University of Wisconsin Center for Wisconsin
Rural Cooperatives, November/December 1999,
Published by the Rural Business and Cooperative Development Service
Bottom line continued to rise in '98 for large corn-soybean and wheat-barley co-ops
By David Cummins
Net savings averaged higher in 1998 than a year earlier for large local gram co-ops in the Corn Belt and Pacific Northwest, despite substantially lower prices received and higher operating expenses.
Major income boosters included increased farm supply sales and margins, service revenue and non-operating income. The latter two income sources were particularly important in the Pacific Northwest (where wheat-barley co-ops predominate). Significantly larger grain volumes marketed by these large grain locals in 1998 more than offset 21-percent lower grain prices.
This was not the situation for large grain locals in the Corn Belt, where corn-soybean co-ops are most common. In the Corn Belt, grain dollar sales were slightly lower, even though marketings averaged 15 percent higher.
For medium-sized grain locals, the bottom line was about 8 percent lower in the Corn Belt, still respectable, but plummeted nearly 80 percent in the Pacific Northwest. Grain marketings were up in both areas, but not nearly enough to compensate for lower prices. This was particularly the case for the medium-sized wheat-barley co-ops, where grain sales and grain margins were off 8 percent and 13 percent, respectively.
Loss rates for the medium-sized co-ops in 1998 were about double 1997's rates, from 6 percent to 12 percent in the Corn Belt and from 12 percent to 29 percent in the Pacific Northwest. In contrast, comparable loss rates for the large locals were 7 percent to 3 percent and 6 percent to zero, respectively.
Total assets and member equity averages were higher across the board. Except for the large wheat-barley co-ops, member equity was a larger percentage of total assets in 1998 than in 1997.
Benchmarking your co-op
Benchmarks are common in business management to measure how well your cooperative is performing. However, such figures don't reveal how your cooperative compares with others.
If your cooperative is primarily a first-handler of wheat and barley or of corn and soybeans, comparative data for 1998 are now available. Tables 1 and 2 contain average financial and structural data compiled from a survey of Pacific Northwest and Corn Belt cooperatives marketing wheat and barley and corn and soybeans, respectively.
Most cooperatives in the study were diversified, also handling farm supplies and providing related services. Fill in the blanks and see how yours measures up.