prices received by non- member growers. In the case of the cotton associations, the feeling seemed to prevail among many members that the associations helped prices in the fall by their policy of distributing sales throughout the year and that nonmembers benefited thereby. This conclusion has a connection with the popular belief that prices are considerably lower in the fall than at other times because of the practice cus- . tomarily followed of marketing a large share of the cotton crop dur- ing that period. Tobacco associations have been more dominant factors in their markets, and in the absence of well-organized markets that supply market quotations according to grades they have been compelled to take the lead in deciding upon their asking prices. The prices of these associations appear to have been an important factor in deter- mining the prices for outside growers. POSSIBLE ACHIEVEMENTS EXPECTED IN PRICE CONTROL Problems of price inevitably play a large part in cooperative associations, particularly in large-scale enterprises of the kind in- cluded in this study. The schedule contained questions relating to price control by cooperatives. These questions were, (1) “ Will co- operative associations ever be able to fix prices on farm products?” (2) “Get cost of production?” (8) “Control acreage?” and (4) MEMBERSHIP RELATIONS OF COOPERATIVE ASSOCIATIONS 9 “Do you think that farmers should organize and set prices on their products?” Table 5 shows the answers to these questions. TABLE 5.—Replies to questions as to probable achievements of cooperative associations in price control Question and reply Association Total Members reporting | | Number| Number| Number| Number| Number 20 50 36 33 139 Yes; if large per cent or majority is controlled____....----- 20 127 | Eee Ee aE ee, 9h ee 62 105 IEDR TURE = Ss 8 or ee ad eee ee ee Oe PP RS er PO a eee 14 LEU Ta Pi oe Eee he en be ee any fy es eee Ol eae eae 10 aa TST ee Ph fy See Se Cpe been Ag ol elem Sa Pere aed ine at A, been TE cee 3 ee ee est os eee es 115| 398 Will cooperatives ever get cost of production for the farmers? Lye ea in a a A Oe ee Se a oe 72 268 ep re ee ie eee Se eee Fees 51 96 ERED een A eee eee ee ees 6 Nene ne Be ae oe ae | 17 SS gt eal ei ea 123 | 381 Will cooperatives ever control acreage? ATT EL 2 E S S E T Oe n n e aed epiei t 29 102 Le Se ee eee ese oe ee 7 84 226 CDOTS TE pe ei i ees at Tee SR i a Ue Sg 2 ee i ees 29 _. Sa: Sot | 113 | 357 Should farmers organize and set prices on their products? pRonpe 8@Cd 2 7 oa ee ees 59 | 281 anenn not sot prices . ... ! >= 422 ee eee op 45 | 88 1 ee ey eens: es tte “St: py | 104 | 369 1 Doubtful. The replies given in Table 5 indicate the prevalence of a belief that cooperative organizations can fix prices, if they have a suffi- cient volume of the product. But that as many as 105 members of the 403 reporting replied that organizations can not fix prices shows that this belief is far from being universal. The rephes of members of association 4 raised the total of negative answers. This was the one association in which the majority of the members interviewed expressed the opinion that organizations can not con- trol prices. The official publication of this association has given considerable space to the limitations of price control, and in all probability its views have had some effect on the ideas of the members. The belief that cost of production should be the basis for deter- mining prices has a strong foothold. A considerable majority realize, however, that an association can not control acreage. When it comes to an expression of whether farmers should be organized and set their own prices, a large majority reply in the affirmative. To get some idea of what the members considered as reasonable prices, the question was asked, “ What is a fair price for cotton or tobacco?” The answers are given in Table 6. 25429° 97-2 10 DEPARTMENT CIRCULAR 407, U. S. DEPT. OF AGRICULTURE TABLE 6.