United States

Department of

Agriculture

Agricultural

&;m,tive

ACS Research

Report No. 86

Dairy Farmers’

Participation

in Cooperatives
Abstract

Dairy Farmers’ Participation in Cooperatives

Thomas W. Gray, Roger A. Wissman, Charles A. Kraenzle,

Beverly L. Rotan, and Celestine C. Adams

Agricultural Cooperative Service

U.S. Department of Agriculture

Slightly less than 90 percent of all dairy farmers had some affiliation (via

membership or nonmember patronage) with agricultural cooperatives in

1986. This was a small increase from 83 percent in 1980. When dairy

farmers participated economically it was often on an “all-or-nothing”

basis, both for marketings and-though somewhat less-supply purchases.

In general, as size of farm increased a greater percent participated; though

the proportions dropped off within the largest size category. Dairy farmers

were loyal to membership, using membership for total marketings and

supply purchases and, in particular, for high proportions of their dairy

product marketings and feed purchases. The greatest participation overall

was in the Lake States and Northern Plains; the lowest participation was

in the Southeast, Mountain, and Pacific States.

Key words: Farmer cooperatives, dairy, economic participation, membership, supply purchases, marketings.

ACS Research Report 86

March 1990
Preface

This study measures the various degrees of association U.S. dairy

farmers have with agricultural cooperatives, all the way from a general

affiliation to full use of membership for large proportions of product marketing and supply purchasing. Selected data for 1980 and 1986 are presented by region of the country and farm size by gross sales. Areas of the

country that may provide potentials for further cooperative expansion are

also identified.

Data for this report were obtained from a sampling of all U.S. farmers. Survey questions were part of the June 1981 and June 1986 Acreage

and Livestock Enumerative Surveys conducted by the National

Agricultural Statistics Service (NASS), formerly the Statistical Reporting

Service (SRS). Personal interviews were conducted with nearly 17,000

farmers. The data were expanded to the country as a whole.
Contents

OVERVIEW ................................................................................................... 1

GENERAL AFFILIATION ............................................................................. 2

ECONOMIC PARTICIPATION ...................................................................... 3

Marketings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Supply Purchases ................................................................................ 3

Dairy Product Commitment to Cooperative Marketing ..................... .4

Feed Expenditure Commitment to Cooperative Purchases . . . . . . . . . . . . . . . . 5

EFFECTIVE MEMBERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Marketings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Supply Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Dairy Product Commitment to Cooperative Marketing . . . . . . . . . . . . . . . . . . . . . . 7

s

Feed Expenditure Commitment to Cooperative Purchases . . . . . . . . . . . . . . . . 9

AREAS FOR EXPANSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Effective Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Nonmember Patrons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Survey Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Definitions . . . . . . . . . . . . . . . . . . . . . . . ..f................................................................14

.

OTHER PUBLICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

. . . 111
Highlights

Dairy farmers are highly likely to be affiliated with an agricultural

cooperative (either as a member or as a nonmember patron). Although the

percentages affiliated have remained relatively stable, the data show a slight

increase from 83 percent of all dairy farmers in 1980 to 87 percent in 1986.

Regions of the country on the low end of affiliation have tended to

remain at the low end (Pacific and Mountain), while regions at the high end

remain at the high end (Lake States, Northern Plains, and Northeast).

Dairy farmers tend to be affiliated with agricultural cooperatives in

increasingly larger proportions as the farm size increases. With the largest

size farms ($500,000 and over in gross sales), the proportions affiliated tend

to drop, while in the smallest size category (less than $10,000 gross sales),

substantively lower proportions are affiliated.

The positive relationship between farm size and participation tends to

hold irrespective of type of economic participation-purchasing or marketing generally, marketing milk or purchasing feed specifically, or whether

farmer or farmer-member using membership.

Dairy farmers tend to participate economically on an “all-or-nothing”

basis. While about 50 percent marketed milk through a cooperative in 1986,

nearly that same percentage (46 percent) committed from 81 to 100 percent

of their dairy product to cooperative marketing. While 50 percent purchased feed from a cooperative in 1986, nearly 30 percent purchased

between 81 and 100 percent of their feed needs.

Dairy farmers tend to be loyal members. Nearly 50 percent of all dairy

farmers held and used a membership to market farm commodities in 1980.

This number increased to just over 60 percent in 1986. Nearly 60 percent of

all dairy farmers used membership to purchase supplies, both in 1980 and

1986.

Dairy members are highly likely to patronize using their membership.

Seventy percent of all dairy members used membership to market farm commodities in 1980. About 90 percent used membership to market in 1986.

About 80 percent of all dairy members used membership to purchase supplies in both 1980 and 1986.

Dairy members using membership tend to participate economically on

an “all-or-nothing” basis. About 65 percent of all dairy members used membership to market dajry products. About 60 percent marketed 81-100 percent of their volume. About 60 percent used membership to purchase feed.

Nearly 35 percent purchased 81-100 percent of their purchased feed needs

from a cooperative.

The Lakes States, Corn Belt, Northeast, and Southeast regions suggest

themselves as likely areas for further cooperative expansion. These areas

have large numbers of dairy farmers using memberships, but in amounts

less than 81-100 percent of commitment.

