Financial Profile of the

100 Largest Agricultural

Cooperatives, 2002

Research Report 204

United States

Department of

Agriculture
Preface Cooperative board rooms were again very busy places in 2002. Much of the Nation’s

business sector struggled during 2002, and cooperatives were no exception. Symbolic

of this economic downturn were Chapter 11 bankruptcy filings by many large U.S.

businesses, including several by major cooperatives. The findings -- analyzed as part

of USDA’s annual financial survey of the top 100 farmer-owned cooperatives -- show

that more than half of the co-ops ended 2002 with lower total revenue and net margins

than in 2001. For the top 100 farmer cooperatives as a whole, revenue dipped 7.5 percent from 2001 while net margins dropped 71.7 percent.

However, most cooperatives should come out of these trying times stronger. To compete, cooperatives will need to rely less on debt and more on member equity. A

stronger equity position provides a cushion when the economy dictates a prolonged

down cycle, as we currently are experiencing. On the other hand, losses generated

from operations hit equity heavily in 2002.

October 2004

i
Contents Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .i

Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iv

Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Distribution of net margins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Distribution of net losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Cotton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Dairy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Diversified . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Fruit & Vegetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Farm Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Grain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Poultry/Livestock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Rice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Sugar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Cotton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Dairy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Diversified . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Fruit & Vegetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Farm Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Grain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Poultry & Livestock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Rice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Sugar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

ii
Contents Performance Measurements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Cotton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Dairy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Diversified . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Fruit & Vegetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Farm Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Grain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Poultry & Livestock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Rice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Sugar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Appendix Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

iii
Highlights The combined total revenue of the largest 100 agricultural cooperatives fell from $69.2

billion in 2001 to $64.0 billion in 2002. The 7-percent decrease is due to lower revenues for nearly

all commodity groups. Total revenues for the last 2 years were as follows:

Year Total Operating Revenue

Billion dollars

2001 69.2

2002 64.0

Total revenue was not the only area showing declines; gross margins fell 1 percent, to

$5.6 billion in 2002. However, the average gross margin as a percent of total operating

revenue did improve slightly and is illustrated below:

Year Gross Profit Margins

Percent

2001 14.1

2002 14.5

While gross margins were down, operating expenses were up 4 percent. Higher

expenses coupled with lower gross margins cut net operating margins, decreasing by

more than 28 percent, to $653.2 million in 2002.

Year Net Operating Margins

Million dollars

2001 910.9

2002 653.2

With lower operating margins, total net margins from operations were down 17 percent, to $441.8 million in 2002. Higher expenses from other non-operating sources

killed the bottom line. Net margins for the last 2 years are shown below:

Year Net Margins

Million dollars

2001 506.8

2002 143.6

Combined assets for the 100 largest agricultural cooperatives were valued at $27.2 billion, down 2 percent from 2001.

Year Total Assets

Billion dollars

2001 27.8

2002 27.2

iv
Highlights Total liabilities also fell slightly in 2002. Short-term debt was up 6 percent while longterm debts decreased by 13 percent.

Short-Term Long-Term

Year Debt Debt

Billion dollars

2001 2.9 6.2

2002 3.1 5.4

Unallocated equity absorbed most of the losses. Unallocated equity fell by 23 percent,

to end 2002 at $1.2 billion, while member equity was down 1 percent. Sources of equity are:

Year 2001 2002

Billion dollars

Preferred stock 0.8 0.8

Common stock 0.6 0.6

Certificates and Credit 6.1 6.0

Unallocated 1.5 1.2 ___ ___

Total 9.0 8.6

Despite declining revenues, liquidity for the largest 100 agricultural coopertives

improved slightly. This is illustrated in the current and quick ratios.

Year Current Quick

Ratio

2001 1.32 0.71

2002 1.35 0.70

Cooperatives increased their leverage slightly in 2002. This was mostly due to falling

equity values. While the average total debt-to-assets remained constant, the average

long-term debt-to-equity jumped tremendously. This would indicate a restructuring of

debt from short-term to long for most of the top 100 cooperatives

Debt-to-Asset Long-Term

Year Debt-to-Equity

Percent Ratio

2001 62 .50

2002 62 .44

v
Highlights Activity ratios had mixed results with the decrease in revenues. An increase in fixed

assets lowered the fixed asset turnover, while the declining current assets fell in line

with falling revenues.

Local Asset Fixed Asset

Year Turnover Turnover

Percent

2001 3.2 15.8

2002 3.3 15.4

vi
Revenue, Margins Trend Downward

for Nation’s Top 100 Ag Cooperatives 

By David Chesnick, Ag Economist

USDA Rural Development

david.chesnick@usda.gov

Operations

Much of the Nation’s business sector struggled

during 2002, and cooperatives were no exception.

Symbolic of this economic downturn were Chapter 11

bankruptcy filings by many large U.S. businesses,

including several by major cooperatives. The findings—analyzed as part of USDA’s annual financial survey of the top 100 farmer-owned cooperatives—show

that more than half of the co-ops ended 2002 with

lower total revenue than in 2001. For the top 100 farm

cooperatives as a whole, revenue dipped 7.5 percent

from 2001.

Most of the $5.2-billion decline in operating revenue can be attributed to lower sales in the dairy and

diversified co-op groups. These two sectors accounted

for 80 percent of the revenue decline. Strong showings

by cotton, grain, and rice co-ops helped offset some of

the downward spiral, as indicated in table 1, which

compares total revenue for all top 100 co-ops between

2001 and 2002.

Cost of goods sold fell 8.1 percent in 2002, which

prevented gross profit margins from falling farther

than they did. Gross profit margins for the top 100 coops declined 1.1 percent, to $5.6 billion – the lowest

amount in 10 years.

Operating expenses of $5.0 billion were up 4.1

percent from 2001. However, those reporting labor

expenses indicated that the cost of labor was down 8.2

percent. The average ratio of labor expense to operating expense dropped from 51.6 percent to 49.1 percent

in 2002.

Falling revenues coupled with increasing expenses caused net operating margins to reach a 10-year low.

Net operating margins were down 28.3 percent, a

$258-million drop from 2001.

Interest expense was down 18.2 percent due to

lower interest rates and debt levels. Lower interest

rates also affected interest income which was down

$42 million to $86 million in 2002.

Other income is revenue indirectly generated

through operations. Other income jumped 84.8 percent

to $407 million. However, most of that increase was

due to a non-recurring situation involving one cooperative.

Other expenses incurred through the normal

course of business that are not directly associated with

operations were up 74.1 percent to $179 million. Much

of this increase was the result of restructuring costs

associated with divestures. Patronage refunds from

business done with other cooperatives were down 34.5

percent to $60 million.

The result of other revenues and expenses was a

lower net expense of $211 million, down from a $378-

million expense in 2001. A lower net expense further

suppressed net margins from operations 17.1 percent

from 2001. Net margins from operations hit $442 million, levels not seen since the mid-1980s.

Non-operating expenses were up more than 1,000

percent at $298 million. Most of these expenses were

from accounting changes and losses from discontinued

operations, which hit net margins hard. Net margins

were down 71.7 percent to $144 million for the largest

100 cooperatives, the lowest amount since 1982.

Distribution

Cash payments to members fell 17.1 percent to

$194 million in 2002. However, an interesting point

emerges when looking at the percentage of cash payments in terms of total net margins. Cash payments as

a percent of net margins reached 135 percent. While on

the surface, one may question how cooperatives could

pay out a higher amount of cash than they made in net

1
2

Table 1—Consolidated Statement of Operations, 2001-02, Top 100 Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Revenue

Revenues

Marketing 48,125,559 52,936,808 -4,811,249 -9.1% 75.2% 76.5%

Farm Supply 15,056,957 15,606,879 -549,922 -3.5 23.5 22.6

————— ————— ———— ———— ——— ————

Total Sales 63,182,516 68,543,687 -5,361,171 -7.8 98.8 99.1

Other Operating Revenues 789,070 610,089 178,981 29.3 1.2 0.9 ————— ————— ———— ———— ——— ————

Total Operating Revenues 63,971,586 69,153,776 -5,182,190 -7.5 100.0 100.0

Cost of Goods Sold 58,334,487 63,455,460 -5,120,973 -8.1 91.2 91.8 ————— ————— ———— ———— ——— ————

Gross Margin 5,637,099 5,698,316 -61,217 -1.1 8.8 8.2

Expenses

Operating Expenses 4,983,894 4,787,397 196,497 4.1 7.8 6.9 ————— ————— ———— ———— ——— ————

Net Operating Margins 653,205 910,919 -257,714 -28.3 1.0 1.3

Other Revenues (Expenses)

Interest Expense -585,242 -715,664 130,422 -18.2 -0.9 -1.0

Interest Revenue 85,501 127,957 -42,456 -33.2 0.1 0.2

Other Income 407,386 220,446 186,940 84.8 0.6 0.3

Other Expenses -179,463 -103,084 -76,379 74.1 -0.3 -0.1

Patronage Revenue 60,398 92,173 -31,775 -34.5 0.1 0.1 ————— ————— ———— ———— ——— ————

Net Margins From Operations 441,785 532,748 -90,963 -17.1 0.7 0.8

Non-Operating Rev. (Exp.) -298,192 -25,955 -272,237 1048.9 -0.5 0.0 ————— ————— ———— ———— ——— ———— ————— ————— ———— ———— ——— ————

Net Margins 143,593 506,793 -363,200 -71.7 0.2 0.7

Percent of Total

Distribution

Distribution of Net Margins

Net Margins 143,593 506,793 -363,200 -71.7 0.2 0.7

Cash Patronage Dividends 194,192 234,266 -40,073 -17.1 135.2 46.2

Retain Patron Dividends 39,591 276,656 -237,065 -85.7 27.6 54.6

Nonqualified Non-Cash Patronage 4,249 16,996 -12,747 -75.0 3.0 3.4

Dividends 10,730 39,029 -28,299 -72.5 7.5 7.7

Unallocated Equity -150,425 -46,073 -104,352 226.5 -104.8 -9.1

Income Tax 45,255 -14,082 59,337 -421.4 31.5 -2.8 ————— ————— ———— ———— ——— ———— ————— ————— ———— ———— ——— ————

Total Distribution 143,593 506,793 -363,200 -71.7 100.0 100.0
margins. The answer lies in the fact that a few cooperatives had huge losses. Net losses from 11 cooperatives

were $674 million and pushed over all net margins to

$144 million. Figure 1 illustrates this point by showing

pre-tax net margins excluding losses compared with

pre-tax net margins with losses over the last 5 years.

Distribution of Net Margins

Net margins for cooperatives without losses

totaled $817 million in 2002 compared to $762 in 2001.

Those cooperatives posting net margins averaged 23.8

percent cash payments in 2002 compared with an average of 30.7 percent in 2001 (table 2).

Qualified allocated non-cash payments as a percent of net margins were 47.8 percent in 2002 compared to 55 percent in 2001. Non-qualified patronage

and dividends were .5 percent and 2.2 percent in 2002

and 2001, respectively. Those cooperatives with net

margins placed 18.6 percent of them in their unallocated equity account compared to 6.1 percent in 2001.

They paid 9.1 percent in taxes compared to 4.7 percent

in 2001.

Distribution of Net Losses

Those cooperatives with net losses (table 3) used

deferred patronage and unallocated equity to absorb

the losses. In 2002, 52.1 percent of the losses were allocated to deferred patronage and 45.9 percent were

written off to the unallocated account. This compares

with 55.8 percent and 36 percent in 2001, respectively.

These cooperatives had $35 million in tax credits

but represented only 4.4 percent of the total loss. For

comparison, 2001 had a tax credit of $6 million but represented 19.6 percent of the loss. It is interesting to

note that a few cooperatives continued to pay dividends even though they suffered losses for the year.

3

Figure 1—Pre-tax net margins before distribution

$ Billion

1.2

1.0

0.8

0.6

0.4

0.2

0

1998 99 2000 01 02

Excluding

losses

Including

losses

Table 2--Distribution of Net Margins, 2002

2001 2002

Percent

Cash Patronage Dividends 30.7 23.8

Retain Patronage Dividends 55.0 47.8

Nonqualified Non-Cash Patronage 2.2 .5

Dividends 1.3 .2

Unallocated Equity 6.1 18.6

Income Tax 4.7 9.1 _____ _____

Total Distribution 100.0 100.0
Cotton

Cotton prices edged higher in 2002, thanks in

part to rising exports. Most cotton cooperatives reported improved revenue, with a 14.3-percent gain for the

sector (appendix table a1). Prices returned to members,

in the form of cost of goods sold, increased 8.7 percent,

substantially less than the increase in revenue. The

result was higher gross margins, which reached $234

million in 2002, an increase of 151 percent and the

highest level recorded in the past 10 years.

Cotton cooperatives needed higher gross margins

to cover record-high operating expenses. Operating

expenses jumped 86.6 percent, to $163 million (due

mostly to the cost of processing a very large crop),

leaving net operating margins of $70 million in 2002.

Falling interest rates as well as lower debt levels

pushed interest expense down 40.3 percent to $15 million. Interest income was up 88.4 percent. However,

interest is not a substantial revenue-generating source

for cotton cooperatives and only account for $347,000.

Other income was down from $14 million to $6 million

in 2002. Patronage source income was up 20.1 percent,

but like interest income, it constitutes a minor source

of revenue with $609,000.

The result was $62 million in net margins from

operations in 2002, a tremendous improvement over a

$10-million loss in 2001. Part of the loss in 2001 was

due to a non-operating expense of $6 million.

The cotton cooperatives distributed 93.1 percent

of net margins in the form of cash ($26 million) and

allocated retains ($32 million). Unallocated equity

received 5.3 percent of the net margins while the

remaining 1.6 percent of margins was placed in nonqualified, non-cash patronage and paid taxes.

Dairy

Lower milk prices coupled with lower volume

pushed revenue down 10.1 percent for dairy cooperatives in 2002. After reaching record levels in 2001,

dairy cooperatives ended the year with total revenue

of $18.9 billion, down $2.1 billion from 2001. Dairy

cooperatives lowered their cost of goods sold by 10.6

percent. However, the drop in the cost of goods sold

couldn’t cover the drop in revenues. Since cost of

goods sold are, in large part, payments to members,

dairy cooperatives did not pass the full price decline

on to their members. The result was a 1.4-percent drop

in gross margins to $1.1 billion.

Operating expenses for dairy co-ops were up 2.4

percent, to $940 million. Lower gross margins with

higher operating expenses caused net operating margins to fall 19.6 percent, to $157 million, the lowest

level in the past 10 years. Lower working-capital loans

and lower interest rates cut interest expense by 19.2

percent, to $52 million. Interest revenues were down

44.3 percent to $6 million in 2002. Net other

income/expense was $80 million, a decline of 11.4 percent from 2001. Patronage refunds received also were

down 23.4 percent to $11 million. Non-operating revenues were down 20.3 percent to $8 million. Although

down 18.1 percent from 2001, net margins from operations were still a healthy $209 million in 2002.