—Replies to question, “What is a fair price for cotton or tobacco?” ? Members reporting Reply Tobacco association Cotton association 1 2 Total 3 4 Total | Number| Number; Number| Number| Number, Number 142OY SE 5.Cents per, pOUNG se eat awn eee eee ee oe es) Se ee ae eee 4 4 i jabOr20 Cents peli POU G2) = sae seb seen e eee eae eee | i ee ee gad ene ks fs Ones Pel | Te JSccents per pound. S22. eee Se EE See NEES iM | ea Sere | | lies a 4 4 18tLO20-cents) pel POUN Gsese_ = — ee ne te ee eee on | eee 3 [poe eee Brae 7 ete 2hheentsiper Pound soa sat = care ea ee ae eee eee 7 4 1 4 37 41 20tOr25. Cents per POUNCE 2. Sean ey foe ee ee 4 3 7 3 2 5 QSICEILS HOCL) POUN Gass) boewne ee eee eek el ea 2 30 32 | 62 64 22 86 220123 | CETES Per DOUNG =! a2 2 ee Pee ape cee! (eegen apes: eee sae 4 3 7 DA TO28 COMLS per pounds lis 20 Sab Ree ee see feet ie ree [hes eae i pe 1 Pt Ors. Cents perppounG = bee = oo sea ee ee ene yp Soe urea | Ses oe aed (eee 1) ae 1 ZicentS Per POU Ge eat! | he Ye ee ea hee eee ee se 1 1 T fewesssis 1 OS etLOmU Genus pen POUNG 29. cn oP eee eee en 5 a 12 Ai aioli 4 S0icentsiper Pounds as? ke ae te eee 4 23 | 27 19 7 26 30°00 35 Gents per pound ts - Seber 2 Pe eee | oe ee eee Ne ee il SIICeN tS Pel DOUNG care e fe nae Se a ee ae oe eae 1 | 1 i ira SEE) ie ig es oe SHGEMCS DET POUT G22 = se eee As See eee eee eae 6 6 1 2 3 Oyver.33 cents per pound 4 2222-2 es ee [eaotoens 25 | 5 1 1 2 Depends on supply and demand-_---.--_-_------------ | 2. es 2 4 | 10 14 0) GS 0) 10 Sp eS EE Bye, Be ae eee g | Reza ee 4 3 | 8 11 VAIS OUREGATIICE bk hai ea tree ns Mee ae ee ee ose | {el = eae 1 el ee RI 2 YRS 8 DOnib KMOWee et ee cae ole SE ee de He eee | 3 122 15 qo ee ae 4 ING ers Wek CLelite cep eae oy ee ee ena gee 34 14 | 48 8 | 32 40 | | Potales= 22 eee TeSvoescocos Hesse ase eee ese| 99 108 | - 207 123 | 132 255 1 This question was asked during the period Nov. 1, 1925-Apr. 30, 1926. 2 One 50 cents, two 40 cents. As shown in the table, the members’ ideas as to what constitutes a fair price vary considerably, but most of the answers name a figure above prevailing prices * for cotton or tobacco. Members of association 4 would be satisfied apparently with about 5 cents per pound less for cotton than would the members of association 3. The difference between the ideas of “ fair” prices in the tobacco associa- tions may be explained in part, at least, by differences in the types involved. ‘These prices indicate the expectations of members regard- ing prices a cooperative organization should obtain for them. EFFECT OF ORGANIZATION CAMPAIGN The methods employed in organizing an association have some effect on the attitude of members toward the organization, at least so far as their conception of the assoc.ation at the time of joining is concerned. To ascertain the views of members regarding “the methods of organizing, the question was asked, “ Was the contract represented correctly to you at the time you signed?” The replies are shown in Table 7. They indicate that the members on the whole did not feel that they had been misled as to the nature of the market- ing contract. 4 Prices in the period Noy. 1, 1925—Apr. 30, 1926, during which the question was asked. ae se = MEMBERSHIP RELATIONS OF COOPERATIVE ASSOCIATIONS 11 TABLE 7.—Feplies to questions regarding correct representation of contract by organizers Members reporting Question and reply Association Total oe 1 2 3 | 4 Was the contract represented correctly to you when you signed it? | Number| Number) Number, Number, Number SS an I Se ee A hag Wet Qu ee, Sk 85 7 105 | 5 345 Lis ae es ee ee Cee Fee teres ese ae 6 es See 13 33 12 31 89 HOT UPR OWE 3 a tn os See a A i 5 6 11 23 oe Eee ae see eet er) i eee 99| 108] 123| 127] 457 Fe | If the contract was misrepresented, in what respect was it mis- | | represented? | MINOGUE OLNOUANCO™ 222" Si sie Neer eae eS 3 20 3 14 40 Riiia pereentare Sipned.. sco sch ee ee oe ee | 2 4 3 0 9 | 49 SN eae REN Se | 5 24 6 14 The next question, “If the contract was misrepresented, in what respect was it misrepresented?” was asked to arrive at the form of | misrepresentation. ‘The replies (Table 7) suggest that organizers sometimes were too optimistic, or that the members misunderstood their statements regarding the advances that would be paid. The question of the time of payment for the product is of considerable importance to farmers. This is particularly true in the case of