United States

Department of

Agriculture

Rural Business

and Cooperative

Development

Service

Petroleum

Cooperatives, 1995 ’

RBCDS Research

Report 143
Abstract This report examines the vital role that agricultural cooperatives perform in providing petroleum

products to farmers and rural America. All aspects of cooperative involvement are documented,

from acquisition of crude oil and natural gas and crude oil refining, to the wholesale and retail

distribution of refined petroleum products. Fifteen regional and interregional cooperatives

responded to a survey that asked detailed information on their petroleum operations.

Cooperatives continue to be an important supplier of petroleum products for farm production,

having a 41 percent share of marketing activity in 1993.

Keywords: cooperatives, petroleum products, refineries, wholesale and retail distribution.

Petroleum Cooperatives, 1993

E. Eldon Eversull and John R. Dunn

Cooperative Services

Rural Business and Cooperative Development Service

RBCDS-Cooperative Services Research Report 143

July 1995

Price: Domestic-$4; foreign-$4.59
Preface Regional and interregional cooperative petroleum operations-refineries and wholesale and

retail marketing and distribution-are documented in this report. Challenges and opportunities

for cooperatives in the petroleum industry are also identified.

The authors acknowledge special assistance from Robert E. Plett, CENEX; Michael A.

O’Connor, NCRA; Stephen 6. Burnett, Agway; Marvin Weisert, Growmark; Hosein Shapouri,

USDA; and James P. Howell, National Council of Farmer Cooperatives.
Contents Highlights .................................................................... i

Cooperatives’ Share of Sales ...................................................l

Challengesandopportunities .................................................. ..l

Challenges ............................................................. .

Opportunities ........................................................... .

CooperativeSystem ........................................................... .

Crude Oil and Natural Gas Production ............................................6

Cooperative Refinery Operations .................................................7

Refining Capacity ........................................................7

ProductsRefined ........................................................ .

SourcesofCrudeOil ................................................... ...7

Refinery Storage Facilities ............................................... : .9

ProductTransportation ................................................. ..10

Refined Product Destination ..............................................l 1

Wholesale Marketing and Distribution ............................................l 1

Products Received by Regionals ...........................................l 1

SourcesofProducts ................................................... ..I 1

DispositionofProducts ................................................. ..ll

Refined Product Storage and Transportation .................................14

Retail Operations and Bulk Delivery .............................................14

Bibliography .............................................................. ..15
Highlights Agricultural cooperatives play a vital role in providing petroleum products to U.S. farmers and

rural markets. In 1993, more than 2,500 regional and local cooperatives sold $5.2 billion worth of

petroleum products. Fifteen regional and interregional cooperatives, representing most of those

handling petroleum products, provided information on their operations for this report.

Cooperatives provided 41 percent of petroleum products used by U.S. farmers for farm production, up slightly from 1988-46 percent of all gasolines, 37 percent of diesel fuel, and 49 percent

of propane.

Regional cooperative suppliers of petroleum products to farms and rural areas identified four

challenges, ranked as follows:

l growing legislative and regulatory burden,

l decreasing number of farms and farm customers,

l increasing distribution costs, and

l deterioration of rural roads and bridges.

The cooperatives also identified four opportunity areas, ranked as follows:

l rural nonfarm markets,

l retail pump sales to highway traffic,

l card- or key-activated outlets, and

l convenience stores with fuel stations.

Crude oil produced from cooperative-owned wells dropped to 1.5 million barrels in 1993, less

than half of 1988’s production. Natural gas produced from cooperative-owned wells also

dropped to almost 4 billion cubic feet.

Cooperatives owned and operated four refineries, with a combined capacity of about 200,000

barrels per calendar day. Eighty one percent of the crude oil supply for these refineries came

from domestic sources.

Total liquid fuel production at cooperative refineries of 64 million barrels in 1993 fell 6 percent

from 1988. Production of unleaded gasoline and premium diesel fuel showed large increases

from 1988. Cooperative refineries produced 25 million barrels of distillate fuels in 1993. More

than 88 percent of all gasolines produced by cooperative refineries and more than 94 percent of

both distillate fuels and propane were delivered to cooperatives.

In 1993, regional cooperatives handled slightly larger quantities of gasolines and slightly smaller

quantities of distillates in their wholesale operations than in 1988. Regional cooperatives handled nearly 2.3 billion gallons of all types of gasoline. Distillate fuel handlings of 2 billion gallons

in 1993 were down 6 percent from 1988.

The largest volume of petroleum sold by regional cooperatives was distributed to local cooperative outlets in the Corn Belt, Lake States, Mountain and Pacific, and Northern Plains regions84 percent of gasolines, 68 percent of distillate fuels, and 84 percent of propane.

.

111
Petroleum Cooperatives, 1993

E. Eldon Eversull

John R. Dunn

RBCDMooperative Services

Agricultural cooperatives play a vital role in providing

petroleum products to U.S. farmers and rural markets. In

1993, cooperatives provided petroleum products valued at

$5.2 billion. Much of it was used for farm production.

Cooperatives were involved at all levels in petroleum

product production and distribution, from crude oil well

exploration, development, and production, to the wholesale

and retail distribution of refined petroleum products.

The operations of 17 regional and interregional cooperatives that handle petroleum were surveyed (table 1). Two of

those responding either no longer sold petroleum products

or sold only a small amount of lubricating oil and grease.

Cooperatives’ Share of Sales

Cooperatives continued to play a significant and

increasing role in providing petroleum products used for

farm production. In 1993, cooperatives provided 46 percent

of all gasolines, 37 percent of diesel fuel, and 49 percent of

propane sold to farmers (table 2). These shares were up

slightly from 1988 levels, but still below the 1979 peak of 45

percent.

The gallons of fuel provided by cooperatives in table 2

have been adjusted by information from a recent

Cooperative Services (CS) study (Chesnick). The 700-plus

local cooperative respondents said they received 11 percent

of their gasolines and distillate fuels and 17 percent of their

propane from noncooperative sources. By including these

additional amounts of fuel, cooperative market shares of

gasolines and distillate fuels both increased 2 percent while

propane was up 4 percent.

Only a portion of the total fuel sold by cooperatives is

used for farm production, even in predominately rural areas.

Respondents estimated total sales of each petroleum product

that was sold for nonfarm use, use in farm production, and

use on farms other than production (table 3). These estimates

form the basis for the share figures provided in table 2.

