United States

Department of

Agriculture

Rural Business–

Cooperative

Service

RBS Research

Report 196

Measuring the Economic

Impact of Cooperatives:

Results from Wisconsin
Abstract This study measures the economic impact of cooperatives at the State level and therefore quantifies a portion of their contribution to economic development. Financial data

was collected from almost 800 agricultural and non-agricultural cooperatives in

Wisconsin during 2000. The total economic impact of these cooperatives was

assessed using a Social Accounting Matrix (SAM) model. The SAM accounted for the

total economic transactions spurred by cooperative business activity in Wisconsin.

Direct, indirect, and induced effects were estimated in terms of jobs, wages and salary,

and total income. In the case of patronage refunds and dividends, the total value

added to the State’s economy was also calculated. The economic impacts are reported for each of the following six cooperative types: agricultural marketing, farm supply

and services, credit unions and farm credit, food, rural utilities, and other. The analysis

did not attempt to measure the total value of cooperatives to either their local

economies or their members. Economic impact studies are a single, not final, measure

of the important role cooperatives play in any economy.

August 2003
Preface The analysis conducted for this research simulated the relationship of Wisconsin’s 798

cooperatives to the State’s broader economy. The cooperatives represented a total of

2.7 million members and $5.6 billion in gross sales. More than $250 million was generated in net profits while $323 million was returned to members in the form of cash

patronage refunds and dividends and almost $65 million paid in Federal, State, and

local taxes.

In the aggregate, and taking into account multiplier effects, Wisconsin cooperatives

support nearly 30,000 full-time jobs and generate almost $1 billion in total income within the State. They also produce more than $200 million in Federal, State, and local tax

revenues. Agricultural cooperatives are responsible for the most significant economic

impacts, accounting for 55 percent of the total economic impact of cooperatives.

The cash patronage refunds and dividends that are distributed to cooperative members annually also have significant economic impacts. When these returns are cycled

through the State’s economy they in effect support a total of 4,637 jobs that generate

$114 million in total income. The returns further create more than $500 million in total

value-added, the influx of additional net income into the State. 

Remember, Social Accounting Matrix (SAM) results and those of other economic

impact models are simply estimates produced by economic simulations and should be

carefully interpreted. The results are products of the data and modeling assumptions.

National and regional industrial surveys (the basis of SAM models) do not differentiate

cooperatives from other organizational structures. Therefore, any unique relationships

cooperatives may have within their economies (e.g., purchasing more inputs locally)

are not included in the analysis.

i
Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Research Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Cooperative Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Economic Impact Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Interpretation of SAM Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Cooperative Sector Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Wisconsin Cooperative Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Appendix: Cooperative Survey Instrument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

ii
Measuring the Economic Impact of

Cooperatives: Results from Wisconsin 

Kimberly Zeuli

Greg Lawless

Steven Deller

Robert Cropp

Will Hughes

University of Wisconsin—Madison

Introduction

Policymakers and community development

agents are increasingly interested in alternative

models for locally owned businesses that will be

responsive to community needs and stimulate local

economic growth. Cooperatives should be an obvious choice. By virtue of being locally owned and

controlled, with net profits distributed to patrons,

many consider cooperatives to be an ideal model

for local economic development. Their structure

and objectives compel them to behave differently

than other community organizational structures

(Fulton and Ketilson).

Cooperatives play a vital and direct role in

rural economic development, as recognized in provisions of the current farm bill. It authorized substantial financial allocations for a rural cooperative

development program. Cooperative developers also

recognized this idea and adopted the following

principle for their profession in 1994: "Cooperatives

are development tools and should promote both

social empowerment and economic goals" (RBS SR

54, Creating ‘Co-op Fever’: A Rural Developer’s

Guide to Forming Cooperatives, p. 11, Patrie).

Unfortunately, very few studies have measured

the economic impact of cooperatives at either the

State or local level. So their contribution to economic development has not been well quantified.

One reason is a lack of good data describing the

cooperative economic activity. With better data and

economic impact analysis, policymakers and community development practitioners could make more

informed decisions regarding the support of alternative business development options.

This report summarizes results from the

research project "Assessing State and Community

Impacts of Agricultural and Rural Cooperatives."

The project quantitatively measured the economic

impact of cooperatives (both agricultural and nonagricultural) in Wisconsin. This required collecting

updated financial data for all of the cooperatives in

Wisconsin. Unfortunately, due to insufficiencies in

this data, only State-level impacts could be analyzed. Further research is warranted at the county

level. The report describes the research methodology, including a general discussion of the limitations of the Social Accounting Matrix (SAM)

approach. This is followed by an overview of the

cooperative data collected from 798 cooperatives

during 2000. The analysis results and conclusion

compose the remainder of the report.