The Lake States, Corn Belt, and Northeast regions may be likely areas

for increasing membership. Each contains substantial numbers of dairy

farmers using cooperatives as nonmember patrons.
Dairy Farmers’ Participation in Cooneratives I

Thomas W. Gray

Roger A. Wissman

Charles A. Kraenzle,Beverly L. Rotan

Celestine C. Adams l

OVERVIEW

Participation in agricultural cooperatives

can occur in various ways and is highly variable

among farmers. Some farmers hold offices and

sit on committees. Others may never attend

even an annual meeting, but they patronize with

large proportions of volume. Others may be

loyal in membership, use cooperatives economically, but have very little product committed.

Still others may have huge proportions of their

volume committed but not hold membership.

The focus in this report is on participation

by membership and patronage. There are four

sections. The first section documents the proportion of dairy farmers who hold membership

and/or patronize an agricultural cooperative.

Irrespective of type of participation, this section

c

1 This is one in a series of reports on farmers’

membership and use of agricultural cooperatives. For

a detailed description of the entire data set see

Kraenzle, et al., 

Use, ACS Research Report No. 77.

affiliation is with agricultural cooperatives.

The second section is on patronage.

Irrespective of membership, it reports the proportions of dairy farmers who 

tives. Both supply and marketing patronage are

discussed, as well as the degree 

mitment, i.e., feed purchases and dairy marketing from “0-20” percent to “81-100” percent of

patronage. The third section focuses again on

patronage, but adds an aspect of membership

loyalty. It documents the proportions of dairy

farmers who actually use cooperative membership in purchasing and marketing decisions, and

again the proportions of product committed in

feed purchasing and dairy marketing.

These sections start from the most general

category of participation and proceed through

increasingly delimited categories: from general

affiliation to membership loyalty and product

commitment in feed purchasing and dairy marketing. Sections correspond to various areas diagramed in figure 1. The area occupied by circle

A plus circle B represents the percentage of all

Figure l-Dairy Farmers’ Participation in Cooperatives l

C

Circle A: Dairy farmers holding membership

in a cooperative

Circle B: Dairy farmers patronizing a cooperative

Area C: Dairy farmers holding membership

and patronizing a cooperative

Area enclosed by Circles A and B: Dairy

farmer general affiliation

I Figure 1 does not represent actual numerical proportions.

1
dairy farmers who have some minimal connection, or affiliation, with agricultural cooperatives: Circle B represents dairy farmers patronizing agricultural cooperatives. Area C

represents farmers using membership to patronize. Not shown are distinctions between supply

purchases, marketings, and degrees of product

commitment.

The fourth section shows subpopulations of

farmers that may represent potentials for further

cooperative servicing, e.g., nonmember patrons

and patrons with small proportions of product

committed. Data for all sections are presented

for regions across the United States and for differing farm size categories,

GENERAL AFFILIATION

Farmers may hold membership, may

patronize, or may do both simultaneously.

Irrespective of type of participation, this section

documents the extent dairy farmers have some

connection with agricultural coVoperatives, either

through membership or nonmember patronage

(table 1).

The proportion of dairy farmers affiliated

with an agricultural cooperative (as members or

nonmember patrons) has remained relatively

stable since 1980, the data showing a slight

increase from 83 percent to 87 percent in 1986.

Relative rankings of regions did change. In 1980

the regions ranged from a low of 71 percent in

the South Central States to a high of 88 percent

in the Northeast. In 1986 they ranged from a

low of 75 percent in the Corn Belt to a high of 93

percent in the Northern Plains. Farmers in the

Northern Plains were midway (78 percent) in

their likelihood of having an affiliation in 1980,

but were among the highest in 1986 (93 percent).

Farmers in the South Central States shifted from

among the lowest at 71 percent to an intermediate position (82 percent).

Overall, regions on the low end of affiliation tended to remain at the low end (Pacific

and Mountain) and regions at the high end of

affiliation tended to remain at the high end

(Lake States and Northeast). Across all regions,

no less than 71 percent had some association (as

members or nonmember patrons) in either 1980

or 1986. Within each region, affiliations either

remained stable or increased. Even at the lowest

levels of affiliation, most dairy farmers had

Table l-Dairy farmers holding membership or patronizing as nonmember, 1960 and 1986

-.

Nonmember

Members patrons

Category

1960 1966 1960 1966

Percent ol dairy farmers

Region

Northeast 75 74 13 15

Southeast 54 71 28 15

Lake States 76 85 11 7

Corn Belt 69 61 8 13

Northern Plains 70 82 8 11

South Central 60 79 . 11 3

Mountain 67 65 9 14

Pacific 68 79 6 4

1960

88

82

87

77

78

71

76

74

Total ’

1966

89

86

92

75

93

82

78

82

Farm size

$ 1,000 - $ 9,999

$ 10,000 - $ 19,999

$ 20,000- $ 39,999

$ 40,000- $ 99,999

$100,000 - $249,999

$250,000 - $499,999

$500,000 and over

Dairy farmers, all categories

’ Total may not add due to rounding.

30 30 27 30 57 60

60 61 17 21 77 81

63 61 14 15 77 76

76 82 12 9 88 90

86 84 7 8 93 92

88 87 3 5 91 92

68 77 10 7 78 84

71 76 12 11 83 87

2
some connection, either as members or as nonmember patrons.

Both data sets show an increasing level of

affiliation as size of farm (gross sales) increased,

with a tailing off at the largest size category

($500,000 and over). There were substantively

lower levels of affiliation among farmers with

the smallest size operations. The 1980 data

ranged from a low of 67 percent for the smallest

gross sales category (less than $10,000) to a high

of 93 percent for the $lOO,OOO-$249,999 category.

