University of Wisconsin Center for Cooperatives
Co-ops share of farm marketings up slightly in '98
By Charles A. Kraenzle
Editor's Note: Assistance in developing estimates of cooperatives' shares of farm marketings and farm production expenditures was provided by staff members of the Rural Business-Cooperative Service of USDA's Rural Development: David Chesnick, 100 largest cooperatives; Dave Cummins, grains and oilseeds; Eldon Eversull, farm supplies; Andy Jermolowicz, fruits and vegetables and tobacco; Charles Ling, milk; and Bruce Reynolds, cotton and cottonseed.
A recent U.S. Department of Agriculture analysis showed that farmer cooperatives' share of total farm marketings—including crop, livestock and poultry—was 30 percent in 1998. That's up from 29 percent in 1997, but below the 32 percent reported for 1996 (fig. 1). The 1998 market share was based on cooperatives' net marketing business volume of $76.6 billion, down from $77.8 billion in 1997 and the record $79.4 billion in 1996.
The major factor in the overall increase in cooperatives' share of farm marketings was the significant increase in cotton and cottonseed share to 43 percent in 1998 from 38 percent in 1997. Increased marketings of the 1997 cotton crop by cooperatives was the major factor.
Cooperatives' share of major farm production items—feed, seed, fertilizer, crop protectants and petroleum— purchased by the nation's farmers was 29 percent in 1998, the same as in 1997. The 1998 share of farm supplies purchased was based on cooperatives' net sales of $24.6 billion, down from the record $25.2 billion in 1997.
Most milk sold through co-ops
Farmers market a large percentage of their milk through cooperatives. Cooperatives' net sales of milk and milk products totaled $25.3 billion in 1998, up nearly $2 billion, or 8.4 percent, from 1997. U.S. farm cash receipts for milk was up nearly $3.4 billion, or 16.1 percent, in 1998, due to higher milk prices. As a result, co-ops' share of total U.S. farm cash receipts for milk was down slightly in 1998, to 86 percent from 87 percent in 1997 (table 1).
Nationally, the quantity of milk sold to plants and dealers in 1998 was up nearly 1.0 percent from 1997. At the same time, the U.S. price per 100 pounds of milk was up an average of 15.3 percent. Co-ops' share of milk sales at the first-handler level includes the value of milk for which cooperatives bargained with processors over price and terms of trade for members.
Figure 2 shows the most recent 5year market-share trends for selected farm commodities marketed by farmer cooperatives. Grain/oilseed and cotton/cottonseed shares varied. Milk, fruit/vegetable and livestock/wool shares were fairly level.
Share of farm production expenditures holds steady
Co-ops' share of major farm production items—feed, seed, fertilizer, petroleum and crop protectants—was 29 percent in 1998, the same as in 1997. Co-ops increased their market share of only one major farm input, petroleum. Co-ops' shares of fertilizer, crop protectants and seed remained the same, while feed's share dropped slightly to 21 percent (table 2 and figure 3).
Total U.S. farm cash expenditures for the five major supply items decreased 2.7 percent from 1997 to 1998, while co-ops' sales decreased 3.9 percent. Co-ops' sales of feed was $5.4 billion, down from $6 billion, or 9.7 percent, in 1997. Total feed expenditures also declined, falling 4.9 percent.
Co-ops' SO-percent share of petroleum expenditures set a record high. The previous record was 46 percent in 1991. Co-ops' sales of petroleum totaled $6.6 billion in 1998, down from $6.8 billion, or 2.1 percent, from 1997. However, total U.S. farm expenditures for petroleum fuel and oils in 1998 was $5.6 billion, down from $6.2 billion, or 10.4 percent, due mainly to lower fuel prices.
Calculating co-ops' share of petroleum expenditures is more difficult than for the other farm supply items because a major proportion of co-ops' petroleum sales is for nonfarm use. Based on previous research, farm use was estimated to be 43 percent. This percentage was applied to co-ops' net sales in calculating market share. This can vary from year to year, depending on weather conditions and other factors.
Co-ops' lowest share of the major farm supply items was seed, at 10 percent, unchanged from 1997 and 1996. Co-ops' share of total U.S. cash expenditures for seed was a high of 19 percent in 1987.
Cooperatives' sales of major farm supplies totaled $21.1 billion in 1998. Petroleum sales accounted for more than $6.6 billion, or 31.4 percent, of the total. Co-ops' sales of seed and crop protectants were up, while all others were down. This was the same for corresponding total U.S. cash expenditures.
Feed accounted for the second largest proportion of co-ops' farm supply sales (25.6 percent), followed by fertilizer (24.5 percent) and crop protectants (15 percent). Seed accounted for only 3.5 percent. Total U.S. feed expenditures accounted for 43.5 percent of the major farm supplies purchased, followed by fertilizer (18.5 percent), crop protectants (15.8 percent) and seed (12.5 percent).
Methods used in developing co-op shares
Cooperative-share estimates for selected commodities and farm supplies are based on data from the following sources. The annual survey of farmer cooperatives conducted by USDA's Rural Business-Cooperative Service, other Cooperative Services studies, cash receipts from farm marketings and farm production expenditures published by USDA's Economic Research Service (ERS) and Cooperative Services' commodity specialists.
Co-ops' shares of farm marketings represent estimates of cooperative activity at the farm-gate or first-handler level. Share estimates for farm production items represent cooperative activity in sales of supplies to farmers. The share estimate for each commodity was based on dollar value and year-to-year changes in related data or on physical quantity (where available). In most cases, the share estimate was based on dollar value.
For those commodities for which physical quantity handled by cooperatives was not available, cooperatives' shares of farm marketings were estimated by first subtracting gross margins from net cooperative business volume. These estimated "payments to farmers" were then related to their respective total U.S. cash receipts, adjusted for crop year, to calculate the percentage share figures.
Shares of the major farm supply items were estimated by first subtracting from co-ops' net business volume the volume of business exported, sold to other firms and used for non-farm purposes. These adjusted business volumes were then related to their respective total U.S. cash expenditures to calculate their percentage share estimates.