Research Methodology

Cooperative Data Collection—Adequate financial data for cooperatives in the State did not exist,

so the first step in the project was to collect it. All

incorporated cooperatives in the State, except farm

credit associations, credit unions, and town mutual insurance companies, register annually with the

Wisconsin Department of Financial Institutions. In

1999, the department listed 666 incorporated operating cooperatives. They included agricultural and

food cooperatives, rural utilities, and others incorporated under Wisconsin’s cooperative statute

(Chapter 185). Credit unions and town mutual

insurance companies are incorporated under a dif1
ferent State statute while farm credit associations

are only incorporated under a Federal statute. All,

however, operate according to the same generally

accepted cooperative principles.

A survey requesting financial information for

fiscal 1999 was sent to 426 cooperatives in March

2000 (see Appendix). It was decided that 240 registered cooperatives would be excluded from the

study since a 1992 survey in found that they were

conducting little or no business (Cropp). These

included county Farm Bureaus, dairy breed associations, and other agricultural trade organizations

organized as cooperatives in the middle of the last

century. A total of 325 surveys were returned by

cooperatives (76 percent response), although all surveys were not fully completed.

Followup telephone calls to non-respondents,

industry trade associations, and key informants produced additional data from 123 cooperatives operating in the State. Those included 25 of the initial

cooperatives surveyed (still operating), 4 farm credit associations, 80 town mutual insurance companies, 8 large agricultural marketing cooperatives

headquartered elsewhere and not incorporated in

Wisconsin (e.g., Land O’Lakes), and 6 non-incorporated housing cooperatives. (Some housing cooperatives are not formally incorporated although they

operate according to generally accepted cooperative principles.)

The "out-of-State" agricultural marketing cooperatives were included because they conduct extensive business with producers in the State and they

provided Wisconsin-specific data. Seven of these

cooperatives provided gross sales, number of members and employees, and salary figures that represented only the Wisconsin portion of their business.

The remaining co-op telephone interviews yielded

membership and employee numbers, but little

financial information.

Financial information for the 350 credit unions

operating in the State was acquired from the

Wisconsin Office of Credit Unions, which requires

them to submit financial reports twice per year.

Combining the mail survey, credit union, and

telephone interview data (798 cooperatives),

"response rates"1 for the various survey questions

ranged from 30 percent to 84 percent. While membership information and gross sales figures were

obtained for most cooperatives, tax information was

gathered for a mere 30 percent. The Wisconsin Office

of Credit Unions does not require credit unions to

report their taxes. To account for these data discrepancies, the response rate for each survey question is included in the statistics tables (section three).

Economic Impact Analysis—Economic impact

studies generally employ regional modeling methods designed to provide empirical representations

of the linkages between the various sectors in the

economy. Social Accounting Matrix (SAM) models

allow researchers to investigate the interdependencies that industry, institutions, and households

have with each other studied region. A SAM comprehensive financial accounting system tracks economic transactions within a given economy. These

types of regional models also identify the overall

size and contribution of an industry, its economic

effect or economic value, in relation to the area mix

of economic activity.

A SAM model offers a "snapshot" of the economy, detailing the sales and purchases of goods and

services between all sectors of the economy for a

specific time. The flow of dollars associated with

the operation of an industry is traced throughout

the economy. One industry’s product can be purchased by others as supplies, fertilizer, fuel and seed

by households and other institutions for final consumption, or be exported outside of the study

region. Likewise, an industry’s product can be purchased from other industries in the economy, from

institutions such as households, or imported from

outside the region. Basically, any industry’s service

or product requires employees, materials, utilities,

capital investments, financing, maintenance, equipment, and service inputs.

Not all of an industry’s products may be purchased locally. Firms may produce goods or provide services for "export" (i.e., sold outside the

region being modeled). They attract outside funds

into the region that in turn support employment,

industrial purchases, and household spending.

Firms that use locally produced products, instead of

those from outside the region, generate revenue

flows to other local industries. However, firms that

2

1 Technically, the credit unions did not respond to any survey that

was part of this study; however, they did respond to the Office of

Credit Unions’ annual questionnaire, therefore justifying the use of

the phrase “response rate.”
produce goods and services for local consumption

(either by industries or by households) may not

actually stimulate significant additional economic

activity in the region.

A firm that purchases or sells products locally

(within the region being modeled) is probably incorporated in SAM model calculations. Estimates of

an industry within the region being modeled are

based on national and regional industrial surveys.

Unfortunately, they do not differentiate cooperatives from other organizational structures. SAM

results are simply estimates that reflect the quality

and type of data employed and the assumptions

implicit in the modeling.

Interpretation of SAM Results—SAM models

produce many kinds of data. The more useful

results for planners and policymakers are estimates

of (1) jobs; (2) wage and salary income; (3) total

income; and (4) tax flows. These four categories of

economic activity are reported in the results section.