In 1986, the percentages ranged from a low of 6 0

percent for the smallest gross sales category to a

high of 92 percent for both the $lOO,OOO-

$249,999 and the $250,000-$499,999 sales category. Between 1980 and 1986, within each size

category the likelihood of farmers having some

affiliation either increased or remained about the

same.

ECONOMIC PARTICIPATION

General affiliation provides’a broad measure

of dairy farmer participation, regardless of type

of participation. In this section the focus will be

tightened to economic patronage irrespective of

membership status.

Marketings

In 1986, 66 percent of all dairy farmers used

a cooperative to market farm commodities (table

2). This is up from 54 percent in 1980.

Proportions participating increased in all

regions. Dairy farmers in the Lake States and

Northern Plains were among the most likely to

market through a cooperative, while farmers in

the Southeast and Mountain States were the least

likely. This was the case for both 1980 and 1986.

A positive relationship was found between

farm size and the proportion of dairy farmers

marketing through a cooperative. The greater the

gross sales, the more likely farmers use a cooperative for marketing. The largest size farms were

an exception. In 1980 they were less likely than

the second largest size farms to market through a

cooperative. In 1986 the two largest size groupings were nearly equal, the data showing slightly

more than 70 percent of each category marketing

through a cooperative.

Supply Purchases

In 1986, 76 percent of dairy farmers purchased supplies from a cooperative. This was up

slightly from 72 percent in 1980. Dairy farmers

in the Northern Plains and Lake States were the

Table 2-Dairy farmers using cooperatives to market

their farm products, 1980 and 1986

Table 3-Dairy farmers using cooperatives to purchase

their farm supplies, 1980 and 1986

Category 1960 1966 Category 1960 1966

Region

Northeast

Southeast

Lake States

Corn Belt

Northern Plains

South Central

Mountain

Pacific

Farm size

$ 1,000 - $ 9,999

$ lO,OOO- $ 19,999

$ 20,000 - $ 39,999

$ 40,000 - $ 99,999

$ 100,000 - $249,999

$250,000 - $499,999

$500,000 and over

Dairy farmers, all categories 54 66 Dairy farmers, all categories 72 76

Percent of dairy farmers

52 59

33 44

62 76

50 58

59 72

40 67

41 40

50 70

18 16

46 55

49 45

54 70

70 76

68 73

60 71

Region

Northeast

Southeast

Lake States

Corn Belt

Northern Plains

South Central

Mountain

Pacific

Farm size

$ 1,000 -$ 9,999

$ 10,000-$ 19,999

$ 20,000-$ 39,999

$ 40,000-$ 99,999

$100,000 - $249,999

$250,000 - $499,999

$500,000 and over

Percent of dairy farmers

76 76

75 80

74 04

66 66

69 91

59 76

68 71

54 44

48 57

68 59

67 65

77 81

77 04

82 84

62 52

3
most likely supply patrons in 1986, while

Northeast and Southeast farmers were most likely in 1980. Pacific States farmers were least

likely to purchase supplies cooperatively in both

years. The percentages participating remained

stable or increased in nearly every region, the

Pacific States region being an exception

(table 3).

Purchasing patterns by farm size were similar to those cited for marketing. As size of farm

increased, the proportions of dairy farmers buying supplies from agricultural cooperatives

increased, with a dropping off of proportions

participating in the largest farm size category.

This was true for both 1980 and 1986.

Dairy Product Commitment

to Cooperative Marketing

Much of the discussion has centered on the

extensiveness of economic participation across

regions and farm sizes. This section continues

that theme, but adds a measure of product commitment. It focuses on the percentage of dairy

product marketed cooperatively.

Table 4 reveals that when dairy farmers

market their dairy product through a cooperative, they tend to be fully committed to cooperative marketing or not at all. While 52 percent

marketed their dairy product through a cooperative, 46 percent marketed 81-100 percent. Just 6

percent marketed less than 81 percent. Dairy

farmers in the Lake and Pacific regions were the

most likely to commit over 80 percent, while

those in the Southeast and Mountain regions

were the least likely.

Though more variable, the relationship

between farm size and participation was similar

to those discussed previously. As size of farm

increased, at the 81-100 percent level of product

commitment, greater proportions of dairy farmers were found committing their dairy products

to cooperative marketing. Unlike with total marketing and supply purchasing, however, the data

show no drop in farmers’ participation from the

largest farms.

Table 4-Dairy farmers using cooperatives for dairy product marketlngs, 1986

Category

l-20

Percent of dairy product sales

21-40 41-60 61-80

Percent of dairy farmers

81-100

Total 1

Region

Northeast

Southeast

Lake States

Corn Belt

Northern Plains

South Central

Mountain

Pacific

Farm size

$ 1,000 - $ 9,999

$ 10,000 - $ 19,999

$ 20,000 - $ 39,999

$ 40,000 - $ 99,999

$ 100,009 - $249,999

$250,000 - $499,999

$500,000 and over

1

2 I:; iij

3 35 39

2 25 29

1 1 2 56 62

I:; 1 1 4 40 46

1:; t ;

3 52 59

I:; 7 46 52

(*I “1

3 2 31 36

1 3 54 59

*

(*) (‘1 9 10

f2) G

I:; fi

35 40

1 (*I 26 34

1 1 (*) 3 49 54

A I:;

2 3 56 62

1 1

A 3 40 52

2 56 60

Dairy farmers, all categories

’ Total may not add due to rounding.

