University of Wisconsin Center for Cooperatives
Rural Cooperatives, Jan./Feb. 1998, pp. 4-6.
Published by the Rural Business and Cooperative Development Service 

Higher Grain Sales Help Co-ops Set Market Share Record in '96

Charles A. Kraenzle

Director Statistics Staff
USDA Rural Business-Cooperative Service

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's 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.

For the first time since 1951, when USDA began tracking the market share of agricultural cooperatives, U.S. farmer-owned cooperatives in 1996 marketed more than one-third of the nation's farm commodities - including crops, livestock and poultry.

    The nation's 3,884 agricultural cooperatives marketed $79.4 billion worth of farm commodities, or 34 percent of all U.S. farm commodities marketed in 1996. That topped the previous market share record of 32 percent, set by cooperatives in 1995. The major reason for the jump was a sharp increase in market share by grain cooperatives, which realized a 39-percent increase in sales value due largely to high er grain prices.

    Cooperatives' share of farm marketings stood at 30 percent in the early 1980s, declined to a low of 24 percent in 1987, and has generally increased since then (figure 1).

    U.S. cooperatives also sold a record $23.7 billion worth of farm supplies in 1996. Cooperatives' share of major farm supply expenditures - feed, seed, fertilizer, petroleum and crop protectants - remained at 28 percent. That is slightly less than the record 29 percent share of major farm supply expenditures cooperatives set in 1979 and matched in 1992 and 1994.

Cooperatives' share of U.S. farm marketings and farm production expenditures, 1982- 96

Table 1 - Cooperatives' share of U.S. farm marketings, by selected commodity group, 1996-94
Commodity group
percent of U.S. cash receipts 1
Milk and products  
Cotton and cottoned  
Grains and oilseeds 2 
Fruits and vegetables  
Livestock and wool 3 
All other 4 
1 Estimates are rounded to the nearest whole percent. Data for 1995 were revised due to changes reported for U.S. cash receipts.
2 Excludes cottonseed.
3 Includes mohair.
4 Includes poultry and eggs, dry edible beans and peas, nuts, rice, tobacco, sugarcane, sugarbeets, honey, and other miscellaneous marketings.
5 All farm commodities weighted by value.

Table 2 - Cooperatives' shares of U.S. major farm production expenditures, 1996-94
Farm production item
Percent of U.S. farm production expenditures 1
Crop protectants 
Total 2
1 Estimates are rounded to the nearest whole percent.
2 The five farm production items weighted by value.

Co-ops' Share of Grain Marketings Up Significantly

    Cooperatives' share of grain and oilseed marketings sold off the farm reached 49 percent in 1996, up from 39 percent in 1995 and the highest on record. The big increase was due, in large part, to many co-op members "clearing out their bins" - selling grain and oilseeds to their cooperatives which they might normally have kept in storage - to take advantage of the high prices.

    In 1996, farmer cooperatives marketed a record $27.7 billion of grains and oilseeds, up $7.8 billion, or 39.2 percent, from 1995. In comparison, total U.S. cash receipts for grains and oilseeds increased 15.1 percent. Significantly higher market prices in 1996 accounted for most of the total dollar increase.

Co-ops' shares of U.S. farm products marketed by commodity group, 1992-96

Dairy Co-ops Maintain Largest Share
    The dairy sector continues to be the commodity sector in which farmer cooperatives are most dominant, accounting for 86 percent of U.S. milk purchased at the first-handler level in 1996. However, that is down from 88 percent in 1995 (table 1). Cooperatives' net sales of milk and milk products totaled $22.9 billion in 1996, up $1.15 billion, or 5.3 percent, from 1995. U.S. farm cash receipts for milk and milk products rose $2.9 billion, or nearly 14.8 percent, in 1996 due to higher milk prices.
    Nationally, the quantity of milk sold to plants and dealers in 1996 dropped nearly 1 percent from 1995. Co-ops' share of milk sales at the first-handler level includes the value of milk for which cooperatives bargained with processors over price and terms of trade for members.
    Co-ops' share of cotton cash receipts decreased from 37 percent in 1995 to 33 percent in 1996. The value of cotton and cottonseed purchased by farmer cooperatives declined nearly 7.7 percent. Farm cash receipts for cotton and  cottonseed, however, grew nearly 1.7 percent. Increased production of cotton in states outside the marketing areas of the major cotton marketing cooperatives is a contributing factor to the decline in co-ops' share of cotton marketed off the farm.

