Abstract

Analysis of Balance Sheets of Local Farm Supply

and Marketing Cooperatives

E. Eldon Eversull and David S. Chesnick

Rural Business and Cooperative Development Service

U.S. Department of Agriculture

This report analyzes the balance sheets of local farm wppiy arA mar&ting cooperatives for 1983-90. The data in this report represent tour ~c~:x)pe:at!vc:

types and four cooperative sizes. Trends for this time period for ‘Ta!(:’ ;;ai;rric<; ,

sheet classifications were made by cooperative types and sizes. MI.:: rf~~-: L%‘_;

was used to compare and contrast trends by size, type, and profitai;i$,

Key words: Balance sheet, cooperatives, farm supply, marketing, Sales. and

financial ratios.

Rural Business and Cooperative Development Service

RBCDS Research Report 138

January 1995

Price: domestic-$4.00; foreign-$4.50
Preface

This report studied the balance sheets of 1,337 cooperatives from 1983

through 1990. Trends of the major balance sheet classifications and financial

ratios are presented for four cooperative sizes and types. The information in this

report should provide cooperative managers and boards of directors a basis to

compare their cooperatives’ historical performance with representative cooperative data.

The authors wish to thank the cooperatives that provided their financial

statements to Rural Business and Cooperative Development Service and thereby made this report possible. Special thanks are given to David E. Cummins

and Jim J. Staiert, Rural Business and Cooperative Development Service, for

reviewing the initial draft of this report.
Contents

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

Profile of Respondent Cooperatives .................................................................. 1

Cooperative Size ........................................................................................ 2

Cooperative Type ....................................................................................... 2

Cooperative Profitability ............................................................................. 4

Sales Mix .................................................................................................. .4

Balance Sheet Definitions.. ............................................................................... .4

Analysis of the Balance Sheet ........................................................................... 6

Current Assets .......................................................................................... .6

Investments and Other Assets................................................................... 9

Property, Plant, and Equipment ................................................................. 9

Current Liabilities ....................................................................................... 9

Long-term Debt ........................................................................................ 10

Member Equities ...................................................................................... 10

Financial Ratio Analysis................................................................................... 12

Liquidity Ratios ......................................................................................... 12

Leverage Ratios ....................................................................................... 12

Activity Ratios .......................................................................................... 17

Profitability Ratios .................................................................................... 18

Conclusions ..................................................................................................... 21

Bibliography ...................................... ............................................................... 23

Appendix A...................................................................................................... 24

Appendix B....................................................................................................... 33

. . .

lu
Highlights

Balance sheets of 1,337 local farm supply and marketing cooperatives, from

1983 to 1990, were analyzed in this report. At least 390 cooperatives in

each of the years were studied. The highest number of cooperatives studied

in one year was 872 in 1987.

Cooperatives were divided into four groups based on their mix of net sales

between supplies sold and farm products marketed. They were also divided

into four size categories, based on their total sales volume. An analysis was

also made of whether the cooperative was profitable or unprofitable based

on income from own operations.

Net sales for all respondent cooperatives decreased throughout the early

198Os, but subsequently rebounded. In 1990, the average net sales for all

cooperatives studied was $6.7 million. More than 50 percent were small

cooperatives, with sales of less than $5 million during the 8 years studied.

These cooperatives not only were important to their member/patrons, but

also were an important asset to their rural communities. They were usually

one of the community’s larger employers, with an average payroll of

$400,000.

A balance sheet states the financial position of the cooperative at the end of

its operating year. The balance sheet represents the cooperative’s assets,

liabilities, and member equity, and their relationship to each other. These

items varied by cooperative size and type, but there was little change in total

assets of all cooperatives during the study period. Current assets of all

respondents averaged 48 percent of total assets, investments in other cooperatives, 20 percent; property, plant, and equipment, 30 percent; and other

assets, 2 percent.

Member equities averaged 58 percent of total liabilities and member equity.

Total liabilities made up the remainder. Of it, 32 percent was current liabilities and 10 percent, long-term debt.

Long-term debt as a percent of total assets declined during the study period

for all cooperative sizes and types. Long-term debt peaked in 1984 at 15.9

iv
Highlights

percent. As a percent of total assets, long-term debt generally declined and

was 9 percent in 1990.

Financial ratio analysis was used in this study to compare between years

and different sizes and types of cooperatives. The ratios contrasted profitable and unprofitable cooperatives. The financial ratio analysis revealed

these findings:

. Return on total assets (net income/total assets) was generally the highest

over the last 3 years of this study.

. Return on allocated equity before taxes (net income before taxes/allocated equity) rose from 8.6 percent in the early 1980s to an average of over

13.5 percent for all cooperatives in 1990.

. The current ratio (current assets/current liabilities) was fairly steady

around 1.5 during the study period while the quick ratio (current assetsinventory/current liabilities) ranged from 1 to 0.6.

l Total debt-to-asset ratio (short- and long-term debt/total assets) was 0.3 in

1983 and fell to 0.2 by 1990.

l The fixed asset turnover ratio (net sales/property, plant, and equipment)

was lowest in 1987. Over the last 3 years, the ratio increased and averaged at least 9.1 percent.
Analysis of Balance Sheets of Local Farm

Supply and Marketing Cooperatives

E. Eldon Eversull and David S. Chesnick

Rural Business and Cooperative Development Service

U.S. Department of Agriculture

Local agricultural cooperatives play a vital

role in providing goods and services to their

patrons and the rural community. This report analyzes their balance sheets and will be useful for

comparative purposes by cooperative managers,

directors, and members. Ratio analysis and trends

will be discussed, and to make the information

more useful, the presentation is subdivided into

four cooperative sizes and types.

The 1,337 local cooperatives surveyed had

farm supply sales (feed, petroleum, fertilizer . ..)

that averaged $3.1 million per year and marketing

sales (corn, wheat, soybeans . ..) that averaged $4

million per year from 1983 through 1990.

Additionally, they provided services (product

delivery, fertilizer application, grain hauling and

storage . . . ) that averaged $0.4 million per year.

These cooperatives were not only important to

their member/patrons, but also an important asset

to their rural communities. The cooperatives paid

an average of $26,000 in annual property taxes.

They were also a large employer in their communities, with an average annual payroll of $400,000.

In a companion report [Chesnick and

Eversull], the income statements of local cooperatives were discussed. This report will focus on the

balance sheet and operational performance of cooperatives. The balance sheet represents a financial

position at a point in time. It is usually presented in

an annual report with the income statement, statement of changes in patrons’ equity, and since 1987,

a statement of cash-flows. The annual report should

also contain notes to the financial statements and,

although not frequently for small cooperatives, contain a verbal statement from the manager and president of the board of directors on the cooperative’s

operating results from the last year and its future

plans.

The typical cooperative balance sheet contains

six main sections: current assets, investments, fixed

assets, current liabilities, long-term liabilities, and

member equities. As implied by its name, a balance

sheet must balance-total assets must equal total

liabilities plus member equities. A balance sheet

that summarizes the data from all cooperative

respondents will be presented later in this report.

PROflLE OF RESPONDENT COOPERATIVES

Rural Business and Cooperative Development

Service conducted annual surveys of farmer cooperatives which were the basis for the Farm Supply

and Services (FSS) database used for this study. To

be included, a cooperative had to sell some farm

supplies. No cooperative that exclusively markets

members’ products was included. In addition to

selling farm supplies, the cooperative also had to

provide an annual report that had a detailed

income statement. The annual reports used were

for the years 1983 through 1990 and contain information from 1,337 farm supply and marketing

cooperatives. Not all cooperatives responded in

every year; there was an average of 596 per year

that provided sufficient data for inclusion in this

report.

More than 67 percent of the respondents used

in this report operated in the Corn Belt, Lake States,

and Northern Plains (figure 1 and appendix table

Al). The Corn Belt and Northern Plains regions

were somewhat overrepresented in this study compared with all U.S. farm supply and grain marketing cooperatives, while those in the Northeast and

Appalachia were underrepresented. To obtain a

more complete understanding of the local cooperatives’ business, information in this report will be
divided into a cross section of four sizes and four

types.

Cooperative Size

Cooperatives were grouped into four sizes by

sales volume. Sales volume figures were actual. No

attempt was made to deflate these values.

Groupings used were: 1) small, less than $5 million;

2) medium, from $5 million to $10 million; 3) large,

more than $10 million to $20 million; and 4) super,

more than $20 million.

