February 27, 2024


Returning Customer Value through Patronage Dividends

By: Andrew Grant


For the past 28 years, Farm Credit East has been pleased to return a share of its earnings to customers in the form of patronage dividends – a benefit of cooperative ownership. In fact, since the patronage program was first adopted, customer-owners of Farm Credit East (and predecessor cooperatives) have received more than $1.4 billion in dividends from ownership of their cooperative.

But what exactly is a patronage dividend? Simply stated, a patronage dividend is a financial benefit that cooperative members receive based on their participation and ownership in a cooperative organization. But let’s dive deeper.

Cooperative Model

In a cooperative, members collectively own and operate the organization. At Farm Credit East, our member owners are our customers and our cooperative is governed by a customer-elected board of directors. The Farm Credit East Board of Directors remains committed to returning to members funds not needed to operate or capitalize the business.

How does patronage work?

When a cooperative generates profits or surplus funds, it allocates a portion of those earnings back to its members. This allocation is known as a patronage dividend.

Based on 2023 earnings, Farm Credit East was pleased to recently announce a record patronage distribution of $120 million in cash patronage dividends to 12,500 farm, fishing and forestry business owners and operators across the Northeast. On average, this represents a 1.25% reduction in eligible customers’ effective interest rate.

In addition, the board approved a special one-time $10 million patronage distribution based on 2023’s outstanding financial results, for a total of $130 million of earnings returned to customer-owners. Read the full press release here.

How does patronage impact your interest rate?

On average over the past three years, eligible customers have received 26% of the interest earned during the year. The level of the patronage payment is based on the interest earned from your loan during the year.




Term (years)

Total Interest

Patronage Dividend*

Net Interest

Another Bank’s Terms








Farm Credit East with Patronage Dividend








*Based on a patronage dividend of 26% of interest accrued. This is an example, and actual results may vary. Patronage is not guaranteed.

Is a patronage payment guaranteed each year? 

The Farm Credit East Board evaluates a variety of business factors, including earnings, growth, capital levels and economic conditions, to determine if it is appropriate to pay patronage dividends in a given year. In evaluating these factors, the board makes a business determination as to whether Farm Credit East earnings should be returned to customer-owners in the form of patronage dividends or retained on our balance sheet to help us continue serving agriculture, commercial fishing and forest products industries through cycles.

How is patronage paid?

Patronage payments are paid entirely in cash. Payments are taxable, so we encourage recipients to consult with their tax advisors about their specific situations.


Learn more about Farm Credit East’s Patronage Dividend Program



Tags: cooperative, patronage

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