2 Less than 0.5 percent.

1 1 1 3 46 52
Feed Expenditure Commitment

to Cooperative Purchases

On the input side, table 5 suggests a similar

“all-or-nothing” commitment to cooperatives,

though not as dramatic as that shown in table 4.

While 50 percent of all dairy farmers purchased

feed cooperatively, nearly 30 percent purchased

more than 80 percent of their purchased feed

needs from a cooperative. The remaining 20 percent was scattered along diffcrcnt lcvcls of commitment from “l-20” percent to “61-80” percent.

Regions with the greatest proportions of dairy

farmers committed at the 81-100 percent level

arc the Northeast and the Lake States. Regions

with the smallest proportions are the Northern

Plains and the Mountain States.

A distinct farm sizc/l>ilrticipation rclationship did not emerge from these farmers feed

purchase patterns. Similar to previously discussed types of participation, there was a substantial drop in participants in the largest size

category.

e

EFFECTIVE MEMBERSHIP

Central to cooperative organization is effective membership, i.e., farmers using membership

in patronage. The focus in this section will be

on those dairy farmers who hold and use their

membership.

Marketings

Just over 60 percent of all dairy farmers

held and used cooperative membership to market their farm commodities in 1986-up from

slightly less than 50 percent in 1980. Dairy

farmers in the Lake States, Northern Plains, and

Pacific States were among the most likely to participate in this fashion, while those in the

Southeast and Mountain regions were the least

likely. Such was the case in both 1980 and 1986.

The percentages participating increased in every

region, except for the Mountain region where

there was a slight decrease (table 6).

Dairy farmers displayed a positive farm size

Table S-Dairy farmers using cooperatives for feed expenditures, 1986

Category

l-20

Percent of feed expenditures

21-40 41-60 61-80

Percent of dairy fanners

81-100

Total ’

Region

Northeast

Southeast

Lake States

Corn Belt

Northern Plains

South Central8

Mountain

Pacific

Farm size

3 l,OOO-$ 9,999

$ lO,OOO-$ 19,999

$ 20,000 - $ 39,999

$ 40,000 - $ 99,999

$ 100,000 - $249,999

$250.000 - $499,999

$500,000 and over

Dairy farmers, all categories

’ Total may not add due to rounding.

7 3 4 2 29 45

7 5 11 7 25 55

9 6 5 4 37 60

8 2 6 2 19 38

6 8 18 7 33 71

9 0 8 4 20 41

15 4 2 1 14 35

6 1 7 1 13 28

.

4 3 8 2 28 45

4 6 3 2 36 50

7 3 5 1 29 45

7 4 5 4 31 50

11 4 7 4 28 53

13 8 12 2 27 62

6 4 4 3 8 25

8 4 6 3 28 50

5
relationship. As farm size increased, greater between size and those patronizing in 1980.

percentages of dairy farmers were found using From 1980 to 1986, the percentages utilizing

memberships to market. memberships increased in all size categories.

Of dairy members (dairy farmers holding

membership), nearly 90 percent used them for

marketing in 1986, up from 70 percent in 1980.

In six of the eight regions, more than 85 percent

of the dairy members were loyal to membership

in marketings in 1986. Dairy members in the

Southeast and Mountain States participated in

lower proportions (65 and 63 percent, respectively, in 1986), though increases were recorded

in these and all other regions from 1980 to 1986

(table 7).

Supply Purchases

Though increases were not as continuous, a

positive relationship between farm size and participation was found here as well. At least 90

percent of all dairy members with sales of

$40,000 or more utilized their memberships to

market commodities in 1986. Participation in

the $l,OOO-$9,999 sales category was substantially less, with just over half patronizing.

Members in the $lO,OOO-$19,999 and $20,000-

$39,999 size categories tended to’patronize in

percentages midway between the least and most

likely. A similar tripart relationship was found

Nearly 60 percent of all dairy farmers used

membership to purchase farm supplies both in

1986 and 1980. Dairy farmers in the Northern

Plains and Lake States were most likely to participate in this fashion in both years. Those

least likely were in the Pacific States region.

Changes within regions were variable, with percentages increasing in some regions and declining in others (table 8).

A positive farm size relationship was found

here as well. Dairy farmers were more likely to

use membership to purchase supplies as size of

farm operation increased. As with most other

participation categories, there was a substantive

drop in the percentage participating in the

largest size category.

Of dairy members, about 80 percent used

membership to purchase supplies-the data

showing 80 percent in 1980 and slightly less, 77

percent, in 1986. There was some shifting by

Table 6-Dairy farmers who used their membership to

market their products, 1980 and 1986

Table 7-Dairy members who used their membership to

market their farm products, 1980 and 1986

Category 1980 1986

Region

Northeast

Southeast

Lake States

Corn Belt

Northern Plains

South Central

Mountain

Pacific

Farm size

$ l,OcQ-$ 9,999 14 15

$ 10,000 - $ 19,999 37 45

$ 20,000 - $ 39,999 43 41

$ 40,009-$ 99,999 50 66

$ 100,000 - $249,999 66 71

$250,000 - $499,999 66 71

$500,000 and over 52 69

Dairy farmers, all

categories 49 61

Percent ol a// farmers

49

I

Category 1980 1986

Percent of all dairy members

Region

Northeast

Southeast

Lake States

Corn Belt

Northern Plains

South Central

Mountain

Pacific

65 86

52 65

75 93

64 92

60 67

76 92

59 63

73 99

Farm size

$ 1,000 -$ 9,999

$ 10,000-$ 19,999

$ 2Q,ooo-$ 39,999

$ 40,000 -$ 99,999

$100,000 - $249,999

$250,000 - $499,999

$500,000 and over

45 54

62 62

66 74

66 90

77 94

75 90

77 99

Dairy members, all categories 70 69

6
region in the ordering of dairy farmers most likely to use membership. Northern Plains,