    Cooperatives accounted for 20 percent of the nation's fruit/vegetable sales in 1996, down from 21 percent in 1995. Cooperatives' sales of fruits and vegetables totaled nearly $9.4 billion in 1996, up 1.3 percent from 1995. However, cash receipts were up nearly 3.7 percent and cooperative purchases of fruits and vegetables from noncooperative firms increased nearly 22 percent in 1996. Purchases from non-cooperative firms were not included in the calculation because the market share estimate represents cooperative involvement at the first-handler level.

    Cooperatives' share of livestock (including wool and mohair) marketings totaled 13 percent in 1996, up from 12 percent in 1995. Cooperatives' livestock sales hit $6.7 billion in 1996, up nearly $252 million, or 3.9 percent. Total U.S. cash receipts for livestock and wool dropped 0.7 percent from 1995 to 1996.

    Cooperatives' share of "all other" marketings, such as poultry, tobacco, nuts, rice and sugar, climbed to 14 percent, up from 13 percent (table 1). Cooperatives' "all other" marketings in 1996 totaled more than $10.1 billion, an 11 percent increase from the $9.1 billion marketed in 1995. Total U.S. cash receipts for "all other" marketings increased 5.1 percent.
    Figure 2 shows the most recent five year market-share trends for selected farm commodities marketed by farmer cooperatives. Grains/oilseeds and livestock/wool shares show a slight upward trend. Milk and fruit/vegetable shares appear to have leveled off. The cotton and cottonseed share is mixed.

Co-ops' shares of selected U.S. farm production supplies 1992-96

Co-ops Maintain Share of Farm Production Expenditures
    Co-ops' share of major farm production itemsÄfeed, seed, fertilizer, petroleum and crop protestants - totaled 28 percent in both 1996 and 1995. Co-ops maintained or increased market share for purchases by farmers of all major farm supplies except crop protectants, where market share was 32 percent in 1996, down from 33 percent in 1995 (table 2 and figure 3). The only increase in co-ops' share was in petroleum, a significant increase from 41 percent in 1995 to a record 47 percent in 1996.

    Farm cash expenditures for the major supply items increased 7.7 percent from 1995 to 1996, while co-ops' safes increased 12.4 percent.
    Co-ops' share of petroleum expenditures set a record. The previous high was 46 percent, in 1991. Calculating co-ops' share of petroleum expenditures is more difficult than for other farm supplies. A major proportion of co-ops' petroleum sales is for non-farm use, which is estimated to be 57 percent (based on prior research). This proportion is subtracted from co-ops' net sales when calculating market share. This could vary from year to year, depending on weather conditions and other factors.
    Co-ops' lowest share of the major farm supply items was for seed, with 11 percent. However, they have maintained this for the past three years. Co-ops' highest share of seed expenditures was 19 percent in 1987.

    Cooperatives' sales of major farm supplies totaled $20.4 billion in 1996. Petroleum sales accounted for $6.3 billion, or 30.9 percent, of the $20.4 billion. Petroleum sales rose 20.8 percent; seed, 13 percent; and fertilizer, 10.8 percent; indicating the favorable crop conditions farmers had in 1996.

    Feed accounted for the second largest proportion of co-ops' farm supply sales (26.4 percent), followed by fertilizer (25.5 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, other USDA studies of cooperatives, cash receipts from farm marketings and farm production expenditures published by USDA's Economic Research Service (ERS), and from Cooperative Services' commodity specialists.
    Co-ops' share of farm marketings represents 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 either physical quantity (where available) or dollar volume. In most cases, the share estimate was based on dollar volume.
    For those commodities for which physical quantities handled by cooperatives were 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 non-farm purposes. These adjusted business volumes were then related to their respective total U.S. cash expenditures to calculate the percentage share estimates.

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