University of Wisconsin Center for Wisconsin
Rural Cooperatives, November/December 1998,
Published by the Rural Business and Cooperative Development Service
Co-ops Break Supply Sales Record
Charles A. Kraenzie
Director, USDA/RBS Statistics Staff
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 Rural Development: 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.
With the dozens of commodities they handle and the services they provide U.S. farm cooperatives broke several performance records during 1997, although their share of farm marketings decreased for the first time in seven years. Dairy co-ops, as the largest sector, contributed to strong gains, while a downturn in the grain business led to a drop in other results for the year.Figure 1-Cooperatives' Share of U.S. Farm Marketings and Farm Production Expenditures, 1982-97
(1)Based on farm cash receipts.
(2)Based on cash expenditures for crop protectants, feed, fertilizer, petroleum, and seed.
Farmer cooperatives' share of farm supplies—feed, seed, fertilizer, crop protectants and petroleum—purchased by the nation's farmers was 30 percent in 1997, a record high for this data series which began in 1951. The previous high was 29 percent, in 1994. The 1997 share of farm supplies purchased was based on cooperatives' record net sales of $25.2 billion.
Cooperatives' share of total farm marketings—including crops, livestock and poultry—reached 31 percent in 1997, down from a record 34 percent in 1996. This was the first annual decrease in co- ops' share of marketings since 1990 (Figure 1). The 1997 market share was based on cooperatives' net marketing business volume of $106 billion, which equaled the record set in 1996.
The major factor in the overall decrease in cooperatives' share of farm marketings—from 34 percent in 1996 to 31 percent in 1997—was the significant decrease in grains and oilseeds share.
Co-ops' share of grain and oilseed marketings at the farm level dropped from a record 50 percent in 1996 to 42 percent in 1997, and was closer to the 39 percent in 1995. The big increase in 1996 was due, in large part, to the sharp increase in grains and oilseeds marketed out of farmer-member inventory to take advantage of rising grain prices. In 1997, farmer cooperatives marketed $24.6 billion of grains and oilseeds, down from a record $28.7 billion in 1996.
Dairy co-ops maintained largest share
Farmer co-ops continued to be a major player in the dairy sector. Cooperatives' net sales of milk and milk products totaled $23.4 billion in 1997, up $.44 billion, or 1.9 percent, from 1996. U.S. farm cash receipts for milk and milk products fell $1.8 billion, or 8 percent, in 1997 due to lower milk prices. As a result, co-ops' share of total U.S. milk purchased at the first-handler level was 87 percent in 1997, up from 86 percent in 1996 (Table 1).
Nationally, the quantity of milk sold to plants and dealers in 1997 rose 1.6 percent from 1996. Co-ops' share of milk sales at the first-handler level includes the value of milk marketed directly for cooperatives and the milk for which cooperatives bargained with processors over price and terms of trade for members.
(2)Co-ops' share of milk marketed was estimated to be 83 percent based on pounds of milk marketed by dairy cooperatives in a special study. The 87 percent, based on cash receipts, was reported in order to be consistent with estimates reported in previous years.
(4)Includes poultry and eggs, dry, edible beans and peas, nuts, rice, tobacco, sugarcane, sugar beets, honey and other miscellaneous marketings.
(5)All farm commodities were weighted by value.
Co-ops' share of cotton/cottonseed cash receipts was 38 percent in 1997, up from 33 percent in 1996. The value of cotton and cottonseed purchased by farmer cooperatives increased $345 million, or nearly 13 percent, for the 1996 crop. Farm cash receipts for cotton and cottonseed, however, rose only 3.2 percent. Increased production of cotton in Texas, as well as a larger share of this cotton handled by co-ops, contributed to the increase in coops' U.S. share of cotton marketed off the farm.
Co-ops accounted for 19 percent of the nation's fruit/vegetable sales in 1997, the same as in 1996. Co-ops' sales of fruits and vegetables totaled nearly $9.3 billion in 1997, slightly lower than a year earlier. Cash receipts for fruits/vegetables grew nearly 3.2 percent. Even though co-op sales were down and cash receipts up in 1997, co-ops' share remained the same as it was in 1996 because co-op purchases of fruits/vegetables from noncooperative firms declined.
Cooperatives' share of livestock (including wool and mohair) marketings was 12 percent in 1997, down from 13 percent in 1996. Co-ops' net sales of livestock hit nearly $7.5 billion in 1997, up $735 million, or 11 percent. However, total U.S. cash receipts for livestock/wool increased nearly 12 percent from 1996 to 1997.
Cooperatives' share of "all other" marketings, such as poultry, dry edible beans and peas, tobacco, nuts, rice and sugar, was 12 percent, down from 13 percent in 1996 (Table 1). Co-ops' "all other" marketings in 1997 totaled nearly $9.9 billion, a 1percent increase from the $9.8 billion marketed in 1996. In comparison, total U.S. cash receipts for "all other" marketings increased nearly 3.7 percent. The big increase was in miscellaneous marketings, such as hay, grasses and other field crops.
Figure 2 shows the most recent 5-year market share trends for selected farm commodities marketed by farmer cooperatives. Grains/oilseeds and cotton/cottonseed shares varied. Milk, fruit/vegetable and livestock/wool shares were fairly level.
Share of farm production expenditures record high
Co-ops' share of major farm production items—feed, seed, fertilizer, petroleum and crop protectants - rose to 30 percent in 1997, a record high. The previous high was 29 percent, in 1994.
Co-ops increased their market share of all major farm supplies except seed. Coops' share of U.S. seed expenditures remained at 10 percent (Table 2 and Figure 3).
Farm cash expenditures for the major supply items increased 1.8 percent from 1996 to 1997, while co-ops' safes increased 7.7 percent. Co-ops' share of feed expenditures, 23 percent, was the largest on record. The previous high was 22 percent, in 1992.
Co-ops' 45-percent share of petroleum expenditures was near the record high (46 percent) set in 1991. Calculating co-ops' share is more difficult for petroleum expenditures than for the other farm supply items, because a major proportion of coops' petroleum sales is for non-farm use. From previous research, non-farm use was estimated to be 57 percent. This percentage was subtracted from co-ops' net sales in calculating market share. This can vary from year to year, depending on weather conditions and other factors.
Cooperatives' sales of major farm supplies totaled $21.9 billion in 1997. Petroleum sales accounted for nearly $6.8 billion, or 30.8 percent, of the total. Petroleum sales rose 7.4 percent; feed, 11.1 percent; and crop protectants, 10.5 percent, reflecting the favorable crop conditions farmers had experienced in 1997.
Feed accounted for the second-largest propo~rtion of co-ops'farm supply sales (27.3 percent), followed by fertilizer (24.5 percent). Seed accounted for only 3.2 percent.
Methods used in developing co-op shares
Cooperative-share estimates for selected commodities and farm supplies are based on data from the annual survey of farmer cooperatives conducted by USDA/RBS-Cooperative Services. Information also comes from other Cooperative Services studies, cash receipts from farm marketings and farm production expenditures published by USDA's Economic Research Service (ERS) and from Cooperative Services' commodity specialists.
(2)The five major farm production items weighted by value.
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 nonfarm purposes. These adjusted business volumes were then related to their respective total U.S. cash expenditures to calculate the percentage share estimates.