Except for a small shift in gasoline used for farm production and other fuel oils (which incurred a large shift but

has a small impact due to low sales), little changed in the

percentage of fuels used for farm production. Sales of distillate fuels, the major farm power fuels, reflected continued

heavy use for farm production.

Challenges and Opportunities

Looking to the next millennium, petroleum cooperatives will face numerous challenges and opportunities as

changes continue in their basic markets and ways of doing

business. Some are unique to the petroleum industry and

cooperatives‘ niche within it, some are common to all

agribusiness concerns serving the American farmer, and others are endemic to the U.S. cooperative system.

For example, the industry was challenged by an

Environmental Protection Agency (EPA) requirement that

refineries produce low-sulfur diesel fuel for highway use by

Oct. 1,1993. This required investment in expensive additional equipment, such as a diesel hydrotreater. More than 34

percent of cooperative refinery production met this challenge and 51 percent of regional cooperative diesel sales

were low sulfur. By the end of 1993, essentially all cooperative diesel sales were low sulfur.

The cooperative system, itself, is challenged by its

farmer-members to sell a renewable resource fuel, ethanolenhanced gasoline. About 29 percent of gasoline sold by

regional- or local-owned petroleum outlets was probably

ethanol or ethanol-enhanced. Ethanol is primarily produced

from corn, so cooperatives have turned ethanol-enhanced

gasoline sales into an opportunity to add value to their

farmer-member corn crop.

Challenges

With 187 refineries and many thousands of retail service stations and bulk delivery outlets, petroleum cooperatives face major challenges. Most of these cooperatives also

sell a variety of other farm supplies, so their petroleum sales

may be complementary to other farm supply sales and thus

expose them to competition from other farm supply distribu1
Table l-Regional and interregional petroleum cooperatives’ structure, fiscal year,

and type of operations, 1993

Cooperative and Headquarters

Crude oil

Operations Refining production

Fiscal Through Through

year Retailing Wholesaling Own inter- Own interends on: facilities regional facilities regional

FEDERATED COOPERATIVES:

CENEX, lnver Grove Heights, MN’,*

Countrymark Cooperative, inc., Indianapolis, IN*

Delta Purchasing Federation, Greenwood, MS*

Farmland Industries, Kansas City, M02

Growmark Inc., Bloomington, IL’,*

SF Services, Little Rock, AR*

South Dakota Wheat Growers, Aberdeen, SD

Tennessee Farmers Cooperative, LaVergne, TN*

Waterloo Service Company, Waterloo, IA

CENTRALIZED COOPERATIVES:

Agway Inc., Syracuse, NY2

Maine Potato Growers, Presque Isle, ME*

MFA Oil Company, Columbia, MO’

MIXED COOPERATIVES:

Farmers Petroleum Cooperative, Lansing, Ml*

Southern States Cooperative, Richmond, VA*

INTERREGIONAL COOPERATIVES:

National Co-op. Refinery Assn., McPherson, KS

Universal Cooperatives, Inc., Minneapolis, MN

9130

8131

6130

8131

8131

6130

12/31

7131

8131

6130

6130

8131

8131

6130

6130

7131

0

-

-

0

-

-

-

-

-

0

0

0

0

0

-

-

0

0

-

0

-

-

-

-

-

-

-

-

-

-

0

-

0

-

-

-

a

-

-

-

-

-

-

0

-

-

-

-

0

0

-

-

-

-

-

-

-

-

-

-

-

-

0

-

0 Cooperative involved in this activity, and,-cooperative not involved in this activity.

1 Members of National Cooperative Refinery Association: CENEX, Growmark, and MFA Oil.

2 Members of Universal Cooperatives, Inc.: Agway, Alabama Farmers, CENEX, Countrymark Cooperative, Inc., Delta Purchasing Federation,

Farmers Petroleum Cooperative, Farmland Industries, Gold Kist, Growmark, Maine Potato Growers, SF Services, Southern States

Cooperative, and Tennessee Farmers Cooperative.
Table z-Cooperatives’ share of fuel used for U.S. farm production

Year/product

Fuel used for U.S. farm production

Total fuel provided Total fuel provided

byall sources by cooperatives

Cooperatives’ share

of fuel used for

U.S. farm production

1,000 gallons Percent

1993

All gasolines

Diesel fuel

1,404,393 645,130

3,298,098 1,231,723

45.9

37.3

Total liquids: 4,702,491 1,876,853 39.9

Propane or LP gas 761,204 371,700 48.8

Total all fuels: 5,463,695 2,248,552 41.2

1988

All gasolines

Diesel fuel

1,600,OOO 699,055 43.7

2,800,OOO 1,034,287 36.9

Total liquids: 4,400,000 1,733,341 39.4

Propane or LP gas 600,000 209,864 35.0

Total all fuels: 5,000,000 1,943,205 38.9

1982

All gasolines

Diesel fuel

2,385,241. 1,124,932 47.2

2,931,690 836,698 28.5

Total liquids: 5,316,931 1,961,629 36.9

37.3

37.0

Propane or LP gas 1,136,167 423,699

Total all fuels: 6,453,098 2,385,328

1979

All gasolines

Diesel fuel

3,381,130 1,653,765 48.9

3,178,766 1,314,703 41.4

Total liquids: 6,559,896 2,968,468 45.3

Propane or LP gas 1,301,867 553,660 42.5

Total all fuels: 7,861,763 3,522,128 44.8

3
Table 3-Percentage of petroleum products sold by cooperatives for off-farm use, for farm production,

and for other farm uses, 1993 and 1988

Petroleum product Off-Farm Use Used for Farm Production Other Farm Uses

1993 1988 1993 1988 1993 1988

Percent

Gasoline (all types)

Diesel fuel

Home heating oil

Other fuel oils

and residual (#4-#6)

Kerosene

Propane or LP gas

Lubricating oils

Grease

44 57 36 3 1 20 12

10 16 80 78 10 6

36 33 12 13 52 54

40 97 40 3 20

22 24 28 18 50 58

38 39 30 30 32 31

10 13 81 81 9 6

9 4 83 9 1 8 5

tors. Specific challenges listed on the survey will be presented in part in the following sections, ranked in order of

importance by respondents. First though, a short discussion

of the competition of local cooperatives can be assessed from

a recent Cooperative Services (CS) study (Chesnick).

More than 700 local cooperatives returned usable surveys on their petroleum operations. Most were associated

with the regional cooperatives represented in this study,

either by owning or by being owned by the regional cooperative.