non- perishables where the sales may extend over many months and some- times even years, so that final settlement is delayed. The propor- tion of the final price which the initial advance represents is there- fore important to the grower. Attention should be called to the fact that the question asked applied to the contract itself, rather than to representations regard- ing the possibilities of the organization. It is possible that mis- representation or misunderstandings have occurred which were not concerned with the terms of the contract. Definite measurement of these factors would be difficult. SATISFACTION OF MEMBERS WITH ASSOCIATIONS The question, “ Would you be willing to sign a new contract?” was employed to indicate, through the replies, the satisfaction of the member with his association. Table 8 gives the replies. These figures indicate the existence of considerable dissatisfaction among the members interviewed. Less than 40 per cent expressed willing- ness to sign a new contract. Attention should be called to the varia- tions between different organizations. A considerably larger propor- tion of the members of association 4 thought they were ready to renew their contracts than in the other associations. It will be © recalled that the members of this association did not appear to place as much reliance on commodity control as did the members of the other organizations. This attitude may account in part for their greater satisfaction with the services of their association. 12 DEPARTMENT CIRCULAR 407, U. S. DEPT. OF AGRICULTURE The next question on the schedule, “ Under what conditions would you sign another contract?” was asked of those who did not indicate a ready willingness to renew membership. The answers received (Table 8) indicate that almost one-third of the members who answered this question were unwilling to sign under any conditions. A little over one-third showed the belief they have in the benefits of commodity control. This applies particularly to the tobacco asso- ciations, and especially to association 1. Almost another third either did not have any clear ideas in mind, or did not answer the question. _ TABLE 8.—Replies to questions as to willingness of members to sign new contracts Members reporting Question and reply Association Total- 1 12 3 4 Would you be willing to sign a new contract? Number| Number| Number) Number| Number RVI ere tira a Fats OR De LENO 2s OE Dn Atk ree ee 1 8 NORE CAPA We ies cy ra 40 64 125 IN Opis ois ae he een ey fee eee gh eee hae SLT | foo ee 41 54 126 AGF aN 25 2521 RES aa a i SIC 2 ae Be Dg 7 (on A eae ee 42 13 102 POG ase ihn gn ae a AOA ae naa a saa 2 OOS ehs eee 123 131 353 Under what conditions would you sign another contract? ONG ease se ae ee BU SON See A alin oe Ste eee 5 29 23 24 81 Get a major percentage of the crop__-_-.---.-1----2.-.---2- 3 47 26 10 11 94 LH ey Shr ta Ys SS Oo ee ES Se Oa Oe Se et 6 21 53 7 87 PAY UPlOMpay Olt SCONE 2 asset sae Soe ae ee en ED 413 2 0 2 7 IPOSSIexpensehe so -22! a ata 2 ee a eee aie ee 0 0 0 3 3 HP NLOLeO ee iCONUTa Ch ose ote tie ee ee meee 0 0 0 3 3 1 BG) FN MSS eR Stat pay Cpe STD te TPN AN OE RIS Nae ee ee era 61 78 86 50 275 1 Because of certain local conditions at the time this survey was taken, 10 replies from association 2 on question 1 were not used. 2 Six of these added: ‘‘If a certain percentage sign contract.”’ 3 These answered: ‘‘ When the signatures already obtained represent 75 to 100 per cent ( three answered ‘above 90 per cent’) of the crop.” 4 When they may get a selling pool. WITHDRAWAL PRIVILEGE IN CONTRACT The associations included in this study employ marketing contracts that run for a period of years with no provision for withdrawal dur- ing the term of the contract. The members are therefore definitely obligated to deliver their crop to the association. To discover whether this feature of the contract was a source of dissatisfaction, the mem- bers were asked, “Do you think dissatisfied members should be allowed to withdraw from the association?” The replies are tabu- lated in Table 9. a MEMBERSHIP RELATIONS OF COOPERATIVE ASSOCIATIONS 13 TABLE 9.