Jobs are defined as the number of positions created in the local economy, not the number of

employed persons. This distinction is important

because the relationship between job growth and

labor force growth varies substantially depending

on the industry. Some industries rely heavily on

semi-skilled and part-time labor. Others use more

full-time or skilled jobs. It is important, whenever

possible, to quantitatively assess whether the jobs

stimulated by a given industry are part-time or fulltime and higher or lower paying.

Wage and salary income includes the wages and

salaries paid to employees and proprietors, the normal profits made by sole proprietors. Total income

(gross regional product) includes all personal

income (employment compensation and income to

sole proprietors) plus property income (dividends,

interest, and rents), and indirect tax payments (primarily excise and sales taxes paid by individuals

to businesses). This is akin to the national Gross

Domestic Product (GDP) measure.

Tax flows measure the dollar value of tax revenues generated by the industry that flow to public

institutions (the local, State, and Federal

Governments). This flow includes direct taxes paid

by the industry as well as the taxes paid by its

employees and taxes paid on economic activities

created through indirect and induced effects.

SAM models can also measure an industry's

total industrial output (gross sales). While some

industry analysts may like to use these comparatively large numbers when promoting the impact

of their industry, industrial output is not necessarily a reliable indicator of an industry’s local economic impact. A gas station, for instance, may generate millions of dollars in gross sales each year,

but since it has few and poorly paid part-time

employees, its economic impact may be negligible.

Thus, industrial output was not measured for this

analysis, which instead focused on the employment,

income, and tax-related measurements described

above.

Each of the economic impact estimates produced by SAM models are further divided into

direct, indirect, and induced components. For

instance, assume the total local economic impact

(total effect) measured in terms of job creation in a

certain industry is 1,000 jobs. This industry may

actually only directly employ 500 people in its firms

(direct effect), although as a consequence of its operations it may generate an additional 500 jobs (indirect and induced effects).

Direct effects refer to the actual production of

the firms or institutions that are studied. For example, direct jobs are the number of positions within

any given business. Direct wage and salary income

represents the firms’ payments to all employees and

returns to sole proprietors. Indirect effects measure

the value of additional economic demands that the

firms or institutions being studied place on other

industries in the region (e.g., when they purchase

supplies from these industries). Firms use public

utilities, communication systems, fuel, wholesale

goods and services, manufactured goods, financial

and legal services, raw and processed commodities, and the products from a variety of other businesses to create their own services or products.

Induced effects estimate the impact of earnings

spent by workers in direct and indirect jobs on

goods and services in the economy. Induced effects

can also be called household effects. The terms are

often used interchangeably. When workers purchase

goods and services for household uses, they in turn

stimulate another layer of economic activity. Most

induced activity occurs in the retail, services,

finance, insurance, and housing sectors of the economy. Because additional employment (and thus

3
income) is then stimulated in each of these sectors,

yet another layer of induced and indirect economic activity is generated. SAM models account for

these iterative rounds of transactions until all of the

possible inter-industrial transactions have been measured.

The multiplier effect refers to the multiple layers

of economic activity linked to an industry. There

are two different kinds of multipliers. Type I only

measures the value of direct and indirect effects

(e.g., direct and indirect jobs are summed and then

divided by the number of direct jobs). Type II (or

Type SAM)2 measures the value of all economic

transactions (direct, indirect, and induced) that are

stimulated in the economy by the industry under

study (e.g., direct, indirect, and induced jobs are

summed and divided by the number of direct jobs).

Only the Type II multipliers are reported for this

analysis.

Cooperative Sector Analysis—The employment,

income, and cash patronage refund data were used

to generate economic impact estimates for cooperatives in Wisconsin using a SAM model of the

State’s economy. In the first stage, all of the cooperative data (798 responses) were aggregated to provide an estimate for the total cooperative sector in

the State. In the second stage, the data were segregated by cooperative type and separated into six

categories for analysis: 

(1) agricultural marketing (includes dairy bargaining associations, cheese plants and

creameries, regional dairy and other types

of marketing co-ops such as cranberry, livestock, and forestry); 

(2) farm supply and services (includes local

farm supply, artificial insemination, farm

management, milk transportation co-ops,

and dairy herd improvement associations);

(3) credit unions and farm credit associations;

(4) food cooperatives (includes natural and

conventional food grocers);

(5) utilities (includes rural electric and rural

telephone co-ops); and

(6) other cooperatives (includes non-agricultural cooperatives that do not fit neatly

under one of the five other categories, e.g.,

a funeral home).

The SAM model used in this analysis has 528

industrial sectors with no differentiation among

business structures (i.e., cooperatives are not distinguished within the industrial sectors). In addition to the cooperative data collected specifically

for this analysis, data from previous county- and

State-level modeling projects were used to calibrate

the Wisconsin SAM.