A $9 million cooperative that exclusively marketed grain, for instance, was small relative to most

grain marketing organizations. A strictly farm supply cooperative with sales of $9 million, however,

was quite substantial. In classifying by total sales

alone, product mix was ignored.

Cooperative Type

To account for differences in operations and

orientation based on product mix, cooperatives

were grouped into one of four descriptive categories: 1) specialized marketing cooperative; 2)

mixed marketing cooperative; 3) mixed farm supply cooperative; and 4) specialized farm supply

cooperative. These descriptions were chosen to represent business operations of these cooperatives as

closely as possible.

In this study, a specialized marketing cooperative derived more than 75 percent of its sales volume from marketing member and nonmember farm

products. This meant that as much as 24 percent of

the sales volume of these cooperatives could be

from selling farm supplies. The products marketed

were grains (and oilseeds), milk, and other.

Figure 1 -Respondent cooperatives location, by region
Between 50 and 75 percent of its total sales

were derived from product marketings for a mixed

marketing cooperative. The remaining 24 to 49 percent of revenues came from sales of farm supplies

and other sources.

A mixed farm supply cooperative derived

between 50 and 90 percent of its sales volume from

selling farm supplies to members and nonmembers.

This meant that between 11 and 49 percent of these

cooperatives’ sales volume was from marketing

farm products. Farm supplies sold included feed,

seed, fertilizer, crop protectants, petroleum, and

other.

The final type of cooperative was a specialized

farm supply cooperative that derived more than 90

percent of its sales volume from selling farm supplies to members and nonmembers. By design for

this study, most of the cooperatives of this type

marketed few farm products. More than 99 percent

of their sales were derived from farm production

supplies.

While this report focuses on farm supply

cooperatives, 25 percent of the average number of

596 cooperatives per year were specialized marketing cooperatives; 27 percent, mixed marketing

cooperatives; 10 percent, mixed farm supply cooperatives; and 38 percent, specialized farm supply

cooperatives (table 1). Of the respondents, 55 percent were small, 25 percent, medium; 13 percent,

large; and 7 percent, super. Both types of marketing

cooperatives tended to be larger cooperatives while

the specialized farm supply cooperatives were most

often small. Most respondents were small and tended to be farm supply cooperatives.

Clearly, the bulk of respondents are in the

Northern Plains, Corn Belt, and Lake States (appendix table A2). The number of respondents for each

year varied considerably. The most respondents

were in 1987, with 872 (appendix table A3), while

the fewest (393) were in 1984. Few cooperatives had

responses for all years, so the data between years

may not be completely comparable. The data in the

FSS database were also not randomly selected and

may not be statistically valid to draw industrywide conclusions. However, the samples are large

and represent a cross section of cooperatives

throughout the United States. Therefore, the data

provide a unique look at cooperative operations.

Table i-Profile of respondent cooperatives by size and type, average of 1983-90

Size Specialized Mixed Mixed Specialized

marketing marketing farm supply farm supply Total

Small 50 6 1 31 184 326

Medium 41 54 18 37 150

Large 35 28 9 5 77

Super 20 19 3 1 43

Total 146 162 61 227 596

Small 34.25 37.45 49.80 81.05 54.70

Medium 28.08 33.51 29.76 16.14 25.17

Large 23.97 17.14 15.18 2.26 12.92

Super 13.70 11.89 5.26 .55 7.21

Average 24.50 27.18

Number

Fercen t

10.23 38.09 100.00

3
Cooperative Profitability

Income from own operations was used in this

study to determine profitable and unprofitable

cooperatives. A profitable cooperative, in this

study, had to have income for at least 50 percent of

the years for which data were available. This

method neutralized the magnitude of profits and

losses and concentrated on whether the operations

of the cooperative were sufficient to cover expenses

in a majority of the years. There were 298 cooperatives or 22.3 percent classified as unprofitable in

this study. On average, 82.5 percent of the cooperatives in each year were profitable.

Sales Mix

The respondent cooperatives had five major

farm supply categories and two marketing (table 2).

Petroleum was the dominant production supply item

sold by small and medium cooperatives. Sales of

small cooperatives, the most numerous respondent

group, averaged $2.2 million over the study period.

Farm production supplies represented the bulk (68.8

percent) of their sales. As cooperatives grew in size,

the importance of farm supplies declined (48.8 percent for medium-sized cooperatives, 36.3 percent for

large, and 28.9 percent for super).

Average sales of specialized and mixed marketing cooperatives were $11 million and larger

than both categories of farm supply cooperatives.

As defined, marketing made up the majority of

their sales. Feed and fertilizer were the most important farm supplies sold for both types of marketing

cooperatives.

Sales of mixed farm supply cooperatives averaged $7.1 million and $3.2 million for specialized farm

supply cooperatives. Petroleum was the most important farm supply item sold, especially for specialized

farm supply cooperatives (40.3 percent of sales).

BALANCE SHEET DEFINITIONS

The assets in a balance sheet are what the

cooperative owns and are usually listed in decreasing order of their liquidity-time it would take to

sell them for cash. The liabilities are what the cooperative owes to others and are usually presented in

a similar decreasing order. The equity section represents members’ investment in their cooperative.

Current assets--are the most liquid assets on the

cooperative balance sheet. Cash and cash equivalents

represent monies either in the bank, in short term

investments, or on hand at the cooperative.

Accounts receivable is money that is due the

cooperative (i.e., a credit sale where the full

purchase price was due from the customer in 90

days). Inventories are products the cooperative has

purchased from patrons to market and supplies the

cooperative hopes to sell to patrons. Prepaid

expenses are those paid up-front and then expensed

as period costs throughout the fiscal year (taxes or

insurance).

Investments in other cooperatjves-represent

stock held in regional cooperatives that it markets

products through or purchases supplies from, plus

stock in the Banks for Cooperatives or CoBank, their

lending source. These investments are purchased

stock as well as stock (patronage) paid back to the

cooperative based on use. The more sales through or

purchases from the regional cooperative or borrowing

from the bank, the larger the investment. Other assets

are usually past due accounts receivable not yet

considered as bad debt losses.

Property, plant, and equipment--are the fixed

assets of the cooperative (i.e., grain bins, office

equipment, warehouse, gas station). Accumulated

depreciation is the sum of all the year’s

depreciation expenses taken on the assets. Net

property, plant, and equipment (PP&E) is the book

value of the fixed assets-their cost minus

accumulated depreciation.

Total assets--are what the cooperative ownscurrent assets, plus investments, plus fixed assets

equal total assets.

Current liabilities-are obligations the cooperative

must pay within the next year. Accounts payable is

money owed, usually to suppliers (sometimes

classified as accounts payable-trade accounts).

Accrued expenses and accrued taxes are unpaid

expenses. Accrued expenses often include unpaid

salaries and benefits earned by employees. Accrued

taxes often include property and sales taxes that

have been incurred but not yet paid. Other liabilities

in this study are most often accounts payable4
gable Z-Percentage breakdown of total sales, by size and type, average of 1983-90

Item Small Medium Large Super

Farm supplies sold:

Feed

Seed

Fertilizer

Crop protectants

Petroleum products

Other

Total

Farm products marketed:

Grain

Milk

Other

Total

Total products sold

and marketed

Based on sales of:

Farm supplies sold:

Feed

Seed

Fertilizer

Crop protectants

Petroleum products

Other

Total

Farm products marketed:

Grain

Milk

Other

Total

Total products sold

and marketed

Based on sales of:

Percent

9.34 10.02 8.45 7.09

1.28 1.69 1.08 1.22

11.10 9.39 8.33 6.85

6.23 5.66 4.79 4.04

25.86 14.57 7.42 6.65

15.02 7.45 6.25 3.06

68.82 48.79 36.31 28.92

26.40 47.23

2.47 2.29

2.31 1.69

31.18 51.21

100.00 100.00

$2,231,323 $6,759,790

Specialized Mixed

marketing marketing

61.73 70.35

1.63 .31

.32 .42

63.69 71.08

100.00 100.00

$12,984,414 $31,465,135

Mixed Specialized

farm supply farm supply

Percent

4.53 9.54 16.62 10.92

.90 1.33 1.88 1.85

4.73 8.32 11.90 15.74

2.91 5.11 6.11 8.75

1.75 7.94 19.07 40.28

.99 4.47 12.63 21.61

15.82 36.71 68.21 99.15

79.75 60.37 30.89 .72

2.70 1.99 .05

1.72 .92 .85 .13

84.18 63.29 31.79 .85

100.00 100.00 100.00 100.00

$11,712,030 $11 ,018,508 $7,120,911 $3,199,379

5
grain trade. This represents grain delivered and

sold to the cooperative by its patrons but the

patrons have not yet been paid. Retired equity

represents allocated equity that the cooperative is

revolving to its members but not yet paid as of the

closing date of the books. This equity accumulated

from past sales to or purchases from patronsusually revolved to members on a set schedule

(often 7 or more years later). Patronage refunds and

dividends are monies declared but not yet paid to

members for current use of the cooperative and for

investing in preferred stock. Cooperatives are

required to pay at least 20 percent in cash, with the

rest becoming allocated equity to be revolved to the

members at a later date. The refunds are based on

cents per product (weight or bushel) sold through

the cooperative or on cents per dollars purchased of

farm supplies from the cooperative. The refunds are

determined by the board of directors. Dividends

paid on preferred stock ownership are based on a

set percent return on the investment. Current portion

of debt (short and long term) is the final current

liability. It is the money owed (principle) for

borrowing money. Long-term debt typically is used

to finance long-term assets, while short-term debt is

usually used for operating or seasonal loans.