—Replies to questions regarding privilege of withdrawal from the association Members reporting Question and reply Association Total 1 | 12 Sih 4 Do you think that dissatisfied members should be allowed to with- | | draw from the association? Number| Number, Number Number| Number PR ee 2 SS A 0g ae ee 11 44 56 84 | 195 UD 3 os Se es ee a a) Sas ee eee 67 52 53 35 207 SeSTeaant Gr nO ANSWer:. 22 ee a el 21 12 13 | 14 60 eer ctebece rai 6 cn eee | 99 | 108] 122 | 133 | 462 If the contract permitted, would you withdraw? jp eee ei ee OR i Ra) ee i as (eae 24 36 71 INO? Se os ee or en ee 68 4e--222=- 61 | 87 | 213 od te en ny EPS 572 aes ee Oe 22 6 28 OS ae ee See ee eee Wa (tee-- 5 | 107 129} 312 1 The confusion existing in association 2 at the time of the survey made data on this question of little value for that territory. Slightly more than half of those who gave a definite answer did not favor granting permission to withdraw. Some interesting com- parisons are suggested by the variations between associations. Asso- ciation 1 showed a decided objection to permitting withdrawal, whereas association 4 showed about the same degree of belief in the withdrawal privilege. The former is a tobacco association and the latter a cotton association. The greater importance placed upon commodity control in the marketing of tobacco may be one reason for the opposite answers given by members of the two associations. _ The answers to the question, “ If the contract permitted, would you withdraw? ” (Table 9), are a further indication of whether members were satisfied with their organization. When these answers are compared with those to the question, * Would you be willing to sign a new contract?” (Table 8), it will be noted that the number who indicated that they would not sign a new contract is larger than the number who replied that they would withdraw from the association, if given the opportunity. When compared with the number who answered “ None” to the question, “ Under what conditions would you sign another contract?” (Table 8), a much closer correspond- ence is found, indicating that some who would like to withdraw are unwilling to sign another membership contract under any conditions. An appreciable proportion of those who expressed dissatisfaction still believe strongly enough in the value of organization to remain as members, even though they were permitted to withdraw. It seems reasonable to infer that some who express an intention not to sign a new contract may do so when the time for decision arrives, especially if they feel that some of the causes of their dissatisfaction have been removed. 14 DEPARTMENT CIRCULAR 407, U. S. DEPT. OF AGRICULTURE SOME SOURCES OF DISSATISFACTION The question, “ What is your most important criticism of the asso- ciation?” was asked. The object of this question was to note the causes of dissatisfaction which the criticism would reveal. As shown in Table 10, a wide variety of answers were received. TABLE 10.—Replies to question, “What is your most important criticism of the association? ” Members reporting Reply Association Total 1 | 2 | 3 | 4 Number| Number| Number| Number| Number ANIC) wc ears eee te ee ae BIE ge ee PR Sa a Ie Spe oe ma 128 12 64 40 144 Delayed payments or too long getting money______.__.____-__-_- 21 12 i 18 58 ARoo“high salaries or expenseSe 2. Soc2 sek ee rees estes ee ecs ee 5 16 10 7 38 Holding the crop) onislowsSales=.ins ce eee ee BIA) Weer res ates Seed 9 21 The outsider or too small membership--__...._....-----.--_----- Siiecemes 12 2 22 DisloyvaltiyxOtsmMenl DORs lipo see eee eee eee eee 4 Sol. Jo 2eet al epee 12 Too lax in enforcement of penalties for contract violations______ Biase aed ae 10 13 Managerior- the managements. 2-222 2s a ee ee 24 | aoe see 8 3 CS fe K OD a cage Aa el ae ta BE eS Te eee tint Rt BO ol he eee | Joe eet | See 3 Overproduction or spreading of territory__.....__....