United StatesDepartment ofAgriculture Sample PoliciesAgricultural$~Vy~ative

for Cooperatives

CooperativeInformationReport 39

Policies for CooperativesCompiled by Galen RappCooperative Information Report 39

May 1990Reviewed and approved for reprinting May 1993.

Preface

The overall objective of this publication is to providedirectors and managers of farmer cooperatives with guide-lines for writing, adopting, and implementing policies.Three broad classes of policies are presented-board, man-agement, and personnel.

Policies reflect the philosophy of the cooperativewhether they are orally implied “because we have alwaysdone it that way” or a formal set of policies researched,skillfully written, adopted by board action, and communi-cated to all who are to work within their guidelines.

Written policy is important to all cooperatives. Ascooperatives mature and longtime directors and employeesretire, many oral and implied policies are lost.Cooperatives in the process of organizing or emerging willfind a set of written policies a guideline for making routineand recurring decisions. In both cases, policies help coop-eratives attain established goals and objectives

Contents

Why Write Policy? .......................................................... . lPolicy Responsibility .................................................. 1Policy Characteristics ................................................. 2Mechanics of Writing Policy ...................................... .3

Guidelines for Writing, Implementingand Evaluating Policies .............................................. 4

Sample Policies ............................................................... 5Board and Manager Functions .................................... 7

Annual Policy Review and Revision ...................... 7Authority ................................................................. 7Board’s Duty to Follow Legal Documents .............. .7Board Meeting Procedure ........................................ 7Board Meeting Minutes .......................................... .8Board Supervision of Manager ................................ 9Board’s Use of Outside Consultants ....................... .9Conflict of Interest .................................................. 9Confidentiality ...................................................... 10Credit to Directors ................................................. 10Director Training and Certification ....................... 10Insurance and Bonds ............................................ .10Manager’s Role in Board Meetings ........................ 11Manager’s Responsibility ..................................... .llResolutions .......................................................... ..ll

Membership Relations .............................................. 12Communications .................................................. .12Purchase of Common Shares of Stock ................... 12

Organization ............................................................ ..13Classification of Employees .................................. 13Counseling ........................................................... .13Employee Performance Appraisal ......................... 13Employment of Relatives ...................................... 13Holidays Observed ................................................ 14Hours of Operations .............................................. 14Jury Duty ............................................................... 15Line of Authority .................................................. 15Pay Periods and Pay Checks ................................. 15Performance Evaluation ....................................... .16Personnel Records ................................................. 16Substitution or Replacement of Paychecks .......... .17

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Supervision .,.........,............,......................,..,........17Wage and Salary Plan Adjustment . . . . . . . . . . . . . . . . . . . . . . . . 17

Public Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Community Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Political Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Finances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Annual Financial Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Annual Operating Budget ..,..................................19Borrowing Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Credit Policy ,,,,..........,.,,.............,,,,,.....................20Handling Delinquent Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21Director Per Diem, Mileage, and Travel

Expense . . ..*...............................,.........................21Donations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Employee Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Employee Travel and Entertainment

Allowance ,,,.......,..................,..,.,.,.....................22Expenditures for Facilities, Machinery,

and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Expenditures for Supplies and Services . . . . . . . . . . . . . . . 23Expressions of Sympathy ..,.......................*......*...24Redemption of Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Travel Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Sales/Marketing/Productions ,,,,...............................26Grain Marketing and Hedging ..,,.............,.,,,,........ 26Inventory ..,............,.......,,,,,,..................................27Marketing ,........,,.,........,,,,,,,..................................27Merchandise To Be Handled . . . . . . . ..*.*..................... 28Producer Payments .,,,,,,,,.........*...,,,.............*. . . . . . . . 28Purchasing Policy ..,,,,,,,,................,,,..................... 28Operation of Association Vehicles ,,,,,,,,.....,.......... 28Reporting Injuries and Property Damage . . . . . . . . . . . ...29Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Employee Relations ..,...............................................30Application Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Attendance and Punctuality ,,.,,,,..........................30

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Conduct ................................................................. 30Discrimination ..................................................... .32Employee Gifts ...................................................... 31Employee Meetings ............................................... 31Employee Orientation ........................................... 32Employee Purchases ..............................................3 2Employee Training ................................................ 32Funeral Leave ........................................................3 3Group Insurance .................................................... 33Holidays ................................................................ 34Hours of Work ....................................................... 34Just Cause for Termination of Employment ........ ..3 5Maternity Leave .................................................... 35Military Leave ....................................................... 36Outside Employment .......................................... ..3 6Persons Eligible for Employment .......................... 36Physical Examination ............................................ 37Promotion .............................................................. 37Probationary Period .............................................. 37Rehire of Former Employees ............................... ..3 8Retirement Plan ..................................................... 38Selection of New Employees ................................. 38Sick Leave ............................................................. 38Termination ........................................................... 39Vacation ................................................................. 4 0Work Breaks .......................................................... 41Work Clothing ....................................................... 41Workmen’s Compensation Insurance ................... .42

Board/Manager Relations ......................................... 42Board of Directors-General Manager

Relationship ....................................................... 42

Statement of Objectives ............................................ 44Overall Objectives of the Cooperative ................. .44Specific Objectives of the Cooperative ................ .45

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Sample Policies for Cooperatives

Galen RappACS Cooperative Education Specialist

Policy Defined-A policy is Q statement that providesguidelines for actions to attain the established objectivesof the cooperative and reflect the cooperative’s basic phi-losophy.

Why Write Policy?

Policies give direction to plans. They are a road mapmanagement can follow to reach goals and attain objec-tives. Well written policy facilitates delegation of authorityto the lowest feasible level in the cooperative. Written poli-cy statements must be a major ingredient of each coopera-tive’s planning activity. These policies should reflect thecooperative’s basic philosophy and serve as guidelines foractions the cooperative takes to attain its established objec-tives.

Before determining policy, objectives must be defined.Objectives should be clearly stated in writing so that poli-cies can be consistent. A cooperative might declare itself ina written objective to be “a nonprofit, member-owned, andmember-controlled enterprise established to provide mar-keting services and products to improve the economic con-dition of its members.” Policymaking becomes the meansfor achieving this objective.

Policy Responsibility

It is the duty and responsibility of the board to origi-nate and approve broad and general policy. The directorsshould approve specific operating policies recommendedby management. In a developing cooperative, the directorsmay have the responsibility to all make policy decisionsthat affect the well-being of the cooperative. The section,“How to Use Sample Policy Handbook,” details policywrit-ing procedure.

Policy Characteristics

Policies can be broad and general or detailed and spe-cific. Broad policies leave room for interpretations and theexercise of judgment and initiative. Specific policiesrequire predetermined conduct.

Policy should deal with a recognized need. It is theresult of careful thought and research; deals with practicaland specific matters: does not conflict with other coopera-tive policies: deals with recurring situations: clearly indi-cates the conditions, to whom, and to what extent itapplies; specifies who is responsible for applying it; andmust be concise, legal, and not in conflict with the cooper-ative’s articles of incorporation and bylaws.

Policies are not all of equal importance. Some policiesare of such significance they determine the character of thebusiness. Others are limited in scope and could be changedor eliminated without effect.

Compare the significance of these two policies. Onestates a producer will be guaranteed the sale of all productsdelivered regardless of quantity or quality while anotherpermits a Is-minute coffee break for all employees in boththe morning and afternoon. The coffee break is importantto employees, but if eliminated would not affect the goalsand objectives of the cooperative. Determining whether acooperative will guarantee sale of members’ products ormerely making every effort to move all products, or onlyhandle products of certain sizes or quality, affects the verycharacter of the business.

Some fundamental policy, such as a requirement toreturn margins to members on a patronage basis will usual-ly be placed in a cooperative’s bylaws. However, separatewritten policies adopted by the board and placed in a poli-cy handbook, are more appropriate than a bylaw for han-dling most issues. Board policies require less formality foradoption. They can be changed easier if unanticipatedproblems occur. This avoids long, complicated bylaws thatmix essential rules critical to a cooperative’s success withsimply desirable business practices.

