Richard J. and Phyllis Bot - Page 9




                                                - 9 -                                                  
            and its membership as a whole.  MCP also was obligated to market                           
            the processed corn at the best rate obtainable on the open                                 
            market.  In the UMAs, petitioners appointed MCP as their agent to                          
            market and sell the corn they delivered to satisfy their                                   
            production and delivery obligations.  MCP determined how much                              
            corn petitioners had to produce and deliver and had “sole and                              
            complete discretion in all phases of the marketing activity”.                              
                  In return for petitioners’ meeting their production and                              
            delivery obligations, MCP was obligated under the UMA to pay each                          
            petitioner:  (1) At least 80 percent of the loan value per bushel                          
            of corn delivered by each petitioner; (2) a storage fee and                                
            interest in some cases; (3) an additional payment (“value-added                            
            payment”) for value added to the corn as a result of its                                   
            processing, and as further compensation for corn delivered by                              
            petitioners, if MCP determined that such a payment was warranted                           
            after calculating the net proceeds from all of its operations for                          
            the processing year and if MCP’s lenders approved; and (4)                                 
            payments from MCP’s earnings as patronage dividends in accordance                          
            with MCP’s bylaws.  During 1994 and 1995, petitioners received                             
            value-added payments of $132,375 and $207,612, respectively,                               
            attributable to the option pool corn they acquired and delivered                           
            to MCP.                                                                                    










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