---___-___- Diets DERE gee roe os) | Ri fe a a 3 Can not borrow on participation receipts. -_-._...._---__-__-_- + Aah mes neo NES RP LEE tS 2 Seerecysor, lack-ofinformation: 322.2 2s ee a ee eae eS Peg treme) ER Mn 3 Otheransw eres eo SAS oh ee ee A 5 22 19 28 74 INGIANSWeIISIVeN See) ne ee eck ee ee ee eM ee gee 5 11 11 10 37 Ut BY) eS ee Rh eS Ee eRe a eee Le 99 108 123 182 462 1 Six of these stated in answer to the question regarding the signing of a new contract that they would not be willing to sign a new contract unless the outsider did. The most important single object or criticism was the delay in payments, arising from pooling the commodity. The belief that salaries or expenses were too high was expressed by a number, particularly in associations 2 and 8. Association 2 had been ex- periencing some difficulties in management, and this condition was reflected in criticism of the management by a number of members. Association 4 had not always followed a well-defined policy of contract enforcement, and several of its members criticized it on that account. Among the replies grouped under the heading “ Other answers ” were such expressions as, “‘ misrepresented some things,” “ not demo- cratic;” “ought to be more open and frank with the members,” “wrong men employed,” “uncertainty and doubt as to what I’ll get,” “management knows nothing about selling cotton,” and “ direc- tors not equal to the job.” Such general statements suggest the importance of keeping members fully informed and making them feel that they are a definite part of the organization. Some of those who had no criticism probably were merely in the position of not having any specific point in mind at the time. METHOD OF PAYMENT Because of the importance to members of the method of payment employed by the association, the questions, “Does the method of MEMBERSHIP RELATIONS OF COOPERATIVE ASSOCIATIONS 15 payment handicap you in any way?” and “If so, how?” were asked. The reples are shown in Table 11. One-third of those interviewed indicated that they were handicapped by the method of payment, and the principal explanation was that they needed the money. TABLE 11.—Replies to questions on effect of method of payment Members reporting Question and reply Association Total 1 | 2 3 | 4 | Does the method of payment handicap you? | usmber| Nu mber| Number| Number| Number ts ee ee a SET See Lie ae | ZB 4. » BB. wan nih 154 rin Ee: Seg eee Or een © | lee ee eee 50 52 79 $2 263 / le a 6 RS Bn FORE a eee 9 | 7 5 | 4 45 eee eet) fg we ae eer ee ee 462 If so, how? | ot Bares. mech Splcaion + 2) 208s 2 oe | 4 ju a prayer Tey. 28 19 23 OU PIEIOA de. Puget ee Se 31 18 18 19 86 Haveae, GOLrowemonGeyr:—. f 8e E s Bae NTs 7 4 vf 18 Like to have all my money at one time_.____--_-_.--___._- seee---- 3 i ee a 7 . =<. ooo arent Se; (plait Sete | SS CONTRACT VIOLATIONS The persons interviewed were asked, “If any of your neighbors do not deliver to the association, what reason do they give for not delivering?” with the results shown in Table 12. The answers to this question bear out the important part played by delayed pay- ments. The need or wish for prompt payment was far in the lead among causes for violation. TABLE 12.—Replies to questions regarding deliveries and contract violations Members reporting Question and reply Association | Total 1 2 3 | 4 | If any of your neightors do not deliver to the association, what reason do they give for not delivering? Number| Number) Number| Number| Number Need or want more money at once__.=_..__-___-__--_.--.-2 32 40 27 76 175 Get nigre smmoney outside +7 8 78st 1d REREAD te 2 33 3 8 46 Dont know, or have not. heard==_+.,..+.22....<.cte..t2 Dp BssSete 10 25 38 CEIPMOL ASIST rete aay, MR ony Ree epee El / fi aa ees GOUe 22 aes 76 Can not wait two years for money_-2_____-_-_--_____-....--. Bete ST | Dew 2 Mobs. 7. Oz 90 oil OF MOUTBIOO[cS J. 46 73/ 109| 109| 337 Do you think a member is ever justified in selling outside the as- sociation? | Cee 2 ee oe iS ee ee =" 300) tai aes 425 DACP SE gr 00 ee eee ES SS ae eee on 7 ES. 7 12 a ee a ae ee oe 83 | 102 | 122 130 | 437 Have you any criticism of the way in which directors have been elected in the past? TEC ee ee ae oe OS Cee 2 en See 73 97 Gyo 286 ancrmmmwens. £25 475 Sah eae ee re ae NS 6 Safi satis (ested SPS coed 8 Tc Sas eli ll oS ef rok Pi | 79 | 99 | 116 — 294 i The variation between associations probably is due largely to dif- ferences between the size of territories included in director districts. It may be due