Policy covers broad or basic area of operations and are

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generally long-term commitments established by the board.Procedures implement policy. They cover routine pro-

cesses established by operations supervisors based onpolicy and may be changed on short notice. Policymakinggroups must resist making detailed rules or writing proce-dure.

Mechanics of Writing Policy

Every business, new or old, large or small, has poli-cies. Present policy may be written or oral. Some policiesare mandatory based on State and Federal statutes. Othersdefine and clarify the articles of incorporation, bylaws, oraccepted contractual agreements (membership documents,marketing contracts, leases, loan documents).

Precedent-the fact that “we’ve always done it thisway” is basis for policy, as long as it does not become theonly basis. Printed materials issued by the cooperativesuch as letters to the membership, advertisements aboutservices, price schedules, employee handbooks, contracts(marketing-purchasing-leases-loans), accounting records,consultants notes, invoices and sales tickets, are all legiti-mate sources of policy statements.

A careful review of the minutes or notes of a steeringcommittee and prior director meetings is a prime source forstatements of policy.

Research should be done on all these sources, materi-als compiled, and formalized statements of policy preparedso they will have meaning and be accepted by the member-ship and employees.

Few people will take the time to look through all theprimary sources for a guidance in decision making. Anyonecan be expected to look in a well-documented manual,properly indexed, that describes what they want to knowwhen the situation arises.

Policies may be drafted by a paid outside consultant.If an outside consultant is used, more time may be neededto interview all the directors and management to determinethe values each may have in a given policy area. Theassessment of values becomes more complex if the direc-

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tors express not only their values, but also try to reflect thevalues of the members.

A well-written and constructed policy mediates differ-ences between conflicting values. Use of an outside consul-tant takes time and costs money, but the approach to anygiven policy area may be more objective and less biasedthan an internally generated policy.

Policy style can either be simple or written with con-siderable explanation. Most policies are written in simpleform for ease in effective communication and implementa-tion. However, some may feel that written policy should bemore complex to be effective and thus leave room for mis-interpretation. If your board chooses this method, reviewthe BOARD/MANAGER RELATIONS sample policy onpages 42-44 as a guide.

Guidelines for Writing, Implementingand Evaluating Policies

l Identify--Cooperative leaders must select the gener-al areas to be covered by policy, such as the board andmanagement functions, organization, public relations,finances, sales/marketing/production, and employee rela-tions.

l Formulate-Ideas for changing current policy orintroducing new policy may come from the members,directors, management, employees, or paid consultants.

l Adopt-The board, after considering the various rec-ommendations, should agree on a final format that clearlyexplains all aspects of policy. Before finalization, obtainpolicy acceptance by getting opinions and reactions of allthose affected. A majority vote is needed for adoption.

l Distribute-Policy that has been identified, formu-lated, and adopted has no value unless all persons who areaffected by the policy know and accept its content. All pol-icy should be in written form, collected in a manual, classi-fied as to subject matter and distributed to persons con-cerned with administering them. Knowledge andacceptance help to ensure consistent application.4

l Implement-The manager is responsible for carryingout board policy by developing procedures to be followed,issuing instructions, and making sure concerned individu-als understand, accept, and observe adopted policies.

l Control-This is the board’s management job. It isthe board’s responsibility to determine if the manager iscarrying out the established policy. Periodic reports fromthe manager on aspects of the cooperative’s operation areneeded and not just at the end of the business year.

l Review and Evaluate-This is the job of the boardand management in judging the effect of any given policy.Evaluating how well policies worked is best determined bythe level of understanding and acceptance of the policiesby the entire organization,

Sample Policies

Sample policies is this publication are intended tooffer a smorgasbord of ideas for directors and managers toconsider in establishing and setting policies. Not all poli-cies exhibited may be relevant to your cooperative.

Every board and management team needs to tailor thespecific content of each policy to meet the needs of theircooperative.

A suggested procedure follows:

1. Management or a board committee or a combinationof both should research and compile a list of the presentpolicies now being followed. The topic or subject of eitherwritten or implied policies should be listed in their orderof importance to the cooperative based on the group’s judg-ment.

2. On an individual basis, each director and memberof the management team should review the sample policiesin this handbook and the list of current policies now ineffect as compiled by the group in step 1.

3. After appropriate study, and usually upon recom-mendation of management, the board should agree on thespecific policies needed.

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4. The chairperson should appoint a committee fromthe board and management to prepare a draft policy oneach topic accepted earlier by the board. Or the board mayinstruct management to draft policies from its list of recom-mended topics.

5. Policy drafts should be presented in a special boardmeeting. Each director and member of the managementteam must have the opportunity to make suggestions andrecommendations as to policy content.

6. A final draft of each policy should be written andinclude recommendations as accepted in the special boardpolicy session. This draft should be sent to each individualboard member and management staff for their extensivereview prior to final approval.

7. A second special board meeting should be held toread and discuss the proposed policies. If major revisionsare necessary, the draft should be referred back to the origi-nal committee. If major revisions are not necessary, theboard may adopt written policy by majority vote.

8. Adopted policy both new or revised must be signedby the board president and secretary, dated, and recordedin the board minutes. For the sake of brevity, the policymay be referenced by title or a numbering system in theminutes and the complete policy attached elsewhere.Revisions should be cross- referenced to the original policy.

9. Each director and management team member shallbe given a complete manual of all adopted policies. Theextent of distribution of policies to employees, membersand other interested parties is at the discretion of the direc-tors and management. An official updated policies manualshall be on file in the corporate offices of the association ormaintained by an elected official of the board.

10. Each policy should be reviewed annually by thecomplete board or a committee appointed by the chairper-son for that specific purpose. A majority vote of the boardis required to adopt policy additions and revisions.

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Board and Manager Functions

Annual Policy Review and RevisionEach year at the (month) board meeting, the board

president shall select a committee of (number) board mem-bers /and the manager/ to review all policies. The commit-tee shall report back to the board by the (month) boardmeeting with suggested revisions to all policies that shouldbe changed. All revisions and additions must be approvedby the full board.

(The following action dates and signature blockshould be used with each policy. To save space in this pub-lication, this part has been deleted from subsequent policyexamples.)

Date: I I

R e v i e w D a t e : I I .

Attested:Secretary

AuthorityManagement is authorized by the board of directors to

take whatever actions are necessary to conduct the busi-ness of the cooperative, including operations, control of allexpenses, and membership activities within the frameworkof policies established by the board.

Board’s Duty to Follow Legal DocumentsThe articles and bylaws in conjunction with the mem-

bership agreement and other contracts with members of thecooperative form the basis under which the cooperativeoperates. As a result, each board member is responsible forreading and understanding the basic tenants of all legaldocuments and of ensuring that the board of directors as awhole follow any requirements they contain for either theboard or the cooperative.

Board Meeting ProcedureBoard meetings are important and should be conduct-

ed in a businesslike manner. This is where plans and poli-

ties are made, operations reviewed, and decisions reachedfor the guidance of management.

Discussions should be full, but limited to the businessat hand. A program or agenda (except for emergency items)for the meeting shall be prepared in advance by the boardpresident and mailed to board members at least (number)days before the meeting date. A suggested outline for aboard meeting is:

l Meeting shall be called to order within (number)minutes of the time stated in the board meeting notice. If aquorum is not present, the president shall determine analternate date and time.

l Read minutes of previous meeting.l Reports of standing and special committees.l Management operational reports, balance sheet,

operating statement and budget comparisons.l Unfinished business.l Read important correspondence of which the board

should be advised.l Discuss plans for improvement of the business.l New business.l Adjournment.

Board Meeting Minutes

Board minutes constitute an important legal and his-torical record of the policies and business activities of thecooperative.

They are a valuable record for the guidance of managc-ment about policy actions and directives. They also pro-vide a source of information for board meetings and actionsto be reported at the annual meeting.