Wisconsin Cooperative Statistics

The cooperative statistics are presented in

tables 1-3. For a complete summary of the primary data, see the 2001 Directory of Wisconsin

Cooperatives (University of Wisconsin Center for

Cooperatives). Table 1 shows that the 798 cooperatives had 2.7 million members and $5.6 billion in

gross sales for 1999. Agricultural marketing cooperatives contributed about $2.6 billion, with an additional $1.4 billion accredited to farm supply and

service cooperatives. (Both types of credit agencies

reported operating income from interest and fees

in lieu of gross sales.) The cooperatives generated

$227 million in net profits of which $323 million

was returned to members as cash patronage refunds

and dividends. This is somewhat misleading, however, because credit unions account for the majority of that estimate, paying out $289 million in dividends (this figure is combined with farm credit

dividends in table 1). The non-credit cooperatives

returned a relatively modest $32 million or 28 percent of their combined net profits.

Table 2 represents the "balance sheet" for

Wisconsin cooperatives. They reported nearly $13

billion in assets and almost $11 billion in liabilities.

Clearly, assets minus liabilities should give us the

equity figure. Due to data discrepancies, this does

not exactly balance.

The employment and tax statistics for the cooperatives are shown in table 3. Cooperatives

employed 17,413 people full-time and 6,021 parttime in 1999. For the purposes of the economic

impact analysis, part-time employees were counted

as half full-time equivalents (FTEs), for a total of

20,424 FTEs. The cooperatives reported paying $583

million in salaries and wages and almost $80 million

in benefits to their employees.

4

2 Technically, type II and Type SAM multipliers are computed

differently, although they should be interpreted the same and

produce the same estimate.
5

Table 1— Wisconsin Cooperative Statistics by Type, 1999

Number Patronage

of Gross Sales Net Profit Refund*

Cooperative Type Responses Members ($millions) ($millions) ($millions)

Agricultural Marketing 42 77,615 2,578.70 33.8 7

(response rate) 88% 88% 49% 41%

Farm Supply & Services 156 253,922 1,394 39.5 11

(response rate) 76% 73% 67% 63%

Credit Unions & Farm Credit 354 1,904,322 771.2 114.1 290.5

(response rate) 100% 100% 100% 100%

Food 30 41,604 103.9 4.2 0.4

(response rate) 83% 77% 53% 53%

Rural Utilities 36 234,550 417.9 16 10.9

(response rate) 89% 89% 64% 67%

Other 180 202,064 304.6 19.5 6.3

(response rate) 57% 41% 32% 36%

Total 798 2,714,077 5,570.40 227 323.4

Note: The response rate for each statistic is presented in parenthesis following the actual estimate. It should be interpreted as a percentage of

the number of responses.

* Includes cash patronage refunds and dividends.

Table 2— Wisconsin Cooperative Equity Statistics, 1999

Assets Liabilities Equity*

Cooperative Type ($ millions) ($millions) ($millions)

Agricultural Marketing 503 257.8 245.2

(response rate) (46%) (46%) (46%)

Farm Supply & Services 780.1 348.6 432.1

(response rate) (69%) (69%) (68%)

Credit Unions & Farm Credit 10,412.10 9,133.90 1,288.20

(response rate) (100%) (100%) (100%)

Food 23.7 11.9 11.8

(response rate) (50%) (50%) (47%)

Rural Utilities 1,093.90 751.5 320.3

(response rate) (69%) (67%) (67%)

Other 146.4 59.9 74.5

(response rate) (38%) (39%) (36%)

Total 12,959.30 10,563.60 2,372.10

Note: The response rate for each statistic is presented in parenthesis following the actual estimate. It should be interpreted as a percentage

of the number of responses.

* Due to discrepancies in the collected data, assets minus liabilities does not equal equity.
Wisconsin cooperatives paid $64.5 million in

Federal, State, and local taxes in 1999. Cooperative

businesses do not pay Federal or State income tax

on net profits allocated to members as patronage

refunds, although they do pay income tax on net

profits earned from non-member business and/or

net profits retained as unallocated equity (i.e., not

returned to members). Again, however, it should

be noted that the tax figures are probably lower

than in reality because only 30 percent of the cooperatives in the State reported tax information. The

Wisconsin Office of Credit Unions did not provide

any data on the taxes paid by credit unions.

Three different sets of estimates were generated from the SAM analysis. The first set (tables 4-

11) measures the direct, indirect, induced, and total

economic effects for each of the six categories of

cooperatives as well as for all of the cooperatives.

The second set (tables 12-14) estimates the distribution of the total economic impact (in terms of jobs,

wages and salaries, and total income) of cooperatives across different economic sectors. The final set

of results (table 15) measures the contribution of

cooperatives in terms of tax revenues.

Agricultural marketing cooperatives (table 4)

employ nearly 5,900 people, providing a significant

source of employment in Wisconsin’s rural areas.

Once the multiplier effect is considered, these cooperative businesses generate an additional 2,395 jobs.