in part to differences in the prominence of directors in other activities or to differences in the extent to which they person- ally have attempted to carry on field service work. Rephes to the next questions, “ What do you think of his ability?” and “ What do you think of his honesty and integrity? ” are also listed in Table 16. Members in associations 1, 2, and 3 were asked if they had any criticisms of the way in which directors had been elected in the past. The replies show very little criticism on these grounds. ~ SALARIES PAID The salaries and other expenses of marketing associations are fre- quently the basis of criticism. To discover whether members knew the amount of the salary of the manager, they were asked the salary of the manager. (Table 17.) A little more than one-third of the members interviewed knew the salary paid the manager. Note should be made of the variation between associations. In association 1 almost three-fourths of the members were able to give the mana- ger’s salary, or approximate it closely, while in association 8 only about one-seventh knew the amount. 20 DEPARTMENT CIRCULAR 407, U. S. DEPT. OF AGRICULTURE TABLE 17.—Replies to questions regarding manager's salary Members reporting Question and reply Association Total 1 | 2 3 4 : a See feet ee M1) cess Op Se pe | What is the manager’s salary? Number, Number| Number| Number| Number DOR GK O Wi hes a Rn ir Wee ML eae a eS Coa 54 102 75 250 Naming a definite figure, correct or nearly correct___------- 55 21 16 42 134 BRO Learn ere ee een a ee eee tis See LE Ae eee 74 75 118 117 384 What salary do you think justified for the manager? | OMAGH OW a seas cee geile Dane ess ee eh 15 31 61 57 164 ABP OOUUSALE I yaaa see ai eee SON eens wee ee 15 9 0 een es ee 35 Dependsionwmanager,siapilityss op san 11 12 14 113 50 Dependsjonttihesvolume of MuSinesse sss. ee ee es eee 6 cS Ee Sane 6 Naming a definite figure, approximating present salary--__- 14 30 26 29 99 A definite figure, about one-half of present salary___-__---- LOW eeo See 9 12 31 ERO USL ieee EN SS a en Fa as eee 2 oe a 65 88 121 111 385 1 “Knough to get a good manager.”’ Replies to the question “ What salary do you think justified for the manager?” do not indicate that clear-cut ideas are held generally by the members regarding the proper salary for their manager. OPERATING EXPENSES To discover how well-informed members were regarding expenses, the question “ What is the cost of marketing (cotton per bale and tobacco per 100 pounds) through the association?” was asked. The distribution of answers is shown in Table 18. Almost half of the members interviewed had no definite idea of expenses. The lack of information on this point was particularly striking in the case of association 3. : TABLE 18.—Replies to question, “What is the cost of marketing cotton and tobacco through the association? ”’ Members reporting Tobacco asso- | Cotton associ- Total Reply ciation ation | Number) Number| Number, Number| Number OTRO Wis aie srt 2S aan ee Pe een ee 39 47 96 19 201 essithan: $lper: 100 pounds® = at ae ee ee ia | ee 6 SistorS2eper 100) pomnds= setae. Lee Ss ee Eee eae 23 iB i ieee ee SS ae 28 $2; tos3rper LOOmoundSs 2. eae a ee es Oe saa 1 pA a ee ee) EP Bese 3 $3: tors4sper 100) pounds: fot a eae Ree es See EEE 4 Ay te See ee eee 8 $3 ta$4. per bale 2-6. 2. oe ee eh) By ea ee eg ech Yd eee 14 32 46 SATO S5.DOr DAG cae on re ee ae Sea a] keg eae 4 50 54 To ascertain the member’s attitude regarding expenses, he was asked, “ What is your opinion of the cost of marketing through the association?” and “ What expense, if any, do you think the associa- tion could profitably eliminate?” Table 19 shows the tabulated MEMBERSHIP RELATIONS OF COOPERATIVE ASSOCIATIONS 2] answers. No general agreement on possible reductions is evidenced, in fact the majority of those interviewed evidently had no com- plaints as to marketing costs. Association 4 showed a considerable number who believed that a saving could be made on field service doubtless because of local conditions within that organization. TABLE 19.