Southeast, and Mountain farmers participated in

the greatest percentages in 1980, while Northern

Plains, Lake States, and Southeast farmers did so

in 1986. Basically, farmers closely approximated

the go-percent national average in all regions,

with the exception of the Pacific in 1980 and the

Northeast and Pacific in 1986. Percentages in

these latter regions were substantially below 80

percent (table 9).

Among farm size categories, farmers using

membership in the smallest and the very largest

farm sales categories were the least likely to

make cooperative purchases. This was true for

both 1980 and 1986. No other pattern between

farm size and sales categories emerged.

Dairy Product Commitment

to Cooperative Marketing

Forty-eight percent of all dairy farmers were

members utilizing memberships to market dairy

products through an agricultural cooperative.

Forty-four percent marketed more than 80 percent. As a percent of all dairy farmers by region,

Lake and Pacific States farmers participated in

the highest proportions. Percentage participating was lowest in the Southeast States (table 10).

A farm size/participation effect did emerge.

As size of farms increased, greater proportions of

dairy farmers used membership to market their

dairy products. Nearly all participants committed more than 80 percent, reflecting again an

“all-or-nothing” pattern of patronage.

Of dairy members, 64 percent used membership to market their dairy product. The Pacific,

Lake, and Corn Belt States were among the leaders, while the Southeast States’ members were

least likely (table 11). This pattern by region

was true for both 1980 and 1986.

A size vs. patronage pattern did not emerge

as clearly among dairy members. Dairy members

in the largest size category were most likely to

use membership in marketing dairy products,

while members in the smallest size category

were least likely. Percentages in between were

more variable. However, nearly all those participating committed more than 80 percent of their

dairy product to cooperative marketing.

Table 8-Dairy farmers who used their membership to

purchase farm supplies, 1980 and 1986

Category 1960 1966

Region

Northeast

Southeast

Lake States

Corn Belt

Northern Plains

South Central

Mountain

Pacific

Farm size

$ 1,000 - $ 9,999

$ 10,000 - $ 19,999

$ 20,000 - $ 39,999

$ 40,000 - $ 99,999

$ 100,000 - $249,999

$250,000 - $499,999

$500,000 and over

Dairy farmers, all categories 57 56

Percent of a// dairy farmers

59 48

47 57

61 70

55 48

61 73

48 63

56 49 -

46 35

20 20

50 40

51 46

61 64

70 67

72 71

52 39

Table 9-Dairy members who used their membership to

purchase farm supplies, 1980 and 1986

Category

Region

Northeast

Southeast

Lake States

Corn Belt

Northern Plains

South Central

Mountain

Pacific

1960 1966

Percent of all dairy members

78 65

87 80

80 83

80 76

87 88

80 79

36 76

67 45

Farm size

$ l,OOO-$ 9,999

$ lO,OOO-$ 19.999

$ 20,000-$ 39,999

$ 40,000 -$ 99,999

$100,000 - $249,999

$250,000 - $499,999

$500,000 and over

Dairy members, all categories

65 66

63 65

81 76

60 78

61 79

62 82

76 51

80 77

7
Table lo--Dairy farmers’ proportion of sales from dairy product marketed through cooperative membership, 1996

Category

Region

Northeast

Southeast

Lake States

Corn Belt

Northern Plains

South Central

Mountain

Pacific

Farm size

$ 1,000 

lO,OOO-$

20,000-$ 39,999

$ 40,000 - $ 99,999

$ 100,000 - $249,999

$250,000 - $499,999

$500,000 and over

Dairy farmers, all categories

’ Total may not add due to rounding.

2 Less than 0.5 percent.

Percant of dairy product sales

Total ’

l-20 21-40 41-60 61-80 81-100

Percent of dairy farmers

1

2 :; I:;

3 35 39

2 24 28

1 2 55 59

I:; 1 “1 4 37 43

3 48 53

ji j ji j (2: 7 46 53

2 2 30 34

1 1 3 54 59

‘2 ‘2 I:; (2:

9 11

32 36

(2) (*I I:; 5 26 31

1 1 3 48 53

1 3 53 58

(2:

i;

(4

3 48 52

1 2 54 58

1 1 (*I 3 44 48

c

Table 11-Dairy members’ proportion of sales from dairy products marketed through cooperative membership, 1986

Category

l-20

Percent of dairy product sales

21-40 41-60 61-80 81-100

Total ’

Region

Northeast

Southeast

Lake States

Corn Belt

Northern Plains

South Central

Mountain

Pacific

Farm size

$ 1,000 - $ 9,999

$ lO,OOO-$ 19,999

$ 20,000 - $ 39,999

$ 40,000-$ 99,999

$ 100.000 - $249,999

$250,000 - $499,999

$500.000 and over

Percxnt of dairy members

4 7 5 3

3 4 4 0

6 5 7 0

61 71

5 8 6 4

5 8 6 7

4 6 5 2

6 8 7 5

(23) 31 53 35 60

“I (*) 1 I:; 4 43 58 64 50

(2: 2 3 3 63 56 69 60

1 3 70 75

Dairy members, all categories

’ Total may not add due to rounding.