For all fuels, lubricating oils, and grease, at least 80

percent was supplied by regional cooperatives to these

locals. Major oil companies supplied about 4 percent, and

independent jobbers about 6 percent. These locals had an

average petroleum sales volume of $2.1 million and median

total sales of $7.5 million. The local cooperatives had numerous competitors. Each had at least 16 retail competitor service stations in their marketing territories, half representing

major oil companies and half independent oil companies.

Legislative and Regulatory Concerns

Respondents said the major challenge facing petroleum cooperatives was the growing legislative and regulatory

burden. Most regional cooperatives had at least a legislative

and regulatory affairs person while refineries often have an

entire department to keep abreast of and in compliance with

new laws and regulations. Since the last study, petroleum

retailers have instituted measures to control pump vapor

pressure and continued efforts to replace leaking underground storage tanks. More recently, the sulfur content of

diesel fuel has been lowered and regional oxygen content of

gas has come into question.

Public concerns over the quality and safety of the

water supply, air, and other components of the environment

will continue to affect the production, storage, transportation, and use of petroleum products. The net results affecting

the petroleum industry are quite simple: decreased total use

of petroleum and petrochemical-based products and more

efficient and careful use of existing supplies.

For cooperatives involved in various aspects of the

petroleum industry, the impact of these changes will take

three general forms: (1) changes in the mix of products produced and raw materials used to produce them; (2) capital

investments required to bring the physical plant and operating practices up to regulated specifications; and (3) changes

in the agronomic and operating practices of petroleum product buyers.

Decreasing Number of Farms

The trend will probably continue toward an increasingly bimodal distribution of farms-marked by an increase

in the number of very large and small farms while the number of medium-size operations declines steeply. Farm numbers have decreased by about 300,000 in the past decade to

about 2 million. In some production sectors, most notably in

red meats and poultry, independent producers will face

especially intense competition from vertically integrated

firms striving to dominate the market from farm to consumer. Surviving producers will be more technically sophisticated. They will be more focused on their individual profit

and less on activities or groups not having a direct and

immediate impact on their profitability.

4
Cooperatives will be challenged to gain and hold on to

the patronage and loyalty of these surviving farmers. New

programs and approaches will be required that are tailored

to the needs of individual patrons.

A reduction in farms alone means fewer customers and

probably more intense competition for their accounts. In

addition, production agriculture is also changing, requiring

fewer gallons of fuel. Fuel requirements will continue to fall

as the products and methods of agriculture production

change due in part to new crops developed from genetic

engineering and reduced-use agronomic practices.

New commercial crops and different agronomic techniques will alter the location of production, the mix of supplies required, and the demographics of the farming sector.

Increasing Distribution Costs

Declining rural populations and fewer and larger

farms have increased distribution costs due to longer distances traveled for the same sales volume. Environmental

and safety concerns also have increased distribution costs.

Many underground storage tanks have been replaced. The

pump-to-vehicle tank delivery system has been upgraded to

lower vapor emissions. Cooperatives have had to adopt new

technology or adapt to changing marketing strategies. About

25 percent of their terminal distribution facilities have been

consolidated or closed. More efficient fuel deliveries allow

more shipments with fully loaded trucks.

Rural Transportation Infrastructure

The deteriorating rural transportation system is of

great significance to U.S. farm supply and marketing cooperative activities.

The extensive transportation and distribution system

of cooperatives depends on a well-maintained rural road,

bridge, and transportation infrastructure that provides

access to all areas. To minimize costs, larger delivery vehicles are required to transport supplies such as petroleum.

Cooperatives must work with other involved public and private parties to ensure that improvement of the rural transportation infrastructure receives the appropriate attention.

Servicing Accounts

With fewer farms and farmers, petroleum cooperatives

are increasingly competing for the same customers. Often,

this competitor is another cooperative. Another CS study

(Chesnick) found that local petroleum cooperatives, on average, have about two other cooperative retail service stations

in their marketing territories and three cooperative bulk

delivery outlets. Duplicate facilities and services increase

cooperatives’ cost in the petroleum sector.

Competition, technology, and changing farm demographics pressures will force cooperatives at all levels to

restructure in search of greater efficiency, more responsiveness, and improved ability to compete. Serious efforts must

be made to eliminate duplication of efforts and investments

and to reduce overlap at all levels of the cooperative system.

Opportunities

Within any challenge lie the seeds of opportunity.

Cooperatives have met prior challenges in supplying farmers

with petroleum products and hold great potential to address

more challenges by responding to the special needs of production agriculture.

Cooperatives turned the challenge of providing leaded

gasoline to power older farm equipment into an opportunity.

Cooperatives have successfully stressed product quality and

differentiation through the use of branded products specifically formulated to meet farm production needs. Most

regionals, for instance, have provided higher-performance

branded diesel fuels and lubricants. These opportunities are

listed in order of importance as ranked (weighted by sales

volume) by survey respondents.

Rural Nonfarm Markets

Respondents said retail pump sales to highway traffic

and rural nonfarm markets have the greatest potential for

increasing cooperative sales. Faced with falling demand for

fuels for farm production, cooperatives need to expand their

markets. They already have in place the infrastructure to

deliver and sell petroleum products to rural America.

Unless cooperatives expand their potential customer

base, more of their capacity will have to be idled in the

future. Cooperatives could then spread their fixed costs over

larger sales. Expanding their customer base addresses the

need to compensate for high-cost, low-volume accounts.

Opportunities for retail pump sales to highway traffic

and to rural nonfarm markets were ranked third and fourth

(unweighted). Card- or key-activated outlets were first and

convenience stores with fuel stations ranked second

(unweighted).

Although too much can be inferred from the difference

in weighted and unweighted rankings, combining this information with a survey of local petroleum cooperatives might

be useful. The survey of local cooperatives (Chesnick) found

that 71 percent had card- or key-activated outlets and 42 percent had convenience stores. This suggests that the larger

regional cooperatives have already adopted these operations. Hence the lower ranking when weighted by volume.

Convenience Stores With Fuel Stations

The third ranked (unweighted rank of 2) opportunity

was having convenience stores with fuel stations. Drastic

reductions in availability of goods and services due to business closure have hit many rural areas. In some communities, the cooperative may operate the only service station.

These communities may also be too small to have a grocery

store.

Although they offer a more limited line of food items

than a grocery store, convenience stores are a reasonable

substitute when the nearest grocery store may be many miles

away. Many convenience stores operate 24 hours and offer

5
more employment opportunities than a self-service station.

This is another way cooperatives can expand their petroleum

sales to a rural, nonfarm market.

