Farmer cooperative sales, income fall in 2002

Rural Cooperatives, Jan-Feb, 2004 by Eldon Eversull

Despite sales gains in the livestock and cotton sectors, final sales data for 2002 shows that net business volume for the nation's 3,140 farmer-owned cooperatives fell to $96.8 billion, with a net income of $1.21 billion. With assets totaling $47 billion and almost $20 billion in equity, farmer cooperatives continued to be a major employer in rural areas, with 166,000 full-time workers and 54,000 part-time and seasonal workers.

U.S. farmers overall had increased sales of products that they produced in 2002, but many farmer-owned cooperatives experienced lower sales and incomes. There area number of reasons why cooperative sales and income do not strictly follow national farm trends. The fiscal year for about half of cooperatives ends in June or earlier, meaning that most of their sales are from the prior year while farm production trends are based on calendar years. Further, many cooperatives sell value-added products that do not necessarily reflect raw commodity prices.

Cooperative marketings declined in all sectors in 2002, except for livestock and poultry, which increased $600 million (4.5 percent), and cotton, which climbed $100 million (2.5 percent). Low milk prices caused dairy co-op sales to drop while several larger fruit and vegetable co-ops had much lower sales. Overall, almost all of the decline in sales occurred on the marketing side, falling about 7.2 percent from 2001.

Net business volume includes receipts from the sale of crops, livestock and value-added products marketed by cooperatives, as well as farm production supplies sold and services provided by cooperatives. It does not include sales between cooperatives.

Farm production supply sales fell 4.4 percent due to large decreases in petroleum and fertilizer sales. On the plus side, livestock feed and seed sales both increased, with feed sales growing by $1.4 billion.

Net income for cooperatives fell from $1.4 billion to $1.2 billion. Sales were lower in each of the three primary sectors USDA tracks: crop and live stock marketing (including value-added goods), farm supplies and farm services.

Several types of marketing cooperatives bucked the downward trend, reporting higher net income in 2002. After posting almost no income in 2001, rice cooperatives were back to historically high levels, with net income of $6.6 million. Cotton cooperatives' net income almost tripled from 2001, to $89.6 million, while grain and oilseed cooperatives had a 4-percent increase.

Farmer-owned cooperatives had combined assets of $47.5 billion in 2002, and net worth of $19.6 billion. Cooperatives financed about the same percentage of assets with debt capital (58.7 percent in 2002 vs. 58.4 in 2001) rather than equity.

The number of cooperatives declined to 3,140 in 2002, down from 3,229 in 2001 and 3,346 in 2000. The main causes were mergers, consolidations, acquisitions and dissolutions.

Memberships in farmer cooperatives totaled 2.8 million in 2002, down from 3 million in 2001. The number of memberships is larger than the number of farmers in the United States because many farmers belong to more than one cooperative.

Co-op data is generated by USDA Rural Development's annual survey of cooperatives.

Table 1--Farmer cooperatives' net business volume (1),
2002 and 2001 (2)

Commodity or function                2002           2001

                                       Million dollars

Products marketed
  Cotton                            2,461          2,400
  Dairy                            23,038         26,187
  Fruits and vegetables             7,338          8,822
  Grains and oilseeds (3)          17,474         18,055
  Livestock and poultry            12,304         11,776
  Rice                                748            756
  Sugar                             2,440          2,648
  Other products (4)                3,852          4,398

  Total products marketed          69,656         75,042

Supplies sold
  Crop protectants                  2,713          2,957
  Feed                              5,373          3,998
  Fertilizer                        4,315          4,966
  Petroleum                         7,157          8,446
  Seed                              1,086          1,051
  Other supplies (5)                3,035          3,338

  Total supplies sold              23,679         24,756

Related-services and
other income (6)                    3,416          3,471
Total                              96,750        103,269

(1) Excludes inter-cooperative business. Volume includes value of
products associated with cooperatives that operate on a commission
basis or bargain for members' products.

(2) Preliminary. Totals may not add due to rounding.

(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-auto accessories (TBAI, farm machinery and
equipment, food, and other supplies.

(6) Includes receipts from trucking, ginning, storage, artificial
insemination, rice drying, and other activities as well as other
income.

Table 2--Farmer cooperatives'
net income (1), 2002 and 2001 (2)

Cooperative type                              2002      2001

                                             Million dollars

Marketing
  Cotton                                      89.6      33.4
  Dairy                                      283.6     364.2
  Fruits and vegetables                     -147.8      76.6
  Grains and oilseeds                        258.7     248.8
  Livestock and poultry                       69.1     -67.3
  Rice                                         6.6       0.1
  Sugar                                       71.2     -23.2
  Other products (3)                         131.8     176.8
Total marketing                              762.7     809.5
Total farm supply                            337.8     429.0
Total related-service (4)                    109.1     118.4
Total                                      1,209.6   1,356.9

(1) Preliminary. Totals may not add due to rounding.

(2) Net income less losses and before income taxes.

(3) Includes dry edible bean and pea, nut, tobacco, wool, fish,
and other product marketing cooperatives.

(4) Includes trucking, ginning, storage, artificial insemination,
and other.

Table 3--Farmer cooperative
numbers and memberships, 2002 (1)

Cooperative type                Cooperatives (2)    Memberships

                                          Number       Thousand

Marketing
  Cotton (3)                                  14             43
  Dairy                                      198             82
  Fruits and vegetables                      212             33
  Grains and oilseeds                        768            542
  Livestock and poultry                       85            120
  Rice                                        15             12
  Sugar                                       48             14
  Other products (4)                         219            203
Total marketing                            1,559          1,049
Total farm supply                          1,201          1,637
Total related-service (5)                    380            107
Total                                      3,140          2,794

(1) Preliminary. Totals may not add due to rounding.

(2) Operations of many cooperatives are multi-product and
multi-functional. They are classified in most cases according to
predominant commodity or function as indicated by business volume.

(3) Cooperative cotton gins are included with related-service
cooperatives.

(4) Includes dry edible bean and pea, nut, tobacco, wool, fish, and
other product marketing cooperatives.

(5) Includes cooperatives that primarily provide trucking, ginning,
storage, artificial insemination and other.