They produced $163 million in direct income, which

when cycled through the local economy amounted

to $263 million in income. (Total income is a more

comprehensive measure than just wage and salary

income.) The multiplier ranges from 1.406 for

employment to 1.610 for total income. Because the

direct economic impact of all cooperatives was similar (i.e., the direct jobs, direct wages and salary,

and direct total income represented a fairly constant portion of their totals across all cooperative

types), the multipliers are fairly consistent across

all types.

Farm supply and service cooperatives (table

5) each employed about 5,900 people. Accounting

for the multiplier effect, these cooperatives helped

create more than 8,000 full-time jobs. The direct

income and total income created was slightly lower

than agricultural marketing cooperatives at about

$158 million and $254 million, respectively.

Credit unions and farm credit associations

(table 6) provide an important range of services for

their clients and play a vital role in Wisconsin’s

credit markets. In terms of direct economic activity,

6

Table 3— Wisconsin Cooperative Employment Statistics, 1999

Wages Benefits Taxes*

Cooperative Type Full-time Part-time ($ millions) ($ millions) ($millions)

Agricultural Marketing 5,614 565 163.4 18.2 12.3

(response rate) (83%) (73%) (63%) (41%

Farm Supply & Services 4,536 2,640 157.9 20.3 21.8

(response rate) (74%) (75%) (69%) (68%

Credit Unions & Farm Credit 4,573 1,552 156.9 24.2 7.6

(response rate) (100%) (100%) (100%) (1%)

Food 372 573 11.1 1.2 1.2

(response rate) (87%) 241 63.4 12.5

19.4

(response rate) (89%) (86%) (75%) (67%)

Other 876 450 30.2 3.4 2.3

(response rate) (47%) (43%) (37%) (40%)

Total 17,413 6,021 582.9 79.8 64.5

Note: The response rate for each statistic is presented in parenthesis following the actual estimate. It should be intrepreted as a percentage of

the number of responses.

* Tax data for credit unions was unavailable: this only represents taxes paid by farm credit associations.
credit unions and associations employ 5,349 people and generate about $157 million in total income.

With the multiplier effect, they ultimately support

7,649 jobs and nearly $253 million in total income.

Of all the cooperatives examined, food cooperatives (table 7) have the smallest economic impact

on the Wisconsin economy. They directly support

659 jobs, which is rather low because most of the

food cooperatives are small businesses with few

employees (typically half of which are part-time).

Regardless, food cooperatives still generate a total

income of nearly $18 million.

Rural utilities (table 8) certainly provide a vital

resource for rural businesses and households. In

terms of direct employment and income, however,

they are not as significant as agricultural and credit cooperatives. They directly employ 1,563 people

and generate nearly $63 million in total income

(which ultimately amounts to more than $100 million after cycling through the State’s economy).

"Other," the group of cooperatives that cannot

be easily classified into any of the previous categories (table 9), ultimately generates additional 1,544

jobs and nearly $49 million in total income. In aggregate (table 10), cooperatives in Wisconsin directly

employ 20,424 FTEs. Accounting for the multiplier

effect, they support almost 30,000 jobs. The total

income created in the State, again after including

the multiplier, is nearly $1 billion.

7

Table 4— Agricultural Marketing Cooperatives

Wage and Salary Total Income

Economic Impact Jobs ($ millions) ($ millions)

Direct 5,897 163.4 163.4

Indirect 1,934 48.3 80.3

Induced 462 11.4 19.3

Total 8,292 232.2 263.1

Type II Multiplier 1.406 1.366 1.61

Table 5— Farm Supply & Service Cooperatives

Wage and Salary Total Income

Jobs ($ millions) ($ millions)

Direct 5,856 157.9 157.9

Indirect 1,867 46.7 77.5

Induced 446 11 18.6

Total 8,170 215.6 254.1

Type II Multiplier 1.395 1.366 1.61

Table 6— Credit Unions and Farm Credit

Wage and Salary Total Income

Jobs ($ millions) ($ millions)

Direct 5,349 156.9 156.9

Indirect 1,856 46.4 77.1

Induced 443 10.9 18.5

Total 7,649 214.2 252.5

Type II Multiplier 1.43 1.366 1.61
8

Table 7— Food Cooperatives

Wages and Salary Income Total

Jobs ($ millions) ($ millions)

Direct 659 11.1 11.1

Indirect 128 3.2 5.3

Induced 31 0.8 1.3

Total 818 15.1 17.7

Type II Multiplier 1.242 1.36 1.601

Table 8— Rural Utility Cooperatives

Wage and Salary Income Total

Jobs ($ millions) ($ millions)

Direct 1,563 63.4 63.4

Indirect 736 18.1 31.1

Induced 173 4.3 7.2

Total 2,472 85.8 101.8

Type II Multiplier 1.582 1.353 1.605

Table 9— Other Cooperatives

Wage and Salary Income Total

Jobs ($ millions) ($ millions)