Card- or Key-Activated Outlets

Card- or key-activated outlets were ranked as the

fourth highest opportunity (weighted), and ranked highest

overall (unweighted). Cooperatives were leaders in petroleum outlets that allowed farmers 24-hour access. Several large

cooperatives began using this concept about a decade ago. In

the last CS survey, about 8 percent of cooperatives’ final outlet sales were from this type of automated-billing system.

Regional cooperatives estimated about 12 million gallons

from these outlets were picked up by farmers in their own

bulk tanks.

The petroleum industry has now widely adopted the

automated-billing process which features use of a credit or

debit card. Seventy one percent of the cooperatives are using

this service (Chesnick). The change, however, has been

accompanied by higher costs. Pumps used in these systems

cost more because of technology involved to process automated billing. Cooperatives also pay a small transaction fee

on credit card sales. Some smaller cooperative outlets may

not have these updated systems because of these additional

costs. Due to wide use by major oil companies, this service

was considered the primary opportunity by all survey

respondents (unweighted).

U.S. cooperatives have served the petroleum needs of

farmers and rural America for many years. By continuing to

be innovative, flexible, and dedicated to serving the needs of

their patron base, cooperatives will continue to play a major

role in the rural petroleum markets for years to come.

Cooperative System

More than 2,500 local, regional, and interregional cooperatives sold petroleum products at the wholesale or retail

level in 1993. Two regionals controlled petroleum operations, ranging from crude oil production and refining to

retail sales. But most cooperatives were involved only in the

wholesale and retail sales of refined petroleum products.

Crude Oil and Natural Gas Production

Crude oil produced in 1993 from wells owned wholly

or partially by cooperatives exceeded 1.5 million barrels,

down 50 percent from 1988 and continuing the decline experienced during the last decade (table 4).

Both the number of crude oil wells and net proven

crude oil reserves declined about 50 percent. National production of crude oil fell to 6.8 million barrels per day, the

lowest level since 1958. Cooperative crude oil production

and reserves have followed this general pattern. Exploration

expenses and the cost of producing domestic crude have

risen, making it more attractive to acquire crude oil on the

open market and forgo the risk and cost of finding new

domestic crude.

Natural gas production and reserves have also

declined, largely for the same reasons as the decline in crude

oil production. Natural gas produced from cooperativeowned wells fell by more than 21 percent between 1988 and

1993 and now totals just under 4 billion cubic feet.

The decreased capability of cooperatives, as a group, to

produce crude oil and natural gas should be a concern for

Table +Crude oil and natural gas production by cooperatives’

Item 1993 1988 1982

Number

Crude oil wells in which an interest is owned 644 1,240 1,961

Gas wells in which an interest is owned 175 80 342

Barrels

Net crude oil produced from owned wells 1,543,990 3,154,823 7,926,165

Net crude oil reserves (proven) 8,853,788 15,461,129 96,776,571

7,000 cubic feet

Net production of natural gas from

owned wells 3,735,974 4,739,860 27,387,163

Net natural reserves (proven) gas 27,650,350 72,066,344 322,221,558

’ Data on a calendar year basis for 1979 and 1982, and on a fiscal year basis for 1988 and 1993.

na = not available.

1979

1,727

571

8,683,715

52,025,OOO

9,877,OOO

na

6
the United States, given the decline in domestic production.

The exit of cooperatives from ownership of production

reserves has enabled them to shift their scarce financial

resources to other areas with better and less volatile returns.

Cooperative Refinery Operations

In 1993, cooperatives owned and operated 4 of the 187

refineries operating in the United States-at Mt. Vernon, IN;

Coffeyville and McPherson, KS; and Laurel, MT.

U.S. crude oil production is declining. Prices have been

weak due to increased foreign production that has not been

met by increased demand. The real cost to refineries for

crude oil (based on 1987 dollars) has continued to fall and in

1993 was at its lowest level since 1973. The real cost per barrel of oil for refineries in 1993 was $13.41 for domestic oil

and $13 for foreign oil, for a composite price of $13.21. This

was almost $1 less than prices in 1988.

Reduced crude oil prices allowed refineries in general

to increase margins about one-half cent per gallon for motor

gasolines and 4 cents for diesel fuels. Although refinery margins were not collected in this study, the increased margins

for U.S. refineries between 1988 and 1993 probably indicated

that cooperative refineries were not experiencing the high

cost of crude oil and low price for refined product that left

some with poor refinery margins in 1988.

Refining Capacity

Cooperative refinery numbers dropped to four after

one closed in 1991 (table 5). Although the closed refinery was

small and only partly used to capacity in 1988, slight increases at other refineries boosted overall cooperative refinery

capacity for the first time in a decade. In 1993, total cooperative refining capacity was 199,950 barrels per calendar day or

208,100 barrels per stream day’. The remaining refineries

represented 1.4 percent of the total 14.4 million-barrel capacity of all U.S. refineries. Average capacity of cooperative

refineries per calendar day was just over half the U.S. average of 84,066 barrels.

Products Refined

Cooperative refineries produced 63.6 million barrels of

liquid fuels and 1.9 million barrels of liquefied petroleum

gas in 1993 (table 6). The total production of 65.5 million barrels was down 5 percent compared with 1988 and down 45

percent from 1979, the peak year. The refineries processed 67

and 6.9 million barrels of crude oil and natural gas liquids,

respectively, in 1993.

Cooperative refineries produced 1.4 million barrels of

leaded gasolines to meet the demand of some older gasolinepowered farm equipment still in use. Cooperatives produced

35.6 million barrels of unleaded gasolines in 1993, up 72 percent from 1988. While the production of leaded gasoline has

diminished in importance, the total production of both leaded and unleaded gasolines was about the same as in 1988.

Table &Number and capacity of cooperative

refineries

Capacity

Year Number

Per calendar Per stream

day day

Barrels

1993' 4 199,950 208,100

1988 5 197,565 205,360

1982 6 319,175 na

1979 8 459,700 na

1 Source: DOE/EIA-0340(93)/l “Petroleum Supply Annual

1993, Volume I,” pages 90-93.

na = not available.

Distillate fuel production at cooperative refineries of

25.4 million barrels in 1993 was down from 29.5 million in

1988. Kerosene production sharply declined from 7.5 million

barrels in 1979 to only 35,856 barrels in 1993. This decrease

probably reflected a shift in production to other distillates.

