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CSOP History and Best Practice

  • CSOPs have not been implemented in the energy sector yet. However, they are backed by successful implementation in the agricultural sector and by their twin concept, the ESOP.
  • Louis O. Kelso first introduced the CSOP in 1958 in California’s Central Valley by enabling local farmers to become (co-)owners of a fertiliser processing plant, Valley Nitrogen Producers, Inc., of which they were the primary consumers. The main drivers to introduce CSOP in Valley Nitrogen were high, inflated fertilizer prices set by an oligopoly of major producers controlling the market.
  • In spite of initial difficulties, the first CSOP was a great success: 4,580 farmers became the (co-)owners of a new artificial fertiliser plant that supplied them with an overall investment of USD 120 million (today about USD 1 billion) financed mainly by a bank loan of the Berkeley Bank of Cooperatives.
  • The initiative broke the monopoly of the fertiliser industry with a price drop from USD 250 per ton to USD 66 per ton while remaining financially self-sufficient and profitable. Thus farmers saved well over USD 1 billion in fertiliser during a 15-year period.
  • The financial structure of the CSOP mirrors the Employee Stock Ownership Plan (ESOPs) of Louis O. Kelso. The latter has been mainstreamed in the US since 1956. In 2018, there were over 6,600 ESOPs and 3,200 ESOP-like plans with 15.5 million employee-owners (13% of the private sector workforce) holding around USD 1.4 trillion in assets.