Higher '96 Grain Prices Help Co-ops Continue to Break Net Income, Business Volume Records

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

    U.S. farmer-owned cooperatives have set new business volume and net income records for the third consecutive year. Net business volume (which includes all receipts for sales, services and miscellaneous income) for the nation's 3,884 farmer cooperatives was $106 billion for 1996, a 13-percent increase from the previous record of $94 billion set in 1995. Cooperatives also enjoyed record net income of $2 , 37 billion, up from $2.33 billion in 1995.

    "For more than 100 years, cooperatives have played a vital role in helping farmers improve their ability to market and process their crops and livestock and to secure farm supplies and other services at reasonable costs," Agriculture Under Secretary for Rural Development Jill Long Thompson said. "These new sales and income records show that the cooperative form of business is alive and well in rural America," she continued. "With the changes enacted in the Federal Agriculture Improvement and Reform Act of 1996, the cooperative way of doing business in rural America makes more sense than ever."

¹ Preliminary. Totals may not add due to rounding.
² Excludes intercooperative business. Volume includes value of products associated with cooperatives that operate on a commission basis and those that bargain for members' products.
³ Excludes cottonseed.
⁴ Includes dry edible beans and peas, fish, nuts, tobacco, wool, and other miscellaneous products.
⁵ Includes building materials, containers, hardware, tires-batteries-accessories (TBA), farm machinery and equipment, and other supplies.
⁶ Includes trucking, ginning, storage, artificial insemination, rice drying, and other.

    The record business volume year for the nation's farmer cooperatives was due primarily to increased prices for grains and oilseeds and farm supplies. Cooperatives' sales of grains and oilseeds increased $7.8 billion, or more than 39 percent, from 1995. Farm supply sales increased $2.4 billion, or more than 11 percent.

    Total marketing sales by cooperatives climbed more than 14 percent, to $79 billion, in 1996. Cooperative net business volume was up for all commodity groups except rice and cotton. Rice revenues were stable while cotton revenues dropped more than 6 percent. Income from services provided by cooperatives and other miscellaneous income was down $192 million, or nearly 6 percent.

    Cooperatives' sold farm supplies worth nearly $24 billion in 1996. Increases in petroleum (nearly 21 percent) and fertilizer (nearly 11 percent) sales were primarily responsible the 11 percent gain in this sector. Favorable weather was a major contributing factor.

    Cooperatives' total net business volume includes sales of crops, livestock and farm supplies. It excludes business done with other cooperatives. The total also includes receipts from services provided by cooperatives, such as trucking, storage, ginning and livestock breeding, as well as interest income and other miscellaneous income.

    While net income for all cooperatives changed only slightly from 1995, the change was dramatic among some types of cooperatives. Net income for farm supply cooperatives - those that primarily obtain fertilizer, crop protectants, etc., for their members - increased nearly 17 percent, from $808.2 million in 1995 to $942.7 million in 1996.
 

    Marketing cooperatives - those that primarily sell, bargain and/or process crops, livestock and livestock products for their members - saw net income dip 5.6 percent. Sugar cooperatives' net income increased significantly due to decreased losses in 1996. Fruit and vegetable cooperatives' net income decreased from $175.9 million in 1995 to $58 million in 1996, a drop of 67 percent. Depressed prices of certain vegetables was the major reason for the lower net income in this sector.

    Combined assets of $42.6 billion were up $2.3 billion - nearly 6 percent. Total liabilities of $25.2 billion increased more than 6 percent. Net worth of $17.4 billion was up nearly 5 percent. Net worth financed 40.9 percent of assets in 1996, down from 41.3 percent in 1995.

    Fourteen percent of cooperatives, up from 11 percent in 1995, experienced a loss in 1996. Losses totaled $122 million, up from $99.5 million in 1995. Grain/oilseed and fruit/vegetable cooperatives accounted for 60.6 percent of the $122 million.

    There were 3,884 U.S. farmer cooperatives in 1996, 122 fewer than in 1995. Two of every five cooperatives removed from USDA’s list of U.S. farmer cooperatives were due to mergers/consolidations. About the same ratio was removed because of discontinued operations. Nearly one in five was sold or removed from the list for various other reasons. Twelve cooperatives were added to the list.

    Memberships in farmer cooperatives totaled 3.6 million in 1996, down more than 3 percent. The number of memberships is larger than the number of farms because many farmers belong to and use the services of more than one cooperative.

    Estimated number of full-time employees in cooperatives totaled 174,365, down from 175,399 in 1995.

¹ Preliminary. Totals may not add due to rounding. are classified in
² Operations of many cooperatives are multiproduct and multifunctional. They most cases according to predominant commodity or function as indicated by business volume.
³ Net income less losses.
⁴ Revised.  bacco, wool, fish, and miscellaneous marketing
⁵ Includes bean and pea (dry edible), nut, to cooperatives.
⁶ Includes trucking, cotton gins, storage, artificial insemination, rice driers, and other service cooperatives.