Patronage Program

Sharing Our Profits with You

AgChoice looks a little different than most lenders because we’re a cooperative. Not only are you a customer, you are an owner who shares in AgChoice’s profits. One way we return those profits to you is through our patronage dividend program that can reduce your effective cost of borrowing.

For a quick overview, download our patronage flyer or read our frequently asked questions. 

Patronage FAQs

1. How does the Board of Directors decide how much patronage to pay?

Like any other business, AgChoice must retain some earnings each year as capital. We need enough capital on hand to ensure sound operations that meet the current and future needs of our customers-owners, and we must be positioned to handle adverse economic cycles. We employ financial projection models and capitalization targets from our business plan to determine how much patronage can be safely distributed.

2. How is my patronage dividend calculated?

The distribution amount each customer-owner receives is a percentage of interest accrued on their AgChoice loans. While the percentage is the same for every customer-owner, the dividend amount varies depending on how much interest you paid in the previous year. Those who borrow more will receive more patronage and vice versa. This aligns with the basic cooperative principle that members derive benefits based on their use of the cooperative’s services.

3. Is my patronage distribution taxable?

Yes. In January, you will receive a 1099-PATR form showing all taxable patronage funds AgChoice issued to you during the previous year. The amount of tax owed depends on several factors. Please consult your accountant or tax advisor with more detailed questions.

4. Why doesn’t AgChoice charge a lower interest rate and eliminate patronage?

We regularly review our pricing strategy to ensure we are competitive in the market. As a cooperative, AgChoice also offers a cash dividend program to return earnings to our customer-owners. We believe it gives our customer-owners the best of both worlds: you receive an attractive interest rate and enjoy the patronage payout. 

5. What types of transactions do not qualify for patronage distributions?

The following transactions do not qualify for patronage distributions:

  • Leases
  • All consumer purpose loans
  • Related services and insurance sales
  • Loans with unique pricing or risk characteristics that the Association designates, in advance, as not eligible for patronage
  • Loans for which the borrower has expressly waived patronage

All existing consumer loans with an application date prior to 01/03/17 will continue to receive patronage until they are paid in full or refinanced. In some cases, borrowers may have both patronage eligible and non-patronage loans with AgChoice.

6. If I don’t qualify for patronage, what are the benefits of stock investment and cooperative membership?

A minimal stock ownership requirement accompanies every borrowing relationship with AgChoice, and all customer-owners benefit from cooperative membership. With stock purchase, customer-owners can participate in Board elections, customer events and educational programs. The funds you pay for stock remain under your account (at risk, as with any other investment), and we will return the full amount to you upon request once you pay your loans in full.

7. Is my patronage dividend a guarantee?

No, but AgChoice has paid patronage each year since we formed in 1999, and we plan to continue paying in the future. In fact, the Board expects patronage dividends to remain strong for several years, barring any unforeseen economic or other changes that would negatively impact profitability or capital requirements. We believe that this practice is essential to fulfilling our shared purpose statement: Inspiring Growth in Our Families, Businesses and Rural Communities.

8. Can I receive my patronage dividend through direct deposit?

Yes. AgChoice offers patronage direct deposit for eligible members. To sign up, complete this easy survey. A member of our team will contact you and guide you through a one-time registration process for fast and convenient patronage delivery.  

Calculate Your Refund


Here is your estimated Patronage Distribution: ESTIMATED PATRONAGE

After receipt of your distribution, patronage effectively lowers your total interest cost for the first year of your loan from $XXXXX to: EFFECTIVE INTEREST EXPENSE

This effectively lowers your interest rate from XXXX to: EFFECTIVE INTEREST RATE

*Results based on 10-year average refund totals. Past performance not a guarantee of future payouts. Calculations do not account for time value of money or distinguish between returns made in cash and in allocated surplus. Talk to a loan officer for details.

Step by Step Patronage Guide

We reduce the cost of borrowing for our customer-owners. Understand how the patronage refund works in 90 seconds. 

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