The product mix at cooperative refineries differs from

all others because of the characteristics of farm-fuel demand

(table 7). Eighty-six percent of cooperative refinery production was for major power fuels used by farmers (gasolines

and distillate fuels). This compares with only 69 percent on a

national scale.

When viewed on the basis of power fuels only, the differences in product mix between cooperative and other

refineries becomes clearer. Distillate fuels are used more

widely than gasolines in production agriculture. Therefore,

cooperative refineries devoted 40 percent2 of their production to distillate fuels, compared with the industry average

of 28 percent.

Sources of Crude Oil

Cooperative refineries purchased most of their crude

oil supplies from domestic sources. Only 17 percent came

from cooperative owned or controlled sources (table 8).

Cooperative refineries became far less dependent on longterm contracts for their crude oil supplies. These contracts

represented nearly a third of all crude oil received by cooperatives in 1982, but only 4.3 percent in 1993. Most supplies

were acquired under short-term contracts and on the spot

market. The cooperatives obtained 72.6 percent of their

crude this way in 1993, down slightly from the high of 80

percent in 1988.

1 Barrels per stream day means running under full capacity at optimal

conditions, while barrels per calendar day includes down time and other

limiting factors.

2 Typically, refinery distillate output is limited to 24 to 30 percent of refined

product output. This product mix reported by surveyed refineries may reflect

refined product trades or transfers between other refineries to obtain

distillates their owners desire.

7
Table 6-Crude oil processed and products refined or manufactured by cooperatives

Item

Barrels

Refinery inputs:

Crude oil run or processed

Natural gas liquid run or

processed and other

Liquid products:

Unleaded gasoline

Leaded gasoline

Kerosene

67,043,754 68,424,389 84,625,330 128,258,ooo

6,903,452 7,712,564 5082,231 na

Premium diesel fuel

No. 2 diesel fuel

Home heating oil

No. 4 fuel oil and residual fuel oil

35,592,868 20,659,508 24,036,846 16,613,325

1,377,364 16,507,057 23,551,519 52,667,775

35,856 102,657 4,045,516 7,540,aoo

3,511,269 2,387,650 2,246,736 na

11,452,543 23,000,449 8,690,186 25,096,725

10,365,078 4,101,659 18,856,697 15,906,375

(No. 5 and No. 6) i,305,898 919,546 6,491,662 na

Total liquid products: 63,640,875 67,678,526 85,672,426 i i 7,825,ooo

Propane or LP gas 1,876,747 i ,458,945 2,618,777 2,327,41a

1 In 1979, unleaded gasoline and residual fuel oil were combined.

na = not available.

Table Anput and output of cooperative and U.S. refineries by major product class, 1993 and 1988

Item

Cooperative refineries All U.S. refineries’

1993 1988 1993 i 988

1,000 barrels per day

Refinery inputs:

Crude oil

Natural gas liquid run

and other

180

l a

180 13.610 13,250

2 1 1,330 1,120

Total: 198 201 14.940 14,370

Products:

Finished gasolines

Distillate fuels

Residual oil

101

69

3

102

a l

2

Percent

7,240 6,960

3,120 2,860

a30 930

Output of power fuels as

a percent of inputs*

Products as a percent of output:

Finished gasolines

Distillates

Residual oil

85.7 90.7 69.3 68.3

58.1 55.0 64.7 64.7

39.9 43.7 27.9 26.6

2.0 1.3 7.4 a.7

1 Source: DOUEIA-0384(93) “Annual Energy Review 1993,” page 155.

* Power fuels include finished gasolines and distillate fuels.

a
Table a---SOUrCeS of crude oil received by cooperative refineries, 1993 and 1988

Source 1993

Barrels Percent Barrels

Beginning inventory’ 4,634,291 5.9 na

Cooperative sources 13,491,909 17.2 8‘463,942

Domestic sources:

1988

Percent

na

12.4

Spot purchases

Short-term contracts

Long-term contracts

Foreign sources:

18,624,775 23.7 19,551,295 28.6

30,051,248 38.2 28,417,313 41.5

2,221,043 2.8 5,301,072 7.7

Spot purchases 1,294,077 1.7

Short-term contracts2 7,093,495 9.0 6,690,767 9.8

Long-term contracts 1,188,375 1.5

Total used: 73,947,206

Ending inventory’ 4,652,007

1 Beginning and ending inventories are not available for 1988.

2 Short- and long-term foreign contracts combined in 1988.

na = not available.

94.1 68,424,389 100.0

5.9 na na

Domestic sources, including cooperative-owned

reserves, provided more than 81 percent of the crude oil

acquired by cooperative refineries in 1993 (excluding beginning inventories). Reliance on foreign sources declined from

more than 25 percent of the total in 1982 to 12 percent in

1993.

Table g-Bulk Storage Capacities at Cooperative

refineries and nonrefinery sites

Type of storage 1993 1988

Barrels

Cooperatives increasingly used spot markets and shortterm contracts for more flexible response to changes in crude

oil prices and sources. This desire for greater flexibility in

sourcing follows the same trend in the U.S. refining industry.

Since 1982, cooperatives have made greater use of futures

contracts at the New York Mercantile Exchange. Through

extensive hedging transactions, cooperatives are better able to

control their price risks in purchasing crude oil and better

protect their crude oil and product inventory values.

Crude oil

Refined liquid fuels:

Motor gasoline

Distillate fuel and kerosene

Residual fuel oil

Refinery Storage Facilities

Cooperative refinery storage capacity of almost 3 milTotal:

lion barrels of crude oil was down from 3.5 million barrels in

1988 (table 9), partly because a refinery was closed. Storage

capacity, if fully used, would carry a refinery for 15 days.

Storage capacity of refined liquid fuels totaled 8.3 million

barrels, or about 13 percent of production. Propane storage

capacity was about 1.8 million barrels or about equal to a full

year’s production.

Propane or LP gas

Lubricating oils, asphalt,

blending stock and others

2,992,ooo 3,545,397

4,253,807 4,473,879

3,842,014 3,488,683

176,878 156,028

8,272,699 8,118,590

1,827,250 1,919,332

1,308,500 1,785,337

9
Product Transportation

More than 90 percent of the crude oil received by cooperative refineries was transported by pipelines (table 10).

Only 8 percent was received by truck and 1 percent by barge

or vessel. In 1993, cooperative owned or leased transportation was used to move 43 percent of their crude oil supplies,

up slightly from 1988.