Dairy cooperatives distributed 84.4 percent of

their net margins in the form of cash ($75 million) and

allocated equities ($102 million). Unallocated equity

accounted for 16 percent of net margins while dividends paid out represented .2 percent of net margins.

There was an income tax benefit for more than $1 million.

Diversified

Diversified cooperatives took a hit in 2002, with

two cooperatives filing for Chapter 11 bankruptcy. The

losses generated from these cooperatives pushed total

revenue for diversified cooperatives down 11.8 percent, to $21.5 billion. Gross margins were down 15 percent, to $1.2 billion, levels not seen since 1994.

Lower gross margins and higher operating

expenses left diversified cooperatives with a net operating loss of $13 million. Operating expenses were up 6

percent to 1.2 billion.

Interest expense was down 16.2 percent to $225

million due to lower interest and debt levels. Interest

revenues were also down by 41.4 percent to $40 million.

There were large amounts of other

revenue/expenses indirectly related to operations in

4

Table 3—Distribution of Net Losses, 2001-02

2001 2002

Percent

Cash Patronage Dividends 0.0 0.0

Retain Patronage Dividends 55.8 52.1

Nonqualified Non-Cash Patronage 0.0 0.0

Dividends -11.4 -1.4

Unallocated Equity 36.0 44.9

Income Tax 19.6 4.4 _____ _____

Total Distribution 100.0 100.0
2002. Other revenue was up 2,178.9 percent to $169

million due to a legal settlement. Restructuring cost

pushed other expenses up 162.2 percent to $85 million.

The net effect was higher indirect operating revenues

of $84 million. Despite these higher revenues coupled

with lower interest expense, diversified cooperatives

ended 2002 with a net loss from operations of $88 million.

Losses from discontinued operations hit a few

diversified cooperatives hard, driving up non-operating expenses 364.5 percent to $103 million. Overall,

diversified cooperatives suffered a net loss of $191 million.

Those cooperatives with net margins paid out 16

percent cash patronage, 56 percent non-cash patronage, and 1 percent dividends. Taxes consumed 7 percent of margins and 20 percent were added to unallocated equity. Most of the net losses were deducted

from deferred patronage—80 percent—while 22 percent were deducted from unallocated equity.

Interestingly, those cooperatives suffering net losses

paid out $6 million in taxes, which accounts for the

remaining 2 percent distribution over the net loss.

Fruit/Vegetable

As in 2001, the market was mixed for fruits and

vegetables. Some produce crops had higher prices,

while prices retreated for others. The net result was

that fruit/vegetable cooperatives saw their net revenue dip 2.2 percent, to $5.2 billion. Cost of goods sold

was cut 3.4 percent, resulting in a 2.6-percent increase

in gross margins, to $1 billion.

Fruit/vegetable cooperatives continued to cut

operating expenses. Operating expenses were down

23.8 percent since 1999, falling to $812 million in 2002.

Lower expense boosted net operating margins 17.3

percent, to $213 million.

Lower interest expense also helped the bottom

line for these cooperatives, falling 20.4 percent to $111

million. Interest income, a relatively minor source of

revenue, fell 27.6 percent to $236,000. Other

income/expenses not directly related to operations fell

from net revenue of $6 million in 2001 to a net expense

of $22 million in 2002. Patronage refunds received

remained unchanged from the prior year at $1 million.

Net margins from operations were up 65.0 percent, to $81 million, in 2002. However, an accounting

change for one cooperative was a substantial part of

the $182-million non-operating expense which left

fruit/vegetable cooperatives with a net loss of $101

million.

The cooperative with the accounting change

expense ended up with a tax credit, and the rest was

charged off to the unallocated equity account.

Excluding that cooperative, the other cooperatives

paid out 16.5 percent of their net margins in cash and

allocated 52.7 percent back to their members in the

form of allocated and deferred patronage. Taxes

accounted for 15.0 percent of distribution and unallocated equity gathered 15.4 percent. The remaining 0.5

percent was distributed in dividends.

Farm Supply

Farm supply cooperatives suffered a $613-million

decline in revenue to $5.3 billion in 2002. Lower petroleum sales accounted for nearly half of the decrease in

revenues. Lower demand for fertilizer also hurt farm

supply sales. Gross margins were down 4.2 percent, to

$696 million.

Operating expenses increased 3.7 percent, to $675

million, for farm supply co-ops. That’s the highest

expense level in the past 10 years. Higher operating

expenses combined with lower gross margins sliced

deep into net operating margins. Net operating margins were down 71.3 percent, to $21.8 million.

Fortunately, lower interest expense, along with

higher other income, prevented net margins from

operations from becoming a net loss. Interest expense

dropped 11.9 percent to $72 million. Interest revenue

was up 5.3 percent to $17.3 million. Other income

jumped a whopping 237.3 percent to $46.4 million.

Nearly all farm supply cooperatives showed an

increase. Other expenses fell 69.3 percent to $3.9 million.

Net margins from operations were $13.8 million,

the lowest amount in the past 10 years. Extraordinary

losses from subsidiaries and accounting changes also

hurt the bottom line. Total net margins ended the year

at $6 million, a 72.8-percent decline from 2001.

Similar to the fruit/vegetable commodity group,

there was one cooperative with a substantial net loss

that affected the cumulative bottom line for all farm

supply cooperatives. This cooperative deducted the

loss from its unallocated equity. The other cooperatives

allocated their net margins back to members with 23

percent cash payments and 45 percent non-cash allocations. Unallocated equity received 17 percent of the

funds while taxes consumed 14 percent of net margins.

Grain

Grain prices and supplies held steady from 2001

to 2002. Virtually all co-ops categorized as "grain coops" in USDA’s top-100 co-op survey also provide

5
farm supplies and services to their members. However,

those cooperatives that predominately market members’ grain generated a higher growth in revenue from

their farm supply sales and service revenue. Feed sales

helped push total farm supply sales up 36.5 percent,

which in turn helped boost total revenue for grain

cooperatives by 7.3 percent, to $5.7 billion.

Gross margins for grain co-ops climbed 1.5 percent, to $547 million. However, operating expenses

jumped 12.1 percent, to $481 million, suppressing net

operating margins 39.8 percent, to $65.8 million.

Despite lower interest rates, grain cooperatives

had higher interest expenses due to higher debt levels.

Interest expense was up 2.0 percent in 2002 to $37.5

million. Interest income was down 43.3 percent to $6

million. Similar to farm supply cooperatives, grain

cooperatives had substantially higher other income.

Other income was up 327.9 percent to $40.1 million.

Other expenses were up $4.4 million to $6.7 million.

Patronage revenue remained steady at $16.7 million.

The net result was a $21-million increase in other revenues that kept net margins from declining more than

they otherwise would. Net margins fell 20.4 percent to

$85 million in 2002.

Distribution followed similar patterns from 2001.

Sixty-six percent of net margins were allocated back to

members with 21 percent paid in cash in 2002. This

compares with 63.5 percent and 19.3 percent, respectively in 2001. Unallocated equity received 22.8 percent

of the net margins while taxes paid used 10.7 percent.

In 2001, 25.8 percent were unallocated and 10.2 percent

went to taxes.

Poultry/Livestock

Declining livestock sales pushed revenue down

for poultry and livestock cooperatives in the top 100.

This commodity group had a decline in revenue of 2.8

percent, to $2.4 billion in 2002. Gross margins of $174

million were up 27.7 percent. Even in the best of times,

margins are generally tight for poultry/livestock cooperatives, so any increase helps.

Operating expenses were down 2.4 percent from

2001 to $109 million. Higher gross margins and lower

operating expenses provide livestock/poultry cooperatives with a 165.6-percent increase in their net operating margins. Net operating margins reached $65 million in 2002.

Lower levels of debt along with lower interest

rates helped push interest expense down 32.6 percent

to $31 million in 2002. Interest income was down 25.3

percent to $14 million. Other income was also down

56.2 percent to $29 million.

Net margins from operations were up 61.3 percent to $67.2 million. However, non-operating expenses jumped 84.0 percent to $13.5 million, bringing net

margins for 2002 to $53.7 million, up 56.5 percent from

2001.

The largest distributions of net margins were for

taxes. Taxes consumed 41.1 percent of total net margins with $22.1 million. Poultry/livestock cooperatives

placed 32.4 percent of their net margins in unallocated

equity. The final 26.6 percent was allocated to members who received $14.2 million with $1.7 million in

cash and the rest in deferred patronage.

Rice

Rice sales were up 1.1 percent, which halted the

declining revenue trend of the past few years.

Domestic rice prices and production declined once

again in 2002. However a few rice cooperatives were

able to open some export markets. These exports

helped total sales reach $1.0 billion. On the other hand,

cost of goods sold jumped 3.5 percent, pushing down

gross margins 4.4 percent, to $307.4 million.

Operating expenses were cut 4.7 percent, to

$292.2 million. Reported labor expenses fell 1.7 percent

but as a percentage of total operating cost increased

from 33.6 percent to 36.5 percent. Therefore, rice cooperatives were becoming more efficient in use of their

assets, which lifted net operating margins 1.3 percent,

to $15.1 million in 2002.

Interest expenses were up 2.3 percent to $4.5 million. Net other operating revenue/expenses were

down 95 percent to $107,000. Higher other revenue

along with lower other expenses helped the bottom

line. Net margins were up 25.1 percent to $10.5 million.

Rice cooperatives allocated 59.9 percent of their

margins back to their members, with most being paid

out in cash. Cash patronage refunds were $5.8 million

in 2002 compared with $7.5 million in 2001. Non-cash

allocations were down slightly to $527,000 from

$563,000 in 2001. Dividends were unchanged from the

prior year at $447,000. Unallocated equity jumped

357.2 percent to $3.8 million, or 35.8 percent of net

margins

Sugar

Total revenue for sugar cooperatives fell 7.5 percent, to $1.5 billion in 2002. However, lower cost of

goods sold enabled gross margins to remain relatively

unchanged from 2001 at $351 million.

Operating expenses fell 7.7 percent to $292 million. Part of that decline is attributed to lower labor

costs which fell 2.4 percent. However, sugar coopera6
7

Table 4—Combined Balance Sheet, 2001-02, Top 100 Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Revenue

Assets

Current Assets

Cash 597,226 812,530 (215,304) -26.5% 2.2% 2.9%

Accounts Receivable 5,034,658 5,083,766 (49,108) -1.0 18.5 18.3

Inventory 5,460,021 5,396,348 63,673 1.2 20.1 19.4

Other Current Assets 1,192,971 1,585,819 (392,848) -24.8 4.4 5.7 ————— ————— ———— ———— ——— ————

Total Current Assets 12,284,876 12,878,463 (593,587) -4.6 45.2 46.4

Investments

Cooperative Banks 318,766 326,141 (7,375) -2.3 1.2 1.2

Other Cooperatives 1,806,963 1,842,289 (35,326) -1.9 6.6 6.6

Other Investments 1,878,914 1,931,522 (52,608) -2.7 6.9 7.0 ————— ————— ———— ———— ——— ————

Total Investments 4,004,642 4,099,951 (95,309) -2.3 14.7 14.8

Net Fixed Assets 7,467,184 7,412,971 54,214 0.7 27.4 26.7

Other Assets 3,446,240 3,382,819 63,421 1.9 12.7 12.2 ————— ————— ———— ———— ——— ————

Total Assets 27,202,943 27,774,204 (571,261) -2.1 100.0 100.0

Liabilities

Current Liabilities

Total Short-Term Debt 3,059,123 2,897,110 162,013 5.6 11.2 10.4

Accounts Payable 3,050,234 3,303,807 (253,574) -7.7 11.2 11.9

Member Payables 522,322 560,952 (38,630) -6.9 1.9 2.0

Patron and Pool Liabilities 1,355,093 1,426,509 (71,416) -5.0 5.0 5.1

Other Current Liabilities 1,521,442 1,788,590 (267,148) -14.9 5.6 6.4 ————— ————— ———— ———— ——— ————

Total Current Liabilities 9,508,214 9,976,969 (468,755) -4.7 35.0 35.9

Non-Current Liabilities

Long-Term Debt Less

Current Portion 5,372,722 6,193,954 (821,232) -13.3 19.8 22.3

Other Liabilities 2,813,318 1,682,824 1,130,494 67.2 10.3 6.1 ————— ————— ———— ———— ——— ————

Total Non-Current

Liabilities 8,186,039 7,876,777 309,262 3.9 30.1 28.4 ————— ————— ———— ———— ——— ————

Total Liabilities 17,694,253 17,853,746 (159,493) -0.9 65.0 64.3

Minority Interest 867,992 879,995 (12,003) -1.4 3.2 3.2

Member Equity

Preferred Stock 833,752 814,315 19,437 2.4 3.1 2.9

Common Stock 618,058 617,822 236 0.0 2.3 2.

Equity Certificates and Credits 6,040,196 6,113,660 (73,464) -1.2 22.2 22.0

Unallocated Equity 1,148,693 1,494,666 (345,974) -23.1 4.2 5.4 ————— ————— ———— ———— ——— ————

Total Equity 8,640,698 9,040,463 (399,765) -4.4 31.8 32.5
tives were able to cut a larger amount of their operating expenses from other areas. Lower operating

expenses helped drive up net operating margins 67.2

percent, to $58 million.

Interest expenses were down 24.7 percent to $36.5

million due to lower interest rates as well as lower

short- and long-term debt levels. Interest income was

also down 37.8 percent to $2 million. Other expenses

associated with subsidiaries and non-member business

fell 11 percent to $18 million. Meanwhile, other income

was up 165.8 percent to $3 million.

Higher net operating margins and lower costs

allowed sugar cooperatives to post net margins from

operations of $8.8 million. Sugar cooperatives had

been operating at a net loss from operations since 1997.

Sugar cooperatives allocated all revenue back to

members. Members received 21.6 percent in cash with

40.3 percent in non-cash and 40.7 percent in non-qualified, non-cash equity.

Financial Position

Assets for the top 100 cooperatives fell for the

first time since 1998. Figure 2 shows the ownership of

assets for the past 5 years. Outside claims to cooperatives’ assets are in the form of liabilities. Members’

claims on co-op assets are reflected in member equity.

Total assets for the top 100 fell 2.1 percent, to

$27.2 billion. Most of the commodity groups–with the

exception of farm supply, grain and rice

cooperatives–saw their assets decline in 2002. Most of

the drop was due to falling current assets. Current

assets dropped $564 million to $12.3 billion (table 4).

