Election and voting policies
of agricultural cooperatives


By Bruce J. Reynolds,
Economist
USDA Rural Development/RBS
bruce.reynolds@usda.gov

Editor’s note: This article is the second in a
three-part series on selecting and compensating
directors. The first article discussed
methods cooperatives use to select and
nominate board candidates (see page 21
of the November-December 2003 issue,
on line at: www.rurdev.usda.gov/rbs/pub/
openmag.htm.). This second article examines
election and member voting policies.


he critical trade-off in cooperative voting policies is the need to establish sufficient voice for members in electing their directors, while at the same time providing for a certain amount of board independence from disruptive member pressures. Election and voting policies are designed to choose directors who will exercise leadership in reconciling member interests and prioritizing goals that will yield the most long-term benefits for membership as a whole.

Survey results of election and voting policies show different ways that cooperatives have sought to establish leadership that both represents members and achieves business success. The following six policies influence this balance: Many of these policies have various kinds of interrelations. For example, in the first policy issue, the number of board seats is influenced by the size of the membership. As another example, cooperatives with the longest director terms more often apply limits on the number of times a director can be reelected. In addition, the much-debated issue of member voting power centers on whether larger producers should have more votes than provided by a one member-one vote policy. This point was raised in an article about preparing for the future in the Nov-Dec 2003 Rural Cooperatives. A question for research is whether voting method influences a tendency for either relatively large or small farmers to serve on cooperative boards of directors. To help answer this question, data were collected on the farm size of directors in relation to the membership as a whole.


Board size
Table 1 reports the number of director seats on cooperative boards, sorted by different membership size intervals. Seven-member boards are the most popular board size, with nine and five-member boards being the next most popular sizes. Only in the largest membership size interval, 3,000 and above, are nine directors the most frequent board size (occurring in 16 out of 80 cooperatives).

As membership size increases, so does the frequency of boards with more than nine directors (see column >9, table 1). For boards that exceed nine directors, no particular board size predominates, being widely dispersed in the range from 10 to 51 directors. But the fact that nine directors is the median for co-ops with 1,500 or more members shows that large organizations also tend to restrain the size of their boards.

Table 2 reports the data for survey respondents that have only at-large directors (no districts), and for those with districts. There were 145 respondents without districts and 292 with districts. The latter generally have larger boards, with a much higher percent having more than nine directors, while 48 percent of cooperatives without districts have a board size of 7 directors. Another distinction, though not reported in Table 2, is cooperatives with membership districts where members, or delegates, elect only the director for their district (and perhaps one or two at-large directors), vs. those where directors are elected by district, but all members get to vote for all directors, regardless of which district they live in.

Term lengths
Length of board terms varied between one to seven years, with three years being the overwhelmingly popular choice. The survey results for this question are reported in table 3. The seven cooperatives with seven-year terms are all in Tennessee, suggesting that at the time these cooperatives organized there, the state incorporation statute may have specified that particular term length.

Term limits
Limits on the number of consecutive times directors can serve (term limits) are used by 154 cooperatives (35 percent), while 281 (65 percent) have no limits on consecutive terms (based on 435 responses). Term limits are now more frequent than in the past, as indicated by comparison with the 1949 survey. 1 In that survey, 76 cooperatives (8 percent) had term limits, while 827 cooperatives (92 percent) let incumbents run for election to board seats for an unlimited number of terms.

Furthermore, out of 31 respondents with term lengths of one or two years (those in the first two columns of table 3), none have term limits. This seems only practical, since the incumbents have to run for election so frequently. Three of the seven respondents having a seven-year term prohibit directors from running for a second term, but the other four have no term limits.

Of the 154 cooperatives reporting the use of term limits, 149 also reported the maximum number of consecutive terms directors may serve. Four of these respondents prohibit election to consecutive board terms, i.e., a oneterm limit. Table 4 reports the number of respondents with term limits. In each of six instances where co-ops limit directors to five or six consecutive terms, the term length is three years. Many cooperatives allow members who have reached the limit on consecutive terms to run again after they have been off the board for one term.

Competitive elections
Many democratic organizations, including some cooperatives, have nominating committees that follow the recommendations of Robert’s Rules of Order in submitting only one candidate for each board vacancy.2 However, cooperatives have traditionally been advised to run more than one candidate per seat, usually by encouraging open and flexible processes for nominating candidates.3 About one-third (148) of respondent cooperatives require that at least two candidates run for each board seat.