Long-term debtincludes notes, bonds, and

mortgages not due within the current year.

Member equitieeare member and patron

investments in the cooperative. The two main types

are allocated and unallocated. Allocated equity is

assigned to members in one of two forms. Each

member has one share and one vote. The other

form includes noncash allocated certificates which

are member investments in the cooperative based

on use. Allocated equity could be classified as stock

if the cooperative was incorporated or certificates

of ownership if the cooperative was not

incorporated. In most cases, cooperative stock or

ownership certificates are not generally traded

between members and, if sold, require board

approval. Unallocated equity is the retained earnings

of the cooperative. Unallocated equity is often

thought of as nonmember-nonpatronage business

but can also be based on member business.

ANALYSIS OF THE BALANCE SHEET

The balance sheet of a local cooperative states

its financial position at the end of an operating

period-a 1Zmonth fiscal year. The balance sheet

represents the cooperative’s assets, liabilities, and

member equity, and their relationship to each other.

This report analyzes the balance sheets of 1,337

local cooperatives. Comparing a large number of

cooperative sizes and types over an &year period

provides examples of typical levels for assets, liabilities, and member equities. Balance sheets for

respondents are presented by cooperative size and

type in tables 3 and 4. Appendix tables A4 and A5

show an abbreviated balance sheet by year.

Each balance sheet category is listed as a percentage of total assets. The dollar amount of total

assets the balance sheets represent is listed at the

bottom of both tables. By cooperative size, total

assets increased from $1.2 million for small cooperatives to $11.2 million for super-size cooperatives.

Comparing total assets to sales (table 2), sales were

about double the asset levels for small, medium,

and large cooperatives, and about triple for super

size. By cooperative type, total assets were $3.8 million for specialized marketing cooperatives, $3.5

million for mixed marketing, $2.9 million for mixed

farm supply, and $1.7 million for specialized farm

supply. For both types of marketing cooperatives,

sales were about triple their asset levels while sales

for farm supply cooperatives were about twice their

asset levels.

Current Assets

Looking first at current assets, cash and cash

equivalents as a percent of total assets decreased as

cooperative size increased. For small cooperatives,

cash was 10 percent of total assets. But this dropped

to 5 percent for super cooperatives. Specialized

marketing cooperatives held the most cash by type

(8.1 percent), and mixed marketing cooperatives

held the second largest percentage (6.3).

Over the whole study period, current assets

increased by 1.5 percent per year for all cooperatives. Most of this growth occurred in 1988 when
gable +-Balance sheet by cooperative size, as a percent of total assets, average of 1993-90

Item Small Medium Large

Percent

-

super

Assets:

Current assets

Cash and cash equivalents

Accounts receivable

Inventories-grain

-farm supplies

Prepaid expenses

Other current assets

Total current assets

10.01 7.09 5.25 4.97

10.12 12.42 12.61 13.13

5.43 5.48 5.88 9.99

12.89 18.29 17.54 14.54

1.13 1.22 .90 1.19

5.57 4.87 5.51 6.61

45.14 47.37 47.70 50.43

Investments and other assets

Investments-ther cooperatives

-Bank for Cooperatives

Total

Other assets

23.83 19.85 16.27 12.69

3.00 2.45 2.57 3.75

26.83 22.30 18.85 16.44

1.71 1.82 1.51 .98

Property, plant, and equipment

Net PPBE 26.31 28.51 31.94 32.15

Total assets 100.00 100.00 100.00 100.00

Liabilities and member equities:

Current liabilities

Accounts payable

Accrued expenses

Accrued taxes

Other liabilities

Retired equity

Patronage refunds and dividends

Current portion of debt

Total current liabilities

3.94 4.56 5.42 5.66

1.12 1.24 1.57 1.88

1.50 1.66 1.64 1.60

8.46 7.94 7.70 10.33

1.26 .67 .32 .22

1.99 1.41 1.37 1.05

8.31 9.53 13.05 13.03

26.58 27.01 31.07 33.77

Long-term debt 7.48 7.80 9.63 12.98

Total liabilities 34.06 34.82 40.70 46.74

Member equities:

Preferred stock

Common stock

Other equities

Unallocated equity

Total member equities

Total liabilities & member equities

13.42 18.05 10.83 10.70

9.30 9.94 9.88 9.09

31.89 25.37 27.54 24.42

11.33 11.82 11.04 9.05

65.94 65.18 59.30 53.26

100.00 100.00 100.00 100.00

Based on total assets of: $1 ,177,573 $2,701,511 $5,027,459 $11,219,478

7
Table d--Balance sheet by cooperative type, as a percent of total assets, average of 1983-90

-

Specialized

marketing

Mixed

marketing

Mixed

farm supply

Specialized

farm supply

Assets:

Current assets

Cash and cash equivalents

Accounts receivable

Inventories-grain

-farm supplies

Prepaid expenses

Other current assets

Total current assets

8.09 6.29 4.23 4.24

6.59 10.44 14.08 19.27

16.79 10.22 2.49 3.14

6.23 13.41 18.50 23.07

.65 .92 1.81 1.05

9.85 8.79 3.34 2.43

48.20 50.07 44.45 53.20

Investments and other assets

Investments-ther cooperatives

-Bank for Cooperatives

Total

Other assets

12.00 14.50 19.35 15.23

2.89 2.97 3.70 3.29

14.88 17.46 23.04 18.52

1.57 .90 .83 1.83

Property, plant, and equipment

Net PP&E

Total assets

35.35

100.00

31.56

100.00

31.68

100.00

26.45

100.00

Liabilities and member equities

Current liabilities

Accounts payable

Accrued expenses

Accrued taxes

Other liabilities

Retired equity

Patronage refunds and dividends

Current portion of debt

Total current liabilities

4.03 4.95 5.49 6.81

1.18 1.78 1.75 1.90

2.26 1.54 1.64 1 .oo

16.12 12.75 5.26 2.49

.64 .88 .18 .37

1.16 1.51 1.06 1.30

10.40 11.48 12.15 14.76

35.78 34.89 27.52 28.64

Long-term debt 11.59 9.56 11.53 11.13

Total liabilities 47.37 44.45 39.05 39.77

Member equities:

Preferred stock

Common stock

Other equities

Unallocated equity

Total member equities

13.25 12.23 11.70 10.84

3.24 3.90 21.27 8.62

25.90 28.31 17.55 32.01

10.24 11.11 10.43 8.75

52.63 55.55 60.95 60.23

Total liabilities & member equities 100.00 100.00 100.00 100.00

Based on total assets of: $3,817,650 $3,484,816 $2,875,063 $1,722,222

8
inventories, especially for marketing cooperatives,

increased dramatically.

Accounts receivable in this study are farm

supply trade accounts, not grain trade receivables.

Farm supply and grain trade receivables were separated (grain trade receivables were classified as

“other” current assets) to allow ratio analysis in a

future section of this study. Accounts receivable for

farm supply sales by size was between 10.1 and

13.1 percent of total assets across cooperative sizes.

