Agricultural cooperatives posted record sales and income in 2011, surpassing previous records set in 2008 by $10 billion, and besting the old income record by $500 million.
Dallas Tonsager, under secretary for Rural Development, made the announcement Tuesday, kicking off National Cooperative Month. Tonsager said co-op employment levels remained strong, with cooperatives employing 184,000 full-time, part-time and seasonal workers, up slightly from 2010.
Tonsager said the number of farm co-ops is declining primarily due to mergers, but memberships and asset values are up.
"[Cooperatives] employ people, the buy supplies, they contract with companies for services, the go into areas to a large extent that might not be served by the private sector because they generally aren't very economical," Tonsager said in a press call Tuesday. "But what we have seen happen in the last several years is a very profound business skill set that these cooperatives have learned and follow that really brings true value."
Tonsager said cooperatives play an important role because not only are farmers getting services, but they are also participating in the business model and enjoying returned earnings.
Net income before taxes for all agricultural co-ops was a record $5.4 billion, eclipsing the previous high of $4.9 billion, set in 2008. Net income was up more than 25%, or $1 billion, from 2010.
The year also saw double-digit increases in prices for dairy products, cotton, livestock and grains and oilseeds. Farm production expenses also increased by double-digits in 2011, with feed, fertilizer and fuel prices leading the upward trend. The 2,285 surveyed cooperatives had sales of $213 billion, exceeding 2010 sales by more than $40 billion.
Growth among ag co-ops was a "natural pattern," Tonsager said, following many other agricultural sectors such as biofuels and export markets.
Top 100 ag co-ops
USDA's annual list of the nation's 100 largest agricultural cooperatives, also released Tuesday, shows that they also had record sales and income in 2011. The 100 largest ag co-ops reported revenue of $148 billion in 2011, an increase of almost 30% over 2010, when revenue totaled $113 billion. Net income for the 100 top co-ops was $3.17 billion, up from $2.35 billion in 2010.
CHS Inc., Saint Paul, Minn. – an energy, farm supply, grain and food co-op – was once again the nation's largest ag co-op, with $36.9 billion in revenue in 2011. It was followed by Dairy Farmers of America, Kansas City, Mo.; with $12.9 billion in revenue. DFA traded places from 2010 with third-ranked Land O' Lakes Inc., St. Paul, Minn., a dairy, food and farm supply co-op, with $12.8 billion in revenue in 2011.
Iowa is home to 14 of the top 100 ag co-ops, the most of any state. It is followed by Minnesota with 13, Nebraska with 10, California with six and Wisconsin with five.
The biggest gains on the list were made by cotton cooperatives, due primarily to sharply higher cotton prices in 2011. Carolinas Cotton Growers Cooperative, Garner, N.C., made the largest jump, rising from 129 in 2010 to 71 on the 2011 list. It was followed by Calcot Ltd., Bakersfield, Calif., which climbed from 131 in 2010 to 85 in 2011. The next eight biggest gainers on the list were all grain or mixed (grain and farm supply) co-ops, due largely to high grain prices.
Tonsager said that strong markets have contributed to strong gains for agricultural cooperatives, but trade also plays a part. He added that some cooperatives have focused largely on export markets and international trade opportunities, which help with price increases.
Most ag co-op sectors see gains
Looking at the entire ag co-op sector, grain and oilseed sales by cooperatives climbed by almost $14 billion in 2011, while dairy product marketing increased by $8 billion. Cotton sales increased more than $1.5 billion while livestock and sugar sales both gained more than $600 million. Sales of farm supplies increased by $10 billion, primarily due to increasing energy prices. Farm supply co-ops recorded gains of more than $3 billion for petroleum products, while sales were up by $1 billion for fertilizer, feed and crop protectants.
Marketing of food, fiber, renewable fuels and farm supplies by cooperatives experienced 24% increases over the previous year, according to the annual survey conducted by the Cooperative Programs office of USDA Rural Development. Gross business volume of $213 billion was the largest ever, as was net income before taxes.
The value of cooperative assets in 2011 grew by about $13 billion, with liabilities increasing by $11 billion and owner equity gaining $2 billion. Equity capital remains low but is clearly showing an upward trend, with an 8% increase over the previous year.
Patronage income (refunds from other cooperatives due to sales between cooperatives) fell by more than 11%, to $613 million, down from $674 million in 2010.
The number of farmer cooperatives continues to decline; there are now 2,285 farmer, rancher and fishery cooperatives, down from 2,314 in 2010. Mergers account for most of the drop, resulting in larger cooperatives. Producers held 2.3 million memberships in cooperatives in 2011, up 2% from 2010.
Farmer, rancher and fishery cooperatives remain one of the largest employers in many rural communities and also provide jobs in many cities. The total farm co-op workforce of 184,000 was up slightly from 2010. While full-time jobs at co-ops increased by 1,800, the number of part-time and seasonal employees declined by 1,600.
Though the drought has changed the game this growing season, Tonsager said cooperatives will likely be able to overcome many repercussions due to accumulated assets.
"The thing to remember about cooperatives is that they are institutions that are dedicated to the communities they are a part of, so when things are good, they tend to build their capital up and get themselves ready for a time when times are rough," Tonsager said.
He added that drought has presented many challenges, but cooperatives will rise up to meet them.
"The stability created in these cooperatives by the resources they have accumulated is going to help everybody get through this tough time," Tonsager said. "They are going to help all rural Americans get through this difficult year."
For more in-depth information about how the nation's agricultural cooperatives performed in 2011, see the September-October issue of USDA's "Rural Cooperatives" magazine at: http://www.rurdev.usda.gov/BCP_Coop_RurCoopMag.html.