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DFA … built by the members it serves
Cooperatives like DFA are funded by the members they serve.
DFA is capitalized by its dairy farmer members via a Base Capital Plan. When members reach their investment target levels, 100 percent of their share of the cooperative's profits are distributed to them in cash.
Since its creation in 1998, DFA has followed an aggressive redemption program, which is subject to the approval of DFA’s corporate board of directors (100% dairy farmers). DFA’s program includes four areas:
- Emphasis on returning equity to the producers who have been out of business the longest;
- Return equity within 10 years from the date a producer ceases to market milk through DFA;
- Early Equity Redemption Program allows producer options for retirement currently in less than 10 years;
- Estate Payment Program
Base Capital Plan: How It Works
DFA has established a target base capital level of $1.75
per cwt. on the annual average of milk marketed by the member.
Transition and cash patronage:
- Members whose base capital levels are below $1.00 per cwt. pay a capital retain of $0.10 per cwt. until they reach the $1.00 per cwt. level.
- Members who have not achieved the target base capital level of $1.75 per cwt. receive 20% of their share of the cooperative's profits in cash and 80% in qualified written notices of allocation (which are applied to their base equity).
- When a member's target level ($1.75) has been achieved, 100% of a member's share of the profits are distributed in cash.
- This plan affords DFA greater access to capital and stabilizes its equity base.