University of Wisconsin Center for Wisconsin
Rural Cooperatives, March/April 1996, pg. 30-31
Published by the Rural Business and Cooperative Development Service 

Non-patronage Business Hits $15.6 Billion

Charles A. Kraenzle

Director, Statistical Services
USDA/RBS Cooperative Services


 
Non-patronage business conducted by U.S. farmer co-ops totaled $15.6 billion in 1994, or 14.8 percent of the $105.5 billion in gross business volume. That represents a six year high in both business volume and as a percent of total business. In 1993, non-patronage business was $13.7 billion and accounted for about 14 percent of the total (table 1). In 1989, non-patronage business totaled $10.3 billion, or 11.6 percent of the total.

    Of the $15.6 billion in total non-patronage business, $8.8 billion was generated by marketing crops and livestock, $6.1 billion from the sale of farm supplies, and $700 million from services and other income. More than $6.9 billion, or 78.6 percent, of the $8.8 billion in non patronage marketing sales was sales of milk and milk products ($2.75 billion), grains and oilseeds excluding cottonseed ($1.5 billion), and fruits and vegetables ($2.66 billion). The non-patronage business trend (in actual dollars and percent of business) has been rising from 1989-94 (fig. 1).

    Non patronage farm supply sales, as a percent of total non-patronage sales, increased from 33.1 percent in 1989 to 39.2 percent in 1994 (fig. 2). Non-patronage farm marketing sales decreased as a percent of total non-patronage business, from 64.5 percent to 56.3 percent.

    The distribution of total non-patronage business among selected types of cooperatives for 1989 and 1994 is shown in figure 3. 

    The proportional share of total non-patronage business increased for "other" marketing cooperatives, such as rice and livestock co-ops. The share decreased for grain and oilseed co-ops. Farm supply co-ops accounted for the largest proportion (28.1 percent) of total non-patronage business in 1994.
 
    During 1989-94, on average, 32.6 percent of farm supply co-ops' total business was done on a non-patronage basis. This compares with 20.4 percent for marketing co-ops and 14 percent for related-service co-ops. For marketing cooperatives, 20.2 percent of their farm supply sales was on a non-patronage basis, higher than their farm supply and related-service cooperatives.

    Data were taken from USDA's Cooperative Services' annual survey of farmer cooperatives. Cooperatives were asked to report the percent of total commodity marketing sales, percent of farm supplies and other related sales, and percent of service receipts and other income handled on a non-patronage basis. Data obtained from respondents were expanded to represent all 4,174 cooperatives in 1994.

 (top graph) Non-patronage business by function, 1989-94
(top graph) Distribution of non-patronage business by function, 1989 and 1994; (bottom graph)

Table 1 - Co-ops' total gross and non-patronage business volume, 1989-94 1
Year
Business volume
Non-patronage as a
 
Total
Non-patronage
proportional of total
 
 ------- Billion dollars --------
percent
1989 
1990 
1991 
1992 
1993 
1994
88.5
92.6
91.3
93.4
97.7
105.5
10.3
10.8
13.3
11.1
13.7
15.6
11.6
11.7
14.6
11.9
13.9
14.8
1 Non-patronage business is defined as any business conducted in which there is no pre-existing legal obligation to pay patronage refunds. Most of this is non-member business.

Distribution of total non-patronage business by selected type of co-op, 1989 and 1994
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