Farmer cooperatives have often maintained inflexible capital structures which severely restrict members' freedom to allocate their own capital in a most profitable manner. This study was conducted to provide insights into how cooperative finance programs might be modified to provide increased capital and, at the same time, be more acceptable to members. The revolving equity certificate means of finance was examined
in depth. Of particular interest was the option of certificate transferability which would allow "capital-short" certificate holders the opportunity to reallocate at least a part of their investment in the cooperative association to more preferred investments on their own farms. An anlysis was designed to determine which types of farmers, according to selected farmer characteristics, would be most likely to 1) possess the highest opportunity costs for capital investments on their farms and 2) buy and/or sell revolving equity certificates at some discounted present value of the certificates' specified face amounts.
Cooperative member and nonmember preferences for selected means of finance were also examined. The acceptability of alternatives such as long-term interest-bearing notes, stock certificates, revolving equity certificates, and high member ship fees was rated by the farmers in the sample. Conclusions were then reached regarding the general acceptability among farmers of selected means of cooperative finance. Several groups of farmers, according to selected farmer characteristics, expressed a desire to participate in a market for transferable revolving equity certificates. It was concluded that transferability of certificates would provide an opportunity for many farmers to allocate their own capital in a more profitable fashion. Examination of the potential buyer-side of the equity certificate market revealed a relatively thin participation except at high rates of discount. In general, cooperatives could better serve their memberships by carefully planning their alternative means of finance, with.special consideration of those alternatives which would allow the members a reasonable degree of investment flexibility