Cooperative refiners have increased their control of

pipelines to more than 5,000 total miles in the past decadeup nearly 37 percent (table 11). More than 1,800 miles of

gathering and trunk lines were wholly owned or leased in

1993, down slightly from 1988. Through various joint ownership or leasing arrangements, cooperative refiners added 600

miles of pipeline.

Cooperatives also owned or leased about 120 truck

transports with a capacity of 2,000 gallons or more, and

about 400 railcars. Combined capacity of the trucks and railcars used in transporting crude oil, refined products, and

asphalt exceeded 240,000 barrels.

Pipelines continued to be the primary (74 percent)

transportation mode used by cooperative refineries for liquid

fuels leaving their facilities (table 12). Truck volume

increased about 4 percent between 1988 and 1993 and now

accounts for nearly a quarter of the shipments. About 8 percent of the liquid fuels shipped from the refinery were in

cooperative owned or leased pipelines. Use of cooperative

trucks increased from 2 percent to 10 percent, helping to

double the share of refinery shipments through cooperatives

to 17 percent.

Greater use of rail and trucks and less of pipelines

marked a shift by refineries shipping propane or liquefied

petroleum (LP) gas (table 13). Truck shipments increased to

39 percent, about the same as pipeline shipments. Use of

cooperative owned or leased vehicles for shipping propane

changed little from the last study. It was only 4 percent in

1993 and entirely in trucks.

Table lo-Transportation modes for crude oil receipts

by cooperative refineries

Transportation

mode

Crude oil

receipts

by refineries

1993 1988

Crude oil received

through the use of

cooperative owned

or leased transportation modes

1993 1988

Percent 1993 1988 1993 1988

Table ii-Pipeline mileage owned or leased by

cooperative refineries

Type of pipeline 1993 1988 1982 1979

Wholly owned

or leased:

Gathering

Trunk

Jointly owned

or leased:

Gathering

and trunk

1,311 1,703 1,414 1,476

505 272 347 176

3,634 3,035 1,907 na

na = not available.

Table 12-Transportation modes for the shipment

of liquid fuels from cooperative refineries

Transportation

mode

Refinery

shipments

of liquid fuels

Refinery shipments

through the use of

cooperative owned

or leased transportation mode

1993 1988 1993 1988

Percent

Pipeline

Rail

Truck

Barge or

vessel

Total all

modes:

74.2 76.9 7.7 6.2

.3 2.8

22.5 18.9 9.6 1.8

3.0 1.4

-

100.0 100.0 17.3 8.0

Table 1%Transportation modes for the shipment

of propane or LP gas from cooperative refineries

Transportation

mode

Refinery

shipments

of propane

or LP gas

Refinery shipments

through the use of

cooperative owned

or leased transportation mode

Pipeline

Truck

Barge or

vessel

Total all

modes:

90.7 97.0 36.5 38.8

8.0 2.0 6.0 1.8

1.3 1.0

100.0 100.0 42.5 40.6

Percent

Pipeline

Rail

Truck

Total all

modes:

40.2 68.0

21 .o 6.8

38.8 25.2 4.2 3.4

-

100.0 100.0 4.2 3.4

10
Refined Product Destination

Refined products from cooperative refineries were

usually delivered primarily to the cooperatives that owned

the refinery (table 14). Eighty-eight percent of all gasolines,

94 percent of distillate fuels, and 95 percent of propane or LP

gas was delivered to cooperatives.

As a composite petroleum system, the cooperative

refiner-to-wholesaler link remained strong. Most products

remained in the cooperative system. Noncooperative buyers,

however, purchased all of the refineries’ residual fuel oil and

solid products.

Wholesale Marketing and Distribution

Cooperatives have the most extensive agricultural supply distribution system in the United States. Many believe

this network is the most significant strength of the cooperative supply system. Through this farmer-owned wholesale

distribution system and its direct linkage to cooperative

retail outlets, farmers are able to buy most major suppliesfeed, seed, fertilizer, and crop protectants-in the qualities

and quantities they desire and at a fair price. Most petroleum

products used for agricultural production are supplied by

regional cooperatives and their outlets.

Products Received by Regionals

Supplies of petroleum products for wholesale distribution by regionals to their locals remained about the same

from 1988 to 1993. This contrasts with the growth in cooperative wholesale petroleum sales from 1982 to 1988 (table 15).

While the quantity of all gasolines remained virtually

unchanged from 1988, ethanol-blended gasoline doubled to

154 million gallons. Although still a small part of the total, its

Table i&Refinery Sales or transfers by product

and type of product recipient, 1993 and 1988

Product recipient

Product Cooperatives Other Buyers

1993 1988 1993 1988

Percent

Motor gasoline 88.4 82.0 11.6 18.0

Distillate fuel

and kerosene 94.4 92.4 5.6 7.6

Residual fuel oil 100.0 100.0

Propane or LP gas 94.9 98.8 5.1 1.2

Lubricating oil 58.0 42.0

Solid products

(asphalt,coke,

and others) 7.3 100.0 92.7

growth shows a continued effort by cooperatives to help promote the use of renewable resource fuels whose feedstock

was grown by farmers.

While the total volume of distillate fuels fell about 6

percent from 1988 to 1993, sales of premium diesel fuel grew

substantially to 673 million gallons, only slightly behind

sales of No. 2 diesel fuel. Growing use of premium diesel

fuel has been at the expense of No. 2 sales.

Sales of propane increased 53 percent from 1988 to

1993. Grease sales also increased tremendously, from 3,000

to 12,000 tons.

Sources of Products

Regional cooperatives continued to rely on cooperative

refineries to provide the bulk of their petroleum products for

wholesale operations (table 16), except for home heating oil,

kerosene, propane, lubricating oil, and grease. They were

supplied more often by spot purchases or domestic contracts

rather than by cooperative refineries. The use of domestic

contracts instead of spot purchases decidedly increased for

all products in 1993, except propane because of stable petroleum product prices. Cooperative wholesalers used domestic

contracts more frequently to lock in a price and assure a supply. None of the cooperatives used foreign contracts to buy

petroleum products in 1993.

Disposition of Products

Regional petroleum wholesalers have four primary

types of outlets or buyers for their petroleum products: (1)

those owned by the regionals, (2) those operated by their

local cooperative affiliates, (3) those operated by noncooperative entities, and (4) other outlets.

Cooperative outlets may be bulk delivery centers, customer-fill stations, card- or key-activated pumps, or combinations. Affiliated and unaffiliated locals are treated as a single group in this report. In addition, regional wholesalers

sell smaller quantities to a range of other buyers, including

other wholesalers and various government or public institutions.