Direct 1,101 30.2 30.2

Indirect 358 8.9 14.8

Induced 85 2.1 3.6

Total 1,544 41.3 48.7

Type II Multiplier 1.402 1.366 1.61

Table 10— All Wisconsin Cooperatives

Wage and Salary Income Total

Jobs ($ millions) ($ millions)

Direct 20,424 582.9 582.9

Indirect 6,880 171.8 286.3

Induced 1,641 40.5 68.6

Total 28,945 795.2 937.9

Type II Multiplier 1.417 1.364 1.609
The cash patronage refunds and dividends distributed to cooperative members annually also have

a significant economic impact (table 11). When

returns are cycled through the State’s economy, they

in effect support a total of 4,637 jobs that generate

slightly more than $114 million in total income.

Further, they create more than $500 million in total

value-added.3 If these businesses were structured

as investor-owned firms, those net profits would

have either been reinvested in the firm or returned

as dividends. In the latter case, the value-added

estimate for the State would probably have been

much lower since investors are generally spread

across the country.

The second stage of analysis estimated the distribution of the total economic impact (in terms of

jobs, wages and salaries, and total income) of the

cooperative types across the different economic sectors in the State—agriculture; mining; construction;

manufacturing; transportation, communications,

and public utilities (TCPU); trade; finance, insurance and real estate (FIRE); services; government;

and other (tables 12-14). The first row of the tables

represents the direct economic impact of each cooperative type (i.e., the figures are the same as those

found in the "direct" row for tables 4-10).

The largest impacts by sector, regardless of the

economic measure, occurred in the trade (retail and

wholesale), finance, insurance and real estate (FIRE),

and service (restaurants, business and personal services, health care, etc.) sectors. This is not too surprising given the fact that the indirect effects of the

cooperative sector were fairly significant; a lot of

the total economic impact was accrued in the first

round of spending. This typically suggests spending

on trade, FIRE, and service, which do not require

significant investment. The agriculture, mining, and

"other" sectors were the least impacted by cooperatives. Again, this has to do with the fact that the

first-round multiplier effect constituted a large portion of cooperatives’ total impact.

Although the government sector was also relatively little affected by cooperative-induced economic activity, cooperatives do generate tax revenues that flow to Federal, State, and local governments. Some of these tax revenues are paid directly by cooperatives in the form of corporate and

other business taxes ($65 million, see table 3), but

cooperatives also generate tax revenues indirectly

via the income taxes paid by their employees as

well as the taxes paid on the indirect and induced

income generated in the economy. The indirect and

induced tax revenues created by cooperative businesses in the State are reported in table 15.

Agricultural marketing, farm credit associations,

and farm supply and service cooperatives generated the most substantial portion of the $90 million

Federal, State, and local tax revenues. More than

half of these revenues ($48 million) are directed to

the Federal Government, while $26 million goes to

the State and $16 million to local governments in

Wisconsin. The cash patronage refunds distributed

by the cooperatives produce additional tax revenues, almost $50 million in total (not reported in

the table).

Conclusion

The analysis conducted for this research simulated the complex relationship Wisconsin cooperatives have with the State's broader economy. The

study looked at six different types of cooperatives:

agricultural marketing, farm supply and services,

credit unions and farm credit associations, food,

rural utilities, and others that did not fit neatly in

any other category. Primary data for the 1999 fiscal

year was collected from 798 incorporated cooperatives in 2000.

The total economic impact of these cooperatives was assessed using a SAM model. The comprehensive financial accounting system measured

the economic transactions spurred by cooperative

business activity within the State. The total economic impact that cooperatives have on the State's

economy through direct, indirect, and induced multiplier effects was estimated in terms of jobs, wages

and salary, and total income.

In the aggregate, and taking into account multiplier effects, Wisconsin cooperatives support nearly 30,000 full-time jobs and generate almost $1 billion in total income within the State. In addition,

they further produce roughly $205 million in

9

3 Value-added, or grossdomestic product, represents the impact of

non-local (outside the State) demand created by the refunds. Thus,

it represents a influx of additional net income into the State.
10

Table 11— Patronage Refund and Dividend Impact

Jobs Total Income

($ millions) ($ millions) Total Value Added

Direct — — 323.4

Indirect 3,754 92.4 158.6

Induced 883 21.8 36.9

Total 4,637 114.2 518.9

Type II Multiplier 1.501 1.575 1.605

Table 12— Jobs Supported By Industrial Sector

Marketing Credit Supply Food Other Utilities TOTAL

Cooperative 5,897 5,349 5,856 659 1,101 1,563 20,424

Agriculture 28 27 27 2 5 11 101

Mining 0 0 0 0 0 0 2

Construction 42 40 41 3 8 16 150

Manufacturing 91 87 88 6 17 35 324

TCPU 76 73 73 5 14 27 268

Trade 950 912 918 60 176 371 3,387

FIRE 202 194 195 14 37 80 723

Services 954 916 922 65 177 347 3,381

Government 30 29 29 2 6 11 106

Other 22 21 21 1 4 12 81

TOTAL 8,292 7,649 8,170 818 2,472 1,544 28,945

Table 13— Wage and Salary Supported by Industrial Sector ($ millions)