By type, both farm supply cooperatives seem to

have a much higher receivable balance, 14.1 to 19.3

percent versus 6.6 to 10.4 for marketing cooperatives. But, marketing cooperatives’ accounts receivable balances were lowered because the grain trade

receivables were classified as “other.” So, if “other”

current assets were added to accounts receivable,

marketing cooperatives receivable balances

increased to 16.6 to 19.1 percent of total assets and

farm supply cooperatives went to 17.4 to 21.7 percent of total assets.

Inventories as a percent of total assets

increased as size increased (18.3 percent for small

and 24.5 percent for super cooperatives). The total

inventory level was about the same for marketing

and farm supply cooperatives. Prepaid expenses

averaged less than 2 percent of total assets for all

cooperative sizes and types.

Investments and Other Assets

All cooperative sizes and types had about 3

percent of their total assets invested in the Banks

for Cooperatives or CoBank. Investments in other

cooperatives dropped from a high of 23.8 percent

for small cooperatives to 12.7 percent for super

cooperatives. Across cooperative types, marketing

cooperatives had less invested than farm supply

cooperatives. Other assets often included overdue

accounts receivable and were less than 2 percent of

total assets for all cooperative sizes and types.

Property, Plant, and Equipment

Property, plant, and equipment (PP&E) as a

percent of total assets tended to increase with cooperative size. Small cooperatives had 26.3 percent of

their assets in PP&E while super cooperatives had

32.2. Specialized marketing cooperatives, which

probably had extensive grain storage and handling

facilities, had, at 35.4, the highest percent of their

assets tied to PP&E. For all cooperatives, PP&E

declined on average 3.4 percent per year over the

study period.

Current Liabilities

Accounts payable were only those payables

due on trade accounts. Those due to grain trading

and other related marketing activities were included in other liabilities to allow ratio analysis in a

future section of this study. Over the &year period,

current liabilities grew an average 2 percent per

year.

Small cooperatives had the least amount of

accounts payable as a percent of total assets. When

other liabilities were included with accounts

payable, small, medium, and large cooperatives

had between 12.4 and 13.1 percent of these liabilities relative to total assets. Super cooperatives had

16 percent.

Both types of marketing cooperatives had

more accounts payable and other liabilities than

both types of farm supply cooperatives. Specialized

marketing cooperatives had the highest accounts

payable and other liabilities balance (20.2 percent)

but were closely followed by mixed marketing

cooperatives (17.7 percent). Both types of farm supply cooperatives, with less marketing sales, ranged

7 to 10 percentage points lower in the accounts

payable and other liabilities categories.

Accrued expenses and accrued taxes averaged

less than 2.5 percent of total assets for all sizes and

types of cooperatives. Retired equity averaged less

than 1.5 percent of total assets for all cooperative

sizes and types.

Cash patronage refunds and dividends as a

percent of total assets decreased as cooperative size

increased, 2 percent for small cooperatives to 1 .l

percent for super cooperatives. For all cooperative

sizes and types, cash patronage refunds and dividends never exceeded 2 percent during the study

period. As a percent of net income before taxes,

cash patronage refunds and dividends ranged from

9
14.9 percent for medium cooperatives to 32 percent

for specialized farm supply cooperatives. The average cash patronage refund and dividend paid in

cash was 19.1 percent of net income before taxes.

The last current liability on tables 3 and 4 is

the current portion of both short- and long-term

debt. The current portion is combined because

many annual reports analyzed did not differentiate

between the two. As a percent of total assets, current debt grew as cooperative size increased and

grew across cooperative types. Current debt was 8.3

percent for small cooperatives and at least 13 percent for large and super cooperatives. By type, current debt increased from 10.4 percent for specialized marketing cooperatives to 14.8 percent for

specialized farm supply cooperatives. Because the

majority are small farm supply cooperatives and

the current portion of debt is lower for small cooperatives, large and super size farm supply cooperatives have significantly more current debt. In fact,

large specialized farm supply cooperatives averaged 15.8 percent and super ones averaged 15.1

percent, thus pushing up the average for all specialized farm supply cooperatives.

Long-term Debt

Long-term debt as a percent of total assets has

declined during 1983-90 for all cooperative sizes

and types. On average, long-term debt declined

12.6 percent per year. Long-term debt peaked in

1984 at 15.9 percent and generally declined to 9 percent in 1990. As cooperative size increases, longterm debt grew from 7.5 percent for small cooperatives to 13 percent for super cooperatives.

Long-term debt was highest for specialized marketing cooperatives (11.6 percent) and lowest for

mixed marketing (9.6 percent). The farm supply

cooperatives averaged around 11 percent.

About 35 percent (206) of the cooperatives provided information that broke out their sources of

debt (short and long term combined). Four categories were identified: 1) Banks for Cooperatives

and CoBank; 2) commercial banks; 3) debentures or

notes; and 4) other.

A regional cooperative was most often the

source in the “other” category. The local cooperative often purchases its farm supplies and markets

its grain through a regional cooperative, which

becomes a source of debt capital. The debt may be

short-term operating capital or long-term investment capital.

Banks for Cooperatives and CoBank were the

most frequent source of debt capital (appendix

tables A6 and A7) for all cooperative sizes and

types. Others were regional cooperatives (15.1 percent), commercial banks (8.2), and debentures or

notes (5.6). Over the study period, funding by

Banks for Cooperatives and CoBank declined

slightly while others increased slightly.

By cooperative size, super-size cooperatives

most often used Banks for Cooperatives and

CoBank as sources of debt capital (79 percent) compared with small cooperatives (57.2 percent, table

5). This importance was even more apparent in dollar terms, debt doubled between each size-$0.21

million for small, $0.45 million for medium, $1 million for large, and $2.4 million for super-size cooperatives. Small cooperatives received almost a third

of their debt capital from regional cooperatives.

Mixed farm supply cooperatives received the

highest percentage of funding from Banks for

Cooperatives and CoBank (82.4 percent).

Specialized farm supply cooperatives borrowed the

least overall and only 55.5 percent from the cooperative banks. Mixed farm supply cooperatives had

the largest amount of debt financing of these selected cooperatives, averaging $0.85 million. Mixed

marketing had $0.76 million, specialized marketing

$0.56 million, and specialized farm supply $0.27

million. At 36 percent of their debt capital, specialized farm supply cooperatives used regional cooperative funding almost 3 times as often as any other

type of cooperative.

Member Equities

Member equities to total assets represent the

percent of the cooperative’s assets owned by the

members, with creditors claiming the rest. Over all

sizes and types of cooperatives, members averaged

57.5 percent ownership of the cooperative. Member

equities declined 1.1 percent per year.

10
Members of small cooperatives had the highest percentage of ownership (65.9 percent) while

members of super-size cooperatives had the lowest

(53.3 percent). By cooperative type, members of

farm supply cooperatives owned at least 60.2 percent of their cooperatives’ assets. Both types of marketing cooperatives had lower member ownership-52.6 percent for specialized marketing and

55.6 percent for mixed marketing cooperatives.

Member equities consisted of both allocated

(preferred, common, and other kinds of ownership

certificates) and unallocated equity. For all sizes

and types of cooperatives, allocated equity declined

relative to unallocated equity. Allocated equity fell

from 81 percent of all equity in 1984 to 74 percent in

1990 (figure 2). Member equity (in nominal dollars)

declined an average of 0.2 percent per year.

Allocated equity declined 1.5 percent per year

while unallocated equity grew by 3.6 percent per

year.

Allocated equity as a percentage of total assets

was highest for small cooperatives at 54.6 percent

and lowest at 44.2 percent for super cooperatives.

Figure z-Allocated and Unallocated Equity as a

Percentage of Total Equity

Percent

100

Allocated equity

Unallocated equity

01 ’

I I I I I I I

1983 84 85 86 87 88 89 90

Table &Source of cooperative debt for selected cooperatives by size and type, average of 1983-90

Item Small Medium wle Super

Percent

Banks for Cooperatives and CoBank 57.20 68.86 72.50 78.97

Commercial banks 8.96 11.95 10.15 4.91

Debentures or notes 2.75 5.73 5.79 7.71

Other (usually regional cooperatives) 31.09 13.46 11.56 8.41

Based on average debt of: $205,327 $454,971 $997,577 $2,385,852

Specialized Mixed Mixed Specialized

marketing marketing farm supply farm supply

Percent

Banks for Cooperatives and CoBank 65.80 77.72 82.36 55.49

Commercial banks 11.39 9.67 4.16 4.91

Debentures or notes 8.91 5.39 2.57 3.59

Other (usually regional cooperatives) 13.90 7.22 10.91 36.01

Based on average debt of: $561,295 $756,850 $853,899 $265,180

11
Allocated equity was more than 50.5 percent for

both farm supply cooperatives and lower for marketing cooperatives- specialized marketing (42.4

percent) and mixed marketing cooperatives (44.4

percent).

