University of Wisconsin Center for Cooperatives
Rural Cooperatives, March/April 1997, pg. 30-31
Published by the Rural Business and Cooperative Development Service
Non-patronage Business Reaches $17.9 Billion
Charles A. Kraenzle
The non-patronage business conducted by U.S. farmer cooperatives totaled $17.9 billion in 1995, representing 15.9 percent of the $112.3 billion in gross business volume. These figures are up slightly from 1994 levels, which showed non-patronage business reaching $15.6 billion, or 14.8 percent of cooperatives' gross business volume of $105.5 billion.
In 1989, the first year data were published, non-patronage business reached $10.3 billion, or 11.6 percent of the total. The $17.9 billion represents a seven-year high in both business volume and as a percentage of total business (table 1).
Marketing cooperatives generated $14.1 billion of
the $17.9 billion in total non-patronage business, followed by the $3.7
billion of farm supply cooperatives, and $115 million from related-service
cooperatives. Total non-patronage business of marketing cooperatives nearly
doubled during the seven-year span of 198995 (fig. 1).
Grain and oilseed (excluding cottonseed) cooperatives led the marketing cooperatives with nearly $5.5 billion, or 39 percent, of the $14.1 billion total nonpatronage business. Dairy cooperatives were second with nearly $2.7 billion, or 19.2 percent. Fruit and vegetable cooperatives followed in volume of non-patronage business with nearly $2 billion or 14.1 percent.
Cooperatives' total non-patronage business volume is generated from farm marketings, sales of farm supplies, service receipts and other income. In 1995, more than $10.7 billion-or 60.1 percent of the $17.9 billion in total non-patronage business-came from crop and livestock marketings. Nearly $6.6 billion, or 36.8 percent, was generated from sales of farm supplies. The remaining $547 million, or 3.1 percent, was non-patronage business from service receipts and other income. Figure 2 shows non-patronage marketing business volume increased sharply during 1992-95, while the non-patronage farm supply business volume gradually increased from 1989 to 1995. In comparison, non-patronage business from service receipts and other income remained fairly flat.
Many cooperatives market farm products, sell farm supplies and provide related-services where sales of each contribute to non-patronage business. From 1989 to 1995, 76.2 percent of marketing cooperatives' non-patronage business came from marketings, 20.5 percent from sales of farm supplies and the remainder, 3.3 percent, from services receipts and other income (fig. 3). In comparison, farm supply cooperatives reported 86.9 percent of non-patronage business came from sales of farm supplies, 8.5 percent from marketings and 4.6 percent from service receipts and other income. In service cooperatives, 68.1 percent of non-patronage business came from services, 26.4 percent from sales of farm supplies and 5.5 percent from marketings.
The distribution of total non-patronage business among selected types of cooperatives for 1989-95 is shown in figure 4. Grain and oilseed cooperatives accounted for the largest proportion, 31.6 percent, followed by farm supply, dairy, and fruit and vegetable cooperatives. Grain and oilseed and farm supply (including service) cooperatives accounted for 60.6 percent of total nonpatronage business during this period.
Data were taken from the annual survey of farmer cooperatives by the Cooperative Services unit of USDA’s Rural Business-Cooperative Service. 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 cooperatives in the year for which the data were collected.
Table 1 - Co-ops' total gross and nonpatronage business volume, 1989-95 1