(1) Proprietary organization.—Under this form of organization, one person owns and operates the factory. The dairy-men are paid a stated price for milk, or the milk is made into cheese for a stated price a pound. The proprietor receives all profits and assumes all losses.
So far as the dairy-man is concerned, the stock company is a proprietary organization. The gains and losses are shared by each member according to the amount of money invested.
(2) Coöperative organization.—In a true coöperative cheese factory each patron is an owner, as the name indicates. The object of this organization is to reduce the cost of manufacture rather than pay large dividends, so that the dairy-man with a large herd and small capital invested in the factory obtains more returns than the one who owns considerable capital and has a small herd. Many cheese factories are coöperative in name only and proprietary in operation. The state of Wisconsin has a law which tends to stop this defect and defines what organizations may use the term or name, coöperative.
The constitution of a coöperative organization should state: 1, Name; 2, object; 3, officers and duties of officers; 4, manager or other person to run business; 5, capital stock; 6, meetings; 7, voting power; 8, amendments.
Some of the most important statements which should appear in the constitution are mentioned in the following sentences. A statement should show what persons are eligible to membership in the organization. It is a careless plan simply to say that the duties of the officers are those usually defined in such an organization. This may lead to confusion and neglect, or both. Direct statements should be made explaining the exact duties of each officer. The limits of the authority of the manager or person who runs the business should be explicitly stated. The manager then knows just what his duties are and what matters or parts of the business must be considered by other officers or committees. The amount of capital stock and the number and value of each share should be exactly stated. The constitution should state when and where the regular meetings must be held and by whom and when special meetings may be called. This gives every member ample notice of the regular meetings. Some method or means should be provided to notify each member of the special meetings.
The voting power should be definitely stated, whether it is limited to shares of capital stock or by members or by number of cows owned by each member. It is necessary to indicate just how amendments to the constitution may be made. Each member should know before the final vote just what changes are being proposed. Types of constitutions may be found in the following references:
Elliott, W. J., Creameries and cheese factories; organization, building and equipment, Mont. Exp. Sta. Bul. 53, 1904.
Farrington, E. H., and G. H. Benkendorf, Organization and construction of creameries and cheese factories, Wis. Exp. Sta. Bul. 244, 1915.
Van Slyke, L. L., and C. A. Publow, The science and practice of cheese making, pages 447-453, 1909.
Iowa Exp. Sta. Bul. 139, 1913. Creamery organization and construction.