Leading the decline in current assets were cash

balances and other current assets. Cash balances fell

26.5 percent to $597 million. Dairy cooperatives had

the largest drain in their cash accounts. Other current

assets dropped 24.8 percent to $1.2 billion, with cotton

and diversified cooperatives having the largest influence in the drop. Inventory was up 1.2 percent and

accounts receivable were down 1 percent to $5.5 billion

and $5.0 billion, respectively.

Total investments were down 2.3 percent to $4

billion. Most of the decline was in non-cooperative

businesses investments, which fell $52.6 million to $1.9

billion. This is a direct turnaround from the prior year

when investments in joint ventures and limited liability companies were driving the increased investments.

Despite the lower revenues in 2002, cooperatives continued to add to their fixed asset base.

8

Figure 2—Ownership of Total Assets, Top 100, 1998-2002

$ Billion

30

25

20

15

10

5

0

1998 99 00 01 02

Total Member

Equity

Minority Interest

Total Liabilities
Investments in fixed assets were up .7 percent to

$7.5 billion. Most of the increase was due to substantial

investments by diversified cooperatives. Those cooperatives reporting capital purchases in 2002 averaged

$2.2 million in new fixed assets.

Other assets increased 1.9 percent to $3.4 billion.

Those assets include notes receivable, property held

for sale, marketable securities, and leases receivable.

Diversified cooperatives provided the largest increase.

Total liabilities only declined 0.9 percent to $17.7

billion. The largest cooperatives appeared to be transferring more of their liabilities from short-term to longterm. While current liabilities fell 4.7 percent, to $9.5

billion, non-current liabilities increased 3.9 percent, to

$8.2 billion.

Short-term debt was up 5.6 percent. Current portion of long-term debt was driving the overall increase

up 120.8 percent to $846 million. Most of the increase is

attributed to one cooperative that had a substantial

amount of its long-term debt called. Excluding that

one cooperative, total short-term debt would have fallen by 5.6 percent. There were more cooperatives with a

positive cashflow from operations that required less

working capital loans.

Accounts payable were down 7.7 percent to $3.1

billion. With the exception of grain cooperatives, all

commodity groups had declining accounts payable.

Other payables such as member payables and pooling

liabilities were down 6.9 percent and 5.0 percent,

respectively. Member payables hit $522 million and

pooling liabilities reached $1.4 billion. Other liabilities

were down 14.9 percent to $1.5 billion.

Total long-term debt less current amounts due

was down 13.3 percent to $5.4 billion. The major

decline in long-term debt was with bonds issued by

cooperatives. Seventy-five percent of the total decline

was attributed to one cooperative whose bonds

became currently due. Cooperative banks continue to

hold most of the cooperative debt with $2.9 billion, a

5.4-percent increase from 2001. Commercial banks also

showed an increase in their lending levels, up 23.9 percent to $1.2 billion.

Other long-term liabilities were up 67.2 percent

to $2.8 billion. The $1.1-billion increase was mostly

due to bankruptcy proceeding from a single cooperative.

Total equity fell $400 million, to $8.6 billion, the

lowest level since 1995. The hardest hit was unallocated equity. Unallocated equity fell 23.1 percent to $1.1

billion in 2002. Member equity was down 0.7 percent

to $7.5 billion.

Cotton

Declining current assets pushed down cotton

cooperative’s total assets by 23.5 percent, to $667 million (appendix table 10). Cotton cooperatives ended

the year with 31.6 percent less in current assets than in

2001. With the exception of cash balances, every category within current assets fell. Accounts receivable

were down 32.3 percent to $107 million; inventories

were down 10.5 percent to $242 million; and other current assets were down 73.9 percent to $40 million.

Investments were up 2.3 percent to $55 million. The

$1.2-million increase was due to higher investments in

cooperative banks and other cooperatives. Investing in

non-cooperative businesses fell 5.9 percent to $27 million in 2002.

Fixed assets were down 4.1 percent to $189 million. Other long-term assets were down 35.6 percent to

$23 million.

Total liabilities for cotton cooperatives were $387

million at the end of 2002, a 35.4-percent decline.

Leading the decline was short-term debt. Short-term

debt fell from a 10-year high of $426 million in 2001 to

$199 million in 2002. Higher cashflows from operations required less working capital loans.

The largest increases came from member

payables and pooling liabilities. Member payables

jumped 100.2 percent to $40 million and pooling liabilities increased 583.8 percent to $50 million. So, while

cashflows were up, cotton cooperatives were also

using funds owed to members to help finance operations. Long-term liabilities were also down 33.5 percent to $69 million.

Some of the higher margins from operations were

used to replenish their unallocated equity account,

which reached a 10-year low of $9 million in 2001.

Unallocated equity increased 147.7 percent to $22 million. The addition to unallocated equity pushed total

equity up 2.9 percent, ending 2002 at $280 million.

Equity allocated to members was down 2.1 percent to

$257 million in 2002. This represented 92 percent of

total equity in 2002.

Dairy

Falling current assets pushed total assets for

dairy cooperatives down 5.1 percent to $4.8 billion.

Current assets fell 10.8 percent to $2.2 billion. Lower

revenues cut into cashflows from operations, which

caused a 45.8 percent drop in cash balances in 2002.

Accounts receivable also were down 9.7 percent to $1.2

billion. Inventory was down $3 million, yet other cur9
rent assets were up nearly $20 million. Nevertheless,

the $289 million drop in cash, accounts receivable, and

inventory caused current assets to reach a 5-year low.

Despite higher investments in cooperative banks

and other cooperatives, total investments were down a

slight .3 percent. However more than 92 percent of

investments are with non-cooperative businesses, and

most of that is with processing. Non-cooperative business investment was down $8.5 million to $1.1 billion.

Fixed assets were down 4.2 percent to $1.2 billion. There was less in fixed assets purchased by dairy

cooperatives and on average there was a higher

amount of those assets sold in 2002.

Total liabilities declined 8.7 percent, to $2.7 billion, due to a drop of 12.9 percent in current liabilities

to $1.9 billion. The largest declines were in member

payables and pooling liabilities which fell nearly $200

million to $878 million in 2002. The member payables

and pooling liabilities usually follow revenues. With a

decline in revenues in 2002, it would be expected to

see these liabilities drop. Accounts payable fell 10.5

percent to $571 million. Short-term debt fell 1.6 percent

to $231 million.

Despite lower long-term debt, non-current liabilities were up 2.9 percent to $774 million in 2002. Longterm debt was down 16.9 percent to $546 million. Most

of the decline can be attributed to a 30-percent reduction of long-term notes issued by dairy cooperatives.

Other liabilities were up 139 percent to $227 million.

Several dairy cooperatives indicated higher pension

liabilities caused this liability to increase.

Minority interest remained steady in 2002. Total

equity was down .4 percent. However, member equity

was up 3.7 percent to $1.5 billion. Unallocated equity

was cut $62 million, which caused the .4-percent

decline.

Diversified

Despite the much-reported co-op bankruptcies,

total assets for diversified cooperatives remained stable between 2001 and 2002, standing at $10.7 billion.

However, the makeup of those assets changed substantially. Current assets fell 5.2 percent. The biggest

changes were in cash balances and other current

assets. Other current assets fell $234 million to $552

million. The drop was mostly due to a decline in other

current assets from one cooperative’s subsidiary that

discontinued its operations. A few cooperatives had

large declines in average net cashflow from operations,

which cut cash balances by 28.6 percent to $175 million. Inventory and accounts receivable were both up

1.7 percent and 2.6 percent, respectively.

Investments were down 1.3 percent with cooperative investments declining the most. Fixed investments climbed $101 million to $2.7 billion. This is surprising considering the bankruptcy filings of a few of

those cooperatives. Nearly all diversified cooperatives

purchased more fixed assets in 2002 than in 2001.

Other assets also jumped 4.7 percent to $2.4 billion.

Despite the increase in non-current assets, the decline

in current assets pushed total assets down from the

2001 levels.

On the other hand, total liabilities jumped 3.8

percent, to $7.7 billion. Leading this increase was noncurrent liabilities. Non-current liabilities were up 5.2

percent, to $4.2 billion, while current liabilities were

up 2.3 percent, to $3.5 billion.

The largest increase in current liabilities was in

short-term debt, which was up 70.6 percent to $1.1 billion. Much of this was due to some long-term debt

being called and converted to current. Cashflow from

operations was also down, so additional working capital loans were needed to help fund operations.

Accounts payable, members payable, and other current liabilities were $436 million less than in 2002.

Long-term debt was down 27.3 percent to $2.1

billion. Many of the declining debts were bonds issued

by two cooperatives that were called by debt holders.

This caused events to occur that ultimately resulted in

bankruptcy filings. Also due to bankruptcy filings,

other liabilities jumped $981 million to $2.1 billion.

As would be expected with bankruptcy filings,

total equity fell 10.8 percent, to $2.7 billion. Member

equity took the biggest hit with a drop of $220 million.

Unallocated equity fell $114 million.

Fruit/Vegetable

Total assets for fruit/vegetable cooperatives

dropped 8.2 percent, with both current and non-current assets falling. Current assets declined 5.6 percent,

to $1.6 billion. However, cash balances were up 23 percent from 2001 to $60 million. Despite lower sales and

overall net losses, the average per-cooperative cashflow from operations was up nearly $3 million. This

illustrates that operations for most fruit/vegetable

cooperatives were more efficient in 2002. However, one

extraordinary circumstance caused overall net losses

for this commodity sector.

Accounts receivable, inventory, and other current

assets were down $108 million, which pushed overall

current assets down $97 million. The decline in

accounts receivable and inventory is in response to

lower sales revenue.

10
Investments were down 5.4 percent to $145 million. Cooperative bank and non-cooperative investment were both down $6 million each. Loans from

cooperative banks have been declining over the past

few years resulting in less investment needed in cooperative banks. Investments in other cooperatives were

up 45.5 percent to $11 million. However, other cooperative investment only makes up around 8 percent of

total investments.

Fixed assets were up a slight .2 percent to $937

million. Other non-current assets dropped 40.3 percent. However, most of that decline was due to impairment of goodwill.

While current assets fell 5.6 percent, current liabilities dropped 9.9 percent. Most of the decline was

attributed to lower amounts of working capital loans

and lower accounts payable. As mentioned earlier, an

increase in cashflows from operations required fewer

short-term loans to pay for operations. Short-term debt

fell 18.3 percent to $272 million in 2002. Accounts

payable fell 18.5 percent to $268 million. Member

payables were up 50.1 percent. However, member

payables only represent 4 percent of total current liabilities at $37.8 million. Pooling liabilities remained

relatively flat at $228 million, up .8 percent.

Non-current liabilities were down 3.8 percent to

$1.2 billion. Both long-term debt and other liabilities

were lower.

Equity for fruit/vegetable co-ops fell to its lowest

level in the last 10 years, at $777 million, a 12.7-percent

decline. Most of the decline came from unallocated

equity. However, most of that loss was caused by the

write-off of goodwill and charged against unallocated

equity. Member equity was up 2.2 percent to $701 million.

Farm Supply

Farm supply cooperatives were one of the few

commodity groups showing an expanded asset base.

Total assets grew 3.8 percent, to $2.6 billion. The

growth was due to expanded current asset levels,

which grew 13 percent to $1.4 billion. Cashflows from

operations were up, which boosted cash balances in

2002. Cash on-hand was up 68.9 percent to $48 million.

Despite lower sales, accounts receivable were up 29.4

percent to $646 million. Inventory levels were down 3

percent to $589 million.

Investments were down 5 percent. The largest

decrease came from investments in other cooperatives

which fell $37 million to $491 million. Investments in

other cooperatives constitute more than 77 percent of

total investments. Most of this decline was due to one

cooperative acquiring the remaining shares of outstanding stock and consolidating the investment within its business. Investment in cooperative banks was

up 13 percent to $65 million. Long-term borrowing

from cooperative banks was up nearly 50 percent in

2002. Investments in other cooperatives were down 4.9

percent to $80 million.

Net fixed assets were valued at $491 million, a

7.2-percent drop. New purchases in 2002 were nearly

half those of 2001. In 2002, the average purchase of

fixed assets by farm supply cooperatives was $4 million compared to $7 million in 2001. Other assets were

up $9 million to $118 million.

Total liabilities grew 10.7 percent to $1.6 billion in

2002. Current liabilities grew 3.0 percent, to $958 million, while non-current liabilities grew at a 24.6-percent rate, ending 2002 at $648 million. Short-term debt

dropped a slight .8 percent to $373 million.

Accounts payable remained steady at $416 million. Member payables and pooling liabilities jumped

21.3 percent to $55 million. The largest increase in

short-term liabilities was in other current liabilities

that included employee benefits accrued, which

caused most of the increase for several cooperatives.

Other liabilities were up 22.9 percent to $114 million.

Long-term debt jumped 28.9 percent to $571 million. However, that increase was mostly due to a substantial increase from one cooperative. Without that

one cooperative included in the total, the long-term

debt, less current portion, would only have increased a

more modest 1.5 percent.

Total cooperative equity fell 5.6 percent, to $1 billion in 2002. The drop was due to write-off of losses

from operations against unallocated equity, which fell

$74 million to $236 million. Total member equity was

up 1.9 percent to $769 million.

Grain

Grain cooperatives also ended 2002 with a higher

asset level. Total assets grew 9.6 percent, to $2.6 billion.

Current assets increased 7.9 percent to $1.4 billion,

while non-current assets grew 11.5 percent, to $1.2 billion. The largest increase was inventory buildup,

which jumped 15.5 percent to $757 million. Due to

higher sales volume, one would assume a higher

inventory level. However, the sales/inventory ratio

actually increased from 14.3 to 18.1. That would indicate that grain cooperatives were not able to increase

their sales in relation to the volume of members’ product delivered, or that members were hoping for higher

prices later and requested the cooperatives to hold

their products.

11
Investments were up 3.3 percent to $324 million.

Leading the increase was a higher investment in other

cooperatives which was up $8 million to $208 million.

The increase in non-cooperative investment was mostly with limited-liability companies for processing

members’ commodities.

Fixed assets jumped 10.3 percent to $822 million.

However, two cooperatives that expanded operations

through acquisitions, plant updates, and new facilities

accounted for more than three quarters of the total

increase. Other non-current assets jumped $42 million

to $100 million.

Grain cooperatives used both borrowed funds

and member equity to fund the asset expansion. Total

liabilities grew 12.2 percent, to $1.5 billion. Current liabilities had the largest increase, $123 million to $1.1

billion. Most of that increase is attributed to short-term

debt, which jumped $109 million to $547 million.

Cooperative banks provided 86 percent of the

increased borrowed funds.

Accounts payable were up 4.4 percent to $221

million. Member payables and pooling liabilities were

down 5.1 percent to $197 million. With higher inventories, it appears that grain cooperatives are financing

those inventory levels with borrowed funds rather

then member liabilities.