* Less than 0.5 percent.

1 1 1 4 58 64
Feed Expenditure Commitment

to Cooperative Purchases

Forty-three percent of all dairy farmers used

membership to purchase feed in 1986. Most

bought more than 80 percent of their total feed

purchases from cooperatives. However, a substantial number-18 percent of all dairy farmers-did buy less than 81 percent. Northern

Plains and Lake States farmers participated most

in utilizing membership to purchase feed.

Pacific and Mountain States dairy farmers were

least likely to participate in this fashion (table

12).

Farm size did appear to affect the level of

purchasing commitment. As size of farm

increased, greater percentages of farmers were

found using membership to purchase feed needs.

Similar to previously discussed types of participation, those farmers in the largest size category

were substantially less committed than the next

largest sized units.

Fifty-seven percent of all dairy members

used membership to purchase feed. Thirty-three

percent purchased more than 80 percent of their

feed needs. No obvious farm-size effect emerged

from the data, though again a large drop in the

percentage participating occurred among dairy

farmers in the largest size category (table 13).

AREAS FOR EXPANSION

Effective Members

The data indicate dairy farmers are highly

involved with agricultural cooperatives, both for

supply and marketing needs. It is not clear what

would be a reasonable expectation or goal for

percent total involvement. Kimble 1 suggests the

entire farm population cannot be regarded as a

potential. Gasson * suggests that membership

alone may not be a good proxy for maximum

extensiveness.

Central to cooperative organization is effective membership, i.e., farmers using their mem1 See Other Publications list at end of report.

Table 12-Dairy farmers’ proportion of total expenditures on feed purchased through cooperative membership, 1996

Category

Region

Northeast

Southeast

Lake States

Corn Belt

Northern Plains

South Central

Mountain

Pacific

Farm size

$ 1,000 - $ 9,999

$ lO,OOO-$ 19,999

$ 20,000-5 39,999

$ 40,000 - $ 99,999

$ 100,000 - $249,999

$250,000 - $499,999

$500,000 and over

l-20

5

5

6

6

4

9

13

3

(*I

1

5

6

10

13

4

Percent of feed expenditures

Total 1

21-40 41-60 61-60 61-100

Percent ol dairy I armers

2 2 1 21 32

3 11 7 20 47

5 4 4 35 56

2 3 2 17 32

16 7 29 63

(4 6 19 37

3 2

(2:

13 31

1 6 1 13 24

.

t2) 2 11 19

3

(4

2 32 37

2 3 1 25 37

3 3 4 29 45

4 6 4 25 49

6 11 2 27 61

4 4 3 6 21

Dairy farmers, all categories

( Toral may not add due to rounding.

2 Less than 0.5 percent.

7 3 5 3 25 43

9
Table 13-Dairy members’ proportion of total expenditures on feed purchased through cooperative membership, 1986

Category

l-20

Percent of feed expenditures

21-40 41-60 61-80 61-100

Total 1

Region

Northeast

Southeast

Lake States

Corn Belt

Northern Plains

South Central

Mountain

Pacific

Farm size

$ 1,000 - $ 9,999

$ 10,000 - $ 19,999

$ 20,000 - $ 39,999

$ 40,000 -$ 99,999

$ 100,000 - $249,999

$250,000 - $499,999

$500,000 and over

Dairy members, all categories 9 4 6 4 33 5 7

7

7

10

12

5

11

20

4

t2)

2

9

7

12

15

5

Percenr of dairy members

3 3

5 16

6 4

3 5

f;

19

10

5 2

2 8

2

10

4

4

8

G

1

1 7

4 3

4 6 1

4 4 5

5 7 4

10 13 2

5 5 4

29 4 4

29 6 6

4 2 6 6

2 8 5 2

3 5 7 6

2 4 4 7

2 0 4 8

16 3 0

36 6 4

52 6 2

41 6 0

35 5 5

30 5 8

31 7 0

8 2 7

’ Total may not add due lo rounding.

* Less than 0.5 percent. c

Table 14-Dairy farmers who purchased feed from cooperatives in which they held membership, 1986

Category

Region

Northeast

SoutfTeast

Lake States

Corn Belt

Northern Plains

South Central

Mountain

Pacific

Farm size

$ l,OOO-$ 9,999

$ lO,OOO-$ 19,999

$ 20,000-$ 39,999

$ 40,000 - $ 99,999

$ 100,000 - $249,999

$250,000 - $499,999

$500,000 and over

l-20

1,863

741

5,601

2,476

307

724

566

304

f2)

113

1,377

3,679

5,560

1,530

324

Percent of feed expenditures

21-40 41-60 61-80

Number

745 788 482

511 1,660 1,027

3,540 2,441 2,446

513 1,041 706

605 1,222 518

t21 625 197

141 69 (*I

131 592 50

*

28 555 214

215 (*) 131

643 886 131

1,848 2,190 2,521

2,169 3,150 1,972

1,003 1,342 227

281 314 231

61-100

7,727

2,990

23,997

5,660

2,259

1,535

559

1,283

1,035

2,581

6,503

18,267

13,894

3,272

457

Total ’

11,605

6,928

38,025

10,397

4,911

3,081

1,336

2,360

1,833

3,039

9,540

28,505

26,745

7,374

1,608

Total dairy farmers 3 12,583 6,186 8,438 5,427 46,009 78,643

’ Total may not add due to rounding.

