Co-ops' share of farm marketings up slightly in '98
Charles A. Kraenzle,
RBS Statistics Staff
USDA Rural Development
Editor's Note: Assistance in developing estimates of cooperatives' shares off arm marketings and farm production expenditures was provided by staff members of the Rural Business-Cooperative Service of USDA- Rural Development. David Chesnick, 100 largest cooperatives; 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.
recent U.S. Department of Agriculture analysis showed that farmer cooperatives' share of total farm marketings including crop, livestock and poultry was 30 percent in 1998. That's up from 29 percent in 1997, but below the 32 percent reported for 1996 (fig. 1). The 1998 market share was based on cooperatives' net marketing business volume of $76.6 billion, down from $77.8 billion in 1997 and the record $79.4 billion in 1996.
The major factor in the overall increase in cooperatives' share of farm marketings was the significant increase in cotton and cottonseed share to 43 percent in 1998 from 38 percent in 1997. Increased marketings of the 1997 cotton crop by cooperatives was the major factor.
Cooperatives' share of major farm production items feed, seed, fertilizer, crop protectants and petroleum purchased by the nation's farmers was 29 percent in 1998, the same as in 1997. The 1998 share of farm supplies purchased was based on cooperatives' net sales of $24.6 billion, down from the record $25.2 billion in 1997.
Most milk sold through co-ops
Farmers market a large percentage of their milk through cooperatives. Cooperatives' net sales of milk and milk products totaled $25.3 billion in 1998, up nearly $2 billion, or 8.4 percent, from 1997. U.S. farm cash receipts for milk was up nearly $3.4 billion, or 16.1 percent, in 1998, due to higher milk prices. As a result, co-ops' share of total U.S. farm cash receipts for milk was down slightly in 1998, to 86 percent from 87 percent in 1997 (table 1).
Nationally, the quantity of milk sold to plants and dealers in 1998 was up nearly 1.0 percent from 1997. At the same time, the U.S. price per 100 pounds of milk was up an average of 15.3 percent. 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 grain and oilseed marketings at the farm-gate dropped from 43 percent in 1997 to 40 percent in 1998. During 1998, farmer cooperatives marketed $21.3 billion of grains and oilseeds, down from $24.6 billion in 1997. Since grain production was up and related prices were sharply lower in 1998, it appears co-ops' loss in U.S. grain share was mainly due to a proportionately smaller increase in the quantity of grains marketed by co-ops at the farm-gate.
Co-ops' share of cotton/cottonseed cash receipts was 43 percent in 1998, up from 38 percent in 1997. The net value of cotton and cottonseed purchased by farmer cooperatives was nearly $3 billion, down 1.4 percent from 1997. However, farm cash receipts for cotton and cottonseed were down 9.1 percent for the 1997 crop.
Co-ops accounted for 19 percent of the nation's fruit/vegetable sales in 1998, the same as in 1997 and 1996. Their sales of fruits and vegetables totaled nearly $9.4 billion in 1998, up 1.3 percent from a year earlier. Total U.S. average cash receipts for fruits/vegetables was up 2.3 percent in 1998. This change, however, was not large enough to change co-ops' share of fruits and vegetables marketed off the farm.
Cooperatives' share of livestock (including wool and mohair) marketings was 14 percent in 1998, up from 12 percent in 1997. Co-ops' net sales of livestock was $7.4 billion in 1998, down $42 million, or 0.6 percent. However, total U.S. cash receipts for livestock/wool decreased 11.4 percent from 1997 to 1998, due to lower prices, especially for hogs and pigs.
Cooperatives' share of "all other" marketings, such as poultry, dry edible beans and peas, tobacco, nuts, rice and sugar, was 12 percent, down from 13 percent reported for 1997. Co-ops' "all other" marketings in 1998 totaled $10.2 billion, a 1.6-percent increase from the $10.1 billion marketed in 1997. In comparison, total U.S. cash receipts for "all other" marketings increased 5.8 percent. The biggest increase was in miscellaneous marketings, such as hay, grasses and other field crops.
Figure 2 shows the most recent 5 year market-share trends for selected farm commodities marketed by farmer cooperatives. Grain/oilseed and cotton/cottonseed shares varied. Milk, fruit/vegetable and livestock/wool shares were fairly level.
Share of farm production expenditures holds steady
Co-ops' share of major farm production items feed, seed, fertilizer, petroleum and crop protectants was 29 percent in 1998, the same as in 1997. Co-ops increased their market share of only one major farm input, petroleum. Co-ops' shares of fertilizer, crop protectants and seed remained the same, while feed's share dropped slightly to 21 percent (table 2 and figure 3).
Total U.S. farm cash expenditures for the five major supply items decreased 2.7 percent from 1997 to 1998, while co-ops' sales decreased 3.9 percent. Co-ops' sales of feed was $5.4 billion, down from $6 billion, or 9.7 percent, in 1997. Total feed expenditures also declined, falling 4.9 percent.
Co-ops' 50-percent share of petroleum expenditures set a record high. The previous record was 46 percent in 1991. Co-ops' sales of petroleum totaled $6.6 billion in 1998, down from $6.8 billion, or 2.1 percent, from 1997. However, total U.S. farm expenditures for petroleum fuel and oils in 1998 was $5.6 billion, down from $6.2 billion, or 10.4 percent, due mainly to lower fuel prices.
Calculating co-ops' share of petroleum expenditures is more difficult than for the other farm supply items because a major proportion of co-ops' petroleum sales is for nonfarm use. Based on previous research, farm use was estimated to be 43 percent. This percentage was applied to co-ops' net sales in calculating market share. This can vary from year to year, depending on weather conditions and other factors.
Co-ops' lowest share of the major farm supply items was seed, at 10 percent, unchanged from 1997 and 1996. Co-ops' share of total U.S. cash expenditures for seed was a high of 19 percent in 1987.
Cooperatives' sales of major farm supplies totaled $21.1 billion in 1998. Petroleum sales accounted for more than $6.6 billion, or 31.4 percent, of the total. Co-ops' sales of seed and crop protectants were up, while all others were down. This was the same for corresponding total U.S. cash expenditures.
Feed accounted for the second largest proportion of co-ops' farm sup ply sales (25.6 percent), followed by fertilizer (24.5 percent) and crop protectants (15 percent). Seed accounted for only 3.5 percent. Total U.S. feed expenditures accounted for 43.5 percent of the major farm supplies purchased, followed by fertilizer (18.5 percent), crop protectants (15.8 percent) and seed (12.5 percent).
Methods used in developing co-op shares
Cooperative-share estimates for selected commodities and farm supplies are based on data from the following sources. The annual survey of farmer cooperatives conducted by USDA's Rural Business-Cooperative Service, other Cooperative Services studies, cash receipts from farm marketings and farm production expenditures published by USDA's Economic Research Service (ERS) and Cooperative Services' commodity specialists.
Co-ops' shares of farm marketings represent 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 dollar value and year to-year changes in related data or on physical quantity (where available). In most cases, the share estimate was based on dollar value. For those commodities for which physical quantity handled by cooperatives was 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 nonfarm purposes. These adjusted business volumes were then related to their respective total U.S. cash expenditures to calculate their percentage share estimates.