Long-term debt has continued to climb, reaching

levels not seen since 1997. Long-term debt grew 6.6

percent to $372 million in 2002. Other non-current liabilities grew at 78.5 percent to $45 million. The large

jump was attributed to nearly all cooperatives having

an increase in non-current liabilities. The reason for

this increase varied by cooperative.

Member equity grew 6.6 percent, to $1 billion.

Both member equity and unallocated equity grew.

Member equity was up 6.5 percent to $757 million,

while unallocated equity was up 7 percent to $257 million.

Poultry/Livestock

Poultry/livestock cooperatives saw assets drop

by 11 percent, to $894 million. Current assets were

down 14.5 percent to $433 million. Cash balances were

down as well as cashflows from operations. The average per-cooperative cashflow from operations was

down $15 million. This in turn put pressure on cash

balances, which were off $12 million, ending the year

at $12 million. Accounts receivable were down 7.6 percent to $187 million. Inventories were up 8.7 percent to

$192 million.

Investments were down by 23.3 percent to $97

million. The decline was mostly due to the sale of a

limited-liability company and liquidation of a limited

partnership from non-cooperative investments. These

non-cooperative investments fell from $40 million in

2001 to $10 million in 2002.

Net fixed assets inched downwards at .4 percent

to $235 million. Other assets fell 4.6 percent to $128

million.

Total liabilities were down 16.1 percent, to $606

million. Most of the decline was due to a drop in current liabilities. Current liabilities were 28.9 percent

lower and ended 2002 at $271 million. Although the

average cashflow from operations was not as large as

in 2001, it was positive and allowed poultry/livestock

cooperatives to rely less on operating loans. Operating

loans were down $114 million to $82 million in 2002.

Accounts payable fell 11 percent to $91 million.

However, other current liabilities were up $15 million

to $98 million, mostly due to an increase in net liabilities from the closing of a consolidated business.

Long-term debt was 5.6 percent lower and ended

2002 with $270 million with nearly half of it held by

commercial banks. Other non-current liabilities were

up $9 million to $65 million.

With higher margins, poultry/livestock cooperatives were able to add equity to their balance sheets.

Member equity was up 3.3 percent, to $204 million.

Unallocated equity remained virtually unchanged at

$81 million.

Rice

Assets for the rice cooperatives grew at a modest

1.4 percent in 2002, to $478 million. Growth in current

assets fueled the increase which was up $19 million to

$261 million. The largest increase was in accounts

receivable. Accounts receivable was up 21.6 percent to

$96 million. Cash balances were also up, closing out

2002 at $29 million, a 23.9-percent increase. Inventory

levels were down 2.3 percent to $131 million.

Total investments were down by slightly over

half to $15 million, a 52.8-percent decline. Investments

in cooperative banks were down $7 million, to $8 million, while investments in non-cooperative ventures

were down $10 million to $7 million in 2002.

Fixed assets, which account for 42 percent of total

assets, were up 2.9 percent to $200 million. The average new investment in fixed assets for rice cooperatives in 2002 was $9 million, which has been consistent

throughout the last few years.

Total liabilities were down 4.1 percent to $215

million in 2002. The largest decline was in current liabilities which fell $6 million to $152 million. Despite

the drop in current liabilities, short-term debt was up

12
13

Table 5--Average ratios, 1998-2002, Top 100 cooperatives

Long-Term Return Return

Debt Debt Times Local Fixed Accounts Gross Net On On

Current Quick To To Interest Assets Assets Inventory Receivable Profit Operating Total Members

Ratio Ratio Assets Equity Earned Turnover Turnover Turnover Turnover Margin Margin Assets Equity

——Liquidity—— ——————Leverage—————— —————————Efficiency————————— ————————Profitability————————

1998 1.34 0.75 60.1% 67.1% 5.25 3.57 15.49 16.82 17.08 13.9% 1.6% 7.8% 14.2%1999 1.34 0.72 60.4% 52.1% 3.76 3.16 14.16 13.98 16.39 15.9% 2.6% 7.6% 13.0%2000 1.33 0.72 61.4% 52.3% 4.70 3.29 14.87 15.57 16.50 14.6% 1.4% 6.2% 9.2%

2001 1.32 0.71 62.2% 50.0% 2.78 3.24 15.78 16.39 17.59 14.1% 0.9% 5.5% 6.4%

2002 1.35 0.70 62.1% 43.9% 3.93 3.26 15.39 16.28 16.83 14.5% 1.2% 5.4% 5.6%
5.4 percent to $78 million. The increase in working capital loans was entirely due to higher loans through the

Federal Government’s commodity loan programs,

which were up $8 million from 2001. Accounts payable

were down 10 percent to $27 million. Members’

payable and pooling liabilities were down 1.3 percent

to $36 million.

Non-current liabilities consisting of long-term

loans were down 5 percent to $62 million. While overall long-term debt was falling, funds borrowed from

cooperative banks jumped 147 percent to $27 million.

Member equity grew at 6.3 percent, to $175 million, while unallocated equity also grew at 6.3 percent

to end 2002 at $88 million.

Sugar

Sugar cooperatives’ assets fell by 1.5 percent, to

$1.5 billion. Much of the decline was in current assets,

which fell 4 percent, to $397 million. Despite higher

net margins and cashflows from operations, cash balances fell 79.6 percent to $3 million. Most of the excess

cash generated by operations was used to pay off loans

and revolve member equity. The largest decline in current assets was in accounts receivable, which fell $24

million to $116 million. Sugar inventory was $16 million higher, and ended 2002 at $256 million.

Investments were up 4.7 percent to $86 million.

Both cooperative and non-cooperative investments

were up $2 million each.

Fixed assets were down $30 million to $683 million. While new equipment purchases were similar to

that in 2001, high depreciation expense from earlier

purchases caused the book value of fixed assets to fall.

Total liabilities fell 2.9 percent to $801 million.

Leading the decline was current liabilities. Current liabilities fell $28 million, a 7.7-percent decline.

Substantial increases in cashflows from operations cut

the sugar cooperatives’ need for working capital loans

and other short-term financial arrangements. Shortterm loans fell $10 million, to $148 million. Accounts

payable fell $11 million, to $72 million. Member

payables and pooling liabilities fell 6.4 percent to $91

million.

Long-term debt was also down, falling $20 million to $367 million. The only liabilities that seemed to

increase for sugar cooperatives were those for employee benefits, which pushed other non-current liabilities

up 30.9 percent to $98 million.

Total equity for sugar cooperatives was up 5 percent to $459 million. However, unallocated equity continued to fall. The combined unallocated equity for

sugar cooperatives has been running in a deficit for a

few years. Each year the deficit in unallocated equity

14

Figure 3--Ratio definitions

Ratio Calculation

Liquidity

Current Ratio current assets/current liabilities

Quick Ratio (current assets - inventory)/current liabilities

Leverage

Debt-to-Assets total liabilities/total assets

Long-Term Debt-to-Equity total non-current liabilities/total equity

Times Interest Earned (net margins + interest expense)/interest expense

Efficiency

Local Assets Turnover total sales/(total assets - cooperative investment)

Fixed Assets Turnover total sales/fixed assets

Inventory Turnover total sales/average inventory

Accounts Receivable Turnover total sales/average accounts receivable

Profitability

Gross Profit Margin gross margins/total operating revenue

Net Operating Margin (net operating margins - patronage refunds received)/total operating revenue

Return on Total Assets net margins before interest and taxes/total assets

Return on Members Equity net margins/total equity
continued to grow while member equity grew. In 2002,

member equity grew 4.7 percent to $567 million while

the deficit in the unallocated account grew 3.4 percent

to $108 million.

Performance Measurements

Performance measurements are presented in

table 5. Figure 3 provides a guide on how the ratios are

calculated. While the prior analysis was based on the

sum total of the cooperatives, the average of these

ratios is used in the performance measurements. With

the top 4 cooperatives generating 42 percent of total

revenues for the top 100, it is easy to see the influence

they would have. Therefore an average is used to

negate the effects of changes in a few of the largest

cooperatives and gives equal weight to every cooperative.

Liquidity of the top 100 improved. The current

ratio, which measures the cooperatives’ liquid assets

against their corresponding liabilities, improved from

1.32 to 1.35 in 2002. However, this improvement was

due mostly to a buildup of inventories. Since inventories are considered to be the least liquid of current

assets, leaving them out of the calculation provides a

stricter look at liquidity. In this case, the quick ratio

(current assets less inventory) falls from .71 to .70.

While the drop in the quick ratio is small, its movement in the opposite direction from the current ratio

illustrates improved liquidity is due to inventory

buildup. Inventory level increases in themselves may

not be a problem if they are due to anticipated higher

sales. However, if higher inventory is due to lack of

sales during the past year, this could pose a problem if

the situation is allowed to continue.

Leverage ratios point to a shift in debt financing

from long-term to short-term. Total debt to assets

remained fairly constant at 62.1 percent, down from

62.2 percent in 2001. However, the average long-term

debt to equity fell substantially from 50.0 percent in

2001 to 43.9 percent in 2002.

Lower interest rates pushed down interest

expense. Lower interest expense coupled with higher

margins for most cooperatives gave a boost to their

interest coverage ratio. The times interest earned

improved from a 10-year low of 2.78 to 3.93 in 2002.

Efficiency ratios describe how well a business

uses its assets. For the most part, efficiency for the

average top 100 in generating sales changed little

between 2001 and 2002 and there was no trend over

the 5-year period. The average local asset turnover

ratio inched up from 3.24 to 3.26 in 2002. The average

fixed asset turnover slipped from 15.78 to 15.39. The

average inventory turnover was also down slightly

from 16.39 to 16.28. The largest change occurred with

the average accounts receivable turnover which fell

from 17.59 to 16.83.

While profit ratios have problems inherent in

them with respect to cooperatives, they do provide

some insight if looking at trends. There is some

improvement in the average gross profit margin and

net operating margins. However, there are no definite

trends in their movements. On the other hand, the

average return on total assets and average return on

member equity have displayed a general deterioration

over the past 5 years. This trend is cause for concern.

In general, cooperatives operate on thin margins and

miscalculations of the market can prove disastrous, as

is pointed out by the few bankruptcies.

Cotton

Cotton cooperatives improved their average liquidity (appendix table 19). These cooperatives were

able to offset their lower current assets by cutting the

amount of working capital loans needed for operations. In relative terms, inventories did not decline in

proportion to other current accounts. This accounts for

the increase in the average current ratio from 1.32 to

1.48, but a slight drop in the average quick ratio from

.69 to .67. The average leverage ratios dropped, showing the average cashflow from operations allowed the

cotton cooperatives to rely less on debt to fund the

cooperatives.

Higher sales improved the efficiency use of

assets. This in turn pushed up profitability as the average gross profit margins, average net operating margins, average return on total assets, and average return

on member equity all showed substantial improvements over 2001.

Dairy

While individual dairy cooperatives had variations between 2001 and 2002, the average performance

measurements of these cooperatives varied little

between the years. The average liquidity ratios slipped

slightly but the difference is negligible. The average

current ratio fell from 1.31 to 1.30 and the average

quick ratio fell from .91 to .88. They used less total

debt on average, but most of the decline was to the

long-term debt levels. The average long-term debt-toequity ratio had the largest change of any performance

15
measurement, falling from 36.4 percent to 32.7 percent

Efficiency ratios all showed improvements between

2001 and 2002. Dairy cooperatives were able to use

their assets more efficiently in generating sales.

However, they were unable to generate higher profits

from the higher efficiency. Higher operating expenses

prevented any gains made in efficiency from translating into profitability, as the average profitability ratios

for all dairy cooperatives slid downward. The largest

decline was in the average return on members’ equity

which fell from 15.3 percent to 13.6 percent.

Diversified

As was noted earlier, diversified cooperatives on

the whole suffered with the bankruptcy filings of several large cooperatives. This in turn caused a negative

turn in their performance. Liquidity fell, but the

decline was not only attributed to those cooperatives

filing for bankruptcy. Several of the stronger diversified cooperatives also experienced a drop in their liquidity. With equity falling, more of the assets were

financed by liabilities, which pushed up the average

debt-to-asset ratio. The average long-term debt to

equity hit a 10-year high of 173.5 percent.

The average profitability ratios fell dramatically.

Most of the decline can be attributed to the bankruptcies. The average return on members’ equity declined

the most, from -4.2 percent to -39.9 percent.

Fruit/Vegetable

Fruit and vegetable cooperatives had mixed

results in their performance. The average liquidity

improved slightly due to slower declining inventory

levels relative to other current assets and current liabilities. The average quick ratio did not change, while the

average current ratio improved from 1.55 to 1.59 in

2002.

Declining long-term debt levels helped improve

leverage. The average overall debt levels declined

slightly more than declining assets as the average

debt-to-asset ratio fell from 69.7 percent to 68.9 percent. The average long-term debt-to-equity ratio

showed the most dramatic decline moving from 79.9

percent to 57.4 percent. Two of the fruit/vegetable

cooperatives had substantial declines in their equity

position. However, on average the decline in equity

was less than the decline in long-term debt.

The average efficiency ratios were higher in 2002

with the exception of fixed asset turnover. The average

fixed asset turnover fell from 11.9 times to 10 times.

However, this decline had more to do with steady

amounts of fixed assets and lower sales than lower

efficiency. Profitability ratios held steady with exception of return on member equity which fell from 7.4

percent to .3 percent.

Farm Supply

Farm supply cooperatives improved their liquidity in 2002. The average current and quick ratio

improved. Most of the farm supply cooperatives

improved their cash balances, boosting their liquidity.

Leverage was up slightly due to carrying a higher level

of long-term debt. The average long-term debt-to-equity ratio was up from 38.4 percent to 44.9 percent.

Lower sales coupled with higher assets caused

efficiency to decline. The average efficiency ratios for

farm supply cooperatives all declined. However, profitability measurements showed slight gains from 2001.

The average return on member equity was up from 6.3

percent to 6.5 percent.

Grain

Grain cooperatives had small changes in their

average performance. Liquidity was up slightly as

illustrated by the average current ratio inching up

from 1.22 to 1.24. However, most of the increase was

due to higher inventory levels as the average quick

ratio slipped from .58 to .56. Grain cooperatives relied

more on debt to help finance their cooperatives with

higher long- and short-term debt. The average total

debt-to-assets ratio increased from 60.2 percent to 62.2

percent, while the average long-term debt-to-equity

ratio increased from 38.7 percent to 40.1 percent.

Despite higher operating revenues, the average

efficiency ratios declined. The average local asset

turnover fell from 2.62 times to 2.46 times. The average

fixed asset turnover had a slight decline from 8.79

times to 8.51 times. If the asset growth is due to anticipated growth in revenues, then declining values

shouldn’t be much of a concern. However, these values

have trended downward over the past 5 years.

