Patronage 101

Patronage dividends are those distributions of profits paid by cooperatives, like West Central Ag Services (WCAS), to their members. The dividends are paid based on a portion of WCAS’ profits, and distributed back to the owner members proportionate to the volume of business they do with the coop. Below is an outline of our guidelines as defined in our by-laws. In the event of any discrepancies, our by-laws are the ruling document.

At WCAS, our by-laws state that to be a member you must meet the following criteria:

1) Must be a producer of ag products
2) Must conduct a minimum of $10,000 worth of business (both sale of commodities, and the purchase of agronomy inputs must equal or exceed this level)

It is possible to be a member one year, and not the next if you do not meet the minimum business threshold.

What products are eligible:
         Sales Items:
                   Chemicals
                   Seed
                   Fertilizer
                  Nutritionals
                  Agronomy Services

        Grain Sales to the elevator:
                  Commodity Based: Corn, Soybeans, Winter Wheat and Spring Wheat
                  Service Based: Drying, Storage, Cleaning

Local vs Regional Stock:
CHS
-CHS is a cooperative in which WCAS is a member and therefore WCAS earns patronage from CHS based on our business volumes.
-This patronage is then passed onto our members during our regular, annual patronage allocation (typically in March).

Local
-Local patronage is earned solely based on your business activity with WCAS.

Patronage Allocations:
- These are done annually (typically March) and are based on the profitability of WCAS, and the volume of business by the member, these numbers are determined annually.
- Distributions have been 35% Cash, and 65% deferred. Please note, the full allocation is stated on box 1 of your form 1099-PATR.

Reassignments and Transfers:
WCAS does allow for the transfer or reassignment of equity, however these requests must be done in writing, and may be subject to board approval. It is the responsibility of the parties involved (other than WCAS) to determine if the transfer constitutes a taxable event, and to report that information accordingly.

Retirements:
Retirements: Members may request a one-time distribution for each of the following:
Age 72: Members may request a payout of their accumulated CHS/Regional Equity
Age 75: Members my request a full payout of All accumulated equity, Local and Regional
Estate: Upon the death of a member the family may request a full payout of all equity.
Discretionary: WCAS, for the past number of years, has also paid out a discretionary equity distribution of local equity. This discretionary payout is determined by the board of directors on an annual basis. Historically, the discretionary payout, combined with the estates and age retirements has totaled 10% of the 12-31-XX local equity balance, this is a practice WCAS hopes to continue for years to come.