Unallocated equity averaged 10.1 percent of

total assets for all sizes and types. Both types of

marketing cooperatives increased unallocated equities as a percentage of total assets, from 8 to 9 percent in the earlier years studied in this report to an

average 10 and 11 percent overall. Mixed farm supply cooperatives’ unallocated equity continued

around 10 percent. Specialized farm supply cooperatives’ unallocated equity topped 12 percent in 1985

and then fell to 8.3 percent in 1990.

FINANCIAL RATIO ANALYSIS

Beyond just looking at levels of assets, liabilities, and member equities, cooperative managers

and boards of directors need comparative measures

to evaluate their cooperatives’ financial performance.

Financial ratio analysis allows comparisons

between years and different cooperatives. While

not an exact science, present-day ratios can be compared with both historical ratios within the firm

and throughout the industry to determine current

financial health. Ratios used in this study were

often chosen because of their comparability with

prior CS studies. Four categories were used-liquidity, leverage, activity, and profitability. Many

factors underlie each ratio and examining one ratio

may not help pinpoint problems. Therefore, when

studying ratios, care must be taken in interpreting

any single ratio. A summary of all financial ratios

by cooperative size and type is presented in appendix tables Bl-B4.

Liquidity Ratios

Liquidity ratios measure the cooperative’s

ability to meet short-term obligations. They focus

on the cooperative’s ability to remain solvent.

Current ratio is found by dividing current

assets by current liabilities. The higher the ratio, the

more likely the cooperative will be able to meet its

short-term obligations. If the ratio is less than 1,

current liabilities exceed current assets and the

cooperatives liquidity is threatened. However, this

ratio does not consider the degree of liquidity of

each of the components of current assets. In other

words, if the current assets of a cooperative were

mainly cash, they would be much more liquid than

if comprised of mainly inventory.

The current ratio fell as cooperative size

increased. The ratio was highest for small cooperatives (2) and fell to 1.3 for super cooperatives (table

6). By cooperative type, the ratio increased from 1.3

for specialized marketing cooperatives to 2.1 for

specialized farm supply cooperatives. Profitable

cooperatives had a current ratio from 0.2 to 0.8 percentage points higher than unprofitable cooperatives.

For each cooperative size and type, the ratio

was fairly steady throughout the study period (figure 3). The current ratio’s high of 1.7 was in 1986

and was 1.6 in 1990.

Quick ratio is current assets minus inventories,

divided by current liabilities. Inventories are

excluded-the least liquid of all current assets. As

was the case for the current ratio, small cooperatives (1.2) had the highest ratio and it decreased as

size increased to 0.6 for super-size cooperatives

(table 7). The quick ratio increased from 0.7 for specialized marketing cooperatives to 1 for specialized

farm supply cooperatives. The quick ratio for profitable cooperatives was always higher than unprofitable ones. The largest difference in the quick ratio

between profitable and unprofitable cooperatives

was in small and specialized farm supply cooperatives.

The quick ratio was highest in 1986 and lowest

in 1988 (figure 3). In 1988, the quick ratio was lowered by an increase in current liabilities caused by a

general buildup of inventories by both types of

marketing cooperatives.

Leverage Ratios

Leverage ratios look at the long-term solvency

of the cooperative. They analyze use of debt and

ability to meet obligations in times of crisis.

12
Figure &Current and Quick Ratios

Ratio

2.00

Current

l.50ti

Quick

01 I I I I I I I I

1983 04 85 86 87 88 89 90

Debt-to-asset ratio is defined as total debt divided by total assets. Lenders would rather see a low

ratio indicating the cooperative’s ability to repay

the loan. Larger cooperatives were financing more

of their assets with debt, but the highest ratio for

any size or type of cooperative was still only 0.3

(table 8). Small cooperatives had the lowest use of

debt at 0.2 and debt use increased to 0.3 for supersize cooperatives. Debt usage was very uniform by

cooperative type, varying only 0.06 between the

highest and lowest ratio. Debt usage surprisingly

was highest for mixed farm supply cooperatives at

0.3 and lowest for specialized farm supply cooperatives (0.24).

There was a large difference between profitable and unprofitable cooperatives use of debt.

Except for super-size and specialized marketing

cooperatives, the difference in the debt ratio

between profitable and unprofitable cooperatives

was at least 0.1. This means that unprofitable cooperatives were either carrying at least 10 percent

more debt or had 10 percent less member equity.

Whether these unprofitable cooperatives were iniTable sCurrent ratio by size and type, profitable and unprofitable, average of 1983-90

Item Small Medium Large

Ratio

Super

All cooperatives

Profitable

Unprofitable

Difference between profitable

and unprofitable

All cooperatives

Profitable

Unprofitable

Difference between profitable

and unprofitable

2.03

2.19

1.50

.69

Specialized

marketing

1.32

1.35

1.13

.22

1.69 1.43 1.29

1.77 1.49 1.30

1.26 1.12 1.10

.51 .37 .20

Mixed Mixed Specialized

marketing farm supply farm supply

Ratio

1.46 1.59 2.09

1.50 1.66 2.27

1.16 1.27 1.52

.34 .39 .75

13
Table ;r-Quick ratio by size and type, profitable and unprofitable, average of 1983-90

Item Small Medium l-We Super

All cooperatives

Profitable

Unprofitable

Difference between profitable

and unprofitable

1.16 0.88 0.73 0.64

1.28 .94 .76 .64

.75 .59 54 .63

53 .35 .22 .Ol

Specialized Mixed Mixed Specialized

marketing marketing farm supply farm supply

All cooperatives

Profitable

Unprofitable

Difference between profitable

and unprofitable

0.68 0.77 0.83 1.04

.70 .78 .86 1.15

.54 .61 .74 .68

.16 .17 .12 .47

Table s-Debt-to-asset ratio by size and type, profitable and unprofitable, average of 1983-90

Item Small Medium Super

Ratio

All cooperatives

Profitable

Unprofiiable

Difference between profitable

and unprofitable

0.20 0.21 0,24 0.28

.18 .20 .22 .28

.28 .30 .37 .35

(*JO) Cl01 l-15) CO7)

Specialized Mixed Mixed Specialized

marketing marketing farm supply farm supply

Ratio

All cooperatives

Profitable

Unprofitable

Difference between profitable

and unprofitable

0.28 0.26 0.30 0.24

.27 .25 .28 .21

.31 .39 .40 .34

(-04) Cl41 Cl21 Cl31

14
Figure &Total Debt-To-Asset Ratio

Ratio

0.4 ,

0.3

0.2

0.1

0

1983 84 85 86 87 88 89 90

tially undercapitalized or their equity had eroded

due to losses was beyond the scope of this study.

More debt financing was used in 1983-85 than

in 1986-90 (figure 4). This might suggest that a

number of the respondent cooperatives had no debt

and because of this, their debt ratio was lowered.

However, at least 96 percent of the respondents

used some debt financing in all the years studied.

Debt-to-equity ratio is calculated by dividing

long-term debt by member equity. This ratio tells

the importance of term debt to the cooperative. As

cooperatives size grew, so did their use of longterm debt. The ratio for small cooperatives was 0.24

and 0.39 for super-size cooperatives (table 9).

Specialized marketing cooperatives had, at 0.36, the

highest ratio by type, while specialized farm supply

cooperatives were the lowest at 0.24. When looking

at the &year trend, use of long-term debt was considerably higher from 1983 to 1986 than in the later

years (figure 5). In all cases the debt-to-equity ratio

was higher for unprofitable cooperatives than profitable ones.