Profitability ratios have also been trending downwards. Return on assets fell from 8.0 percent in 1998 to

4.7 percent in 2002. Lower efficiency with higher debt

and sagging profits strongly suggests there could be

problems in the future if this trend continues.

Poultry/Livestock

Poultry/livestock cooperatives improved their

liquidity mostly due to higher inventory levels. The

average current ratio jumped up from 1.25 to 1.44.

However, the average quick ratio only inched up from

.92 to .93. While overall debt levels were down, these

cooperatives tend to carry a higher portion of debt

16
than most other commodity groups. This is illustrated

by their high average debt-to-asset ratio of 81.9, up

from 81.0 in 2001.

The efficiency ratios showed improvement from

2001 to 2002. The only ratio to show a decline was the

average fixed asset turnover, which fell from 59.7 times

to 50.8 times. Profitability ratios showed improvement

despite the large negative return on members’ equity.

One cooperative that generated a loss does not carry

much equity, which had a tremendous influence on the

average return on members’ equity ratio. Hence the

return on members’ equity improved from -84.9 to -

44.3

Rice

Rice cooperatives improved their liquidity position while maintaining their leverage. Rice cooperatives have the highest average value for their current

ratio at 1.72, up from 1.69 in 2001. Much of the

improvement was due to higher cash balances and

accounts receivable. This is illustrated by a higher

increase in their average quick ratio compared to their

current ratio. The quick ratio improved from .89 to .95.

Rice cooperatives hold the least amount of average debt in proportion to assets. The average debt-toasset ratio was at 47.8 percent in 2002, the same as in

2001.

The average efficiency ratios were down slightly

from 2001, with exception of inventory turnover.

Lower inventory levels helped improve the average

inventory turnover from 9.6 times to 9.9 times in 2002.

The average profitability ratios while down slightly

did not vary much from 2001, with the exception of

return on members’ equity. The average return on

members’ equity was down from 11.3 to 10.0 in 2002.

Some of this decline can be traced back to payments to

members in the form of cost of goods sold. In other

words, members received more value for their produce

in the front end of the transaction, generating lower

profits for the cooperative. However, the average

return on members’ equity for rice cooperatives continues to be one of the steadier of all top 100 commodity groups.

Sugar

Higher inventory levels pushed up the average

liquidity for sugar cooperatives. The current ratio

inched up from 1.20 to 1.23, but the average quick ratio

slipped from .53 to .48 in 2002. A higher average cashflow from operations allowed the sugar cooperatives

to cut the amount of both short- and long-term debt,

which took a little pressure off of their leverage ratios.

The average debt-to-asset ratio fell from 65.9 percent to

65.0 percent in 2002. Long-term debt-to-equity fell

from 90.8 percent in 2001 to 84.8 percent in 2002.

Efficiency ratios dipped in 2002 mostly due to

lower revenues. However, higher inventories also

weighed heavily in pushing down the average inventory turnover ratio, which fell from 6.77 times to 5.85

times. Sugar cooperatives are some of the most highly

capitalized cooperatives in terms of fixed assets, as

evident by the low values for their average fixed asset

turnover ratios: 1.96 in 2002 compared to 2.04 in 2001.

During the past few years, they have been investing in

their fixed capital. These investments seem to be paying off with cuts in operating expenses and rising profit margins. The average return on assets was up from

2.5 percent to 3.4 percent, while the average return on

members’ equity was up from -8.7 percent to 3.1 percent in 2002.

17
18

Appendix Tables
19

Appendix Table 1—Consolidated Statement of Operations, 2001-02, Cotton Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Revenue

Revenues

Marketing 2,463,135 2,154,900 308,235 14.3% 96.1% 96.3%

Farm Supply 59,241 50,333 8,908 17.7% 2.3% 2.2% ————— ————— ———— ———— ——— ————

Total Sales 2,522,376 2,205,233 317,143 14.4% 98.4% 98.6%

Other Operating Revenues 41,880 32,065 9,815 30.6% 1.6% 1.4% ————— ————— ———— ———— ——— ————

Total Operating Revenues 2,564,256 2,237,298 326,958 14.6% 100.0% 100.0%

Cost of Goods Sold 2,330,656 2,144,243 186,413 8.7% 90.9% 95.8% ————— ————— ———— ———— ——— ————

Gross Margin 233,600 93,055 140,545 151.0% 9.1% 4.2%

Expense

Operating Expenses 163,475 87,609 75,866 86.6% 6.4% 3.9% ————— ————— ———— ———— ——— ————

Net Operating Margins 70,125 5,446 64,679 1187.6% 2.7% 0.2%

Other Revenues (Expenses)

Interest Expense -14,661 -24,544 9,883 -40.3% -0.6% -1.1%

Interest Revenue 347 184 163 88.4% 0.0% 0.0%

Other Income 6,250 14,232 -7,982 -56.1% 0.2% 0.6%

Other Expenses -201 - -201 N/A 0.0% N/A

Patronage Revenue 609 507 102 20.1% 0.0% 0.0% ————— ————— ———— ———— ——— ————

Net Margins from Operations 62,469 -4,175 66,644 -1596.3% 2.4% -0.2%

Non-Operating Rev. (Exp.) - -6,200 6,200 -100.0% N/A -0.3% ————— ————— ———— ———— ——— ———— ————— ————— ———— ———— ——— ————

Net Margins 62,469 -10,375 72,844 -702.1% 2.4% -0.5%

Percent of Total

Distribution

Distribution of Net Margins

Cash Patronage Dividends 26,463 14,066 12,397 88.1% 42.4% -135.6%

Retain Patronage Dividends 31,655 -32,134 63,789 -198.5% 50.7% 309.7%

Nonqualified Non-Cash Patronage 643 447 196 43.8% 1.0% -4.3%

Dividends - 15,988 -15,988 -100.0% N/A -154.1%

Unallocated Equity 3,342 -8,877 12,219 -137.6% 5.3% 85.6%

Income Tax 366 135 231 171.2% 0.6% -1.3% ————— ————— ———— ———— ——— ———— ————— ————— ———— ———— ——— ————

Total Distribution 62,469 -10,375 72,844 -702.1% 100.0% 100.0%
20

Appendix Table 2—Consolidated Statement of Operations, 2001-02, Dairy Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Revenue

Revenue

Marketing 18,679,608 20,815,455 -2,135,847 -10.3% 98.7% 98.8%

Farm Supply 181,229 170,346 10,883 6.4% 1.0% 0.8% ————— ————— ————— ———— ——— ————

Total Sales 18,860,837 20,985,801 -2,124,964 -10.1% 99.6% 99.7%

Other Operating Revenues 73,557 72,355 1,202 1.7% 0.4% 0.3% ————— ————— ————— ———— ——— ————

Total Operating Revenues 18,934,394 21,058,156 -2,123,762 -10.1% 100.0% 100.0%

Cost of Goods Sold 17,837,314 19,945,146 -2,107,832 -10.6% 94.2% 94.7% ————— ————— ————— ———— ——— ————

Gross Margin 1,097,080 1,113,010 -15,930 -1.4% 5.8% 5.3%

Expenses

Operating Expenses 940,212 917,896 22,316 2.4% 5.0% 4.4% ————— ————— ———— ———— ——— ————

Net Operating Margins 156,868 195,114 -38,246 -19.6% 0.8% 0.9%

Other Revenues (Expenses)

Interest Expense -52,360 -64,788 12,428 -19.2% -0.3% -0.3%

Interest Revenue 5,890 10,584 -4,694 -44.3% 0.0% 0.1%

Other Income 110,337 119,812 -9,475 -7.9% 0.6% 0.6%

Other Expenses -30,808 -30,046 -762 2.5% -0.2% -0.1%

Patronage Revenue 11,007 14,370 -3,363 -23.4% 0.1% 0.1% ————— ————— ———— ———— ——— ————

Net Margins from Operations 200,934 245,046 -44,112 -18.0% 1.1% 1.2%

Non-Operating Rev. (Exp.) 8,492 10,661 -2,169 -20.3% 0.0% 0.1% ————— ————— ———— ———— ——— ———— ————— ————— ———— ———— ——— ————

Net Margins 209,426 255,707 -46,281 -18.1% 1.1% 1.2%

Percent of Total

Distribution

Distribution of Net Margins

Cash Patronage Dividends 74,833 106,195 -31,362 -29.5% 35.7% 41.5%

Retain Patronage Dividends 102,020 194,634 -92,614 -47.6% 48.7% 76.1%

Dividends 522 920 -398 -43.3% 0.2% 0.4%

Unallocated Equity 33,475 -74,294 107,769 -145.1% 16.0% -29.1%

Income Tax -1,424 28,252 -29,676 -105.0% -0.7% 11.0% ————— ————— ———— ———— ——— ———— ————— ————— ———— ———— ——— ————

Total Distribution 209,426 255,707 -46,281 -18.1% 100.0% 100.0%
21

Appendix Table 3—Consolidated Statement of Operations, 2001-02, Diversified Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Revenue

Revenue

Marketing 13,296,777 15,671,390 -2,374,613 -15.2% 62.0% 64.4%

Farm Supply 8,054,465 8,529,416 -474,951 -5.6% 37.5% 35.1% ————— ————— ———— ———— ——— ————

Total Sales 21,351,242 24,200,806 -2,849,564 -11.8% 99.5% 99.5%

Other Operating Revenues 109,459 124,065 -14,606 -11.8% 0.5% 0.5% ————— ————— ———— ———— ——— ————

Total Operating Revenues 21,460,701 24,324,871 -2,864,170 -11.8% 100.0% 100.0%

Cost of Goods Sold 20,255,220 22,906,948 -2,651,728 -11.6% 94.4% 94.2% ————— ————— ———— ———— ——— ————

Gross Margin 1,205,481 1,417,923 -212,442 -15.0% 5.6% 5.8%

Expenses

Operating Expenses 1,218,502 1,149,066 69,436 6.0% 5.7% 4.7% ————— ————— ———— ———— ——— ————

Net Operating Margins -13,021 268,857 -281,878 -104.8% -0.1% 1.1%

Other Revenues (Expenses)

Interest Expense -225,473 -269,176 43,703 -16.2% -1.1% -1.1%

Interest Revenue 39,648 67,709 -28,061 -41.4% 0.2% 0.3%

Other Income 168,664 7,401 161,263 2178.9% 0.8% 0.0%

Other Expenses -84,918 -32,384 -52,534 162.2% -0.4% -0.1%

Patronage Revenue 27,014 54,815 -27,801 -50.7% 0.1% 0.2% ————— ————— ———— ———— ——— ————

Net Margins from Operations -88,086 97,222 -185,308 -190.6% -0.4% 0.4%

Non-Operating Rev. (Exp.) -103,478 -22,275 -81,203 364.5% -0.5% -0.1% ————— ————— ————— ————— ———— ———— ——— ———— ———— ———— ——— ————

Net Margins -191,564 74,947 -266,511 -355.6% -0.9% 0.3%

Percent of Total

Distribution

Distribution of Net Margins

Cash Patronage Dividends 40,258 67,570 -27,312 -40.4% -21.0% 90.2%

Retain Patronage Dividends -211,540 36,604 -248,144 -677.9% 110.4% 48.8%

Dividends 4,150 8,000 -3,850 -48.1% -2.2% 10.7%

Unallocated Equity -49,130 29,951 -79,081 -264.0% 25.6% 40.0%

Income Tax 24,698 -67,178 91,876 -136.8% -12.9% -89.6% ————— ————— ———— ———— ——— ———— ————— ————— ———— ———— ——— ————

Total Distribution -191,564 74,947 -266,511 -355.6% 100.0% 100.0%
22

Appendix Table 4--Consolidated Statement of Operations, 2001-02, Fruit/vegetable Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Revenue

Revenue

Marketing 5,036,711 5,132,330 -95,619 -1.9% 97.8% 97.4%

Farm Supply 1,525 10,931 -9,406 -86.0% 0.0% 0.2% ————— ————— ———— ———— ——— ————

Total Sales 5,038,236 5,143,261 -105,025 -2.0% 97.8% 97.6%

Other Operating Revenues 113,190 126,403 -13,213 -10.5% 2.2% 2.4% ————— ————— ———— ———— ——— ————

Total Operating Revenues 5,151,426 5,269,664 -118,238 -2.2% 100.0% 100.0%

Cost of Goods Sold 4,125,654 4,270,038 -144,384 -3.4% 80.1% 81.0% ————— ————— ———— ———— ——— ————

Gross Margin 1,025,772 999,626 26,146 2.6% 19.9% 19.0%

Expenses

Operating Expenses 812,295 817,565 -5,270 -0.6% 15.8% 15.5% ————— ————— ———— ———— ——— ————

Net Operating Margins 213,477 182,061 31,416 17.3% 4.1% 3.5%

Other Revenues (Expenses)

Interest Expense -111,367 -139,939 28,572 -20.4% -2.2% -2.7%

Interest Revenue 236 326 -90 -27.6% 0.0% 0.0%

Other Income 11,247 10,031 1,216 12.1% 0.2% 0.2%

Other Expenses -33,324 -4,285 -29,039 677.7% -0.6% -0.1%

Patronage Revenue 1,159 1,159 0 0.0% 0.0% 0.0% ————— ————— ———— ———— ——— ————

Net Margins from Operations 81,427 49,353 32,074 65.0% 1.6% 0.9%

Non-Operating Rev. (Exp.) -182,148 -4,997 -177,151 3545.1% -3.5% -0.1% ————— ————— ———— ———— ——— ———— ————— ————— ———— ———— ——— ————

Net Margins -100,721 44,356 -145,077 -327.1% -2.0% 0.8%

Percent of Total

Distribution

Distribution of Net Margins

Cash Patronage Dividends 10,200 3,252 6,948 213.7% -10.1% 7.3%

Retain Patronage Dividends 32,582 6,315 26,267 415.9% -32.3% 14.2%

Nonqualified Non-Cash Patronage - 11,587 -11,587 -100.0% N/A 26.1%

Dividends 281 8,404 -8,123 -96.7% -0.3% 18.9%

Unallocated Equity -121,595 7,477 -129,072 -1726.3% 120.7% 16.9%

Income Tax -22,189 7,321 -29,510 -403.1% 22.0% 16.5% ————— ————— ———— ———— ——— ———— ————— ————— ———— ———— ——— ————

Total Distribution -100,720 44,356 -145,076 -327.1% 100.0% 100.0%
23

Appendix Table 5—Consolidated Statement of Operations, 2001-02, Farm Supply Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Revenue

Revenue

Marketing 455,075 457,126 -2,051 -0.4% 8.6% 7.8%

Farm Supply 4,713,599 5,343,132 -629,533 -11.8% 89.3% 90.7% ————— ————— ———— ———— ——— ————