Promptly after each board meeting the minutes shallbe written in permanent form and placed on file at thecooperative’s office by the board secretary. The minutesshall include:

l Date, place, and time of meeting.l A record of the people who attended the meeting

and directors who were absent.l A brief statement of all matters pertaining to the

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business of the cooperative during the meeting.l All motions, resolutions, and votes by the board. If a

roll call vote is taken each individual response shall berecorded.

l Highlights of the manager’s report, such as volumeof sales, expenses, earnings,

l Signature of the board secretary and president.The handwritten copy of the minutes taken at the

board meeting should be submitted to (Title of Person) fortyping within [number] days after the regularly scheduledmeeting.

Board Supervision of Manager

The board of directors shall have absolute authorityand responsibility to select the manager, negotiate the man-ager’s salary, develop and revise the manager’s job descrip-tion, assign duties to the manager, and terminate employ-ment in cases where the manager is not performing to theboard’s standards.

Board’s Use of Outside Consultants

The board is responsible, with the consultation of themanager, for hiring such outside consultants as may be nec-essary to operate the business in an appropriate manner.These consultants may include, but are not limited toaccountants, lawyers, and engineers.

Conflict of Interest

No director shall engage in any business or serviceactivity that will place themselves in direct competitionwith any business unit or service offered by the coopera-tive.

If upon review of the board, any director is in thebounds of this conflict of interest policy, they shall beasked to resign.

(Failure to resign shall result in action as provided bythe bylaws of the cooperative.)

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Confidentiality

A director may not disclose information obtained byvirtue of his or her position as director before such infor-mation is made available to all members at the direction ofthe board, nor provide such information to selected per-sons under circumstances giving business or other advan-tage to the director or other persons.

Credit to Directors

The cooperative shall not extend credit to any directoron any terms or in any amounts not available to any othermember of the cooperative.

Directors will receive no price advantage over thatavailable to other members.

Director 7kaining and Certification

Recognizing their individual and joint responsibilitiesfor the overall economic functions of the cooperative, eachdirector shall:

Attend at least one training function in the area ofmanagement or finance annually.

0 Participate in at least one area or regional coopera-tive meeting.

Receive a certificate of completion for a basic direc-tor training program within a 3-year time limit.

Failure to participate in management and financialtraining programs for cooperative directors could result inrequested resignation by the board president.

Insurance and Bonds

The general manager/board committee/ shall deter-mine through annual review if all phases of the businessare adequately protected by insurance and bond coverage,and report findings to the full board as soon as possibleafter the review. The board shall ensure that actions aretaken to correct any deficiencies.

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Insurance and bond coverage shall be purchased froma cooperative insurance company if rates are competitive.

Manager’s Role in Board Meetings

The manager shall attend all board meetings and pre-sent a manager’s report and (monthly, quarterly) financialreview.

Financial statements shall include but are not limitedto:

Statement of Operations with budget comparisons Balance Sheet with comparison to past fiscal year Aging of all accounts receivable Summary of delinquent accounts Market position including forward sales and contracts Position of Commodity Options used in hedging.

Manager’s Responsibility

Management is responsible for the day-to-day opera-tion of the cooperative. This includes hiring all employeesand handling all matters regarding personnel.

The manager shall give to the board periodical com-parisons regarding the financial condition of the coopera-tive and volume of business. This may be expanded toindicate exactly which reports are to be made and howoften, ie., budget/previous month/previous year.

The manager should be prepared to discuss items on theagenda and other issues expected to come up at the meeting.

The manager should also bring up matters he/she feelsneed board attention or discussion.

Proposals for board action shall contain sufficientinformation for board members to make informed decisions

Resolutions

All resolutions offered to any general assembly of thiscooperative must be submitted to the resolution committeeand approved by the board by a majority vote prior to pre-sentation or publication.

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Resolutions that have any political activity implica-tions or suggest support of political candidates or specificlegislation at the local, State, or National level may not bepublished or presented to any general assembly of thiscooperative.

Resolutions for specific recognition to any member,director, manager, employee, or patron may be offered fromthe floor of the general assembly.

All resolutions offered either in print or verbally musthave prior approval of the board president.

Membership Relations

Communications

The board will actively communicate with members,patrons, communities being served, other cooperatives, andthe public, as appropriate, and in keeping with the cooper-ative’s communication plan. Attitudes about the coopera-tive shall be gathered and recorded and the informationwill be used to shape programs, procedure, and policy.

All communications will consistently project thedesired image of a well-managed, soundly-financed, anddemocratically-controlled cooperative established toimprove the economic condition of members and patrons.

Purchase of Common Shares of Stock

At all times, the bylaws of the cooperative shall deter-mine how and when any potential or existing member whodesires to participate in patronage refunds shall purchaseshares of common stock.

Any member who desires to participate in the patron-age refunds of the (name of cooperative) shall purchase(number) shares of common stock at a par value ofC! ) with cash.

The balance of the necessary shares may be earnedfrom patronage or transferred from equities of another con-senting member.

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Organization

Classijkation of Employees

All employees will be designated as one of the follow-ing classifications:

Permanent full-time-An employee who works a mini-mum of ( ) hours per day, ( ) days per week, ( ) weeks peryear.

Permanent part-time-An employee who works a min-imum of ( ) hours per day ( ) days per week, ( ) weeks peryear.

Temporary-All other employees.A temporary employee who is later classified as a reg-

ular full-time employee will be entitled to benefits from thetime of last initial employment.

Counseling

Management maintains at all times an “open door”policy for counseling with employees on their individualemployment concerns, including educational and careerdevelopment, relationships with fellow employees, andother work related issues.

Employee Performance Appraisal

Formal appraisals of each employee’s performancewill be conducted at least annually.

The evaluation will be based on her/his positiondescription and the performance standards.

Each employee will participate with the supervisor inthe appraisal.

Employment of Relatives

Employment of immediate relatives (husband, wife,child, sibling, parent, grand parent, aunt, uncle, nephew,niece) of any /salaried or regular full-time employee/boardmember/supervisor/shall be prohibited.

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Holidays Observed

The board of directors recognize the following holi-days (1) shall be observed by closing.

New Year’s day

Martin Luther King

Washington’s Birthday

Memorial Day

Independence Day

Labor Day

Veterans Day

Thanksgiving Day

Christmas Day

If a holiday falls on a Sunday, the following Mondaywill be observed, or if the holiday falls on Saturday whichis not a normal work day, the previous Friday will beobserved.

(1) This statement in included for illustration purpos-es only. Your cooperative may wish not to offer this state-ment.

Note: Specific days presented in the sample policy arefor illustration only. Each cooperative must determine dayappropriate for their operation.

Hours of Operations

It is the manager’s /board’s/ responsibility to deter-mine the cooperative’s hours of operations based on recom-mendations of the board /manager/.

The cooperative shall have as its standard hours ofoperation:

Monday through Friday from 8:00 AM to 5:00 PM,Saturday from 8:00 AM to Noon. Deviations from thisschedule for emergencies shall be at the discretion of themanager. Seasonal variations require approval of the board.

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Jury DutyEmployees will be permitted to serve on jury duty

when requested.While serving, employees will continue their normal

salary.Any compensation received by the employee for jury

service, other than for meals, and mileage, must be turnedover to the association.

Line of Authority

The board of directors of this cooperative has givenfull authority to the general manager to employ, terminate,and set wages of all cooperative employee within theguidelines of the approved wage and salary plan, excepthim/herself.

Employees are cautioned not to discuss personalgrievances and problems or accept orders from directors,patrons, or any other employee except the general manageror his/her supervisor.

It shall be the responsibility to management to com-municate line of command to the employee through jobdescriptions, organization charts, and other media.

Pay Periods and Paychecks

Pay periods begin on Monday and end on Sunday. Allemployees will be paid /weekly/biweekly/monthly/. Payday will be on Wednesday for all employees. Each employ-ee will receive with their paycheck a record of the deduc-tions required by law and/or authorized by the employee tobe deducted.

Employees who are paid on an hourly basis will bepaid time and one-half for all work in excess of 40 hoursduring the week. To maintain uniformity, hours in excessof the scheduled workweek are not to be worked exceptwhen authorized by supervisors. At the end of the work-week, the employee will sign his/her hourly schedule/time-card/ for hours worked to indicated its correctness.

