Bulking up: co-ops continue trade recovery, paced by bulk goods - Brief Article - Statistical Data Included

Rural Cooperatives, July-August, 2002 by Tracey L. Kennedy

Editor's Note: USDA's Rural Business-Cooperative Service began an annual survey of cooperative involvement in international markets in 1997. Prior to 1997, cooperative exports and imports had been measured at five-year intervals. An overview of survey findings for 2000, with comparisons to 1997-1999, is presented here.

In 2000, U.S. cooperative exporters continued their recovery from the global currency and financial crises that plagued world markets in the late 1990s. Export sales of more than $5.95 billion were reported, a jump of almost 25 percent compared with a 6.4,percent increase for U.S. agricultural exports as a whole (USDA). Following record sales in 1997, cooperative exports had fallen off sharply in 1998 and had begun to recover only slightly by 1999 (figure 1).

[FIGURE 1 OMITTED]

While trends in U.S. trade point to the increased importance of differentiated products relative to bulk commodities, exports by U.S. cooperatives remain concentrated in bulk products. Of the total for 2000, $3.99 billion, or 67 percent of exports, consisted of bulk commodities such as grains, oilseeds, and cotton, compared to 41 percent for U.S. bulk sales. The majority of these shipments originated from a small number of large cooperatives. Consumer-oriented or high-value products, such as fresh and processed fruits and vegetables, accounted for $1.62 billion, or 27 percent, of the total, compared to 36 percent for all U.S. consumer products. Intermediate products--ingredients and partially processed products, such as flours, meals, oils and feed--accounted for $235 million, or almost 4 percent, compared to 21 percent for comparable U.S. sales. In addition, exports of various farm inputs and equipment totaled $108 million, or about 2 percent, of the total.

Cooperatives' overall share of U.S. agricultural exports (excluding fisheries, farm inputs, etc.) for 2000 was approximately 11.3 percent. Co-ops had a 21.5 percent share of U.S. bulk commodity exports, 7.4 percent of consumer-oriented products, and 2.1 percent of intermediate products.

Among the 91 cooperatives reporting in 2000, export sales continued to be concentrated among a few of the largest cooperatives, with six co-ops--each having sales in excess of $100 million--responsible for 79.6 percent of total exports. Those six cooperatives represented a range of agricultural products and geographic areas. The magnitude of exports among individual cooperatives ranged from less than $10,000 to almost $3 billion.

Co-ops recover across most commodities; market shifts continue

Exports by cooperatives showed improvement across two of three major product categories in 2000 (figure 2). Bulk commodity sales (primarily grains, oilseeds and cotton) dropped more than 50 percent, from $5.4 billion in 1997 to $2.5 billion in 1998 and $2.2 billion in 1999. However, they showed a marked improvement in 2000, increasing 46 percent, to nearly $4 billion. Indeed, increased sales of bulk commodities accounted for most of the gains in total cooperative exports from 1999.

[FIGURE 2 OMITTED]

Consumer-oriented products (mainly fresh and processed fruits and vegetables, tree nuts, meats, dairy products and other processed products), which had declined throughout 1998 and 1999 (10.8 percent and 17.5 percent, respectively), increased 15 percent in 2000, to more than $1.6 billion. Only 12 percent of the cooperative export gain in 2000 was attributable to consumer-oriented products, compared to the much higher proportion (two-thirds) registered by U.S. sales of the same types of products.

Intermediate products (semi-processed products and ingredients or inputs such as feed components, flour, meal, oil, and animal byproducts) fell 24 percent from 1997 to 1998, then recovered with a 60-percent increase in 1999. In 2000, they fell off more than 52 percent, to $235 million.

Asia continued as the largest regional destination for cooperative exports in 2000, accounting for $2.46 billion, or 41.5 percent, of the total (figure 3). Latin America (primarily Mexico) continued to emerge as an increasingly important customer, growing $1.41 billion, or 23.6 percent. African markets also climbed, with $600.7 million, or 10.2 percent of the total, while European destinations continued to decline in importance, accounting for $532.4 million, or 8.9 percent, of co-op exports.

While 2000 appears to have marked a turning point for cooperative exporters following the global economic woes of the late 1990s, continued structural change via mergers, alliances and dissolutions in a number of commodity subsectors signal significant change in future co-op trading patterns.

Figure 3--Cooperative exports by destination, 2000

Canada            7.3%
Asia             41.5%
Oceania           0.4%
Europe            8.9%
Latin America    23.6%
Middle East       2.3%
Unidentified      5.8%
Africa           10.2%

Total exports $5,952,588,675

Note: Table made from pie chart.