Sales climb, net income declines
for local cooperatives in 2000
Beverly L. Rotan
USDA Rural-Business Cooperative
Service
ales by local cooperatives
of major farm supplies
(feed, seed, fertilizer,
chemicals, petroleum and
other farm supplies)
averaged $8.33 million in 2000, a 14-
percent increase from $7.28 million in
1999. Petroleum sales spurred this
increase, with a 30-percent surge to
$2.92 million per local cooperative in
2000 (table 1). Seed sale averages also
climbed sharply, up 21 percent, to
$248,967 per local co-op in 2000.
Indeed, every category of farm supply
sales increased from1999 to 2000.
When revenue from the sale of farm
commodities is added to farm supply
sales, the total sales average per local
cooperative rose to more than $14.1
million in 2000.
Net income averaged almost
$242,000 in 2000, down steeply from
$334,000 in 1999, a 27 percent drop.
About 26 percent of the 331 local
cooperatives in this study reported
losses in 2000. Local co-op savings
were up 3 percent, while patronage
refunds from regional cooperatives
declined 49 percent from 1999. Even
with this slight downturn, these
refunds were still an important source
of revenue, allowing 39 out of 95 cooperatives
that had local losses to report
overall net income for the year.
Increases in fertilizer and petroleum
sales were both due to the rise in
propane prices. Propane is used to heat
farm homes and as a component in
anhydrous ammonia fertilizers. Sales of
tires, batteries and accessories, containers,
building materials and groceries
from convenience stores (all categorized
as “other farm supplies” on the accompanying
tables) all showed increased
sales. As a group, this category climbed
12 percent, to more than $1.1 million.
Overall sales for marketing farm
commodities (crops and livestock)
showed a small increase in 2000. Grain
sales, with higher market prices and
production in 2000 than in 1999, were
up 4 percent, to almost $6 million per
local cooperative on average. Service
income increased less than 1 percent.
Both current assets and total assets
showed increases, up 11 and 8 percent,
respectively, on average for the
331 co-ops surveyed. Investments also
increased in property, plant and
equipment; grain and oilseed inventories;
farm supply inventories; and
accounts receivable.
Current liabilities for local co-ops
jumped nearly 14 percent during the
two-year study period, with patrons’
credit balances, seasonal debt and
accounts payable showing double-digit
increases. Growth was also experienced
in accrued expenses, as well as
in current and long-term debt. Cash
patronage refunds and dividends
decreased.
Equity financing remained a strong
fiscal component for local cooperatives,
with equity growing about 4 percent
from 1999 to
2000. Farm income
also remained strong
for local cooperatives,
in large part
because of government
payments.
Cost of goods sold
and revenue almost
offset each other in
2000, with cost of
goods sold rising
about 10 percent and
revenue rising 8 percent.
Cost of goods
sold averaged almost
88 percent of net
sales. Total expenses
climbed about 8 percent
from 1999.
These factors may be
the reason why there have been so many
cooperatives with net income losses for
the year.
Local agricultural cooperatives continued
to play a vital role in supplying
goods and services to their farmer-members
and in marketing their crops. Local
co-ops are also important to rural communities,
where they are often one of the
largest employers and generate considerable
tax revenues for their communities.
Co-ops in the study had an average of
39 employees, who earned an average
salary of $27,024. Total employee
expenses were up about 6 percent from
1999. Directors’ fees and expenses were a
small part of total costs. However, director
compensation is an important factor
that helps many cooperatives convince
producers to divert time each month to
helping to guide their cooperative. Coop
boards averaged seven members, who
were paid an average of $952 per year.
Information for this article was the
result of a study that collected detailed
financial information from 331 cooperatives.
These co-ops were grouped into
four categories: small, medium, large
and super (table 2).