Table Q-Debt-to-equity ratio by size and type, profitable and unprofitable, average of 1983-90

Item Small Medium Large Super

Ratio

All cooperatives

Profitable

Unprofitable

Difference between profitable

and unprofitable

All cooperatives

Profitable

Unprofitable

Difference between profitable

and unprofitable

0.24

.23

.30

CO71

Specialized

marketing

0.36

.36

.38

(.02)

0.28 0.33 0.39

.27 .32 .39

.37 .37 .40

(.lO) CO51 CO11

Mixed Mixed Specialized

marketing farm supply farm supply

Ratio

0.33 0.29 0.24

.33 .28 .22

.37 .36 .31

(.04) t.08) CO91

15
Figure &Debt-to-Equity Ratio

/?a tio

.35

.30

.25

.20

.15

.lO

.05

0

1983 84 85 86 87 88 89 90

Times-interest-earned ratio is the number of

times interest expense is covered by earnings. It is

calculated by dividing earnings before interest and

taxes by interest expense. The ratio should be 1 or

more to enable the cooperative to pay interest

expenses from current earnings. Interest coverage

was the greatest for smaller cooperatives and generally falls as cooperative size increases to supersize cooperatives (2.4) (table 10). By cooperative

type, the ratio ranged from 2.3 for mixed farm supply to 2.7 for specialized farm supply.

By both size and type, there was a marked difference between profitable and unprofitable cooperatives’ times-interest-earned ratio. For unprofitable

cooperatives, the times-interest-earned ratio was

always less than 1 (not covering interest expenses

by current earnings). Small profitable cooperatives,

who generally had less debt and thus lower interest

expense, had the highest times interest earned ratio

(4.1).

The ratio was higher for respondent cooperatives in 1986 through 1990 when compared with

1983 through 1985 (figure 6). Times-interest-earned

Table lo-Times-interestearned ratio by size and type, profitable and unprofitable, average of 1983-90

Item Small Medium Super

All cooperatives

Profitable

Unprofitable

Difference between profitable

and unprofitable

2.92 3.10 2.64 2.38

4.09 3.68 3.26 2.51

Cl51 .49 .35 .81

4.24 3.19 2.91 1.70

Specialized Mixed Mixed Specialized

marketing marketing farm supply farm supply

All cooperatives

Profitable

Unprofitable

Difference between profitable

and unprofitable

Ratio

2.46 2.69 2.32 2.74

2.81 3.05 2.87 3.63

.32 .36 .05 .31

2.49 2.68 2.81 3.31

16
Figure 6-Times-Interest-Earned Ratio

Ratio

5

4.

1983 84 85 86 07 88 89 90

ratio was at its highest in 1987 at 4.6, and by 1990

had declined to 3.2.

Activity Ratios

Activity ratios measure how well cooperatives

use assets. A low ratio could mean that the cooperative was overcapitalized or carrying too much

inventory. A high ratio could be deceptive. A cooperative with fully depreciated older assets could

have an artificially high ratio even though those

assets are no longer operating efficiently.

Total asset turnover ratio was found by dividing

net sales by total cooperative assets. The ratio was

higher for larger cooperatives (table 11). Super-size

cooperatives had the highest ratio at 3.4, indicating

the most efficient use of assets. By cooperative type,

the total asset turnover ratio was higher for marketing than farm supply. The total asset turnover ratio

was its lowest in 1985 at 2.2, and highest in 1990

(5.8, see figure 7).

Interestingly, by both size and type, all unprofitable cooperatives except mixed farm supply had

Table I r-Total asset turnover ratios by size and type, profitable and unprofitable, average of 1983-90

Item Small Medium Large Super

Ratio

All cooperatives

Profitable

Unprofiiable

Difference between profitable

and unprofitable

2.69

2.67

2.76

(.09)

Specialized

marketing

3.22 3.23 3.36

3.22 3.18 3.35

3.26 3.58 3.91

CO4) t.401 t.56)

Mixed Mixed Specialized

marketing farm supply farm supply

Ratio

All cooperatives

Profitable

Unprofitable

Difference between profitable

and unprofitable

3.40 3.37 2.97 2.65

3.45 3.35 2.98 2.63

3.65 3.55 2.93 2.78

(-20) l.20) .05 l.15)

17
greater asset turnover ratios than profitable cooperatives. As mentioned earlier, some ratios by themselves can be misleading and this is a good example

of that. By only examining this ratio, one would

incorrectly infer that unprofitable cooperatives

were using assets more efficiently than the more

profitable ones. This demonstrates the danger in

placing too much emphasis on a single ratio in isolation.

Fixed asset turnover ratio represents net sales

divided by net property, plant, and equipment

(PP%E). This ratio shows how well the cooperative

is using its fixed assets. As discussed in the total

asset turnover ratio section, the fixed asset turnover

ratio by itself might not give a complete picture of

the cooperative’s financial health. A cooperative

with fully depreciated assets would have an artificially high ratio. A cooperative that invested heavily in PP&E for future expansion will have a temporarily low ratio. By size, a fixed asset turnover

ratio of 13 was greatest for large cooperatives (table

12). By type, the ratio was the highest for mixed

farm supply cooperatives (13.4). The fixed asset

turnover ratio was at its low in 1987 (figure 7).

During the last 3 years of the study, the ratio has

increased and averaged at least 9.1 percent.

Profitability Ratios

Profitability ratios indicate the efficiency of the

cooperative’s operations. Because a cooperative is

owned by its user-members, many common industry profitability ratios have little meaning. For

instance, profitability ratios measuring the return

on common or preferred stock of similar investororiented firms are not appropriate because there is

seldom an open market for cooperative stock.

Gross profit margin is found by subtracting the

cost of goods sold from net sales and then dividing

this amount (gross margin) by net sales. The gross

profit margin is an important operating ratio. A

small change in the gross margin has a tremendous

impact on income from own operations. It indicates

the cooperative’s pricing policy and cost of goods

offered for sale. [For a thorough discussion of gross

profit margin, see Chesnick and Eversull, p. 81.

Figure &Total and Fixed Asset Turnover Ratios

Percent

01 ’

I I I I I I I

1983 84 85 86 07 88 89 90

For all cooperatives, the gross profit margin

averaged 8.2 percent. Specialized farm supply

cooperatives, at 17.1 percent (table 13), had the

highest gross profit margin. In general, both types

of farm supply cooperatives had, on average, from

4 to 10 percentage points higher gross profit margins than both types of marketing cooperatives. At

10.8 percent, small cooperatives had the highest

gross margin percent by size.

There was not a marked difference between

the gross margins of profitable and unprofitable

large and super-size cooperatives and specialized

marketing cooperatives. For small and medium,

both types of farm supply, and mixed marketing

cooperatives, the difference between profitable and

unprofitable cooperatives was at least 2.2 percentage points. Competition may be forcing some cooperatives to lower their gross margin, and in turn,

making them unprofitable. Also, profitable cooperatives may have lower cost supply sources that

allow them to have higher gross margins.

The gross profit margin was the highest for

respondent cooperatives in 1986 at 10.5 percent

18
Table In-Fixed asset turnover ratios by size and type, profitable and unprofitable, average of 1983-90

Item Small Medium

Ratio

Large Super

All cooperatives

Profitable

Unprofitable

Difference between profitable

and unprofitable

12.37 11.89 12.98 11.64

12.27 11.92 13.02 11.70

12.80 11.70 12.61 11.33

(53) .22 .41 .37

Specialized Mixed Mixed Specialized

marketing marketing farm supply farm supply

All cooperatives

Profitable

Unprofiiable

Difference between profitable

and unprofitable

12.10 11.63 13.43 11.09

12.11 11.58 13.51 11.13

12.28 12.19 13.18 10.90

t-131 t.61) .33 .23

Table 1%Gross profit margin by size and type, average of 1983-90

Item Small Medium Large Super

Percent

All cooperatives

Profitable

Unprofitable

Difference between profitable

and unprofitable

10.82 10.14 8.15 7.44

11.32 10.38 8.18 7.38

8.55 8.21 7.97 6.44

2.77 2.17 .21 .94

Specialized Mixed Mixed Specialized

marketing marketing farm supply farm supply

Percent

All cooperatives

Profitable

Unprofitable

Difference between profitable

and unprofitable

3.90 6.63 10.51 17.12

3.94 7.01 10.91 17.67

3.24 3.72 8.69 14.59

.70 3.29 2.22 3.08

19
Figure 8-Grass Profit Margin

Percent

12

1c

e

e

4

2

a

1983 84 85 86 87 88 89 90

(figure 8). It fell from 1986 to 1989, and then

rebounded to 9 percent in 1990.

Return on total assets measures the rate of

return on total investment. It is calculated by dividing net income by total assets. Because some assets

were financed through debt, this ratio measures

return to both members and lenders. Usually it is

calculated after taxes. Small and medium cooperatives had a higher return on total assets (table 14),

with medium-sized cooperatives the highest at 4.6

percent. Most unprofitable cooperatives had a negative return on total assets, but because profitability

was determined by income from own operations

and not net income, unprofitable cooperatives

could have a positive return to total assets as did

super-size cooperatives (0.5).