* None found in NASS sampling.

3 Either category.

10
bership in patronage. These farmers know, perhaps better than any other farmers, the advantages of cooperation. They hold membership

and patronize, thereby contributing to and benefiting from organized cooperation. They are likely to be knowledgeable about cooperatives, and

their predisposition toward them, positive.

Given limited resources, possibilities for expansion can be perhaps best centered on these members.

Effective members committing more than 80

percent of their patronage are perhaps the best

any cooperative can hope for. However, there is

room for expansion among members using their

membership in amounts less than 81 percent of

supply and marketing needs.

In 1986, 32,600 dairy farmers (20 percent of

all dairy farmers) used membership to purchase

feed in amounts less than 81 percent of their

needs. About 14,000 of these farmers were in

the Lakes States region. Over 11,000 purchased

less than 61 percent. Other regions with large

numbers included the Corn Belt, with nearly

5,000, and the Northeast and Southeast, each

with about 4,000 effective members, i.e., members using membership in patronage (table 14).

There is not quite the same margin for

expansion among effective members marketing

their dairy product. Since most milk marketed

through a cooperative is under an exclusionary

contract (the farmer-member must market all

milk sold through cooperative membership), little room is left for expanding levels of commitment. Between 8,000 and 8,500 dairy farmers in

the entire United States used memberships to

market milk in amounts less than 81 percent of

total marketings. The greatest numbers were in

the Lake States (2,600), followed by the Corn

Belt (1,900) and the Northeast (1,500) (table 15).

Nonmember Patrons

Many farmers use cooperatives as nonmembers. Reasons to bring these patrons in as members are many. In part, it is central to cooperation itself. Agricultural cooperatives are

designed by farmers to meet their mutual needs.

Nonmember patrons represent incomplete orgaTable 15-Dairy members’ proportion of gross sales from dairy products marketed

through cooperative membership, 1986

Category

I-20

Percent of dairy product sales

21-40 41-60 61-60 61-100

Total ’

Region

Northeast

Southeast

Lake States

Corn Belt

Northern Plains

South Central

Mountain

Pacific

327

350

612

;:I

Farm size

$ l,OOO-$ 9,999

$ lO,OOO-$ 19,999

$ 20,000 - $ 39,999

$ 40,000 - $ 99,999

$100,000 - $249,999

$250,000 - $499,999

$500,000 and over

(9 t2)

124 214

VI t2)

692 585

384 175

t21 43

89 50

Total dairy members 3 1,289

175

43

395

404

I:,’

t21

50

.

1,068

I:;

156

347

170

t21

85

103

I:;

792

69

t2)

860

1,030

269

1,464

1,145

201

91

336

124 887 1,012

t21 2,609 2,948

1,197 6,759 7,955

1,920 30,095 33,292

1,378 29,206 31,935

306 5,862 6,230

180 4,141 4,461

5,104

12,502 14,034

3,521 4,183

37.240 39,867

12,136 14,033

3,767 4,137

3,779 4,347

1,273 1,449

5,342 5,332

79,559 87,682

’ Total may not add due to rounding

2 None found in NASS sampling.

3 Either category.

11
Table 16-Nonmember dairy patrons’ proportion of feed expenditures purchased through cooperatives, 1986

Category

l-20

Percent of feed expenditures

21-40 41-60 M-60

Total ’

01-100

Region

Northeast

Southeast

Lake States

Corn Belt

Northern Plains

South Central

Mountain

Pacific

310 276

264 (2)

251 396

238 246

170(2) 19

57 24

208 (2)

Number

395

t2)

723

795

165

I:;

76

173

I:;

if

140

57

t21

1,676 2,829

627 891

986 2,356

583 1,861

349 684

146 287

28 166

t21 284

Farm size

$ l,OOO-$ 9,999

$ 10,000 -$ 19,999

$ 20,000 - $ 39,999

$ 40,000 - $ 99,999

$ 100,000 - $249,999

$250,000 - $499,999

$500,000 and over

234 (2) 173 1,645 2,052

173 273 250 219 914

330 246 364 57 897 1,894

347 399 471 313 855 2,385

294 24 765 605 1,688

43 130 t21 173

76

I:

t21

;i

175 251

Total nonmember patrons 3

’ Total may not add due to rounding.

2 None found in NASS sampling.

3 Either category.

1,497 942 2,154 369 4,395 9,357

r

Table 17-Nonmember dairy patrons’ proportion of dairy product marketed through cooperative membership, 1986

Category

l-20

Percent of dairy product sales

21-40 41-60 61-60

Total ’

81-100

Region

Northeast

Southeast

Lake States

Corn Belt

Northern Plains

South Central

Mountain

Pacific

Farm size

$ 1,000 - $ 9,999

$ 10,000 - $ 19,999

$ 20,000- $ 39,999

$ 40,000- $ 99,999

$100,000 - $249,999

$250,000 - $499,999

$500.000 and over

181

I?

