University of Wisconsin Center for Wisconsin
Rural Cooperatives, September/October 1999, p. 27-28.
Published by the Rural Business and Cooperative Development Service 

Net business volume, net income for farmer co-ops decline in 1998

By Eds


Editor's Note: Information for this article was compiled by the Statistics Staff of USDA's Rural Business-Cooperative Services, including Charles A. Kraenzle, Celestine C. Adams, Katherine C. DeVille, Jacqueline E Penn and Ralph M. Richardson

Business volume of the nation's farmer-owned cooperatives declined to $104.4 billion in 1998, down from $106.7 billion in 1997, according to data compiled by USDA's Rural Business-Cooperative Service. Business volume includes gross receipts from the sale of crops, livestock, farm supplies and services collected by the nation's 3,651 farmer cooperatives.

Farmer cooperatives' net income of $1.7 billion in 1998 was down from $2.3 billion in 1997. That's the lowest income level since 1993 and well off the income record of $2.36 billion set in 1995. Lower margins for farm supplies, poultry and sugar were major factors that caused the income decline. Losses suffered by a number of cooperatives also hurt the overall income performance.

Crop and livestock marketing receipts dropped 1.5 percent, farm supply sales declined 3.8 percent and service receipts and other income fell 3.5 percent in 1998. Among the major products marketed, grain and oilseed dollar volume dropped the most (13.6 percent), largely due to significantly lower prices.

The drop in farm supply sales was due mainly to lower prices for livestock feed, petroleum and fertilizer. Feed sale receipts alone dropped 10.4 percent from 1997. The drop in farm supply sales, as well as the lower margins, also had a significant impact on earnings of farm supply cooperatives. Net income of $578.8 million was down nearly 31 percent.

Table 1
Farmer cooperative numbers, net income, and memberships, 1998 and 1997(1)
Principal product
marketed and
major function
Cooperatives(2)

Net Income(3)

Memberships
1998
1997

1998
1997

1998
1997

Numbers

Million dollars

1,000
Marketing:
Cotton(4)
15
16

64.0
67.7

42.3
42.7
Dairy
228
239

447.2
369.7

92.9
104.9
Fruit & Vegetable
249
259

76.9
189.7

44.0
44.0
Grain & oilseed
964
1013

441.4
437.0

728.7
745.0
Livestock & poultry
98
108

-71.2
191.4

197.8
270.3
Rice
17
18

7.3
7.3

12.9
14.0
Sugar
52
51

-12.1
-2.0

15.9
13.8
Other products(5)
240
239

64.0
52.5

264.9
263.2
Total marketing
1,863
1,943

1,017.5
1,313.3

1,398.4
1,497.8
Farm supply(6)
1,347
1,386

578.8
834.6

1,773.7
1,743.2
Related-service(7)
441
464

146.0
166.5

180.6
183.1
Total
3,651
3,793

1,742.3
2,314.4

3,352.6
3,424.2
(1)Preliminary. Totals may not add due to rounding.
(2)Operations of many cooperatives are multi-product and multi-functional. They are classified in most cases according to predominant commodity or function indicated by business volume.
(3)Net income less losses and before taxes.
(4)Cooperative cotton gins included with related-service cooperatives.
(5)Includes bean and pea (dry edible), nut, tobacco, wool, fish, and miscellaneous marketing cooperatives.
(6)Data for 1997 memberships were revised.
(7)Includes trucking, cotton gins, storage, artificial insemination, rice driers, and other services cooperatives.
Table 2
Cooperative business volume,
1998 and 1997(1)
Commodity
or function
Net volume(2)
1998
1997
Million dollars
Products marketed:
Cotton
2,961
3,004
Dairy
25,324
23,374
Fruit & Vegetable
9,423
9,268
Grain & oilseed(3)
21,295
24,639
Livestock & poultry
9,555
9,578
Rice
932
930
Sugar(4)
2,445
2,284
Other products(5)
4,737
4,765
Total products
76,671
77,843
Supplies purchased:
Crop protectants
3,163
3,125
Feed
5,376
5,988
Petroleum
6,420
6,756
Seed
730
702
Other supplies(6)
3,384
3,238
Total farm supplies
24,226
25,181
Services and other income(7)
3,520
3,647
Total business volume
10,4418
10,6670
(1)Preliminary. Totals may not add due to rounding.
(2)Volume includes value of products associated with cooperatives that operate on a commission basis or bargain for members' products.
Excludes intercooperative business
(3)Excludes cottonseed
(4)Data for 1997 were revised
(5)Includes dry edible beans and peas, fish, nuts, tobacco, wool, and other miscellaneous products.
(6)Includes building materials, containers, hardware, tires-batteries-accessories (TBA), farm machinery and equipment and other supplies.
(7)Includes trucking, ginning, storage, artificial insemination, rice drying, and other.