Marketing Credit Supply Food Other Utilities TOTAL

Cooperative 163.4 156.9 157.9 11.1 30.2 63.4 582.9

Agriculture 0.3 0.3 0.3 0.02 0.05 0.1 1

Mining 0.02 0.02 0.02 0.01 0.003 0.01 0.1

Construction 1.6 1.6 1.6 0.1 0.3 0.6 5.8

Manufacturing 3.4 3.3 3.3 0.2 0.6 1.3 12.2

TCPU 3.1 3 3 0.2 0.6 1.1 11.1

Trade 17.2 16.5 16.6 1.1 3.2 6.7 61.2

FIRE 6.2 6 6 0.4 1.2 2.6 22.4

Services 26.3 25.3 25.4 1.8 4.9 9.3 93.1

Government 1.3 1.3 1.3 0.1 0.2 0.5 4.6

Other 0.2 0.2 0.2 0.01 0.04 0.1 0.8

TOTAL 223.2 214.2 215.6 15.1 41.3 85.8 795.2
Federal, State, and local tax revenues. Agricultural

cooperatives are responsible for the most significant cooperative economic impact in the State. The

$263 million in total income linked to agricultural

marketing cooperatives and the $254 million in total

income tied to farm supply and service cooperatives together represent 55 percent of the combined

economic impact of all cooperatives. Credit unions

and rural utilities are other significant contributors

of jobs and income.

Wisconsin cooperatives (excluding credit

unions) returned $34 million to members as cash

patronage refunds in 1999. Credit unions issued

$289 million in dividends to their members.

Patronage refund and dividend dollars represent

another important income stream in the State’s

economy, ultimately supporting 4,637 jobs and $114

million in total income after considering multiplier

effects. These returns further generate $500 million

in total value-added, the net income brought into

the State as a result of spending the returns. If the

cooperatives were structured as investor-owned

firms, it is likely that investor dividends would support fewer jobs, total income, and total value-added

within the State.

Larger economic impact figures could have

been generated if the analysis had been based

instead on industrial output or gross sales.

Wisconsin cooperatives generated more than $5.5

billion in gross sales in 1999. Nevertheless, the more

conservative impact estimates used in this analysis are based on the assumption that estimates driven by job figures are more appropriate than those

derived from gross sales.

Remember, however, that results produced by

SAM models are simply estimates produced by economic simulations and should be carefully interpreted. The results are products of the data and

modeling assumptions and thus share those limitations. The collected data from cooperatives was

11

Table 14— Total Income Supported by Industrial Sector ($ millions)

Marketing Credit Supply Food Other Utilities TOTAL

Cooperative 163.4 156.9 7.9 11.1 30.2 63.4 582.9

Agriculture 0.5 0.4 0.4 0.03 0.1 0.2 1.6

Mining 0.04 0.04 0.04 0.003 0.01 0.01 0.1

Construction 1.7 1.6 1.6 0.1 0.3 0.7 6.1

Manufacturing 5.2 5 5 0.4 1 2 18.6

TCPU 7.4 7.1 7.1 0.5 1.4 2.6 26.1

Trade 27.8 26.6 26.8 1.8 5.1 10.7 98.8

FIRE 25.2 24.1 24.3 1.7 4.7 10.7 90.6

Services 30.1 28.8 29 2 5.6 10.7 106.3

Government 1.6 1.6 1.6 0.1 0.3 0.6 5.8

Other 0.2 0.2 0.2 0.01 0.04 0.1 0.8

TOTAL 263.1 252.5 254.1 17.7 48.7 101.8 937.9

Table 15 - Indirect and Induced Taxes Generated by The Cooperative Sector ($ millions)

0Marketing Credit Supply Food Other Utilities TOTAL

Federal 13.5 13 13.1 1 2.5 5.1 48.2

State 7.2 6.9 7 0.5 1.3 2.8 25.8

Local 4.5 4.3 4.3 0.3 0.8 1.8 16

TOTAL 25.3 24.3 24.4 1.7 4.7 9.7 90
sparse for some variables (e.g., tax information) and

thus does not accurately reflect total cooperative

figures. Further, the SAM estimates of an industry’s

input mix and whether those inputs are purchased

within the region being modeled are based on

national and regional industrial surveys.

Unfortunately, these surveys do not differentiate

cooperatives from other organizational structures.

Therefore, any unique relationships cooperatives

may have within their economies (e.g., purchasing

more inputs locally) cannot be analyzed. Primary

survey information to update the national or regional statistics is needed to improve the quality of the

model output, particularly where the studied industry segment may differ from national or regional

averages (such as cooperatives).