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All employee’s timecards will be picked up immedi-ately following the end of the workweek.

Advance payment to either salaried or hourly employ-ees will be allowed only with the approval of the generalmanager, and is limited to (number) weeks pay.(l)

Regular or normal pay is defined as forty(40) hours forone (1) workweek, eight (8) hours for one (1) day, and four(4) for one-half (l/2) day.

Performance Evaluation

At least yearly at a time chosen by the board presi-dent, a formal evaluation of the performance of the boardas an entity and of individual members shall be conducted.The evaluation may be done as an internal program, or con-ducted by outside consultants. Areas of unsatisfactory per-formance as determined by the evaluation shall bereviewed with the board, and the necessary remedialactions for correction shall be taken, and recorded in theboard minutes.

The Board holds the General Manager accountable forthe total operation of the cooperative and its membershipactivities. Performance is measured by means of regularreports from management, performance of products andservices on members’ farms, member reports, an annualoutside audit, and an annual budget.

Personnel Records

A personnel file shall be maintained for each employ-ee. Individual personnel files will be considered confiden-tial.

This file shall contain such information as theemployee’s application form, physical report, references,State and Federal withholding tax forms, yearly perfor-mance appraisal reviews, and other employment history.

An inactive file shall be maintained for at least 3 yearsfor persons who have left employment of the association.

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Substitution or Replacement of Paychecks

Employees are expected to exercise caution and goodjudgment in handling paychecks.

Replacement of checks, lost or misplaced by anemployee or issued incorrectly as a result of employeecarelessness, will be made at the expense of the employee.

Supervision

Each employee is directly responsible to his/hersupervisor as indicated by the organization chart and theemployee’s position description.

The employee is accountable for all duties specified inthe position description and equally accountable for addi-tional duties assigned by the supervisor.

Wage and Salary Plan Adjustment

Wages and salaries of all employees will be adminis-tered within the limits of the current wage and salary planapproved by the board of directors.

Recommendations for individual wage and salaryadjustment will be based on an appraisal of job perfor-mance by the employee’s supervisor.

All adjustments must be approved by the general man-ager before becoming effective.

All adjustments must be within the pay range and attime intervals commensurate with the association’s wageand salary plan.

Public Relations

Community Activities

The association encourages its employees to partici-pate in community affairs and trade association so long assuch activities do not interfere with the employee’s abilityto perform work or place an undue hardship on the associ-ation. Employees shall obtain permission to leave their

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workplace for such activities from the supervisor.The cooperative may maintain membership with civic

and educational organizations. Employees may be designat-ed by the board of directors/general manager/ to representthe cooperative membership.

The cooperative shall pay all dues and expenses of theauthorized membership.

Contlicts of Interest

Employees are to avoid conflicts of interest, whichcould be construed as unethical, or which could embarrassthe cooperative.

Political Activity

No employee shall engage in any partisan politicalactivity as a representative of the cooperative.

Finances

Accounts Payable

The board instructs the manager to ensure that allmoneys owed are paid on a timely basis to avoid servicecharges, interest penalties, and or delinquent notices.Where applicable, bills are to be paid, if cash flow andcredit limits allow, in time to receive any discounts forearly payment.

Annual Financial Audit

The board of directors shall engage the services ofa Certified Public Accountant/Public Accountant/ forthe purpose of auditing the financial records andaccounts of the cooperative at the end of each fiscalyear.

The engaged accountant shall be instructed to preparean/Unqualified Opinion /Qualified Opinion/ audit of thefinancial records. The final prepared audit shall include,

18

but not be limited to: a balance sheet, statement of opera-tions, source and use of funds, and the necessary supple-mentary schedules.

Upon completion of the audit, a full report shall bepresented to a majority of the board in a official directors’meeting. The accountant’s reports must be approved orrejected by official board action, and made a part of theboard’s minutes.

Annual Operating Budget

The manager shall prepare or cause to be prepared anannual operating budget for board consideration. The pre-liminary budget should be presented to the board not laterthan the month prior to the beginning of the next fiscalyear. The final budget shall be approved by the board ofdirectors by (number of days) days after completion of thepast fiscal year’ audit. (1)

Management shall operate the cooperative as far aspractical within the budget as adopted. Expendituresexceeding the budget by more than ( ) percent in any givenmonth or in total shall require approval by the board.

Management is responsible for developing long-rangeplans for review and approval by the board, which willprovide for orderly growth, maintain financial stability,and meet the needs of members served by the cooperative.

(1). It is an advantage to have the final budget projec-tions and pro forma statements based on the previous yearsfiscal audited figures.

Borrowing Policy

All major borrowing shall be obtained from the sourceof least cost but must be in compliance with previous loancovenants, agreements, and commitments.

Borrowing may not exceed the loan limit of $ setby board resolution.

The board in conjunction with the manager shallreview the loan limit resolution annually. If needed, themanager may request board approval to increase the limit

19

during the year. To assure the availability of adequatefunds and credit services at reasonable cost, the coopera-tive will maintain alternative sources of capital, utilizingthe Farm Credit System, other lending institutions, andother sources, as appropriate.

Credit Policy

Note: This section constitutes only part of the coopera-tive’s total credit policy. The following statements areoffered as suggestions in formal policy development.

The manager is responsible for having the credit pol-icy available at all times for employee and patron refer-ence.

A credit application signed by the patron andapproved by the appropriate person /committee/ shall beon file before credit is extended to any patron.

All purchases made on credit during the month aredue and payable by the (date] (last day) of the followingmonth.

A f i n a n c e c h a r g e o f percent per month (APR-percent) will be charged against accounts not paid on orbefore the (date) (last day) of the month after the month ofpurchase. A minimum finance charge of $ will beapplied to all past due accounts.

An account becomes delinquent when it exceeds thedue date by (number) days.

Credit will not be extended to patrons with delin-quent accounts.

The manager has the authority to establish creditlimits for individual accounts up to $ . Higher limitsmust be approved by /board/controller/credit committee/.

All accounts have a credit limit of $ , unlessprevious arrangements have been approved by management/board/.

Patrons with delinquent accounts shall contact man-agement /credit committee/ to discuss arrangement for pay-ment.

The manager will contact patrons with delinquent20

accounts to discuss specific arrangements for payment.

Handling Delinquent Accounts

The credit committee (hoard president plus two otherdirectors appointed by the president) shall review with themanager the accounts receivable on a /monthly/quarterly/basis.

Delinquent notices shall be sent to those accounts pastdue per the credit policy.

Delinquent unpaid balances of accounts receivableover (number) days past due /will be/may be/ referred tothe cooperative’s attorney for collection /or charged againstthe member’s ownership account, upon action of the boardof directors/.

If it becomes necessary /to apply member’s ownershipaccount to member’s receivable/ or action is taken througha collection agency or civil court, the member shall be puton a cash basis until a satisfactory credit statement can beprovided.

Director Per Diem, Mileage, and Travel Expense

Directors shall be paid $ularly scheduled meetings.

for attendance at all reg-

Directors serving on president-appointed committeess h a l l a l s o r e c e i v e $ for each meeting attended.

A scheduled meeting is when a director is performingduties as a director.

A director may be authorized by the president to usehis/his personal vehicle for cooperative business whennecessary and a cooperative vehicle is not available. Whensuch a personal vehicle is used, the director shall be paid$. per mile for the actual miles driven. The rate shall bereviewed yearly. Public transportation expense will bereimbursed if in the opinion of the president, it is mostadvantageous to the cooperative and the director.Transportation expense for a spouse /will/will not/ beallowed. Air travel will be allowed at (type) class, if cost isless that other modes of travel.

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When it is necessary for a director and/or spouse toremain away from home overnight while in the service ofthe cooperative, the cooperative will, with prior approvalof the board president, pay reasonable and necessary lodg-ing and meal expense not to exceed $ per day.

Expenses shall be itemized and /approved by theboard president/ turned in to the manager for payment on astandard expense form.

Donations

In the interest of charitable organizations and commu-nity goodwill, contributions may be made to individualorganizations not to exceed $ or $ in product peryear for each organization. However, total annual contribu-tions are not to exceed $-9 as approved budgetedamount.