140

181

140

Number

I:;

t2)

179

92

I:;

184 276

130 130

1,503 1,684

887 887

165 344

t21 140

57 57

I21 t21

t2) t2)

219 219

545 726

914 1,233

1,092 1,184

t2) 12)

156 156

Total nonmembe patrons 3

’ Total may not add due to rounding.

2 None found in NASS sampling.

3 Either category.

322 t21 271 12) 2,926 3,519

12
nizational participators. Since they are not

involved in membership structures, they have, at

best, very poor vehicles to represent their interests. The cooperative cannot account very well

for their changing needs in a planning sense.

Leadership talent cannot be tapped. There is

greater chance these patrons will not receive

important information that could affect their

own operations. Better information and more

involvement by membership could result in

greater product commitment and membership

loyalty.

About 11 percent (19,300) of U.S. dairy

farmers were nonmember marketing and purchasing patrons in 1986, with nearly 80 percent

located in the Northeast, Lakes States, and Corn

Belt regions. The leading regions regarding feed

purchases were the Northeast (nearly 3.000), the

Lake States (approximately 2,500). and the Corn

Belt region (slightly less than 2,000) (table 16).

These farmers bought substantial proportions of

their feed needs from cooperatives as nonmember patrons.

The data do not show many nonmember

patrons marketing dairy products through a

cooperative. The Lake States region is the only

area of the country having more than 1,000 nonmember patrons marketing milk through a cooperative (table 17).

A third population of farmers that might

logically provide room for expanding the presence of effective members is inactive members,

i.e., members who do not patronize cooperatives.

The data show, however, that this population is

very small. Just 2 percent (about 2,500 farmers)

of the entire U.S. dairy farmer population hold

memberships and do not use them. No region

has more than 1,000 inactive members.

Other areas hold promise, though do no)

have proportionate farmer membership and

patronage experiences to build on. Given their

limited resources, cooperatives may most easily

increase participation by directing their efforts

toward a) members who are patronizing, but in

amounts less than 80 percent of volumes, and b)

farmers patronizing as nonmembers. In other

regions of the United States, cooperatives may

have to go farther afield to help farmers with no

cooperative exposure to identify their joint and

unmet agricultural needs.

Finallv. the oarticioation rates droo among

the largest farmers across the United States.

While fewer, these farmers represent volume

potential, so cooperatives would be well advised

to pursue these farmers as well through membership and patronage commitment. Further, substantively lower rates of participation exist

among the smallest volume farmers across the

United States. If operational efficiencies permit,

these farmers might be pursued, not only for

their volumes, but as farmers in need, capable of

increasing community awareness of cooperative

advantages.

13
APPENDIX

Survey Description

This report is based on questions included in the June 1981 and June

1986 Acreage and Livestock Enumerative Survey conducted by the National

Agricultural Statistics Service (NASSJ, formerly the Statistical Reporting

Service (SRS). Information was obtained from personal interviews of nearly

17,000 farmers. The population of farms sampled was about 211,000 less

than the total population of U.S. farms. It was assumed that those farms not

in the population surveyed were representative of the farms in the survey.

Consequently, data were expanded to represent the total population.

Definitions

Marketing and Farm Supply Cooperatives are farmer cooperatives operating as marketing, farm supply, or both. Bargaining associations are counted as marketing cooperatives. Also included are cooperatives providing services related to marketing or furnishing farm supplies, such as cotton gins

and rice dryers, and transportation cooperatives. These cooperatives usually provide for one vote per member, a limited return on invested capital,

and return of net margins to member patrons or all patrons on a patronage

basis. They also obtain more than half their business from members.

Excluded from this study are cooperatives organized by farmers to provide production services, such as farm management, credit, fire insurance,

electricity, and irrigation, Also excluded are cooperatives providing personal services and products, such as cooperative hospitals and medical clinics,

burial societies, community [cooperative) water systems, and cooperative

grocery stores.

Member patrons are farmers holding membership in a marketing and/or

farm supply cooperative and who either market products through or purchase farm supplies from it.

Nonmember patrons are farmers who do not hold membership in a

marketing and/or farm supply cooperative but who market products through

or purchase farm supplies from it.

Farms are places of business from which $1,000 or more of agricultural

products are sold, or normally would be sold, during the year.

Dairy Farms are farms where dairy products are the main source of

farm income.

OTHER PUBLICATIO_NS

Casson, Ruth, “Farmers’ Participation In Cooperative Activities,”

Sociologia Ruralis, Vol. 17, 1977.

Kimble, Helen, Effective Membership of Agricultural Co-operatives,

Oxford, England: The Plunkett Foundation for Cooperative Studies, October

1974.

Kracnzle, C.A., R.A. Wissman, T.W. Gray, B.L. Rotan, and C.C. Adams.

Farmer Cooperatives: Members and Use, ACS Res. Rpt. 77, U.S. Dept. of

Agriculture. Washington, D.C., January 1989.

14

*U.S. Government Printing Office : 1990 - 261-497/20054
Agricultural Cooperative Service (ACS) 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.

U.S. Department of Agriculture

Agricultural Cooperative Service

P.O. Box 96576

Washlngton, D.C. 20090-6576

The agency (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.

ACS publishes research and educational materials and issues Farmer Cooperatives

magazine. All programs and activities are conducted on a nondiscriminatory basis,

without regard to race, creed, color, sex, age, marital status, handicap, or national

origin.