By cooperative type, return on total assets was

highest for mixed marketing cooperatives at 4.2

percent. With assets relative to sales higher for both

types of farm supply cooperatives, the return to

total assets was very similar to that of the marketing cooperatives, even though the farm supply

cooperatives had higher net incomes relative to net

Table id--Return on total assets by size and type, profitable and unprofitable, average of 1983-90

Item Small Medium Large Super

Percent

All cooperatives, after taxes

Profitable

Unprofitable

Difference between profitable

and unprofitable

4.12

5.58

(2.20)

7.78

Specialized

marketing

4.59 3.79 3.85

5.43 4.79 4.09

(1.38) (3.07) .52

6.81 7.86 3.57

Mixed Mixed Specialized

marketing farm supply farm supply

Percent

All cooperatives, after taxes

Profitable

Unprofitable

Difference between profitable

and unprofitable

3.76 4.18 3.81 3.96

4.54 4.81 4.93 5.21

(2.27) (2.18) (2.47) (1.65)

6.81 6.99 7.40 6.86

20
Figure s--Return on Total Assets

and Allocated Equity

Percent

;“~~ Return on allocated equity .+.:...

,LI I I I I

1983 84 85 86 87 88 89 90

sales. Profitable cooperatives had a return to total

assets of at least 4.5 percent while unprofitable

cooperatives’ return was negative for all types.

During the last 3 years of this study, cooperatives generally experienced their highest return on

total assets, continuing a trend since 1985 (figure 9).

Return on allocated equity is net income divided

by allocated equity. Allocated equity was determined by subtracting unallocated equity from total

member equities. It represents member investment

in their cooperative. This return after taxes rose

from an average of 6.6 percent in the early 1980s to

an average of over 14.4 percent for all cooperatives

in 1990.

There was a higher return on allocated equity

for both types of marketing cooperatives (9.3 to 9.7

percent) than farm supply cooperatives (6.8 to 8.2

percent, table 15). Even though both types of farm

supply cooperatives had higher gross profit margins, they tended to have more allocated equity

than marketing cooperatives, averaging between 80

and 83 percent of total member equities. But, by

size, super cooperatives had the highest return on

allocated equity (10.3 percent) and at 80.2 percent,

the highest percent of allocated equity to total equity. Return on allocated equity increased in the past

6 years of the study period with the exception of a

slight decline in 1989 (figure 9).

The difference between the return on allocated

equity between profitable and unprofitable cooperatives was quite large. For all sizes and types, the

return on allocated equity was at least 9 percentage

points higher for profitable cooperatives.

CONCLUSIONS

Local cooperatives that weathered the agricultural recession in the early to mid-1980s were

forced to evaluate their operations. Debt financing

was becoming increasingly expensive with interest

rates in double digits. Outstanding accounts receivable balances were building. Farmers were also

having problems-with many being forced out of

agriculture. Those local farm supply and marketing

cooperatives that remained in business through the

last decade emerged leaner, stronger, and prepared

for the 1990s.

Many cooperatives studied in this report

maintained strong balance sheets. The asset base

changed little during the study period. Member

equities averaged 58 percent of total assets. Longterm debt fell by 12 percent per year.

Local cooperative debt was most often

acquired from the Banks for Cooperatives and

CoBank. The respondents maintained strong ties

with regional cooperatives, especially the small and

specialized farm supply cooperatives that acquired

about one-third of their debt capital from regionals.

The composition of member equities shifted

slightly during the study. Losses drew down unallocated equity, mainly in 1985-87. From 1987 to 1990,

allocated equity fell relative to total equity as cooperatives subsequently rebuilt unallocated equity.

The financial ratios developed in this study

found that there are differences in cooperatives

based on their size and type. The current ratio was

strongest at 2 for small and specialized farm supply

cooperatives. As size increased, the current ratio

fell. The debt-to-asset ratio has been falling. Larger

cooperatives use more debt-but the ratio for all

21
Table 15-Return on allocated equity by size and type, profitable and unprofitable, average of 1983-90

Item Small Medium Large Super

Percent

All cooperatives, after taxes

Profitable

Unprofitable

Difference between profitable

and unprofitable

7.21

9.67

(4.00)

13.67

Specialized

marketing

9.40 8.55 10.28

10.95 10.65 10.82

(3.18) (7.63) 1 .a4

14.13 18.28 8.98

Mixed Mixed Specialized

marketing farm supply farm supply

Percent

All cooperatives, after taxes

Profitable

Unprofitable

Difference between profitable

and unprofitable

9.31 9.70 8.16 6.82

11.40 11.07 10.33 8.70

(5.04) (5.40) (6.17) (3.28)

16.44 16.47 16.40 9.98

respondents averaged only 0.3. Total asset turnover be able to compare their operations with those of

was greatest for super-size and both types of mar- similar cooperatives. The balance sheets in this

keting cooperatives. Average sales were 3.4 times study showed the cooperative’s financial position

their total assets. Small and medium cooperatives at a point in time. They represent a summation of

and both types of farm supply cooperatives had past transactions, events, and expected future benehigher gross profit margins, averaging at least 10 fits. A strong balance sheet is a good indication of

percent. sound management practices.

Mergers will continue as cooperatives are

pressured to expand their marketing area to remain

competitive. About 100 of the respondents merged

with or were acquired by other cooperatives, or

went out of business during the study. Financial

ratios developed in this study should help local

cooperatives compare themselves with a representative group of cooperatives. The ratios will also

help them study possible mergers with other sizes

or types of cooperatives.

Information in this report does not suggest

that any size or type of local cooperative has a more

superior balance sheet. Rather, by combining the

information from many similar, yet diverse cooperatives, management and the board of directors will

22
BIBLIOGRAPHY

Chesnick, David S., and E. Eldon Eversull, Analysis

of Income Statements of Local Cooperatives, U.S.

Department of Agriculture,‘Rural Development

Administration-Cooperative Services, RR 134,

November 1994.

Dunn, John R., Beverly L. Rotan, and E. Eldon

Eversull, Agronomy Operations of Local

Cooperatives, U.S. Department of Agriculture,

Agricultural Cooperative Service, RR 109,

January 1993.

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

Statistics, U.S. Department of Agriculture,

Agricultural Cooperative Service, SR 39,

November 1993.

Royer, Jeffrey S., Roger A. Wissman, and Charles A.

Kraenzle, Farmer Cooperatives’ Financial Profile,

1987, U.S. Department of Agriculture,

Agricultural Cooperative Service, RR 91,

September 1990.

Staiert, Jim J., “Gross Profits Increase for Top 100;

Most Other Indexes Show Decline,” U.S.

Department of Agriculture, Agricultural

Cooperative Service, Farmer Cooperatives,

Volume 60, No. 9, December 1993.

Wissman, Roger A., Working with Financial

Statements-Guide for Cooperative Members, U.S.

Department of Agriculture, Agricultural

Cooperative Service, CIR 43, November 1991.

23
Appendix table AI-All U.S. farm supply and grain

marketing cooperatives compared with

respondent cooperatives

Ail farm supply All

and grain marketing respondent

cooperatives cooperatives

Northeast 4.30 0.82

Appalachia 5.24 1.50

Southeast 2.20 .90

Delta States 4.43 2.17

Corn Bett 23.64 28.20

Lake States 17.58 15.26

Northern Plains 27.85 34.18

Western Plains 3.83 5.91

Southern Plains 5.93 7.33

Southwest 1.26 1.05

Northwest 3.74 2.69

Total 100.00 100.00

Percent

24
Appendix table Pa-Number of respondent cooperatives, by size, type, and region

Region

Specialized Mixed

marketing marketing

Mixed

farm supply

Specialized

farm supply Total

Northeast

small

medium

Total

Appalachia

small

medium

large

super

Total

Southeast

small

total

Delta States

small

medium

large

Total

Corn Belt

small

medium

large

super

Total

Lake States

small

medium

large

super

Total

Northern Plains

small ’