Employee Credit

Employees with approved credit may purchase goodsand services on the same credit terms as other patrons.

Employees shall borrow their long-term credit require-ments at regular financial institutions such as banks andcredit unions.

A terminating employee’s owing balance shall bededucted from his/her final payroll settlement from thecooperative.

Employee Travel and Entertainment Allowance

Air travel when necessary at (type) rates. (economy ortourist)

Private auto use at $ per mile.Per diem for lodging and meals not to exceed $

per day, except for specific locations at actual cost byapproval of board/manager.

Entertainment as part of travel limited to per diemwithout prior approval of board/manager.

Receipts for al l expenditures over !§ must be22

attached to a request for reimbursement.Payment for travel expense reimbursement to employ-

ees must be approved by manager.Payment for travel expense reimbursement to manager

must be approved by/treasurer/secretary of board/presidentof board.

Expenses for spouse travel /will/will not/ be allowed.Foreign travel only with prior board approval and

with allowance specified in advance.

Expenditures for Facilities, Machinery, and Equipment

The general manager shall obtain approval from theboard for purchases or leases of new or replacement facili-ties, machinery, or equipment exceeding $ .

In emergencies, where replacement of an asset is need-ed before a general board meeting can be held, the managermay obtain approval by contacting the (name) board com-mittee by phone and having individuals indicate approval.

In this situation, the committee shall have theapproval ratified at the next board meeting and included inthe minutes of the meeting.

For an example, in a marketing cooperative, needs forrepairs may occur during a peak receiving season. If direc-tors are involved in their own harvesting operations, theymay not be available for telephone approval. In this case,the board may instruct management to make the necessaryrepairs without consultation.

Expenditures for Supplies and Services

The board must approve expenditures for operationalsupplies and services exceeding $ /per month/annual-ly/.

Operational supplies or services costing in excess ofthis amount should be placed for bids, with at least (num-ber) price quotes obtained. For supplies and services lessthan the stated amount, the manager shall have the authori-ty to authorized purchase.

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Expressions of Sympathy

The manager shall send expressions of sympathy tofamilies of employees or directors in case of death, but lim-ited to the immediate family (husband, wife, child, sibling,parent, grand parent, aunt, uncle, nephew, niece).Individual contributions for flowers or memorial fundsshall not exceed $-a

Redemption of Equities

It shall be the intent of the board to provide, with theapproval of the (lending institutions), an orderly programfor members’ investments to be paid and to allow equityfinancing based on participation to be provided by theactive members.

Within the limits of sound, progressive financial poli-cy and any provisions of the bylaws or any applicable Statelaws, the board shall have absolute discretion in determin-ing when to redeem any members’ equity placing priorityin the following manner:

First-Repurchase the common stock (and other class-es if fiscally responsible) of former member-patrons whohave died, retired, or moved from the area served by thecooperative.

Second-Repurchase common stock (and other classesif fiscally responsible) of other former member-patrons whohave not used the services of the cooperative for (number)years.

Third-Redeem retained patronage investments ofdeceased members.

Fourth-Redeem all other retained patronage invest-ments, oldest first: if all patronage investments in a singlecalendar year are not to be redeemed at the same time, apro rata share of all such investments will be redeemed.

Equities of deceased members shall be distributed asfollows:

Individual Accounts0 a written request for payment. proof by original certificate of the Court that the

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applying party is the qualified and acting executor oradministrator of the estate of the deceased member.

present all of the deceased member’s shares of stockin the cooperative in the form of certificates. If these havebeen lost or destroyed an affidavit may be submitted in lieuof the original certificate.

a copy of the death certificate.joint Accounts shall be held by the cooperative in the name of the

surviving joint tenant(s). or transferred to the individual accounts of surviving

joint tenant(s) upon receipt of written request and certifiedcopy of the deceased member’s death certificate.

Upon the death of the last surviving joint tenant, theequities shall be paid out as provided for individualaccounts.

Partnership Accounts shall be paid out as provided for individual

accounts. All partners will be deemed to have equal sharesin the partnership unless a different intent is shown inwriting.

Similar procedures should be outlined for handlingthe equities of retired, move-aways, and members who nolonger qualify for membership.

Travel Expense

An expense report must be submitted by an employeeany time association funds are spent for travel.

When necessary for an employee to remain away fromhome overnight on association business, the associationwill pay reasonable lodging and meal expense not toexceed $

Paidxipts must be submitted along with theexpense report by the employee for all lodging expense andfor any single item of expense that exceeds $ .

An employee may occasionally be requested byhis/her supervisor or general manager to use his/her per-sonal vehicle for association business.

In such instances, the employee will be paid ( ) cents25

per mile for the actual miles driven, upon presentation ofan expense report.

Public transportation will be used when specified bythe general manager. In such instances, the employee willbe reimbursed upon presentation of the paid travel receipt.

Sales/Marketing/Productions

Grain Marketing and Hedging

The policy of the board of directors shall be to protectinventory of all types of grain through hedges or cash trans-actions.

The maximum inventory of unprotected grain shall be:

Grain(type) Inventory in Units (Bu/Cwt)-

--

All grain purchased, except allowable company inven-tory, shall be marketed immediately after purchase.Margins shall be maintained as projected in the annualbudget. Sales through forward cash contracts are not to beconstrued as cash grain sales. Selling “short” on the cashgrain position is prohibited.

Use of hedging with futures contracts to protect thecash grain margins of minimum inventories is permitted.

All grain hedged in Board of Trade transactions shallbe reviewed at the request of the board of directors and acopy of each transaction sent to the board president. At notime shall management place futures contracts in a specu-lative position.

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Inventory

An annual inventory of the cooperative shall be takeneach year and the physical count shall be verified by anauditor hired by the board of directors. The president shallappoint a committee to observe the taking of actual physi-cal inventory at the close of the fiscal year.

It shall be the general manager’s responsibility tomaintain inventories of merchandise for sale. Care shouldbe given not to overstock slow moving merchandise.

Here, the board may identify some items needed foroperation of the cooperative and establish minimum vol-umes (i.e., boxes for packing fresh vegetables).

Marketing

The cooperative is to market only products from thoseareas that can be expected to provide a reasonable return toboth the producer and the cooperative.

Each marketing service provided by the cooperativeshall be self-sustaining, with producers to finance each ser-vice in proportion to their use of it.

To assure supplies of raw products of suitable qualityto meet sales needs and commitments, contracts may bemade between the cooperative and producers.

Marketing operations are to be consumer oriented. Thecooperative shall provide marketing and technical informa-tion needed for growers to plan their production in linewith consumer demands as to quality and quantity, and inthe forms desired by consumers.

To meet consumer demand, the cooperative may pur-chase products from sources other than its members, butnot to exceed 49 percent of the total dollar marketed..

Marketing agreements are legal contracts between thegrower and the cooperative. The cooperative will protectthe integrity of its marketing agreements and the interestsof the members who comply with their agreements by initi-ating appropriate legal action against members who violatetheir marketing agreements and other persons who inducesuch violations.

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Merchandise To Be Handled

It is the manager’s /board’s/ responsibility to deter-mine the major lines of merchandise handled by the coop-erative based on recommendations of the board /manager/.

Producer Payments

Timing of payment schedules to producers for prod-ucts shall be determined by the board, consistent withsound business practices and in compliance with restric-tions imposed or recommended by the lending institution.Payments shall be administrated on a day to day basis bythe manager.

Payments to producers will be equitable in relation toquality delivered and services performed.

Purchasing Policy

The manager shall purchase supplies, equipment, andproducts from regional cooperatives/stated supplier/,where applicable provided all factors are equal, includingquality, service, price, and refunds.

Operation of Association Vehicles

Employees operating an association vehicle must havea valid driver’s license or chauffeurs license if required.

Each employee must adhere to safety rules while oper-ating or using any and all types of equipment, includingmotor vehicles and those items pushed, pulled, or ener-gized by them.

Every employee is responsible to operate equipmentsafely and report any expectant failure or defect immedi-ately to management.

