VIEWPOINT

Board of director oversight of MFA continues to guide your cooperative
By Don Copenhaver

The previous Viewpoint in Today’s Farmer was devoted to the important role played by the corporate board of directors of MFA Incorporated. Our board members provide necessary guidance and oversight for the complex business interests of your cooperative. Fourteen individuals sit on MFA’s corporate board. Counting the elections this past February, over the course of a two-year period, nine of those positions will turn over. That’s a large loss of talent and experience. Fortunately, our membership continues to select qualified, talented individuals. But it takes time for those individuals to reach their potential because of the complexity of today’s business environment.

Board members are asked to understand how other cooperatives operate, how they are structured and how MFA’s balance sheet compares to the balance sheets of other cooperatives. Furthermore, they must analyze investor-owned businesses. How does MFA compare and compete with businesses structured in an entirely different manner with entirely different philosophies?

Several years ago, a retired CEO of a neighboring cooperative addressed our corporate board. Among other items he addressed in his presentation were five responsibilities of a cooperative’s directors that he considered core:

• Oversight of the business

• Compliance with law

• Selection of qualified management

• Consideration of major policy matters affecting the business

• Abundant good faith, absolute candor, openness and honesty.

Additionally, he said, two overriding duties required of board members are the duty of care and the duty of loyalty. Taken together, these responsibilities are especially important in today’s business world.

Keep in mind there are three keys for a successful cooperative: an interested membership, an involved board of directors with a genuine interest in the success of the cooperative, and dedicated employees across all levels of the organization. Frequent, open communication makes this work to the greatest degree possible. Communication should flow both ways, back and forth between management, employees, members and the board of directors.

We rely on our board of directors, because they are involved—not in day-to-day decisions, but in the governance of your cooperative. One essential duty provided by MFA’s corporate board is the oversight of our financial condition. A specific board committee, consisting of five directors, is responsible for overseeing the quality and integrity of our accounting, auditing, internal control and financial reporting practices. We take this charge seriously. The committee is charged with directing a complete audit of the cooperative.

MFA has been extremely fortunate to have Joe Dent of Humeston, Iowa, to head this committee. He’s your board member from District 2 (and a row-crop farmer and cattleman). Under his leadership, the committee selects and evaluates independent auditors and meets twice a year with representatives of the audit firm.

The group meets pre-audit to examine scope and post-audit to assess significant issues with the independent auditors. Upon completion of the annual audit, the committee reviews the audited financial statements and discusses those statements with management and the independent auditors.

As you’d expect, the U.S. Security and Exchange Commission has a list of very specific requirements this committee must take into account. The committee has authority to meet with outside auditors without members of management present. When we change outside auditors (as happened this past year), the audit committee recommends and interviews candidates. Committee members then make recommendations to the full board.

Additionally, as I’ve described in past columns, we ask yet another committee, our corporate board’s legislative committee, to represent MFA’s membership in communication with elected political leaders in our trade territory. The legislative committee consists of four board members—the chairman, vice chairman and two other members. These individuals represent MFA’s member/owners in meetings with the congressional delegation in MFA’s trade territory. We don’t rely on lobbyists. We put actual producers face to face with our elected leaders. These meetings traditionally coincide with an annual trip to Washington, D.C., for the meeting of the National Council of Farmer Cooperatives. During that trip, committee members meet with as many of our elected officials as can be scheduled.

There are other board committees: an executive committee, a director training steering committee and a scholarship committee. I don’t mean to slight their activities. But I’ve described just two above to provide an example of the intricacies involved and to underscore just how much we, as a modern agribusiness, rely on their abilities and judgment. Please join me in thanking those individuals for their willingness to lend their time and expertise. I thank the membership for continuing to select such a stellar group of individuals who can and will lead MFA to greater achievement and service.