Outlets owned by local cooperatives were the most

important customers of regional wholesalers for nearly every

petroleum product (table 17). Locals bought 57 percent of the

gasolines, 66 percent of the distillate fuels, and 80 percent of

the propane sold or transferred by regional wholesalers.

Regional-owned final outlets (usually centralized regionals)

received 12 percent of all gasolines and 22 percent of all distillate fuels.

Noncooperative outlets purchased only 5 percent of

the regionals’ gasoline and 3 percent of the distillate fuels

sold or transferred. Other buyers, typically resellers, purchased a quarter of the regionals’ gasoline supply. Others

were less significant buyers of distillate fuel and propane.

Outlets in the Corn Belt, Lake States, Mountain and

Pacific, and Northern Plains regions received the largest volume of petroleum sold by regional cooperatives (table 18).

These five regions handled 84 percent of the gasoline, 68 per11
Table is(lUantity of petrOleUm products received by regional cooperatives for wholesaling operations

Product 1993 1988 1982

1,000 gallons

Gasolines:

Unleaded and leaded gasolines 2,135,330 2,208,982 1,992,543

Ethanol blended gasoline 154,025 70,255 19,802

Ethanol (for blending) 35,826 7,823 na

Total gasolines (ex. ethanol): 2,289,355 2,279,217 2,012,135

Distillate fuels:

Premium diesel fuel

No. 2 diesel fuel

Home heating oil

Total distillate fuels:

672,948 87,046 na

761,445 1,105,801 698,757

573,078 943,629 981,756

2,007,471 2,136,476 1,680,513

Other fuel oils and residual oil 277,581 22,092 40,342

Kerosene 48,259 73,869 63,506

Propane or LP gas 1,075,600 701,606 763,106

Lubricating oil 28,173 28,671 44,133

Tons

Grease 11,979 3,199 6,387

na = not available.

Table i&Source of petroleum products for regional cooperative wholesale operations, 1993 and 1988

Product

Cooperative refineries Spot purchases

1993 1988 1993 1988

Domestic contracts

1993 1988

Foreign contracts

1993' 1988

All gasolines

Premium diesel fuel

Diesel fuel

Home heating oil

Other fuel oils

(#4-#6)

Kerosene 4.0 7.3

Propane or LP gas 8.5 4.1

Lubricating oil 36.2 61.5

Grease 9.9 62.5

71.2 69.0 16.5 23.3 12.3 5.4 2.3

79.0 70.8 10.5 27.2 10.5 2.0

61.3 71.4 20.4 21.5 18.3 7.0 0.1

25.3 41.9 14.5 39.2 60.2 11.4 7.5

63.8 86.2 30.7 13.8 5.5

26.8 75.5 69.2

54.3 24.9 37.2

9.6 25.3 54.2

9.7 9.6 80.4

Percent

9.2 8.1

67.6 3.4

10.8 2.4

23.1 4.7

1 No foreign contracts used by regional cooperatives in 1993.

12
Table l-r--Quantity of petroleum products sold or transferred by cooperative wholesalers to each category of

final outlet, 1993

Final Outlet

Petroleum product Regional Local Noncooperative cooperative cooperative

-owned -owned -owned

Other

Gasolines:

Unleaded gasoline’

Ethanol blended gasoline

Ethanol (for blending)

249,581

22,873

479

1,000 gallons

1,198,129 93,679 593,941

112,799 11,801 6,552

32,177 1,516 1,654

Total gasolines: (except ethanol) 272,455 1,310,928 105,479 600,494

Distillate fuels:

Premium diesel fuel

Diesel fuel

Home heating oil

Total distillate fuels:

47,437 605,915 10,856 8,740

132,644 521,863 25,400 81,538

270,682 203,559 28,068 70,769

450,763 1,331,337 64,324 161,046

Other fuel oils and residual (#4-#6) 2,515 4 275,062

Kerosene 27,815 12,141 1,750 6,554

Propane or LP gas 191,393 864,963 1,141 18,104

Lubricating oil 5,705 21,042 584 842

Tons

Grease 3,265 5,817 6 2,891

1 Includes leaded gasoline.

Table Is-Distribution of cooperative wholesale petroleum deliveries by region, 1993 and 1988

Motor gasoline Distillate fuels Propane Lubricating oil

Region’

1993 1988 1993 1988 1993 1988 1993 1988

P ercenf

Northeast 7.4 10.2 20.0 22.9 9.5 10.2 13.4 21.1

Lake States 18.6 12.1 18.1 12.8 31.3 24.8 23.7 17.1

Corn Belt 28.2 32.0 21.6 28.4 30.6 30.8 18.3 24.0

Northern Plains 16.7 21.6 13.7 16.2 14.7 23.8 15.8 17.7

Appalachian and

Southeast 4.6 4.1 5.7 6.0 3.8 3.6 3.6 3.2

Delta States and

Southern Plains 4.4 10.5 6.5 6.3 2.4 3.1 7.2 8.7

Mountain and Pacific 20.1 9.5 14.4 7.3 7.7 3.8 18.0 8.3

1 Northeast: ME, NH, VT, NY, MA, RI, CT, PA, NJ, DE, MD, and DC. Lake States: MI, WI, and MN. Corn Belt: OH, IN, IL, IA, and MO.

Northern Plains: ND, SD, NE, and KS. Appalachian: VA, WV, KY, TN, and NC. Southeast: SC, GA, AL, and FL. Delta States: MS, LA, and

AR. Southern Plains: OK and TX. Mountain: MT, ID, WY, CO, UT, NV, NV, AZ, and NM. Pacific: WA, OR, CA, HI, and AK.

1 3
cent of the distillate fuel, and 84 percent of the propane sold

by regional cooperatives in 1993. The market in the

Mountain and Pacific regions has grown tremendously since

1988. Motor gasoline sales grew 10 percent and distillate

fuels grew 7 percent.

Refined Product Storage and Transportation

Regional cooperatives operated 26 terminals for storage and distribution of motor gasolines and distillates and 5

terminals for propane (table 19). Sometimes these terminals

were co-locations for all three products. Motor gasoline storage of 116 million gallons would provide an l&day supply

for cooperative wholesale operations. Distillate storage

would provide a 28-day supply. Propane is picked up at a

pipeline terminal and delivered directly to retail outlets, so

the regionals keep only a one-day sales equivalent in storage.

Highway transports and railcars traveled more than 36

million miles (table 20) delivering liquid fuels and propane.

