Returns $7.0 Million to Members
Farm Credit of Western New York returned $7.0 million to its member-borrowers based on interest which accrued on their accounts in 2007. This marks the twelth year in a row that the 16-county credit and financial services cooperative has distributed a patronage refund to member-borrowers.
Patronage
Refund Fact Sheet
General information
When an agricultural business borrows from Farm Credit of Western New
York, the business owner becomes a member entitled to share in the financial
success of the cooperative.
A patronage refund is similar to Refunds paid on other types of stocks.
However, because of Farm Credit of Western New York's cooperative ownership
structure, a patronage refund has three unique features:
- Refunds are based on "patronage." This means that a member's refunds
correspond to the interest—or "patronage"—paid during the
year, not to the value of the member's stock.
- Patronage refunds are taxed just once—at the member level. Most
corporate earnings are taxed twice: first at the corporate level (before
refunds are paid out), then at the stockholder level (where stockholders
pay tax on their earnings.)
- Farm Credit of Western New York is a cooperative, so the organization can distribute earnings to stockholders without paying taxes at the "corporate" level. This means that members (who must pay tax on their earned refunds) receive a larger share of the organization's net income.
Common
questions
Why doesn't the Association lower interest rates and eliminate the
patronage program?
The purpose of the Association is to provide financing and exceptional
service at competitive rates. Investors need the security of knowing that
we have the ability to generate earnings. The Association needs to build
capital and loss reserves to withstand the down cycles of the ag economy.
Earnings capability and capital and loss reserves result in lower-cost
funds, which we pass on to member-borrowers.
Why has the Association used allocated patronage refunds in the past?
The long-term viability of the Association depends on our ability to build
capital to fund growth or other credit services needed by our membership
in the future. At times, high cash refunds may compromise that financial
strength. Allocated retained patronage allows Farm Credit to build necessary
capital with the flexibility to return that capital when it is no longer
needed.
The
revolvement period (payment in cash) of allocated patronage refunds is
determined by the time necessary to accumulate needed equity. The Board
of Directors approves revolvement, contingent on future Association operating
results. Any revolvement of allocated patronage refunds would be made
in the same order in which it was allocated.
For more information about patronage refunds and other Farm Credit services,
contact info@farmcreditwny.com.
AgEnhancement
Grants
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Globe Trotter
Environmental
Loan Prog.
Patronage Refunds
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