Total Sales 5,168,674 5,800,258 -631,584 -10.9% 97.9% 98.4%

Other Operating Revenues 111,351 92,413 18,938 20.5% 2.1% 1.6% ————— ————— ———— ———— ——— ————

Total Operating Revenues 5,280,025 5,892,671 -612,646 -10.4% 100.0% 100.0%

Cost of Goods Sold 4,583,581 5,165,999 -582,418 -11.3% 86.8% 87.7% ————— ————— ———— ———— ——— ————

Gross Margin 696,444 726,672 -30,228 -4.2% 13.2% 12.3%

Expenses

Operating Expenses 674,689 650,846 23,843 3.7% 12.8% 11.0% ————— ————— ———— ———— ——— ————

Net Operating Margins 21,755 75,826 -54,071 -71.3% 0.4% 1.3%

Other Revenues (Expenses)

Interest Expense -71,941 -81,663 9,722 -11.9% -1.4% -1.4%

Interest Revenue 17,255 16,383 872 5.3% 0.3% 0.3%

Other Income 46,422 13,762 32,660 237.3% 0.9% 0.2%

Other Expenses -3,563 -11,587 8,024 -69.3% -0.1% -0.2%

Patronage Revenue 3,931 4,577 -646 -14.1% 0.1% 0.1% ————— ————— ———— ———— ——— ————

Net Margins from Operations 13,858 17,298 -3,440 -19.9% 0.3% 0.3%

Non-Operating Rev. (Exp.) -7,782 5,014 -12,796 -255.2% -0.1% 0.1% ————— ————— ———— ———— ——— ———— ————— ————— ———— ———— ——— ————

Net Margins 6,076 22,312 -16,236 -72.8% 0.1% 0.4%

Percent of Total

Distribution

Distribution of Net Margins

Cash Patronage Dividends 15,254 15,066 188 1.20% 251.05% 67.52%

Retain Patronage Dividends 29,641 22,038 7,603 34.50% 487.84% 98.77%

Dividends 5,285 5,164 121 2.30% 86.98% 23.14%

Unallocated Equity -56,693 -13,843 -42,850 309.50% -933.06% -62.04%

Income Tax 12,589 -6,113 18,702 -305.90% 207.19% -27.40% ————— ————— ———— ———— ———— ———— ————— ————— ———— ———— ———— ————

Total Distribution 6,076 22,312 -16,236 -72.80% 100.00% 100.00%
24

Appendix Table 6—Consolidated Statement of Operations, 2001-02, Grain Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Revenue

Revenue

Marketing 3,329,240 3,668,805 -339,565 -9.3% 62.0% 71.0%

Farm Supply 2,044,760 1,497,955 546,805 36.5% 38.0% 29.0% ————— ————— ———— ———— ——— ————

Total Sales 5,374,000 5,166,760 207,240 4.0% 100.0% 100.0%

Other Operating Revenues 299,474 123,022 176,452 143.4% 5.6% 2.4% ————— ————— ———— ———— ——— ————

Total Operating Revenues 5,673,474 5,289,782 383,692 7.3% 105.6% 102.4%

Cost of Goods Sold 5,126,506 4,750,994 375,512 7.9% 95.4% 92.0% ————— ————— ———— ———— ——— ————

Gross Margin 546,968 538,788 8,180 1.5% 10.2% 10.4%

Expenses

Operating Expenses 481,142 429,371 51,771 12.1% 9.0% 8.3% ————— ————— ———— ———— ——— ————

Net Operating Margins 65,827 109,417 -43,591 -39.8% 1.2% 2.1%

Other Revenues (Expenses)

Interest Expense -37,497 -36,780 -717 2.0% -0.7% -0.7%

Interest Revenue 6,178 10,887 -4,709 -43.3% 0.1% 0.2%

Other Income 40,106 9,372 30,734 327.9% 0.7% 0.2%

Other Expenses -6,713 -2,335 -4,378 187.5% -0.1% 0.0%

Patronage Revenue 16,679 16,745 -66 -0.4% 0.3% 0.3% ————— ————— ———— ———— ——— ————

Net Margins from Operations 84,580 107,307 -22,727 -21.2% 1.6% 2.1%

Non-Operating Rev. (Exp.) 237 -813 1,050 -129.1% 0.0% 0.0% ————— ————— ———— ———— ———— ———— ————— ————— ———— ———— ———— ————

Net Margins 84,816 106,494 -21,678 -20.4% 1.6% 2.1%

Percent of Total

Distribution

Distribution of Net Margins

Cash Patronage Dividends 17,816 20,598 -2,781 -13.5% 21.0% 19.3%

Retain Patronage Dividends 38,542 47,076 -8,535 -18.1% 45.4% 44.2%

Nonqualified Non-Cash Patronage -5 338 -343 -101.5% 0.0% 0.3%

Dividends 45 107 -62 -57.9% 0.1% 0.1%

Unallocated Equity 19,335 27,465 -8,130 -29.6% 22.8% 25.8%

Income Tax 9,083 10,909 -1,826 -16.7% 10.7% 10.2%

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

Total Distribution 84,816 106,494 -21,678 -20.4% 100.0% 100.0%
25

Appendix Table 7—Consolidated Statement of Operations, 2001-02, Poultry/livestock Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Revenue

Revenue

Marketing 2,391,664 2,460,455 -68,791 -2.8% 99.6% 99.6%

Farm Supply N/A N/A N/A N/A N/A N/A ————— ————— ———— ———— ——— ————

Total Sales 2,391,664 2,460,455 -68,791 -2.8% 99.6% 99.6%

Other Operating Revenues 10,480 9,207 1,273 13.8% 0.4% 0.4% ————— ————— ———— ———— ——— ————

Total Operating Revenues 2,402,144 2,469,662 -67,518 -2.7% 100.0% 100.0%

Cost of Goods Sold 2,228,545 2,333,720 -105,175 -4.5% 92.8% 94.5% ————— ————— ———— ———— ——— ————

Gross Margin 173,599 135,942 37,657 27.7% 7.2% 5.5%

Expenses

Operating Expenses 108,908 111,590 -2,682 -2.4% 4.5% 4.5% ————— ————— ———— ———— ——— ————

Net Operating Margins 64,691 24,352 40,339 165.6% 2.7% 1.0%

Other Revenues (Expenses)

Interest Expense -31,000 -45,970 14,970 -32.6% -1.3% -1.9%

Interest Revenue 13,938 18,652 -4,714 -25.3% 0.6% 0.8%

Other Income 19,548 44,608 -25,060 -56.2% 0.8% 1.8% ————— ————— ———— ———— ——— ————

Net Margins from Operations 67,177 41,642 25,535 61.3% 2.8% 1.7%

Non-Operating Rev. (Exp.) -13,513 -7,345 -6,168 84.0% -0.6% -0.3% ————— ————— ———— ———— ———— ———— ————— ————— ———— ———— ———— ————

Net Margins 53,664 34,297 19,367 56.5% 2.2% 1.4%

Percent of Total

Distribution

Distribution of Net Margins

Cash Patronage Dividends 1,656 N/A 1,656 N/A 3.1% N/A

Retain Patronage Dividends 12,592 N/A 12,592 N/A 23.5% N/A

Unallocated Equity 17,361 20,900 -3,539 -16.9% 32.4% 60.9%

Income Tax 22,055 13,397 8,658 64.6% 41.1% 39.1% ————— ————— ———— ———— ———— ———— ————— ————— ———— ———— ———— ————

Total Distribution 53,664 34,297 19,367 56.5% 100.0% 100.0%
26

Appendix Table 8—Consolidated Statement of Operations, 2001-02, Rice Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Revenue

Revenue

Marketing 1,047,247 1,035,663 11,584 1.1% 99.8% 99.7%

Farm Supply 2,138 2,624 -486 -18.5% 0.2% 0.3% ————— ————— ———— ———— ——— ————

Total Sales 1,049,385 1,038,287 11,098 1.1% 100.0% 100.0%

Other Operating Revenues N/A N/A N/A N/A N/A N/A ————— ————— ———— ———— ——— ————

Total Operating Revenues 1,049,385 1,038,287 11,098 1.1% 100.0% 100.0%

Cost of Goods Sold 741,992 716,781 25,211 3.5% 70.7% 69.0% ————— ————— ———— ———— ——— ————

Gross Margin 307,393 321,506 -14,113 -4.4% 29.3% 31.0%

Expenses

Operating Expenses 292,242 306,544 -14,302 -4.7% 27.8% 29.5% ————— ————— ———— ———— ——— ————

Net Operating Margins 15,152 14,962 190 1.3% 1.4% 1.4%

Other Revenues (Expenses)

Interest Expense -4,482 -4,381 -101 2.3% -0.4% -0.4%

Other Income 1,856 116 1,740 1500.0% 0.2% 0.0%

Other Expenses -1,963 -2,256 293 -13.0% -0.2% -0.2% ————— ————— ———— ———— ———— ———— ————— ————— ———— ———— ———— ————

Net Margins 10,564 8,441 2,123 25.1% 1.0% 0.8%

Percent of Total

Distribution

Distribution of Net Margins

Cash Patronage Dividends 5,797 7,519 -1,722 -22.9% 54.9% 89.1%

Retain Patronage Dividends 527 563 -36 -6.4% 5.0% 6.7%

Dividends 447 446 1 0.2% 4.2% 5.3%

Unallocated Equity 3,781 827 2,954 357.2% 35.8% 9.8%

Income Tax 11 -914 925 -101.2% 0.1% -10.8% ————— ————— ———— ———— ———— ———— ————— ————— ———— ———— ———— ————

Total Distribution 10,564 8,441 2,123 25.1% 100.0% 100.0%
27

Appendix Table 9—Consolidated Statement of Operations, 2001-02, Sugar Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Revenue

Revenue

Marketing 1,426,102 1,540,684 -114,582 -7.4% 98.0% 97.9%

Farm Supply N/A 2,142 -2,142 -100.0% N/A 0.1% ————— ————— ———— ———— ——— ————

Total Sales 1,426,102 1,542,826 -116,724 -7.6% 98.0% 98.1%

Other Operating Revenues 29,679 30,559 -880 -2.9% 2.0% 1.9% ————— ————— ———— ———— ——— ————

Total Operating Revenues 1,455,781 1,573,385 -117,604 -7.5% 100.0% 100.0%

Cost of Goods Sold 1,105,021 1,221,591 -116,570 -9.5% 75.9% 77.6% ————— ————— ———— ———— ——— ————

Gross Margin 350,760 351,794 -1,034 -0.3% 24.1% 22.4%

Expenses

Operating Expenses 292,429 316,910 -24,481 -7.7% 20.1% 20.1% ————— ————— ———— ———— ——— ————

Net Operating Margins 58,331 34,884 23,447 67.2% 4.0% 2.2%

Other Revenues (Expenses)

Interest Expense -36,460 -48,423 11,963 -24.7% -2.5% -3.1%

Interest Revenue 2,009 3,232 -1,223 -37.8% 0.1% 0.2%

Other Income 2,956 1,112 1,844 165.8% 0.2% 0.1%

Other Expenses -17,973 -20,191 2,218 -11.0% -1.2% -1.3% ————— ————— ———— ———— ———— ———— ————— ————— ———— ———— ———— ————

Net Margins 8,863 -29,386 38,249 -130.2% 0.6% -1.9%

Percent of Total

Distribution

Distribution of Net Margins

Cash Patronage Dividends 1,914 N/A 1,914 N/A 21.6% N/A

Retain Patronage Dividends 3,573 1,560 2,013 129.0% 40.3% -5.3%

Nonqualified Non-Cash Patronage 3,611 4,624 -1,013 -21.9% 40.7% -15.7%

Unallocated Equity -300 -35,679 35,379 -99.2% -3.4% 121.4%

Income Tax 65 109 -44 -40.4% 0.7% -0.4% ————— ————— ———— ———— ———— ———— ————— ————— ———— ———— ———— ————

Total Distribution 8,863 -29,386 38,249 -130.2% 100.0% 100.0%
28

Appendix Table 10—Combined Balance Sheet, 2001-02, Cotton Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Assets

Assets

Current Assets

Cash 11,185 3,632 7,553 207.9% 1.7% 0.4%

Accounts Receivable 106,575 157,404 (50,829) -32.3% 16.0% 18.1%

Inventory 242,286 270,654 (28,368) -10.5% 36.3% 31.1%

Other Current Assets 39,983 153,169 (113,186) -73.9% 6.0% 17.6% ————— ————— ———— ———— ——— ————

Total Current Assets 400,030 584,859 (184,829) -31.6% 60.0% 67.1%

Investment

Bank of Cooperatives 25,103 23,123 1,980 8.6% 3.8% 2.7%

Other Cooperatives 3,290 2,379 911 38.3% 0.5% 0.3%

Other Investments 26,662 28,332 (1,670) -5.9% 4.0% 3.3% ————— ————— ———— ———— ——— ————

Total Investments 55,055 53,834 1,221 2.3% 8.3% 6.2%

Net Fixed Assets 188,629 196,764 (8,135) -4.1% 28.3% 22.6%

Other Assets 23,189 36,029 (12,840) -35.6% 3.5% 4.1% ————— ————— ———— ———— ——— ————

Total Assets 666,903 871,486 (204,583) -23.5% 100.0% 100.0%

Liabilities

Current Liabilities

Short-Term Debt 199,468 426,303 (226,835) -53.2% 29.9% 48.9%

Accounts Payable 13,631 21,078 (7,447) -35.3% 2.0% 2.4%

Member Payables 39,675 19,819 19,856 100.2% 5.9% 2.3%

Patron and Pool Liabilities 48,989 7,164 41,825 583.8% 7.3% 0.8%

Other Current Liabilities 16,370 21,591 (5,221) -24.2% 2.5% 2.5% ————— ————— ———— ———— ——— ————

Total Current Liabilities 318,133 495,955 (177,822) -35.9% 47.7% 56.9%

Non-Current Liabilities

Long-Term Debt

Less Current Portion 63,420 88,651 (25,231) -28.5% 9.5% 10.2%

Other Liabilities 5,620 15,109 (9,489) -62.8% 0.8% 1.7% ————— ————— ———— ———— ——— ————

Total Non-Current Liabilities 69,040 103,760 (34,720) -33.5% 10.4% 11.9% ————— ————— ———— ———— ——— ————

Total Liabilities 387,173 599,715 (212,542) -35.4% 58.1% 68.8%

Equity

Common Stock 13 13 0 0.0% 0.0% 0.0%

Equity Certificates and Credits 257,267 262,695 (5,428) -2.1% 38.6% 30.1%

Unallocated Equity 22,450 9,063 13,387 147.7% 3.4% 1.0% ————— ————— ———— ———— ——— ————