It took 681 highway transports to haul these products, more

than 67 percent for liquid fuels. Transports hauled more than

1.3 billion gallons of motor gasolines and distillate fuels and

Table l+Number and total capacity of cooperative

wholesaler storage terminals, by major product

group, 1993 and 1988’

Products

Number of terminals Total capacity

1993 1988 1993 1988

Number 7,000 gallons

469 million gallons of propane to final outlets. Regional

cooperative owned or leased transports delivered 23 percent

of the volume of motor gasolines, 33 percent of the distillate

fuels, and 44 percent of the propane to their final outlets.

The average highway transport used for hauling motor

gasolines and distillate fuels traveled 45,000 miles while railcars traveled 15,000 miles. Transports used to haul propane

traveled 38,000 miles and railcars 19,000.

Retail Operations and Bulk Delivery

More than 2,500 local and regional cooperatives handled petroleum products in the United States in 1993. Their

combined net volume of petroleum products topped $5.2 billion, primarily from sales to end users at bulk delivery centers or customer-fill stations.

In recognition of their primary markets-production

agriculture and rural markets+ooperatives have placed

special emphasis on developing and marketing branded-premium diesel fuels and special lubricants for agricultural

applications. Many rural customers also depend on cooperatives to provide propane to heat their homes.

The relatively small volumes and long delivery distances involved in serving some rural markets have prompted many noncooperative petroleum suppliers to withdraw

from rural areas, in favor of the more lucrative urban markets. Cooperatives’ continuing commitment to serve their

farmer-owners have kept them involved in rural markets

where they have become increasingly important suppliers of

petroleum products to American agriculture.

Regional cooperative survey respondents felt that 354,

Motor gasolines 26 35 116,430 120,481

Distillates 26 36 179,725 144,351

or more than 5 percent, of their outlets were in markets

where they could be considered the sole supplier. These outlets sold an estimated 242 million gallons of liquid fuels, or

more than 5 percent of the total volume.

Propane or LP gas 5 na 2,554 na

1 Does not include storage terminals at refinery sites.

na = not available.

Table no-Number of transports used and mites

traveled in regional cooperative wholesale

operations, 1993 and 1988

Item 1993 1988 1993 1988

Number 1,000 miles

Survey respondents supplied refined liquid fuels to

3,556 bulk delivery centers, 1,779 card- or key-activated outlets, and 1,938 customer-fill stations (table 21). Some of these

outlets are probably located at the same site as the bulk

delivery centers. More than 86 percent of them were owned

by local cooperatives. Nine percent of the bulk delivery outlets and 12 percent of the card- or key-activated outlets were

owned by regional cooperatives, with the remainder owned

by noncooperatives. Seventy-one percent of the customer-fill

stations were locally owned, 13 percent by regionals, and 16

percent by noncooperatives.

The drastic reduction in customer-fill stations may be a

trend towards more card- or key-activated outlets or reflects

the choices offered in the prior survey. In the 1988 survey,

respondents were not given the choice of card- or key-activated outlets so many of the customer-fill stations in 1988

were actually card- or key- activated outlets.

In 1988 an estimated 8 percent of their liquid fuels volume was sold through card- or key- activated outlets. If use

of credit or debit cards at the pump by many of the major oil

Highway transports for: l

Liquid fuels 460 472 20,588 28,224

Propane or LP gas 221 187 8,449 5,527

Railcars used to transport:

Liquid fuels 400 na 6,100 1,500

Propane or LP gas 81 80 1,527 313

* Highway transports with a minimum of 2,000 gallon capacity.

na = not available

14
Table nl-Final outlets for petroleum products supplied by regional cooperative wholesalers, 1993 and 1988

Type of outlet

Product/outlet type Bulk delivery centers Card- or key-activated Customer fill stations

1993 1988 1993’ 1993 1988

Refined liquid fuels:

Regional-owned

Local cooperative-owned

Noncooperative-owned

Total:

320 304

3,096 2,794

140 141

3,556 3,239

Number

217

1,544

18

1,779

257 299

1,385 2,578

296 312

1,938 3,189

Propane or LP gas:

Regional-owned

Local cooperative-owned

Noncooperative-owned

Total:

253 154 878 704

1,532 879 444 127

81 25 17

1,866 1,058 1,339 831

1 Data for card- or key-activated liquid fuel outlets not available for 1988 and there are none of these type outlets for propane or LP gas.

companies is any indication of their popularity, sales from

these outlets will continue to increase. This type of outlet

allows 24-hour operations and automated billing, so some

cooperatives can maintain petroleum outlets for their rural

customers without the expense of an attendant.

Cooperatives also operated 1,866 bulk delivery centers

and 1,339 customer-fill stations for propane in 1993. Again,

many of these outlets also probably handled other liquid

fuels.

Bibliography

Chesnick, David S., Local Petroleum Cooperatives, 1993, U.S.

Department of Agriculture, Rural Business and

Cooperative Development Service, Cooperative

Services, Research Report, not yet published.

Eversull, E. Eldon, and John R. Dunn, Petroleum Cooperatives,

2988, U.S. Department of Agriculture, Agricultural

Cooperative Service, Research Report 94, May 1990.

Richardson, Ralph M., et al., Farmer Cooperative Statistics,

2993, U.S. Department of Agriculture, Rural

Development Administration, Cooperative Services,

Service Report 43, November 1994.

U.S. Department of Energy, Energy Information

Administration, Office of Energy Markets and End

Use, Annual Energy Review 1993, DOE/EIA-0384(93),

July 1994.

U.S. Department of Energy, Energy Information

Administration, Office of Oil and Gas, Petroleum

Supply Annual, 1993, Volume 2 DOE/EIA-0340(93)/2,

June 1994.

1 5
U.S. Department of Agriculture

Rural Business and Cooperative Development Service

Ag Box 3255

Washington, D.C. 20250-3255

Rural Business and Cooperative Development Service (RBCD

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 RBCDS (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. RBCDS also publishes research and educational

materials and issues Farmer Cooperatives magazine.

The United States Department of Agriculture (USDA) prohibits discrimination in its

programs on the basis of race, color, national origin, sex, religion, age, disability, political

beliefs and marital or familial 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 the USDA Office of

Communications at (202) 720-7808 (TDD). .

To file a complaint, write the Secretary of Agriculture, U.S. Department of Agriculture,

Washington, D.C. 20250, or call (202) 720-7327 (voice) or (202) 720-l 127 (TDD). USDA is

an equal employment opportunity employer.