There is no practical reason for nominating committees to limit their selection and nomination to one candidate per seat. Robert’s Rules have for more than a century been a useful procedural guide, but their applications ought to be flexible. The rules have influenced some organizations to adopt governance policies that might be impractical for many applied situations, as noted by one scholar.4

One survey respondent from a cooperative without an opposing candidate requirement commented that it still always has two candidates run for board seats. Ten other respondents commented that, although not required, they still make extra efforts to recruit second candidates, but do not always succeed.

Several respondents commented that two opposing candidates are preferable, but finding members to run for the board is difficult. Another respondent mentioned that the cooperative recently terminated the policy of having at least two opposing candidates because “members got tired of getting beat” when running against incumbents.

Outside directors
One of the traditional requirements for directors is that they are members of the cooperative. Various objectives can be accomplished by requiring cooperative boards to exclusively consist of members, with member control being especially important. Members can also establish control when a minority of non-members may serve on a board, so long as member directors can exercise a majority under all voting and decision rules where more than a simple majority might be required.

In this survey, 18 cooperatives reported having outside, or non-member, directors with the power to vote on decisions. Two of the 18 cooperatives define their outside board members as “public directors,” while 16 cooperatives select outsiders to serve from the general community of business leaders and professionals. Four of the 16 had more than one seat on their boards designated for outside directors.

Some respondents commented that their bylaws permit outside directors, but that they did not exercise that authority. Others said they were studying the use of outside directors. In surveys completed by co-op managers, several wrote that having one seat on the board designated for a non-member with special business or professional experience would be very helpful to management.

Farm size and voting method
Does a policy of one member-one vote result in disproportionate influence by relatively small farmers? This question can only be answered on a case-by-case basis, but the composition of boards in terms of relative farm size is worth a look. The survey results show the extent to which boards are made up of the largest farmers in a cooperative’s membership. There are no presumed advantages or disadvantages of directors having either large or small farms. Of course, the critical distinction is differences in patronage volume, and farm size is only an approximation. But above all, electing the best directors possible is the key task.

The issue of member voting power is often debated under the assumption that the one member-one vote procedure results in boards with under-representation for large farm operators (large volume patrons). Some argue that proportional voting corrects such imbalance, and feel that this method is used too infrequently. Out of the 379 survey responses on the relative farm size of directors, only 27 have proportional voting.

Table 5 reports the percent of directors in the four quartiles (the smallest 25% of members are in the 1st quartile). The percent of directors in the largest and smallest halves for cooperatives with proportional voting and for those with one member-one vote are also reported in table 5. Even though the size of the two comparative groups is lopsided, it shows that proportional voting resulted in more of the larger producers being elected to boards of directors. The 4th quartile of farm operators by size held 37% of the board seats in 27 proportional voting cooperatives, in contrast to 26% in the 352 one member-one vote cooperatives. Still, most one member-one vote cooperatives also prefer to elect directors from among the relatively largest farmers in their membership. About 63% of one member-one vote cooperatives elect directors who are among the largest half of farm operating size in the membership.

Policy by design
Designing policies for board elections and member voting can be a simple matter of adopting commonly reported practices or implementing the recommendations from manuals such as Robert’s Rules. It can also be more demanding when members take it upon themselves to design a system that reflects their values and, more specifically, try to balance attributes that while creating some friction, can induce more pressures for superior leadership. Election and voting policies usually try to offer members good choices and enough influence from voting so that elected directors will represent their interests. But an equally important trade-off is to have a board that can pursue independent deliberation, and not simply deliver mandates from their supporters or districts.

Another trade-off, discussed in the article on selecting candidates, involves the importance of election and voting policies that support the development of strong team-building on the board. Yet, brought to an extreme, a cohesive team can be complacent and unreceptive to new ideas that challenge the status quo.

Election and voting policies used most frequently are not necessarily the best. That evaluation has to be made in the context of each individual organization. When members are involved with designing or revising their policies, a fresh and creative approach can make the difference between the merely functional and the achievement of excellence in the governance of cooperatives.

  1. Nelda Griffen, H. N. Weigandt and K. B. Gardner, Selecting and Electing Directors of Farmers’ Cooperatives. USDA/Farmer Cooperative Service, General Report #14, 1955.
  2. Henry M. Robert III, et al, Robert’s Rules of Order. 10th edition, 2000, (1st edition, 1876) p. 419.
  3. Helim H. Hulbert, David Volkin, and Nelda Griffen, Bylaw Provisions for Selecting Directors of Major Regional Farmer Cooperatives. USDA/Farmer Cooperative Service, General Report # 78, 1960, p. 12-13.
  4. Russell Hardin, Liberalism, Constitutionalism, and Democracy. Oxford University Press, 1999, p. 110.















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