What is allocated surplus?

Members, through the board, usually elect to leave a portion of the patronage refund in the cooperative to help keep its operation on a sound financial basis. The retained portion of each member's patronage refund is recorded on the books of the association, or allocated to each member's equity account. This retained patronage refund is called allocated surplus.

Qualified allocated surplus is a portion of the patronage refund retained for the purpose of providing for the capital needs of your cooperative. Farm Credit operates with a minimal stock requirement. This stock requirement is not adequate to maintain the levels of capital which are required to operate a safe and sound financial institution. Allocated surplus now provides that source of capital.

Farm Credit's goal is to operate efficiently and maintain a strong permanent capital base. It is the board's responsibility to continually monitor the financial position of the association. The board can vote to retire allocated surplus when it determines the association does not need it for capital.