Every incident or accident involving personal injuryor property damage shall be fully reported in detail withoutdelay.

Drivers will refrain from the use of intoxicants,including alcohol, stimulating, depressing, or hallucinatory

28

drugs, or narcotics prior to and during the workday.Drivers will obey all State laws, rules, and regulations,

and be responsible for operative violation of them.Drivers will test and examine all brakes and other

safety equipment for proper function at the beginning ofeach workday.

No driver will loan or willfully misuse an associationvehicle, nor operate it in a manner to damage or injure itmechanically.

The driver shall not allow any unauthorized person todrive or be transported in a company vehicle, includingfriends, relatives, or children.

All drivers shall pay /moving/ fines incurred.Every vehicle used for transportation of flammable or

explosive liquid, gases or solids shall at all time followOSHA guidelines for safety equipment.

Any vehicle used in the transportation of butane,propane, gasoline, kerosene, diesel, or an flammable orexplosive shall not be driven by any person under the ageof 21 or over the age of 65.

Reporting Injuries and Property Damage

Personal injury, customer injury, and property damageaccidents must be reported to the general manager or thesupervisor as soon as possible on forms provided andsigned by the injured employee and supervisor.

Except for minor injuries, a physician’s attentionimmediately must be secured. Failure to do so could resultin dismissal.

Safety

The association is interested in the welfare and safetyof each employee and will make every effort to complywith the Occupational Safety and Health Act (OSHA).

Employees must be constantly aware of accidentpotential.

Employees are charged with the responsibility forexercising good judgment and caution in observing safety

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rules, particularly in handling products and equipmentthat could result in personal injury to self, fellow workers,patrons, the public or result in property damage.

Employees are expected to use safety equipmentwhenever and wherever needed. Excessive violation ofsafety rules could be cause for termination.

All potential safety problems are to be reported to theemployee’s supervisor.

Employee Relations

Application Requirements

All applicants shall complete and file an employmentapplication form prior to personal interview.

Attendance and Punctuality

Employees are expected to be at their normal scheduledwork location promptly at the beginning of the work day.

If an employee must be absent, he/she must notify thesupervisor as far in advance as possible but no later thanone-half (l/Z) hour after normal starting time.

Work will continue until quitting time, or if on a shiftassignment, until relieved or dismissed by the supervisor.

Tardiness or absences shall be handled by the supervisor.

Conduct

While management makes no pretense of controllingan employee’s conduct when not at work, his/her conductand reputation “off the job” affects the public image of thecooperative. To this extent, employees’ conduct will betaken into consideration.

Every effort shall be made to create a good publicimage of the cooperative through the media of clean workclothes, clean facilities and equipment, and “off-work”behavior of employees.

A pleasant, friendly, and courteous greeting whether

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in personal contact or on the telephone, will go a long wayin creating a good public image of the cooperative plus agood public image of oneself.

The employee should at all times be supportive of thecooperative goals and strategies as well as fellow employees.

The employee should offer constructive suggestions tohis/her supervisor to improve the cooperative’s goals,strategies, and other employees to better serve the coopera-tive’s patrons.

Discrimination

The association will not discriminate against hir-ing of any applicant or the employment of any personbecause of race, color, national origin, sex, age, handi-cap, or religion in accordance with the EqualEmployment Opportunity Act.

Employee Gifts

Any professional or business related gifts to coopera-tive employees with a value of $ or more shallbecome property of the cooperative.

It is the responsibility of employees to report gifts tothe general manager.

Gifts from the cooperative to individuals, eitheremployees or persons outside the cooperative, may begiven at the discretion of the general manager, but shall notb e i n e x c e s s o f $ in value per gift.

Employee Meetings

Employees will be requested to attend periodicemployee meetings scheduled by management. This pro-vides an opportunity to inform employees of company poli-cies, cooperative information and training, and will pro-vide the employee an opportunity to express his or herviews and make contributions for improvements. Hourlyemployees will be paid for attending these meetings if heldduring nonbusiness hours.

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Employee Orientation

Each new full-time employee will be thoroughlybriefed on the employee policy handbook and will receivea copy of the personnel handbook.

The personnel handbook shall contain a copy of theemployee’s job description, organizational chart for thecooperative, and his/her reporting relationships.

Employee Purchases

Permanent full time and permanent part time employ-ees may make purchases through wholesale outlets readilyavailable to the cooperative.

Merchandise purchased through wholesale catalogueswill be figured on a cost basis, plus freight, sales tax, and 5percent. This would apply only to merchandise not nor-mally handled by the association. Purchases shall be paidimmediately upon receipt of invoice. Each transactionmust be cleared before further purchases will be allowed.

Management, at its discretion, may grant nominal dis-counts to employees on their purchases of products: how-ever, such discounts will not apply to agricultural produc-tion or business supplies and services.

Employees, permanent full time, permanent part timeand temporaries, may purchase for personal use any itemsin our normal inventory at retail, less percent.

Some “sale” items may not carry this discount, basedon the decision of the general manager.

Discounts on purchases are intended for the sole per-sonal use of the employees and their immediate family anddo not extend to purchases for friends or relatives or forincome purposes.

Employee Training

The cooperative encourages employee trainingthrough special training sessions, correspondence coursesand regular classroom instruction.

Approval of the course selected must be obtained from

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the supervisor. Cost of courses that are particularly benefi-cial to both the cooperative and the employee will be paidby the cooperative.

Where sufficient interest is shown, classes in job train-ing will be held and technical textbooks made available forinterested employees.

Funeral Leave

Regular full time employee’s will be allowed ( ) daysper year with pay on account of death in the employee’simmediate family, defined as spouse, father, mother, child,son-in-law, and daughter-in-law.

One day leaves will be allowed on account of death of:father-in-law, mother-in-law, brother, sister, brother-in-law,sister-in-law, grandchild, and grandparent. Any exceptionto this rule will be charged to the employee’s vacation,

Approval in advance must be secured from theemployee’s supervisor and/or general manager.

Group Insurance

A hospital and medical insurance plan is provided foreach salaried and regular full-time employee and his/herfamily, if so desired.

The cooperative pays ( ) of the employee’s hospitaland medical insurance premiums and ( 1 of the premiumsfor dependents.

All eligible employees will be furnished a detailedcopy of the plan and an explanation of its coverage, as wellas requirements for filing a claim.

The life insurance plan includes an minimum of$_-- term life insurance coverage on the employee plus asalary continuation benefit which provides for an incomeequal to of an employee’s basic wages. This coverageapplies for a period of illness up to 12 months duration atwhich time the retirement plan salary continuation programtakes over. (name of cooperative) and the employee partici-pate on a share-cost basis. A life insurance policy will be

33

provided for each employee participating with the plan.All eligible employees will be furnished a detailed

copy of the plan and an explanation of its coverage, as wellas requirements.

Holidays

The following holidays will be observed: New Year’sDay, Memorial Day, Fourth of July, Labor Day, ThanksgivingDay, Christmas Day, and a personal holiday. The personalholiday may be used however an employee desires, butmust be cleared with the supervisor before using it.

Permanent full time and permanent part time employ-ees shall be paid their normal salaries and hourly rates forholidays.

If a permanent full time or permanent part timeemployee is required to work on a holiday, he/she will begiven an additional day of vacation.

The additional day is to be selected by the employee,but must be approved by their supervisor and/or the gener-al manager. The pay rate for the holiday will be the normalpay rate.

If a holiday falls on Sunday, the following Mondaywill be observed.

If a holiday falls on Saturday, the previous Friday willbe observed.

If a holiday occurs during an employee’s vacation, theemployee will be charged with one less day of vacation.

Hours of Work

A normal work week will consist of ( ) ( ) hour days/and ( ) ( ) days/, totaling ( ) hours per week for all perma-nent full-time employees.

( ) hour is allowed for lunch except where operatingconditions require a shorter period or by mutual agreementof the supervisor and the employee.

