What CHS Inc. is and who owns it

CHS Inc. is a farmer-owned cooperative based in Minnesota that supplies energy, grains, crop inputs, and risk management services to agricultural operations across North America. Unlike a corporation where shareholders are investors, CHS is owned by the farmers and ranchers who use it — currently around 500,000 member-owners across the United States and Canada.

The cooperative structure means profits are returned to members rather than paid to outside investors. CHS operates grain elevators, fertilizer plants, petroleum distribution terminals, and crop insurance services. Members can buy fuel, seed, fertilizer, and other inputs through CHS locations, and they can sell their grain through CHS marketing channels.

CHS is structured as a federated cooperative, which means it is made up of regional cooperatives that are themselves owned by farmers. Your local or regional co-op is likely a member-owner of CHS, and you may be a member of that local co-op. This layered ownership connects individual farmers to a larger network without removing local control.

Key Takeaways

  • CHS Inc. is owned by approximately 500,000 farmers and ranchers who use its services, not by outside investors.
  • Members can purchase fuel, seed, fertilizer, and crop inputs through CHS locations and sell grain through CHS marketing channels.
  • Membership in a local or regional cooperative typically gives you membership rights in CHS, though you should confirm this with your local co-op.
  • Profits from CHS operations are returned to members as patronage refunds, distributed based on how much each member used the cooperative's services.
  • CHS offers crop insurance and risk management services alongside its supply and marketing functions.

How membership works and what it costs

Membership in CHS is usually indirect — you become a member by joining a local or regional agricultural cooperative that is itself a member-owner of CHS. Your local co-op handles the relationship with CHS on behalf of its members. Some regional cooperatives charge a membership fee or require a minimum purchase commitment, but this varies by location and by the specific cooperative you join.

When you join a member cooperative, you typically receive a membership certificate or share certificate representing your ownership stake. This certificate may have a nominal value (often $10 to $100) and does not represent a financial investment in the way a stock purchase does. Instead, it documents your right to vote on cooperative matters and to receive your share of profits.

The membership structure means you have voting rights on major decisions — such as electing the board of directors and approving the annual budget. One member gets one vote, regardless of how large or small their operation is. This differs from investor-owned companies, where voting power is tied to the number of shares owned.

Patronage refunds and how profits are returned

CHS returns profits to members through patronage refunds, also called dividends or rebates. These are calculated based on how much each member used CHS services during the year — not based on how many shares they own. If you bought $10,000 worth of fuel and fertilizer through CHS and another member bought $50,000 worth, you receive a smaller refund even if you both own the same number of shares.

Patronage refunds are typically paid in cash or applied as a credit to your account. Some cooperatives allow members to reinvest refunds back into the cooperative as additional equity. The amount and timing of refunds depend on CHS's annual financial performance and the decisions made by the board of directors and membership.

Refunds are usually distributed annually, though some cooperatives distribute them more frequently. You should receive a statement showing how your refund was calculated — the total patronage dollars you earned and the percentage of CHS profits that was returned to members that year.

Services CHS provides to members

CHS operates as both a supply cooperative and a marketing cooperative. On the supply side, members can purchase petroleum products (diesel, gasoline, heating oil), fertilizers, seed, crop protection chemicals, and animal feed through CHS locations. CHS also provides agronomy services, including soil testing and crop consulting, to help members make decisions about inputs.

On the marketing side, CHS operates grain elevators where members can deliver and sell corn, soybeans, wheat, and other commodities. CHS handles storage, cleaning, and marketing of grain, and members can choose to sell at the time of delivery or store grain for later sale. CHS also offers forward contracting and hedging services to help members manage price risk.

CHS provides crop insurance through its subsidiary, CHS Crop Insurance, offering coverage for yield loss, revenue loss, and named-peril policies. Members can also access risk management tools and market information through CHS to help plan their operations and make marketing decisions.

How to find and join a CHS member cooperative

To use CHS services, you first need to join a local or regional cooperative that is a member of CHS. CHS does not sign up individual farmers directly. You can find member cooperatives by visiting the CHS website and using their cooperative locator tool, which shows locations by state and region.

Once you identify a cooperative near you, contact them directly to ask about membership requirements and any fees. Most cooperatives will ask for basic information about your operation — the crops you grow, the size of your operation, and your location — to determine if they serve your area and what services they can offer.

Membership applications are usually straightforward and can often be completed in person at a local CHS location or office. You may be asked to sign a membership agreement and pay a membership fee if one applies. After approval, you receive your membership certificate and can begin purchasing supplies and marketing grain through CHS.

Differences between CHS and investor-owned agricultural companies

The main difference is ownership and profit distribution. CHS is owned by the farmers who use it, and profits go back to members as patronage refunds. An investor-owned company is owned by shareholders who may or may not use the company's services, and profits are paid as dividends to shareholders based on stock ownership.

In a cooperative, voting power is equal — one member, one vote — regardless of the size of your operation or how much you purchase. In an investor-owned company, voting power is tied to stock ownership, so larger shareholders have more control. This means CHS members have a direct say in how the cooperative is run, even if they operate a smaller farm.

CHS also operates on a cost-plus model for many services, meaning prices are set to cover costs plus a modest margin, with excess profits returned to members. Investor-owned companies aim to maximize profits for shareholders, which can result in higher prices for customers who are not owners.

Tax treatment of patronage refunds and membership

Patronage refunds from CHS are taxable income to you in the year they are paid or credited to your account. You should receive a Form 1099 from CHS or your member cooperative showing the amount of patronage refunds you received. Report this income on your tax return in the same way you would report other farm income.

If you reinvest patronage refunds back into the cooperative as additional equity, the refund is still taxable income even though you do not receive cash. The cooperative should provide documentation showing both the amount of the refund and the amount you chose to reinvest.

Your membership certificate itself is not a taxable asset unless you sell it or it increases in value. Membership fees paid to join a cooperative may be deductible as a business expense if you operate a farm as a business, but you should consult a tax professional about your specific situation.

Frequently Asked Questions

Do I have to be a farmer to join CHS?

You must join through a member cooperative, and most member cooperatives require you to be involved in agriculture — farming, ranching, or a related operation. Some cooperatives serve broader rural areas and may have different membership criteria. Contact your local cooperative to ask about their specific requirements.

Can I sell my membership share?

Membership shares are typically not freely traded like stock. If you leave the cooperative or sell your farm, the cooperative usually has the right to buy back your membership certificate at its stated value. Some cooperatives allow transfers to family members or other farmers, but this varies by cooperative bylaws.

What happens if CHS has a loss instead of a profit?

In years when CHS operates at a loss, there are no patronage refunds to distribute. Members do not owe money to cover the loss — your liability is limited to your membership investment. The cooperative adjusts its operations and pricing to return to profitability in future years.

Can I use multiple CHS member cooperatives?

Yes, if you operate in an area served by more than one CHS member cooperative, you can join both and use their services. However, you typically maintain separate memberships and accounts with each cooperative. Your patronage refunds are calculated separately for each one based on your purchases through that cooperative.

How do I find out what my patronage refund will be?

Your member cooperative provides a statement each year showing your patronage refund calculation. This statement shows your total purchases or volume through CHS during the year and the refund amount based on that volume and CHS's overall profitability. You can also contact your local cooperative office to ask about your refund status.