Finally, this analysis did not attempt to measure the total value of cooperatives to either their

local economies or members. Economic impact

models, including SAM, measure neither the savings that cooperatives may offer their members nor

how savings are spent in the broader economy. Nor

do they account for the increased profitability that

members may achieve through their cooperative

business and how they spend those personal profits in the broader economy. Cooperatives also offer

more to their communities than employment opportunities by providing markets access and essential

services to the residents. They also help develop

local leadership (human capital) that can start and

lead other social and business ventures. This impact

study should, therefore, be viewed as a single, not

final measure, of the important role cooperatives

play in the State’s economy.

REFERENCES

Cropp, Bob. Wisconsin Cooperatives: Directory and

Business Information Guide, 1993. Madison,

WI: University of Wisconsin Center for

Cooperatives.

Fulton, Murray and Lou Hammond Ketilson. "The

Role of Cooperatives in Communities:

Examples from Saskatchewan." Journal of

Agricultural Cooperation 7(1992): 15-42.

Patrie, William. Creating ‘Co-op Fever’: A Rural

Developer’s Guide to Forming Cooperatives.

USDA, RBS Service Report 54, July 1998.

12
13

APPENDIX: Cooperative Survey Instrument

Information in the box below (with the exception of e-mail address) will go into a public directory.

ALL ANSWERS BELOW WILL BE KEPT STRICTLY CONFIDENTIAL

Use most recent fiscal year

Membership: Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Wisconsin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gross Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net Margin (Before Income Taxes and Distributions) . . . . . . . . . . . . .

Cash Patronage Paid for the Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Assets: Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fixed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Liabilities: Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fixed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Member Equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Federal Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Wisconsin Property Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Wisconsin Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Wisconsin Payroll Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Wisconsin Sales Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other Miscellaneous Wisconsin Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of Full-Time Employees in Wisconsin . . . . . . . . . . . . . . . . . .

Number of Part-Time Employees in Wisconsin . . . . .. . . . . . . . . . . . . .

Wages and Salaries Paid in Wisconsin . . . . . . . . . . . . . . . . . . . . . . . . .

Benefits Paid in Wisconsin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Name of ___________________________________________________________________________________

Type of Cooperative: _________________________________________________________________________

General Manager: ____________________________________________________________________________

Board President: ____________________________________________________________________________

Main Address:

———————————————————————————————————————————————

———————————————————————————————————————————————

———————————————————————————————————————————————

Telephone: ____________________________________ Web Page: _________________________________

Fax: __________________________________________ E-mail contact: _____________________________
14

IF your cooperative has no branches, thank you for taking the time to complete this survey.

IF your cooperative has one or more branches, please continue below.

Please check this box if you would like a copy of the study's summary results.

The information below will allow us to do two things: Most importantly, the town and employee data will allow us

to calculate statewide data on a sub-state basis. We've requested the branch managers' names in case we would want

to market educational programs to them in the future. 

Town or City of Branch Location Number of Employees Name of Branch Manager

Your Comments : ____________________________________________________________________________________

____________________________________________________________________________________________________

____________________________________________________________________________________________________

____________________________________________________________________________________________________

____________________________________________________________________________________________________
U.S. Department of Agriculture

Rural Business–Cooperative Service

Stop 3250

Washington, D.C. 20250-3250

Rural Business–Cooperative Service (RBS) provides research,

management, and educational assistance to cooperatives to

strengthen the economic position of farmers and other rural

residents. It works directly with cooperative leaders and

Federal and State agencies to improve organization,

leadership, and operation of cooperatives and to give guidance

to further development.

The cooperative segment of RBS (1) helps farmers and other

rural residents develop cooperatives to obtain supplies and

services at lower cost and to get better prices for products they

sell; (2) advises rural residents on developing existing

resources through cooperative action to enhance rural living;

(3) helps cooperatives improve services and operating

efficiency; (4) informs members, directors, employees, and the

public on how cooperatives work and benefit their members

and their communities; and (5) encourages international

cooperative programs. RBS also publishes research and

educational materials and issues Rural Cooperatives magazine.

The U.S. Department of Agriculture (USDA) prohibits

discrimination in all its programs and activities on the basis of

race, color, national origin, gender, religion, age, disability,

political beliefs, sexual orientation, and marital or family

status. (Not all prohibited bases apply to all programs.)

Persons with disabilities who require alternative means for

communication of program information (braille, large print,

audiotape, etc.) should contact USDA’s TARGET Center at

(202) 720-2600 (voice and TDD).

To file a complaint of discrimination, write USDA, Director,

Office of Civil Rights, Room 326-W, Whitten Building, 14th and

Independence Avenue, SW, Washington, D.C. 20250-9410 or

call (202) 720-5964 (voice or TDD). USDA is an equal

opportunity provider and employer.