Total Equity 279,730 271,771 7,959 2.9% 41.9% 31.2% ————— ————— ———— ———— ——— ————

Total Liabilities and Equity 666,903 871,486 (204,583) -23.5% 100.0% 100.0%
29

Appendix Table 11—Combined Balance Sheet, 2001-02, Dairy Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Assets

Assets

Current Assets

Cash 189,996 350,790 (160,794) -45.8% 3.9% 6.9%

Accounts Receivable 1,164,253 1,289,420 (125,167) -9.7% 24.1% 25.3%

Inventory 666,231 669,589 (3,358) -0.5% 13.8% 13.1%

Other Current Assets 198,249 178,416 19,833 11.1% 4.1% 3.5% ————— ————— ———— ———— ——— ————

Total Current Assets 2,218,729 2,488,215 (269,486) -10.8% 45.9% 48.8%

Investment

Bank of Cooperatives 31,610 30,227 1,383 4.6% 0.7% 0.6%

Other Cooperatives 60,063 56,493 3,570 6.3% 1.2% 1.1%

Other Investments 1,127,394 1,135,913 (8,519) -0.7% 23.3% 22.3% ————— ————— ———— ———— ——— ————

Total Investments 1,219,067 1,222,633 (3,566) -0.3% 25.2% 24.0%

Net Fixed Assets 1,212,168 1,265,779 (53,611) -4.2% 25.1% 24.8%

Other Assets 187,621 121,808 65,813 54.0% 3.9% 2.4% ————— ————— ———— ———— ——— ————

Total Assets 4,837,585 5,098,435 (260,850) -5.1% 100.0% 100.0%

Liabilities

Current Liabilities

Short-Term Debt 230,908 234,649 (3,741) -1.6% 4.8% 4.6%

Accounts Payable 571,307 638,330 (67,023) -10.5% 11.8% 12.5%

Member Payables 331,558 369,873 (38,315) -10.4% 6.9% 7.3%

Patron and Pool Liabilities 546,824 707,776 (160,952) -22.7% 11.3% 13.9%

Other Current Liabilities 198,595 202,775 (4,180) -2.1% 4.1% 4.0% ————— ————— ———— ———— ——— ————

Total Current Liabilities 1,879,192 2,153,403 (274,211) -12.7% 38.8% 42.2%

Non-Current Liabilities

Long-Term Debt

Less Current Portion 546,151 656,968 (110,817) -16.9% 11.3% 12.9%

Other Liabilities 227,377 95,122 132,255 139.0% 4.7% 1.9% ————— ————— ———— ———— ——— ————

Total Non-Current Liabilities 773,528 752,090 21,438 2.9% 16.0% 14.8% ————— ————— ———— ———— ——— ————

Total Liabilities 2,652,720 2,905,493 (252,773) -8.7% 54.8% 57.0%

Minority Interest 377,837 377,962 (125) 0.0% 7.8% 7.4%

Equity

Preferred Stock 68,157 69,964 (1,807) -2.6% 1.4% 1.4%

Common Stock 25 23 2 7.4% 0.0% 0.0%

Equity Certificates and Credits 1,438,435 1,382,232 56,203 4.1% 29.7% 27.1%

Unallocated Equity 300,411 362,761 (62,350) -17.2% 6.2% 7.1% ————— ————— ———— ———— ——— ————

Total Equity 1,807,028 1,814,980 (7,952) -0.4% 37.4% 35.6% ————— ————— ———— ———— ——— ————

Total Liabilities and Equity 4,837,585 5,098,435 260,850) -5.1% 100.0% 100.0%
30

Appendix Table 12—Combined Balance Sheet, 2001-02, Diversified Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Assets

Assets

Current Assets

Cash 174,936 244,846 (69,910) -28.6% 1.6% 2.3%

Accounts Receivable 1,871,757 1,824,980 46,777 2.6% 17.5% 17.0%

Inventory 1,598,291 1,571,728 26,563 1.7% 15.0% 14.7%

Other Current Assets 552,254 785,051 (232,797) -29.7% 5.2% 7.3% ————— ————— ———— ———— ——— ————

Total Current Assets 4,197,238 4,426,605 (229,367) -5.2% 39.3% 41.3%

Investment

Bank of Cooperatives 82,489 87,681 (5,192) -5.9% 0.8% 0.8%

Other Cooperatives 938,367 955,527 (17,160) -1.8% 8.8% 8.9%

Other Investments 407,039 403,260 3,779 0.9% 3.8% 3.8% ————— ————— ———— ———— ——— ————

Total Investments 1,427,895 1,446,468 (18,573) -1.3% 13.4% 13.5%

Net Fixed Assets 2,698,064 2,597,393 100,671 3.9% 25.3% 24.2%

Other Assets 2,357,122 2,250,699 106,423 4.7% 22.1% 21.0% ————— ————— ———— ———— ——— ————

Total Assets 10,680,319 10,721,165 (40,846) -0.4% 100.0% 100.0%

Liabilities

Current Liabilities

Short-Term Debt 1,129,907 662,431 467,476 70.6% 10.6% 6.2%

Accounts Payable 1,370,129 1,472,547 (102,418) -7.0% 12.8% 13.7%

Member Payables 68,898 101,054 (32,156) -31.8% 0.6% 0.9%

Patron and Pool Liabilities 195,584 147,621 47,963 32.5% 1.8% 1.4%

Other Current Liabilities 789,125 1,090,983 (301,858) -27.7% 7.4% 10.2% ————— ————— ———— ———— ——— ————

Total Current Liabilities 3,553,643 3,474,636 79,007 2.3% 33.3% 32.4%

Non-Current Liabilities

Long-Term Debt

Less Current Portion 2,065,904 2,840,327 (774,423) -27.3% 19.3% 26.5%

Other Liabilities 2,122,798 1,142,168 980,630 85.9% 19.9% 10.7% ————— ————— ———— ———— ——— ————

Total Non-Current Liabilities 4,188,702 3,982,495 206,207 5.2% 39.2% 37.1%

————— ————— ———— ———— ——— ————

Total Liabilities 7,742,345 7,457,131 285,214 3.8% 72.5% 69.6%

Minority Interest 188,213 179,892 8,321 4.6% 1.8% 1.7%

Equity

Preferred Stock 132,920 138,529 (5,609) -4.0% 1.2% 1.3%

Common Stock 554,564 559,383 (4,819) -0.9% 5.2% 5.2%

Equity Certificates and Credits 1,865,963 2,075,885 (209,922) -10.1% 17.5% 19.4%

Unallocated Equity 196,314 310,345 (114,031) -36.7% 1.8% 2.9% ————— ————— ———— ———— ——— ————

Total Equity 2,749,761 3,084,142 (334,381) -10.8% 25.7% 28.8% ————— ————— ———— ———— ——— ————

Total Liabilities and Equity 10,680,319 10,721,165 (40,846) -0.4% 100.0% 100.0%
31

Appendix Table 13—Combined Balance Sheet, 2001-02, Fruit/Vegetable Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Assets

Assets

Current Assets

Cash 59,958 48,751 11,207 23.0% 2.0% 1.5%

Accounts Receivable 433,273 475,116 (41,843) -8.8% 14.7% 14.8%

Inventory 1,028,092 1,070,997 (42,905) -4.0% 34.8% 33.3%

Other Current Assets 113,388 136,395 (23,007) -16.9% 3.8% 4.2% ————— ————— ———— ———— ——— ————

Total Current Assets 1,634,712 1,731,259 (96,547) -5.6% 55.3% 53.8%

Investment

Bank of Cooperatives 37,367 42,937 (5,570) -13.0% 1.3% 1.3%

Other Cooperatives 11,401 7,834 3,567 45.5% 0.4% 0.2%

Other Investments 95,988 102,250 (6,262) -6.1% 3.2% 3.2% ————— ————— ———— ———— ——— ————

Total Investments 144,755 153,021 (8,266) -5.4% 4.9% 4.8%

Net Fixed Assets 937,238 935,584 1,654 0.2% 31.7% 29.1%

Other Assets 237,387 397,442 (160,055) -40.3% 8.0% 12.4% ————— ————— ———— ———— ——— ————

Total Assets 2,954,092 3,217,306 (263,214) -8.2% 100.0% 100.0%

Liabilities

Current Liabilities

Short-Term Debt 271,639 332,429 (60,790) -18.3% 9.2% 10.3%

Accounts Payable 268,329 329,221 (60,892) -18.5% 9.1% 10.2%

Member Payables 37,839 25,212 12,627 50.1% 1.3% 0.8%

Patron and Pool Liabilities 228,419 226,662 1,757 0.8% 7.7% 7.0%

Other Current Liabilities 129,972 125,044 4,928 3.9% 4.4% 3.9% ————— ————— ———— ———— ——— ————

Total Current Liabilities 936,198 1,038,568 (102,370) -9.9% 31.7% 32.3%

Non-Current Liabilities

Long-Term Debt

Less Current Portion 1,054,726 1,077,601 (22,875) -2.1% 35.7% 33.5%

Other Liabilities 171,602 197,087 (25,485) -12.9% 5.8% 6.1% ————— ————— ———— ———— ——— ————

Total Non-Current Liabilities 1,226,328 1,274,688 (48,360) -3.8% 41.5% 39.6% ————— ————— ———— ———— ——— ————

Total Liabilities 2,162,526 2,313,256 (150,730) -6.5% 73.2% 71.9%

Minority Interest 15,000 15,000 - 0.0% 0.5% 0.5%

Equity

Preferred Stock 3,909 5,215 (1,306) -25.0% 0.1% 0.2%

Common Stock 27,112 27,115 (3) 0.0% 0.9% 0.8%

Equity Certificates and Credits 670,278 653,861 16,417 2.5% 22.7% 20.3%

Unallocated Equity 75,267 202,859 (127,592) -62.9% 2.5% 6.3% ————— ————— ———— ———— ——— ————

Total Equity 776,566 889,050 (112,484) -12.7% 26.3% 27.6% ————— ————— ———— ———— ——— ————

Total Liabilities and Equity 2,954,092 3,217,306 (263,214) -8.2% 100.0% 100.0%
32

Appendix Table 14—Combined Balance Sheet, 2001-02, Farm Supply Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Assets

Assets

Current Assets

Cash 47,800 28,300 19,500 68.9% 1.8% 1.1%

Accounts Receivable 646,055 499,386 146,669 29.4% 24.6% 19.8%

Inventory 589,437 607,581 (18,144) -3.0% 22.5% 24.1%

Other Current Assets 94,436 83,743 10,693 12.8% 3.6% 3.3% ————— ————— ———— ———— ——— ————

Total Current Assets 1,377,729 1,219,010 158,719 13.0% 52.6% 48.3%

Investment

Bank of Cooperatives 64,641 57,199 7,442 13.0% 2.5% 2.3%

Other Cooperatives 490,325 527,147 (36,822) -7.0% 18.7% 20.9%

Other Investments 80,262 84,440 (4,178) -4.9% 3.1% 3.3% ————— ————— ———— ———— ——— ————

Total Investments 635,228 668,786 (33,558) -5.0% 24.2% 26.5%

Net Fixed Assets 490,769 529,029 (38,260) -7.2% 18.7% 20.9%

Other Assets 117,881 108,612 9,269 8.5% 4.5% 4.3% ————— ————— ———— ———— ——— ————

Total Assets 2,621,607 2,525,437 96,170 3.8% 100.0% 100.0%

Liabilities

Current Liabilities

Short-Term Debt 372,591 375,512 (2,921) -0.8% 14.2% 14.9%

Accounts Payable 416,025 416,160 (135) 0.0% 15.9% 16.5%

Member Payables 19,789 18,476 1,313 7.1% 0.8% 0.7%

Patron and Pool Liabilities 35,213 26,858 8,355 31.1% 1.3% 1.1%

Other Current Liabilities 113,936 92,711 21,225 22.9% 4.3% 3.7% ————— ————— ———— ———— ——— ————

Total Current Liabilities 957,555 929,717 27,838 3.0% 36.5% 36.8%

Non-Current Liabilities

Long-Term Debt

Less Current Portion 570,894 443,057 127,837 28.9% 21.8% 17.5%

Other Liabilities 77,106 76,974 132 0.2% 2.9% 3.0% ————— ————— ———— ———— ——— ————

Total Non-Current Liabilities 647,999 520,031 127,968 24.6% 24.7% 20.6% ————— ————— ———— ———— ——— ————

Total Liabilities 1,605,554 1,449,748 155,806 10.7% 61.2% 57.4%

Minority Interest 10,602 10,618 (16) -0.2% 0.4% 0.4%

Equity

Preferred Stock 360,445 355,625 4,820 1.4% 13.7% 14.1%

Common Stock 11,814 11,915 (101) -0.8% 0.5% 0.5%

Equity Certificates and Credits 397,134 387,699 9,435 2.4% 15.1% 15.4%

Unallocated Equity 236,058 309,832 (73,774) -23.8% 9.0% 12.3% ————— ————— ———— ———— ——— ————

Total Equity 1,005,451 1,065,071 (59,620) -5.6% 38.4% 42.2% ————— ————— ———— ———— ——— ————

Total Liabilities and Equity 2,621,607 2,525,437 96,170 3.8% 100.0% 100.0%
33

Appendix Table 15—Combined Balance Sheet, 2001-02, Grain Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Assets

Assets

Current Assets

Cash 69,348 75,646 (6,298) -8.3% 2.7% 3.2%

Accounts Receivable 412,885 415,143 (2,259) -0.5% 15.8% 17.4%

Inventory 757,022 655,714 101,308 15.5% 29.0% 27.5%

Other Current Assets 125,293 118,434 6,859 5.8% 4.8% 5.0% ————— ————— ———— ———— ——— ————

Total Current Assets 1,364,548 1,264,937 99,610 7.9% 52.3% 53.1%

Investment

Bank of Cooperatives 47,944 47,571 373 0.8% 1.8% 2.0%

Other Cooperatives 207,728 199,918 7,810 3.9% 8.0% 8.4%

Other Investments 67,937 65,918 2,020 3.1% 2.6% 2.8% ————— ————— ———— ———— ——— ————

Total Investments 323,609 313,407 10,202 3.3% 12.4% 13.2%

Net Fixed Assets 822,044 744,997 77,047 10.3% 31.5% 31.3%

Other Assets 100,391 58,800 41,591 70.7% 3.8% 2.5% ————— ————— ———— ———— ——— ————

Total Assets 2,610,592 2,382,141 228,451 9.6% 100.0% 100.0%

Liabilities

Current Liabilities

Short-Term Debt 546,672 437,670 109,001 24.9% 20.9% 18.4%

Accounts Payable 221,336 211,950 9,386 4.4% 8.5% 8.9%

Member Payables 21,244 25,100 (3,856) -15.4% 0.8% 1.1%

Patron and Pool Liabilities 176,178 177,924 (1,746) -1.0% 6.7% 7.5%

Other Current Liabilities 139,639 129,839 9,800 7.5% 5.3% 5.5% ————— ————— ———— ———— ——— ————