Employees are required to punch their own timecards. Employees should punch in at their assigned startingtime and punch out at their assigned quitting time. Any34

deviations must be approved by the supervisor.Actual hours worked each day will be computed at the

nearest quarter hour.Hours in excess of the normal work week are not to be

worked unless advance authorization is given by theemployee’s supervisor or general manager.

To maintain the consistent high quality of servicegiven customers, employees may be required to work on ashift basis.

There may be occasions when employees will beasked to work overtime.

Just Cause for Termination of Employment

The association considers the following acts as amongthose contributing to just cause for immediate discharge.Disregard for association policies, insubordination, mali-cious damage to equipment, excessive absenteeism, drink-ing or using intoxicants or drugs on duty, being intoxicatedor under influence of drugs on duty, dishonesty, disregardof safety rules, and other such acts that would tend to harmor embarrass the association. An employee discharged forjust cause shall forfeit all employee rights and not be eligi-ble for rehire.

Maternity Leave

With written approval of her physician, a femaleemployee who becomes pregnant may work during herterm of pregnancy.

Disability due to maternity will be handled the sameas an illness or accident requiring sick leave. Upon diagno-sis of pregnancy, the employee will immediately furnishthe cooperative with a physician’s statement indicatingapproximate delivery date and length of time she mightcontinue to work.

A maternity leave of absence /without pay/ will begranted upon request.

The length of leave will be determined at the timeleave is approved, but normally not exceeding 6 months.

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Upon release from the doctor, an employee on mater-nity leave will be able to return to a position equal in payand status to her previous position prior to maternity leave.

Military Leave

A leave of absence shall be granted to regular employ-ees called into the military service of the United States:The employee will not lose any benefits accrued to him,including vacation, sick leave, seniority, or retirement ben-efits, unless not permitted by the retirement plan.

Existing statutes applicable to reemployment andother veteran’s rights will be followed by the cooperativewhen the employee returns form military service.

The cooperative will allow time off without pay forsummer training of employees who are members of theNational Guard or organized reserve units. Such time maybe counted as vacation time if the employee so desires.

Outside Employment

No employee shall conduct a personal business, pro-ject, or profession that requires any cooperative workingtime or that is in competition to or is in conflict with anyphase of the cooperative’s business without the consent ofhis/her supervisor.

No employee shall conduct any outside employmentduring regular scheduled work hours at the cooperative.

Work during off-duty hours that will interfere with theproper efficiency of the employee’s duties will not be con-sidered in the best interest of the cooperative.

The employee may be required by the GeneralManager to limit or discontinue such activity or leave theemployment of the cooperative.

Persons Eligible for Employment

The association will not hire close relatives of the gen-eral manager or any director as a permanent full-time

36

employee or permanent part-time employee.Close relatives included spouse, child, father, mother,

sister, brother, father-in-law, mother-in-law, sister-in-law,brother- in-law, son-in-law, daughter-in-law or grandparent.

Physical Examination

A physical examination may be required of any appli-cant prior to acceptance for employment.

Arrangements for physical examinations shall be madewith a physician approved by the cooperative and expenseinvolved shall be paid by the association.

Promotion

The cooperative has no set policy that provides for sys-tematic or seniority promotion. However, managementpromises an unbiased, and fair evaluation of an employee’sgrowth and value to the organization and will give pay andresponsibility advancement accordingly.

Promotion should be made within the cooperative sys-tem whenever practical, recognizing that some positionsrequiring special skills, training, or experience may have tobe filled from outside.

Probationary Period

All new employees shall serve a (number)-monthprobationary period during which the cooperative andthe employee shall have an opportunity to determinethe desirability of the job and the suitability of theemployee on the job.

At the end of the (number)-month period, an interviewwill be held between the employee and the supervisor todetermine if satisfaction exists between both the employeeand the supervisor.

If the employee continues after the (number)-monthperiod, he/she will be classified as a regular full-time orregular part-time employee.

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Rehire of Former Employees

An employee who voluntarily resigns and later returnsto the employment of the cooperative shall be considered anew employee.

Retirement Plan

The cooperative provides a retirement plan for all per-manent full time employees eligible to participate.Contributions to the plan will be in accord with the plan’srules and regulations.

A detailed explanation of this benefit is available toeach participant.

Selection of New Employees

The decision to hire shall be based on how well per-sonal qualifications compare with the job requirements.

Department supervisors shall screen and interview jobapplicants.

The department supervisor shall have the responsibili-ty for hiring and discharging an employee, subject to theapproval of the general manager.

Sick Leave

An employee is entitled to take sick leave during thoseperiods incapacitated from performing duties by reason ofsickness, off the job injury or for medical, surgical, dental,eye examination or treatment, or where the employee’spresence at their post of duty might jeopardize the healthof others.

Both permanent full time and permanent part timeemployees accrue sick leave benefits. A maximum of ( )working days may be accumulated.

Permanent full time employees while at their job siteshall accrue sick leave at the same proportional rate of per-manent full time employees.

The employee shall be paid at the normal rate of pay38

for the actual time absent from work up to the extent of thesick leave accrued.

No employee shall be paid in lieu of accrued sick leave.Sick leave may be used in increments of one-half of a

working day. However, if an employee is absent for twohours or less the general manager may waive the chargeagainst the employee’s sick leave.

The cooperative must be notified of absence becauseof sickness not less than one-half (l/2) hour after the begin-ning of the work day in which the absence began. Return towork after sick leave shall also be reported.

Requests for sick leave for medical, dental, optical, orchiropractic examinations or treatments shall be submittedfor approval to the supervisor and/or general manager priorto the beginning of sick leave.

If sick leave accrual becomes exhausted, an employeemay charge excessive sick leave against vacation time ifany is accrued.

Time lost for disabling work-related injuries will notbe charged against sick leave.

A sick leave record will be maintained by the associa-tion for each employee showing the total number of accruedsick leave days and the number of sick leave days taken.

Employees shall have on file with the cooperative thename, address, and telephone number of the person to becontacted in case of accident or illness on the job.

The general manager reserves the right to deny, inwhole or part, payment for sick leave in cases of provenabuse or malingering.

Termination

Employees who voluntarily terminate employmentwith the association shall give ( ) weeks written notice.Failure to give such notice may result in forfeiture of certainassociation benefits as determined by the general manager.

Permanent full-time employees terminated due to lackof work, reduction in work force for economic reasons orfor other cause not the fault of the employee shall be enti-tled to ( ) weeks pay in lieu of notice.

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In the case of extended illness, an employee may beterminated and company-paid employee benefits will ceasewhen the employee has used all accrued vacation and sickleave. However, the employee may request a (number&dayleave of absence and continue to enjoy company benefits ifpaid in total by the employee. Leave of absence requestsmust be approved by the general manager.

Upon termination, an employee shall turn in his/heruniforms so the association emblems may be removed. Theuniform will subsequently be returned to the employee.

Vacation

Vacation may not be taken until completion of one fullyear of employment with the cooperative.

Vacation benefits may be accrued by both permanentfull time and permanent part time employees, but not bytemporary employees.

Permanent full time employees shall accrue paid vaca-tion as follows: first year of service, 6 working days: after 1year of service, 2 extra days will be allowed for each addi-tional year served for the next 3 years; up to a maximum of12 working days; upon completion of the 11th year of con-tinuous service, employees will be allowed 18 workingdays of vacation per year.

Permanent part time employees shall accrue vacationat a proportional rate of permanent full time employees.

A vacation record will be maintained for each employ-ee showing the total number of accrued days and the num-ber of vacation days taken,

Vacation time can only be used in increments of one-half of a working day.

Employees are encouraged to take a vacation everyyear, but if necessary, some or all of accrued vacation maybe postponed until another year within the following lim-its: the maximum accrual of vacation is 12 working daysafter completion of 11 years of service and then it will be24 working days. After 25 years of service it will beincreased to 36 working days.

Vacations are for the purpose of employee relaxation40

away from the job. This may best accomplished if vacationsare taken a week at a time as a minimum.

If an observed holiday fall within an employee’s vaca-tion period, they will be given an additional day of vaca-tion. This day may be chosen by the employee, but must beapproved by the supervisor and/or the general manager. Theemployee will be paid for the holiday at their normal rate.