Farm marketing cooperatives— those that sell crops, livestock and value-added products for their members —also suffered a steep 22.5 percent decline in net income. Fruit/vegetable, poultry and sugar cooperatives all suffered significant income drops. Bucking the trend were dairy co-ops, which posted a 21-percent income gain. Net income for grain and oilseed cooperatives increased 1 percent despite substantially smaller sales volumes.

Co-ops reflect farmer trends

Cooperatives continued to expand as reflected by total assets reaching a record $46.5 billion in 1998, an increase of 5.8 percent from nearly $44 billion in 1997. To finance this expansion, total liabilities also grew to $26.6 billion from $25.5 billion, a 4.5 percent increase. More importantly, however, a larger proportion of total assets were financed by net worth as it jumped to nearly $20 billion from $18.5 billion, an increase of 7.6 percent.

Cooperatives Net Income - 94-98 (top graph) and Cooperatives' Net Business Volume, 94-98

The number of U.S. agricultural cooperatives dropped to 3,651, down from 3,791 in 1997, reflecting the changing structure of agriculture. Mergers, consolidations, acquisitions and dissolutions resulted in a loss of 195 cooperatives. However, 55 cooperatives were added to the list in 1998.

Membership in farmer cooperatives totaled 3.35 million in 1998, down 2.1 percent from 1997. The number of memberships was larger than the number of farmers in the U.S. because many farmers belong to more than one cooperative.

Cooperatives employed 173,782 full-time employees in 1998, up from 172,199 in 1997.

Farmland. CenexHarvest States Top NCB’s list

Two agricultural organizations that recently announced plans to consolidate operations top the list of the largest U.S. cooperatives, published by the National Cooperative Bank INCB), Washington, D.C. The annual list recognizes America's top 100 cooperatives with annual revenues greater than $325 million.

Farmland Industries, with 1998 revenues of nearly $8.8 billion, and Cenex Harvest States, with nearly $8 billion in 1998 revenues, were the largest agricultural cooperatives in the Co-op 100 list. In addition, the two organizations are the largest cooperatives in the United States.

Consolidation among agricultural cooperatives was a major trend in 1998. Nine of the agriculture cooperatives listed in last year's report were partners in mergers with four of the top 100 cooperatives, notes the NCB report. Agriculture remains the dominant industry sector in the NCB list, represented by 42 cooperatives with combined revenues of $60 billion, compared to 49 ag cooperatives with $57 billion on the 1997 list.

Top 15 on 1998 NCB Co-op 100

Name '98 Revenue '97 Revenue Ag Rank


$ millions

1. Farmland Industries 8,775 9,148 1
2. Cenex Harvest States 7,959 9,124 2
3. Dairy Farmers of America 7,325 3,862 3
4. Land O'Lakes 5,174 4,195 4
5. Wakefern Food Corp. 5,159 4,613 -
6. TruServ Corporation 4,328 4,224 -
7. TOPCO Associates Inc. 4,000 3,900 -
8. Associated Wholesale Grocers 3,180 3,129 -
9. ACE Hardware Corp. 3,120 2,907 -
10. Ag Processing Inc. 2,615 2,948 5
11. Roundy's Inc. 2,516 2,611 -
12. Spartan Stores 2,409 2,475 -
13. Do-It-Best Corp. 1,948 1,749 -
14. Certified Grocers of CA Ltd. 1,832 1,827 -
15. Lumberman's Merchandising Corp. 1,700 1,656 -

 


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