Total Current Liabilities 1,105,068 982,484 122,585 12.5% 42.3% 41.2%

Non-Current Liabilities

Long-Term Debt

Less Current Portion 372,303 349,124 23,180 6.6% 14.3% 14.7%

Other Liabilities 45,012 25,210 19,802 78.5% 1.7% 1.1% ————— ————— ———— ———— ——— ————

Total Non-Current Liabilities 417,315 374,333 42,981 11.5% 16.0% 15.7% ————— ————— ———— ———— ——— ————

Total Liabilities 1,522,383 1,356,817 165,566 12.2% 58.3% 57.0%

Minority Interest 74,036 73,819 217 0.3% 2.8% 3.1%

Equity

Preferred Stock 121,230 95,594 25,636 26.8% 4.6% 4.0%

Common Stock 24,351 19,180 5,171 27.0% 0.9% 0.8%

Equity Certificates and Credits 611,909 596,748 15,161 2.5% 23.4% 25.1%

Unallocated Equity 256,684 239,983 16,700 7.0% 9.8% 10.1% ————— ————— ———— ———— ——— ————

Total Equity 1,014,173 951,505 62,668 6.6% 38.8% 39.9% ————— ————— ———— ———— ——— ————

Total Liabilities and Equity 2,610,592 2,382,141 228,451 9.6% 100.0% 100.0%
34

Appendix Table 16—Combined Balance Sheet, 2001-02, Poultry/Livestock Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Assets

Assets

Current Assets

Cash 12,122 24,072 (11,950) -49.6% 1.4% 2.4%

Accounts Receivable 187,484 202,950 (15,466) -7.6% 21.0% 20.2%

Inventory 191,967 176,663 15,304 8.7% 21.5% 17.6%

Other Current Assets 41,855 103,338 (61,483) -59.5% 4.7% 10.3% ————— ————— ———— ———— ——— ————

Total Current Assets 433,428 507,023 (73,595) -14.5% 48.5% 50.5%

Investment

Bank of Cooperatives 3,660 3,172 488 15.4% 0.4% 0.3%

Other Cooperatives 83,743 83,384 359 0.4% 9.4% 8.3%

Other Investments 9,911 40,262 (30,351) -75.4% 1.1% 4.0% ————— ————— ———— ———— ——— ————

Total Investments 97,314 126,818 (29,504) -23.3% 10.9% 12.6%

Net Fixed Assets 235,122 235,990 (868) -0.4% 26.3% 23.5%

Other Assets 127,814 133,987 (6,173) -4.6% 14.3% 13.3% ————— ————— ———— ———— ——— ————

Total Assets 893,678 1,003,818 (110,140) -11.0% 100.0% 100.0%

Liabilities

Current Liabilities

Short-Term Debt 82,157 195,907 (113,750) -58.1% 9.2% 19.5%

Accounts Payable 90,631 101,786 (11,155) -11.0% 10.1% 10.1%

Other Current Liabilities 97,773 82,765 15,008 18.1% 10.9% 8.2% ————— ————— ———— ———— ——— ————

Total Current Liabilities 270,561 380,458 (109,897) -28.9% 30.3% 37.9%

Non-Current Liabilities

Long-Term Debt

Less Current Portion 270,209 286,218 (16,009) -5.6% 30.2% 28.5%

Other Liabilities 65,404 56,004 9,400 16.8% 7.3% 5.6% ————— ————— ———— ———— ——— ————

Total Non-Current Liabilities 335,613 342,222 (6,609) -1.9% 37.6% 34.1% ————— ————— ———— ———— ——— ————

Total Liabilities 606,174 722,680 (116,506) -16.1% 67.8% 72.0%

Minority Interest 2,060 2,080 (20) -1.0% 0.2% 0.2%

Equity

Common Stock 18 29 (11) -37.9% 0.0% 0.0%

Equity Certificates and Credits 204,262 197,809 6,453 3.3% 22.9% 19.7%

Unallocated Equity 81,164 81,220 (56) -0.1% 9.1% 8.1% ————— ————— ———— ———— ——— ————

Total Equity 285,444 279,058 6,386 2.3% 31.9% 27.8% ————— ————— ———— ———— ——— ————

Total Liabilities and Equity 893,678 1,003,818 (110,140) -11.0% 100.0% 100.0%
Appendix Table 17—Combined Balance Sheet, 2001-02, Rice Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Assets

Assets

Current Assets

Cash 29,244 23,602 5,642 23.9% 6.1% 5.0%

Accounts Receivable 95,885 8,877 17,008 21.6% 20.0% 16.7%

Inventory 131,145 134,239 (3,094) -2.3% 27.4% 28.5%

Other Current Assets 4,806 5,821 (1,015) -17.4% 1.0% 1.2% ————— ————— ———— ———— ——— ————

Total Current Assets 261,079 242,539 18,540 7.6% 54.6% 51.4%

Investment

Bank of Cooperatives 7,930 15,339 (7,409) -48.3% 1.7% 3.3%

Other Investments 7,406 17,164 (9,758) -56.9% 1.5% 3.6% ————— ————— ———— ———— ——— ————

Total Investments 15,336 32,503 (17,167) -52.8% 3.2% 6.9%

Net Fixed Assets 200,069 194,434 5,635 2.9% 41.8% 41.2%

Other Assets 1,768 2,358 (590) -25.0% 0.4% 0.5% ————— ————— ———— ———— ——— ————

Total Assets 478,252 471,834 6,418 1.4% 100.0% 100.0%

Liabilities

Current Liabilities

Short-Term Debt 77,826 73,846 3,980 5.4% 16.3% 15.7%

Accounts Payable 26,579 29,521 (2,942) -10.0% 5.6% 6.3%

Member Payables 1,405 1,418 (13) -0.9% 0.3% 0.3%

Patron and Pool Liabilities 34,474 34,921 (447) -1.3% 7.2% 7.4%

Other Current Liabilities 11,854 18,359 (6,505) -35.4% 2.5% 3.9% ————— ————— ———— ———— ——— ————

Total Current Liabilities 152,137 158,065 (5,928) -3.8% 31.8% 33.5%

Non-Current Liabilities

Long-Term Debt

Less Current Portion 62,402 65,671 (3,269) -5.0% 13.0% 13.9% ————— ————— ———— ———— ——— ————

Total Non-Current Liabilities 62,402 65,671 (3,269) -5.0% 13.0% 13.9% ————— ————— ———— ———— ——— ————

Total Liabilities 214,539 23,736 (9,197) -4.1% 44.9% 47.4%

Equity

Common Stock 9 8 1 8.4% 0.0% 0.0%

Equity Certificates and Credits 175,275 64,928 10,347 6.3% 36.6% 35.0%

Unallocated Equity 88,429 3,162 5,267 6.3% 18.5% 17.6% ————— ————— ———— ———— ——— ————

Total Equity 263,713 48,098 15,615 6.3% 55.1% 52.6% ————— ————— ———— ———— ——— ————

Total Liabilities and Equity 478,252 71,834 6,418 1.4% 100.0% 100.0%

35
Appendix Table 18—Combined Balance Sheet, 2001-02, Sugar Cooperatives

2002 2001

2002 2001

Percent Common Sized Statement

$ thousand Difference Change Percent of Total Assets

Assets

Current Assets

Cash 2,636 12,891 (10,255) -79.6% 0.2% 0.9%

Accounts Receivable 116,491 140,490 (23,999) -17.1% 8.0% 9.5%

Inventory 255,551 239,183 16,368 6.8% 17.5% 16.1%

Other Current Assets 22,707 21,452 1,255 5.9% 1.6% 1.4% ————— ————— ———— ———— ——— ————

Total Current Assets 397,385 414,016 (16,631) -4.0% 27.2% 27.9%

Investment

Bank of Cooperatives 18,022 18,891 (869) -4.6% 1.2% 1.3%

Other Cooperatives 12,046 9,607 2,439 25.4% 0.8% 0.6%

Other Investments 56,315 53,983 2,332 4.3% 3.9% 3.6% ————— ————— ———— ———— ——— ————

Total Investments 86,383 82,481 3,902 4.7% 5.9% 5.6%

Net Fixed Assets 683,080 713,001 (29,921) -4.2% 46.8% 48.1%

Other Assets 293,067 273,084 19,983 7.3% 20.1% 18.4% ————— ————— ———— ———— ——— ————

Total Assets 1,459,915 1,482,582 (22,667) -1.5% 100.0% 100.0%

Liabilities

Current Liabilities

Short-Term Debt 147,955 158,363 (10,408) -6.6% 10.1% 10.7%

Accounts Payable 72,267 83,214 (10,947) -13.2% 5.0% 5.6%

Member Payables 1,914 - 1,914 N/A 0.1% N/A

Patron and Pool Liabilities 89,413 97,583 (8,170) -8.4% 6.1% 6.6%

Other Current Liabilities 24,178 24,523 (345) -1.4% 1.7% 1.7% ————— ————— ———— ———— ——— ————

Total Current Liabilities 335,727 363,683 (27,956) -7.7% 23.0% 24.5%

Non-Current Liabilities

Long-Term Debt

Less Current Portion 366,713 386,337 (19,624) -5.1% 25.1% 26.1%

Other Liabilities 98,399 75,150 23,249 30.9% 6.7% 5.1% ————— ————— ———— ———— ——— ————

Total Non-Current Liabilities 465,112 461,487 3,625 0.8% 31.9% 31.1% ————— ————— ———— ———— ——— ————

Total Liabilities 800,839 825,170 (24,331) -2.9% 54.9% 55.7%

Minority Interest 200,244 220,624 (20,380) -9.2% 13.7% 14.9%

Equity

Preferred Stock 147,091 149,388 (2,297) -1.5% 10.1% 10.1%

Common Stock 153 156 (3) -1.9% 0.0% 0.0%

Equity Certificates and Credits 419,673 391,803 27,870 7.1% 28.7% 26.4%

Unallocated Equity (108,085) (104,559) (3,526) 3.4% -7.4% -7.1% ————— ————— ———— ———— ——— ————

Total Equity 458,832 436,788 22,044 5.0% 31.4% 29.5% ————— ————— ———— ———— ——— ————

Total Liabilities and Equity 1,459,915 1,482,582 (22,667) -1.5% 100.0% 100.0%

36
37

Appendix table 19—Average selected ratios by commodity group-Top 100 Cooperatives, 2001-02

Long-Term Return Return

Debt Debt Times Local Fixed Accounts Gross Net on on

Current Quick to to Interest Assets Assets Inventory Receivable Profit Operating Total Members

Ratio Ratio Assets Equity Earned Turnover Turnover Turnover Turnover Margin Margin Assets Equity

——Liquidity—— —————Leverage————— —————————Efficiency——————— ————————Profitability————————

Cotton 2001 1.32 0.69 62.1% 33.4% 3.05 2.88 22.33 7.13 18.36 8.9% -0.7% 5.5% -2.2%

2002 1.48 0.67 52.6% 22.1% 4.42 4.28 25.26 12.45 22.37 14.1% 4.2% 14.5% 29.8%

Dairy 2001 1.31 0.91 61.0% 36.4% 4.50 5.79 29.47 59.06 21.15 9.3% 1.4% 7.0% 15.3%

2002 1.30 0.88 59.4% 32.7% 4.05 6.04 30.27 110.88 23.90 9.3% 1.1% 5.6% 13.6%

Diversified 2001 1.21 0.83 73.3% 114.9% 1.21 2.15 9.12 16.53 12.09 9.6% -0.8% 2.4% -4.2%

2002 1.13 0.76 76.6% 173.5% 0.51 2.02 8.29 17.06 11.34 9.5% -2.2% 0.1% -39.9%

Fruit/Vegetable 2001 1.55 0.67 69.7% 79.9% 1.70 2.12 11.91 33.98 11.04 20.5% 0.9% 4.6% 7.4%

2002 1.59 0.67 68.9% 57.9% 3.76 2.19 10.04 42.43 12.32 21.1% 0.9% 5.5% 0.3%

Farm Supply 2001 1.36 0.63 57.1% 38.4% 2.05 2.88 12.76 9.92 16.18 16.4% 1.0% 5.6% 6.3%

2002 1.40 0.72 57.7% 44.9% 3.90 2.46 11.90 8.81 11.55 17.4% 1.6% 5.5% 6.5%

Grain 2001 1.22 0.58 60.2% 38.7% 2.70 2.62 8.79 9.79 20.97 13.2% 1.3% 5.8% 9.7%

2002 1.24 0.56 62.2% 40.1% 4.65 2.46 8.51 8.32 17.78 12.5% 1.1% 4.7% 8.5%

Poultry/Livestock 2001 1.25 0.92 81.9% 202.0% 0.56 3.67 59.72 209.93 11.85 4.5% 0.4% 2.7% -84.9%

2002 1.44 0.93 81.0% 472.8% 1.60 4.01 50.81 326.45 11.86 5.7% 1.3% 5.6% -44.3%

Rice 2001 1.69 0.89 47.8% 33.3% 7.48 2.36 5.48 9.63 13.11 32.1% 2.1% 5.9% 11.3%

2002 1.72 0.95 47.8% 32.5% 5.82 2.25 5.11 9.87 10.85 32.0% 2.0% 5.7% 10.0%

Sugar 2001 1.20 0.53 65.9% 90.8% 0.85 1.10 2.04 6.77 10.49 22.8% -1.2% 2.5% -8.7%

2002 1.23 0.48 65.0% 84.8% 1.45 1.01 1.96 5.85 11.93 24.2% 1.2% 3.4% 3.1%
U.S. Department of Agriculture

Rural Business–Cooperative Service

Stop 3250

Washington, D.C. 20250-3250

Rural Business–Cooperative Service (RBS) provides research,

management, and educational assistance to cooperatives to

strengthen the economic position of farmers and other rural

residents. It works directly with cooperative leaders and

Federal and State agencies to improve organization,

leadership, and operation of cooperatives and to give guidance

to further development.

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

rural residents develop cooperatives to obtain supplies and

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

sell; (2) advises rural residents on developing existing

resources through cooperative action to enhance rural living;

(3) helps cooperatives improve services and operating

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

public on how cooperatives work and benefit their members

and their communities; and (5) encourages international

cooperative programs. RBS also publishes research and

educational materials and issues Rural Cooperatives magazine.

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

discrimination in all its programs and activities on the basis of

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

political beliefs, sexual orientation, and marital or family

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

Persons with disabilities who require alternative means for

communication of program information (braille, large print,

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

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

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

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

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

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

opportunity provider and employer.