The employee must give the supervisor a minimum of2 weeks notice prior to the desired vacation. Each vacation,insofar as possible, will be granted at the time requested,but final allotment of vacation periods is reserved by thegeneral manager.

If a terminating employee is in good standing, he/shewill be compensated for their accrued vacation time. Thisamount will be included in the last paycheck.

In the case of employee’s death, payment for accruedvacation shall be paid to the employee’s estate.

Note: The lengths of time and specific detail are forillustration purposes in the sample policy. Each coopera-tive must determine the length and method of accruingvacation benefits proper for their labor market.

Work Breaks

Where practicable, employees will be granted (num-her)-minute breaks, once in the morning and once in theafternoon.

Breaks will be arranged by the general manager and/orsupervisors.

Employees will be expected to maintain work breakschedules and be prompt in resuming work.

Breaks will be staggered so work areas are attended atall times. At no time shall a member or cooperative cus-tomer be made to wait while an employee is on break.

Abuse of breaks may result in loss of this privilege.

Work Clothing

All employees are required to come to work in properattire, clean and neat in appearance.

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The association will pay the cost of authorized uni-forms up to $ annually for those employees requiredto wear them.

Employees may purchase uniforms during the proba-tionary period of employment. The cooperative will thenreimburse the employee if they move to the permanent full-time or permanent part-time status up to $ .

Workmen’s Compensation Insurance

The association carries workmen’s compensationinsurance on all eligible employees for their protection ofincome in case of on-the-job injury.

The insurance costs the employee nothing. The coop-erative pay the entire cost.

All injuries must be reported within ( ) hours toassure that all workers comply with Workmen’sCompensation Insurance regulations. Failure to complywith required reporting may result in loss of eligibility.

Board/Manager Relations

Board of Directors - General Manager Relationship

I. ObjectiveTo establish the policy governing the basic relation-

ship between the board and the general manager of thecooperative, including the principles involving the delega-tion of authority.

II. PolicyThe board recognizes, establishes, and maintains the

following guidelines in their relationship with the generalmanager:

A. It is recognized that good management is the mostimportant factor in the success of the cooperative. Thisincludes a strong and effective board of directors, generalmanager, and staff, as well as dedicated employees. In exer-cising its responsibilities, the board reserves authority toestablish policies, approve plans and programs, and dele-gate authority to the general manager, except those that are,42

by law, the Articles of Incorporation and Bylaws, conferredupon or reserved to the board.

B. The board recognizes the responsibility and need toestablish policies, approve plans and programs, appraiseresults achieved, and delegate authority to the general man-ager to execute and carry out plans, programs, and policies.The general manager shall, among other things be responsi-ble for the hiring of capable personnel, determining com-pensation within the approved wage and salary plan andpolicy, training, supervising, and terminating personnel, ifnecessary.

C. All policies of the board shall be adopted at regularor special meetings acting collectively as a board. The gen-eral manager is delegated the responsibility of carrying outpolicies and reporting back to the board on the resultsachieved.

D. The board recognizes that should any directorundertake in private conversation with others to makecommitments for the board, unless directed officially bythe board, that director becomes involved in a seriousbreach of policy that might disrupt the entire organization.The board member may be subject to reprimand from hisfellow directors should she/he attempt to make commit-ments unofficially for the board.

E. It shall be the policy of the board to refrain as indi-viduals from discussing management and personnel prob-lems directly with personnel of the cooperative. The board,in consultation with the general manager, may confer withkey personnel at regular or special meetings of the board.

Please study this provision carefully to make sure itmeets the needs of your cooperative.

F. It shall be distinctly understood that the “flow” ofauthority for the management of the cooperative shall bethrough the general manager to the board. The board shallrequire full and complete information from the generalmanager concerning matters in connection with the man-agement of the cooperative as set forth in board policies.

G. Primarily, the purpose of this policy is to determinethe relationship that shall exist between the board, as theelected trustees of the members, and the general manager,

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who is employed by the board. The board recognizes thatefficient management of the cooperative can exist onlythrough mutual understanding and complete cooperationbetween the board and general manager.

The general manager is expected to produce resultsand give an account to the board for his/her stewardship.His/her performance cannot be the best unless he/she isgiven latitude to exercise independent judgment in execut-ing policies of the board. The board acknowledges thatobligation and gives the general manager that latitude ofjudgment and discretion, and expects faithful performancein carrying out all of the policies.

H. The board recognizes responsibility for the employ-ment of the general manager and, further, the additionalresponsibility for a systematic appraisal annually of thegeneral manager’s performance so that growth, develop-ment, and effective improvements are encouraged.

III. ResponsibilitiesA. The president shall be responsible for directing the

attention of board members to violation of this policy.B. The president shall be responsible for seeing that

the performance of the general manager is appraised eachy e a r b y (date) by the (committee), with areport made to the entire board in (month), and theresults discussed with the general manager.

Statement of Objectives

Overall Objectives of the Cooperative

1. To improve and stabilize the net income of themembers:

a. Through the effective overall performance of suchmarketing, purchasing, packing, processing, warehousing,grower financing, and related services as are deemed neces-sary or advantageous by the members.

b. By providing adequate jointly-owned facilities forhandling, packing, warehousing, processing, at a lesserinvestment per unit than the grower can provide them on

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the farm or ranch.c. By maintaining sufficient volume to be a factor in

the market, reduce market risks, and support at competitiveunit costs a capable staff, adequate facilities, and an effec-tive program of approved services.

2. To conduct the cooperative’s business in a mannerthat will earn and retain the favorable regard of our mem-bers, customers, employees, suppliers, and the public.

Specific Objectives of the Cooperative

Board ofDirectors-Maintain the association in accor-dance with cooperative principles and consistent with thearticles of incorporation, bylaws, and other legal contrac-tual requirements.

Management-Manage the operations of the coopera-tive in accordance with viewpoints, objectives, and poli-cies of the directors and members.

Membership Relations-Create among the members asense of ownership of and responsibility for their coopera-tive, encouraging members to recognize the necessity ofuniting and actively supporting cooperative philosophyand technique.

Organization-To be a nonprofit, member-owned andmember-controlled business to render a vital service tofarmers in maintaining optimum profitability of farmingoperations.

Public Relations-Recognize the role of business in acommunity, and strive to provide leadership and to cooper-ate with other business, community, and civic groups infurthering programs of mutual interest and benefit to thecommunity.

Continuously maintain good relations and increase thegoodwill and acceptance of the public and communities inthe areas of operation.

Finances-Maintain financial stability for debt retire-ment, equity retirement, and future growth and expansion.

Sales/Marketing/Production-Provide the best valuein products and services for the members.

Realize optimum total returns for the member’s pro-45

duce through effective merchandising, advertising, andselling.

Employee Relations-Create among the employees anunderstanding of member ownership philosophy and prin-ciples and develop their interests in and enthusiasm forhigh quality member service.

Create among all personnel a desire for maximumgrowth and development and to provide ways and meansto assist them in accomplishing their objectives throughself-expression, maximum creativeness, and sense ofaccomplishment.

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U.S. Department of AgricultureAgricultural Cooperative ServiceP.O. Box 96576Washington, D.C. 20090-6576

Agricultural Cooperative Service (ACS) provides research, man-agement, and educational assistance to cooperatives to strength-en the economic position of farmers and other rural residents. Itworks directly with cooperative leaders and Federal and Stateagencies to improve organization, leadership, and operation ofcooperatives and to give guidance to further development.

The agency (1 ) helps farmers and other rural residents developcooperatives to obtain supplies and services at lower cost and toget better prices for products they sell; (2) advises rural residentson developing existing resources through cooperative action toenhance rural living; (3) helps cooperatives improve services andoperating efficiency; (4) informs members, directors, employees,and the public on how cooperatives work and benefit their mem-bers and their communities; and (5) encourages internationalcooperative programs.

ACS publishes research and educational materials and issuesFarmer Cooperatives magazine. All programs and activities areconducted on a nondiscriminatory basis, without regard to race,creed, color, sex, age, marital status, handicap, or national origin.