University of Wisconsin Center for Cooperatives
Rural Cooperatives, March/April 2000, pp. 25-26
Published by the Rural Business and Cooperative Development Service 

How Does Your Local Farm Supply Cooperative Rate?

By Beverly L. Rotan
Economist
USDA Rural Development
Rural Business-Cooperative Service

With farm commodity prices severely depressed and thousands of producers all across the nation struggling for their economic survival, most farmers could improve their odds by belonging to financially strong marketing and supply cooperatives to add some certainty to an uncertain world. But a cooperative is not a panacea, and managers and directors need to constantly monitor all aspects of the cooperative operation to make certain it is returning a good value to its members.

One way to measure the success of your farm supply cooperative is to compare it with the performance of cooperatives with similar functions during the past year. Was its performance higher, lower or about the same as the average of a cross section of local farm cooperatives with similar factors?

The two tables below contain average financial data compiled from a survey of 329 cooperatives for 1997 and 1998. These include trend and industry norm comparisons. Fill in the blanks and compare these benchmarks with your cooperative's financial data.

So how is your cooperative doing?

Table 1 - Compare your farm supply cooperative 1/ with averages for cooperatives with similar functions

Size(1997) 2, 3/
Size (1998) 2,3/
 Your cooperative
Measure/Item Item Small Medium Large Super
Small Medium Large Super
Sell farm supplies only Percent 85 60 41 10
85 60 41 10
Total assets Mil. dol. 1.6 4.1 7.4 14.0
1.6 4.3 7.9 15.4
Long-term debt Thou. dol. 90.0 342.0 661.2 786.3
88.1 361.7 759.4 1,284.4
Total liabilities Thou. dol. 404.6 1,287.0 2,646.5 5,544.1
405.6 1,324.3 2,937.2 6,055.9
Total sales Mil. dol. 2.9 7.2 13.3 24.9
2.6 7.0 12.7 26.0
Total service revenue Thou. dol. 48.1 204.1 320.1 665.9
56.2 201.7 321.7 686.5
Total revenue Mil. dol. 2.9 7.7 14.1 26.5
2.7 7.2 13.5 27.6
Net income (losses) Thou. dol. 115.4 335.5 642.2 1,159.2
85.7 300.3 506.8 1,049.4
Total of labour expenses Percent 54 51 53 54
54 51 53 55
Patronage refunds received Thou. dol. 67.1 184.9 319.5 761.6
70.5 184.2 333.3 790.2
Liquidity ratios
Current Ratio 2.39 1.90 1.51 1.42
2.35 1.90 1.40 1.41
Quick Ratio 1.42 1.05 0.80 0.71
1.38 1.05 0.75 0.63
Leverage ratios
Debt to asset Ratio 0.11 0.13 0.16 0.18
0.09 0.12 0.17 0.19
Debt to equity Ratio 0.08 0.12 0.14 0.09
0.07 0.12 0.15 0.13
Times interest earned Ratio 7.37 7.47 6.27 7.30
5.87 6.83 5.37 5.88
Profitability ratios
Gross profit margin Percent 16.99 16.64 18.65 16.12
17.86 18.15 19.56 15.88
Return on total assets before interest and taxes Percent 9.12 10.01 10.97 10.57
6.81 8.86 8.30 8.85
Return on total equity Percent 10.05 11.87 13.49 13.68
7.20 10.21 10.13 11.22
1/100 percent of sales were generated from farm supply sales.
2/Small = Sales are $5 million or less; medium = $5 million to $10 million; large = $10 million to $20 million; and super = over $20 million.
3/There were 329 cooperatives surveyed in both years.
Table 2 - Compare your mixed farm supply cooperative 1/ with averages for cooperatives with similar functions

Size(1997) 2, 3/
Size (1998) 2,3/
 Your cooperative
Measure/Item Item Small Medium Large Super
Small Medium Large Super
Market farm products and sell farm supplies Percent 6 19 24 19
6 19 24 19
Total assets Mil. dol. 1.1 3.7 8.3 16.2
1.1 3.9 8.6 17.4
Long-term debt Thou. dol. 27.9 479.4 1,063.2 2,029.7
116.0 571.2 1,117.8 2,094.0
Total liabilities Thou. dol. 399.1 1,380.0 3,293.8 8,099.2
342.8 1,467.2 3,381.7 8,594.6
Total sales Mil. dol. 2.7 7.9 14.6 34.9
2.5 7.3 14.4 34.3
Total service revenue Thou. dol. 60.6 251.3 550.1 1,102.9
65.6 293.8 598.5 1,224.7
Total revenue Mil. dol. 2.9 8.4 15.6 36.9
2.6 7.8 15.5 36.4
Net income (losses) Thou. dol. 14.3 232.8 377.2 868.3
34.2 233.0 388.1 941.9
Total of labour expenses Percent 51 48 51 48
51 49 51 49
Patronage refunds received Thou. dol. 27.9 125.8 345.6 634.9
31.8 126.6 365.2 662.6
Liquidity ratios
Current Ratio 1.54 1.74 1.44 1.36
2.33 1.70 1.30 1.32
Quick Ratio 0.80 1.07 0.81 0.64
1.18 0.94 0.68 0.59
Leverage ratios
Debt to asset Ratio 0.14 0.17 0.20 0.25
0.20 0.19 0.20 0.25
Debt to equity Ratio 0.04 0.21 0.21 0.25
0.16 0.24 0.21 0.24
Times interest earned Ratio 1.70 4.47 3.61 3.20
2.53 4.68 3.37 3.32
Activity ratios
Fixed asset turnover Ratio 11.83 7.39 5.80 7.98
10.29 5.72 5.06 7.19
Total asset turnover Ratio 2.49 2.17 1.76 2.15
2.31 1.87 1.66 1.97
Profitability ratios
Gross profit margin Percent 11.17 12.37 14.51 13.45
12.47 13.31 15.58 15.10
Return on total assets before interest and taxes Percent 4.00 8.96 6.82 8.35
5.83 8.03 6.75 8.36
Return on total equity Percent 2.03 10.25 7.49 10.70
4.73 9.66 7.37 10.64
1/50 to 99 percent of sales were generated from farm supply sales.
2/Small = Sales are $5 million or less; medium = $5 million to $10 million; large = $10 million to $20 million; and super = over $20 million.
3/There were 329 cooperatives surveyed in both years.
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