Testimony in opposition of SB 281- The Organization and Operation of Cooperatives and Extension of Credits by Electric Cooperatives

I thank Chairperson LeMahieu and committee members for the opportunity to testify on Senate Bill 281, which alters Chapter 185 regarding the organization of cooperatives.

As an organic farmer and member of many cooperatives, I understand need and history of cooperatives for agricultural and rural communities. Cooperatives provide a crucial link between community members and access to markets like feed and livestock. These service organizations are guided by the principles of putting the welfare of their members first; not the bottom-line of the cooperative.

Earlier this year, our office requested a legislative council memo describing Senate Bill 281 and comparing the bill with certain provisions of current law. The memo clarified the concerns I had about this bill. 

Currently, Wisconsin law provides a broad framework base upon fundamental cooperative principles. This framework allows cooperatives flexibility to establish unique organizational structures based on their needs.

The bill before this committee goes too far and makes changes in the section of the law related to cooperatives that does not keep line with basic cooperative principles. For instance, the bill allows outside directors to have the same voting rights as member directors, which violates the principle of “the farmer as the company.” The bill does not allow cooperative members to look at financial records over three years old, again, violating the principle of “the farmer as the company.”

Furthermore, Senate Bill 281 allows a cooperative member’s voting power to be based on a member’s current or recent patronage activity, which violates the principle of “one member, one vote.” This change could potentially open the door for cooperatives to treat members differently based upon the size of their farm operations. 

Under current law, any dividend on a cooperative stock is prohibited from exceeding 8% per year. Under this bill, cooperatives are allowed to issue stock with more than an 8% rate of return. Cooperatives are in the business of serving the needs of its members, not providing large dividends to cooperative stock holders.

I am supportive of changes to allow electric companies to assist consumers with small loans to replace aging power poles and energy efficiency equipment.   

Overall, after meeting with constituents and analyzing the bill language, I do not believe that parts of Senate Bill 281 have the welfare of cooperative members at heart. The process by which these changes came about was not conducted in a manner that included all or a majority of organizations with cooperative members; nor was the information about what this bill accomplishes fully shared with members of the Assembly and Senate who chose to join as co-sponsors.

If a cooperative wants to become a corporation, put that issue to a member vote. Chapter 185 exists for a reason: to protect a cooperative business model—let’s keep it that way.

I urge you to vote against Senate Bill 281 in its current form. Thank you.