In 2021, the UW Center for Cooperatives (UWCC) launched the Cooperative Governance Research Initiative (CGRI) with the goal of generating robust data and insights about governance practices within and across U.S. cooperative sectors. The 2021 CGRI survey yielded responses from 500 cooperatives. Of those 500 cooperatives, 67 serve agricultural producers and have boards comprised of producer-members. Our latest CGRI report is the first to focus on a subset of respondents: ag co-ops.
Cooperatives within the agriculture sector are diverse—and their governance structures, processes, and cultures reflect this diversity. The report provides information on the practices and culture around governance that agricultural cooperative leaders and practitioners need. It also examines the relationships between governance and performance and begins to unpack the dimensions of governance that may impact long-term cooperative health. This document is not a “how to” manual; rather, it is a window into the broad spectrum of practices agricultural cooperatives are using.
Key Takeaways from the 2021 CGRI Ag Sector Findings
This is the first report to focus on a subset of CGRI respondents: those serving agricultural producers. Our findings suggest:
- Hybrid and secondary cooperatives tend to have greater age and gender diversity on their boards than primary cooperatives. Despite this, they feel less confident their board is representative of membership and are more likely to pursue goals related to board diversity in the next three years. There are opportunities to diversify cooperative boards to enhance member representation and potentially improve governance outcomes.
- Board compensation among agricultural cooperatives varies widely. While we found no evidence that correlates director compensation with cooperative performance, board compensation strategies should consider the impact on director recruitment and engagement, recognizing that cooperative members—particularly younger ones—have significant demands on their time.
- There is substantial variation in how agricultural cooperatives identify and recruit board members, including the use and composition of nominating committees. The use of a nominating committee structure is positively correlated with cooperative performance and delivering value to members.
- A strong link exists between board service limits and self-rated performance. Cooperatives without board service limits consistently rate their performance higher than those with service limits. Cooperatives should think carefully about the purpose of service limits and the trade-offs they create in other dimensions of governance.
- The majority of participating agricultural cooperatives do not conduct regular board evaluations. Applying this important practice can help improve board processes and culture.
- Agricultural cooperatives differ in their approach to agenda setting and meeting facilitation. Who sets the agenda and facilitates the meeting appears to influence how much time the board spends on strategy and other common board topics, and whether the right amount of time is spent on the appropriate topics.
- Agricultural cooperative boards that strike the right balance between supporting and challenging the CEO have higher levels of trust between the board and CEO. Cooperatives that allow for healthy dissent in the boardroom tend to rate themselves more favorably in the area of strategic growth.
- Member participation is a common challenge across cooperative sectors. Our interviews highlight that agricultural cooperatives with leaders who are committed to the cooperative model foster a culture of robust member engagement at all levels and value the critical role the board plays in the cooperative’s success.
Our report 2021 CGRI Ag Sector Findings offers an opportunity to understand the different ways agricultural cooperatives—large and small, new and old—structure their governance. It also examines the relationships between governance and performance and begins to unpack the dimensions of governance that may impact long-term cooperative health. Below are some examples of the types of findings in our report.
Age and Term Limits (Figure 17)
We found strong links between the use of board service limits and self-rated performance. These findings should not be used to suggest that boards with service limits are inherently disadvantaged or that any performance advantage directly results from not having service limits. Instead, they should prompt us to think critically about the role of service limits and the trade-offs they invoke.
Board Evaluations (Figure 21)
A quarter of participating ag co-ops evaluate the board annually. Cooperatives that evaluate their full board annually are more confident their board has the right mix of people to perform its governance duties effectively than those that evaluate their board every few years or not at all.
Board Agendas (Figure 24)
In 89 percent of responding ag co-ops, the CEO has sole, primary, or joint responsibility for agenda-setting, compared with 66 percent among all respondents. In 44 percent of ag co-ops, the CEO sets the agenda with board approval, whereas that occurs in just 21 percent of all responding co-ops.
Board Compensation (Figure 32)
The majority of participating ag co-ops (85 percent) compensate directors; however, annual compensation levels vary widely. While average compensation is higher in ag co-ops than respondents from other sectors, 89 percent pay their directors less than $20,000 per year.