—Replies to inquiries as to the members’ attitude regarding expenses Members reporting Question and reply Association i Total 1 | a ale -3 | 4 i What is your opinion of the cost of marketing through the asso- | __ t ciation? | Number Number Number| Number Number nis meetin So ts et Sees ee 35 | 19 | 52 | 63 | 169 vy RSS ee ee eee eee | 1 19 13 | 37 7 (Don ie Ge ee ee ee 5 ivl7 copes ot 6 23 7) PUy Ea Se See oe ee 41 50 | 65 106 262 What expense, if any, do you think the association could profitably | eliminate? | (Pipes ee ee ee ee ee eee ee | 15: score 2 10 16 41 See Tee ee ee ea te wen 3 2 31 36 Pros Bo ne re 19 21 37 28 105 mien salaries: (by reduetion) _- ==... =... =- -222=-L-=--==5.- 6 2 | 10 6 24 Unnecessary labor (employ fewer men) ---.-.-------------- 6 | 5 | 1 6 18 OOP EEG fy a eS i ee ee eS See See Se 9 seeeee e+ --------|--- +--+ g 2 77 Dao sae aes eae eee a | 55 31 | 60 | 87 | 233 LACK OF APPRECIATION OF MARKETING SERVICES The schedule included questions designed to bring out the mem- bers’ conception of the advantages and benefits resulting from mem- bership in the organization. The first of these questions, “ What are the principal benefits you have derived from selling your tobacco (or cotton) through the association?” gave a wide distribution of replies. (Table 20.) TaBLeE 20.—Replies showing appreciation of the marketing services of the association [This survey was begun in November, 1925, and completed in April, 1926] Members reporting Lar | ° > o> —_ Question and reply Association | hs, ij; tetiers et | | What are the principal benefits you have derived from selling your | | : tobacco (or cotton) through the association? | Number Number; Number Number Number Get more money than outside buyers would give_-_--_____- 52 ee 1g | 60 71 So BE: A add te ak ieee inet (oooh te sas 16 3 19 Prstortptiayr he tirig 5 =e ere. } ge 2. ee Re es re Ss tes ee C5 Lis she site 9 LEG? 2 GL/e | Sos ee ess eee ek ees ee es (ee eee fee SS 40 4 Get money at different times of the year___-_..._._.___.-_|_-_-.--_|__- » BAEte Ss 5 | 13 LES TEV Goro: | Ua: oe en ae fess 6 A ee = 14 een erste ature WOE Yo =. 8 ee er ew eee Tenet le gated 2 19 4) 25 Den} know,or den’t know yet2s2 -:3 28s eo | EEE TSE 8 22 ee eh 30 More money than if there were no association_-_........--- 43 i pe Se | 26 64 1 Part of the time. 2 Stabilized the price. 22 DEPARTMENT CIRCULAR 407, U. S. DEPT. OF AGRICULTURE TABLE 20.—Replies showing appreciation of the marketing services of the association—Continued Members reporting © Question and reply Association Total 1 2 3 4 | What are the principal benefits you have derived from selling your | tobacco (or cotton) through the association?—Continued. :Number| Number| Number) Number| Number BQH O UE RE et ie Ee Wn ns eae Beas es GUL ee 19 33 26 36 114 OPHeRANnS WeISH- — es face soe eee eet eee ee ee ae eS 26 13 12 12 63 INOS WORE tans ee eee bets ee cn eens 8 23 4 2 37 ANAL So Hed el orate Done Olas Stew, ak) Cee a tape ees | 99 109 123 132| 38463 What advantages have you as a member which nonmembers do not | have? Mi rbe erste sae tev Sie ae AR 2 ao aa cewek | 60 50 30 46 186 Selling on grade, insurance, and other marketing services--! 3 4 26 7 40 Getjmoremotiey=- oboe ee pe ee eeemeeee Se Ee Se eee 37 40 Get money at different timeslot they @arc2-- <2. sscee ene sae 7 eee eS eee 9 ll WWessttrouble=senase ae ee be re eee neo oe a De eee 10 12 24 1D) onzgikm Oweree. eee ae ey eee Eee ae eee eee bere 17 25 n= ss. 42 42 AV CHAE GsPTICOS= Sees sate een nate NE 2 eee Ae Sea ee 6 i ee 12 Better standing in the neighborhood__-_--_-.------__-_---_- QU) SAS ARH Oat ea Se ee 9 Getiadvanceland-wartito sells a-- aoe Se ee ee esau $9 8. | 8 Heeling of helping the causes <2. ==. 4220-22522 422-s2s=25> eh Ree AE Ee Oe, bo ee ee 4 Loan value on participation certificates__..........-.---_-- 2. ave on saben Rees ln eee’ 2 Production/‘eredit. 22802. EA 2 ees ea as ae ent Ay | SE . 4 Otherans wero. sees So es es ne aes 7 426 8 16 57 INIOMSHS WETS {2022 oo) 62 be ae eee Peso ad i 5 6 6 24 oD Of al Se ee reas ea eee ee eee 99 108 123 133 3 463 What advantages, if any, have nonmembers which you do not have? Belitardseetinioney,aLionces= 22a ea ee eee 66 53 5 72 43 234 Ridingatheassociaplony 0:2 = awe. ee tee ee eee 9 15 23 28 aD Better prices®