medium

large

super

Total

1

1

2 1 30 15 39 105

30 57 26 14 127

37 35 14 2 88

26 24 4 1 57

116 146 59 56 377

8 16 9 75 108

9 10 6 33 58

11 8 2 1 22

7 6 3 16

35 40 20 109 204

56 56 18 163 293

47 39 7 13 106

19 13 2 2 36

13 9 22

135 117 27 178 457

2

2

1

1

3 6 9

2 2

3 8 11

1 11 13

1 3 4

2 2

1 1

2 17 20

3 7 12

3 7 12

6 15 22

1 5 6

1

7 20 29

continued

25
Appendix table M-Number of respondent cooperatives, by size, type, and region (Continued)

Region

Specialized Mixed Mixed Specialized

marketing marketing farm supply farfn supply Total

Western Plains

small

medium

large

super

Total

5 4 2 46 57

4 4 1 5 14

2 2 1 5

1 1 1 3

12 11 3 53 79

Southern Plains

small

medium

large

super

Total

23 24 17 21 85

2 3 1 1 7

2 1 3

2 1 3

29 28 19 22 98

Southwest

small

medium

large

super

Total

1 1 1 7 10

1 1 2

1 1

1 1

1 2 1 10 14

Northwest

small

medium

large

super

Total

2 1 1 13 17

2 1 2 4 9

4 2 1 7

1 2 3

9 4 5 18 36

Total

small

medium

large

super

Total

117 135 76 403 731

94 115 45 81 335

76 58 2 1 10 165

52 43 7 4 106

339 351 149 498 1,337

26
Appendix table As-Number of respondent cooperatives, by size, type, and year

Size

Specialized

marketing

Mixed Mixed

marketing farm supply

Specialized

farm supply Total

1990

small

medium

large

super

Total

39 52 27 145 263

49 58 17 40 164

35 32 10 4 81

12 10 2 2 26

135 152 56 191 534

1989

small

medium

large

super

Total

52 56 34 221 363

56 75 24 47 202

46 38 14 9 107

36 30 5 2 73

190 199 77 279 745

1988

small

medium

large

super

Total

202

33

6

334

129

85

65

613

40 65 27

39 41 16

36 31 12

29 29 6

144 166 6 1 242

1987

small

medium

large

super

Total

80 111 6 1

62 72 26

39 27 7

17 21 2

198 231 96

301

45

553

205

73

41

872

1

347

1986

small

medium

large

super

Total

.

58 82 40 264 444

50 61 27 42 180

35 33 8 6 82

19 23 3 2 47

162 199 78 314 753

1985

small

medium

large

super

Total

44 41 28

16 37 13

34 18 9

17 12 3

111 108 53

152

36

5

265

102

66

33

194 466

continued

77
Appendix table &+Number of respondent cooperatives, by size, type, and year (Continued)

Size

Specialized Mixed

marketing marketing

Mixed

farm supply

Specialized

farm supply Total

1984

small

medium

large

super

Total

1983

small

medium

large

super

Total

Average of 1983-90

small

medium

large

super

Total

2 1 24 18 133 196

20 34 14 39 107

22 18 7 7 54

17 15 3 1 36

80 9 1 42 180 393

88 54 11

38 56 10

35 25 8

15 14 2

154 149 31

50 61 31 184 326

4 1 54 18 37 150

35 28 9 5 77

20 19 3 1 43

148 162 61 227 596

53

11

4

68

186

113

72

31

402

28
Appendix table A+Abbreviated balance sheet, by size and year

hem Current Net Total Current Long-term Total Total liabilities

assets PPBE assets liabilities debt liabilities Networth &networth

Small cooperatives

1983

1984

1985

1986

1987

1988

1989

1990

Mediumcooperatives

1983

1984

1985

1986

1987

1988

1989

1990

Large cooperatives

1983

1984

1985

1986

1987

1988

1989

1990

Supercooperatives

1983

1984

1985

1986

1987

1988

1989

1990

595 328 1,233 369 101 470 763 1,233

521 235 1,078 254 80 334 744 1,078

545 266 1,131 277 77 354 777 1,131

542 303 1,183 238 66 304 879 1,183

554 297 1,161 251 59 310 851 1,161

620 287 1,239 282 43 324 915 1,239

601 286 1,191 287 45 332 859 1,191

607 302 1,204 302 42 344 860 1,204

1,223 791 2,569 773 257 1,031 1,538 2,569

1,214 692 2,557 690 245 935 1,622 2,557

1,243 767 2,752 680 253 933 1,819 2,752

1,213 956 2,824 689 297 986 1,838 2,824

1,321 936 2,859 785 206 992 1,867 2,859

1,463 812 2,806 919 157 1,075 1,731 2,806

1,293 747 2,557 753 110 863 1,694 2,557

1,327 784 2,687 796 136 932 1,755 2,687

2,244 1,695 5,000 1,578 689 2,266 2,734 5,000

2,236 1,452 4,626 1,522 594 2,116 2,510 4,626

2,313 1,817 5,280 1,611 613 2,224 3,056 5,280

2,213 2,176 5,557 1,465 723 2,189 3,368 5,557

2,658 2,104 5,727 1,840 515 2,356 3,371 5,727

2,697 1,649 5,135 1,959 323 2,281 2,854 5,135

2,110 1,433 4,302 1,491 270 1,761 2,541 4,302

2,339 1,425 4,593 1,651 286 1,937 2,656 4,593

4,906 4,032 11,092 3,681 1,989 5,670 5,422 11,092

5,097 3,746 10,829 3,963 2,000 5,963 4,866 10,829

5,513 4,507 12,298 4,304 2,394 6,698 5,600 12,298

5,021 3,585 10,795 3,799 1,864 5,663 5,132 10,795

5,094 3,702 10,525 4,093 1,177 5,270 5,255 10,525

7,435 3,509 12,645 6,090 924 7,014 5,631 12,645

5,650 3,262 10,645 4,458 768 5,226 5,419 10,645

6,166 3,082 10,927 4,538 833 5,371 5,556 10,927

Dollars in thousands

29
Appendix table As--Abbreviated balance sheet, by type and year

Item Current Net Total

assets PPBE assets

Current Long-term Total Total liabilities

liabilities debt liabilities Networth &networth

Specialized marketing

cooperatives

1983

1984

1985

1986

1987

1988

1989

1990

Mixed marketing

cooperatives

1983

1984

1985

1986

1987

1988

1989

1990

Mixedfarm supply

cooperatives

1983

1984

1985

1986

1987

1988

1989

1990

Specialized farm

supply cooperatives

1983

1984

1985

1986

1987

1988

1989

1990

All cooperatives

1983

1984

1985

1986

1987

1988

1989

1990

1,406 1,117 3,151 1,063 421 1,483 1,668 3,151

2,031 1,573 4,390 1,577 681 2,258 2,132 4,390

1,795 1,569 4,167 1,344 670 2,014 2,153 4,167

1,537 1,457 3,779 1,095 597 1,692 2,087 3,779

1,522 1,293 3,342 1,100 294 1,394 1,948 3,342

2,633 1,494 4,743 2,113 290 2,403 2,340 4,743

1,915 1,298 3,828 1,480 233 1,713 2,115 3,828

1,665 965 3,141 1,211 207 1,418 1,723 3,141

1,548 1,080 3,306 1,003 443 1,445 1,861 3,306

1,667 1,144 3,544 1,133 507 1,640 1,904 3,544

1,643 1,232 3,666 1,131 458 1,589 2,077 3,666

1,394 1,090 3,175 921 356 1,277 1,898 3,175

1,505 1,086 3,187 1,027 278 1,304 1,883 3,187

2,390 1,220 4,282 1,738 271 2,009 2,273 4,282

1,898 1,113 3,662 1,315 203 1,518 2,144 3,662

1,563 908 3,057 1,026 125 1,151 1,906 3,057

1,544 1,183 3,538 1,015 551 1,566 1,972 3,538

1,334 960 2,985 848 448 1,296 1,689 2,985

1,283 816 2,808 851 343 1,194 1,614 2,808

1,062 862 2,519 610 294 905 1,614 2,519

1,098 751 2,368 624 195 819 1,549 2,368

1,700 972 3,289 1,109 232 1,341 1,948 3,289

1,422 836 2,810 884 229 1,113 1,697 2,810

1,267 828 2,684 792 219 1,012 1,672 2,684

994 421 1,999 578 166 744 1,255 1,999

940 375 1,847 480 155 635 1,212 1,847

828 344 1,683 383 123 506 1,177 1,683

724 311 1,492 284 87 371 1,121 1,492

698 284 1,412 284 66 350 1,062 1,412

835 342 1,650 375 73 448 1,202 1,650

917 388 1,775 436 69 505 1,270 1,775

992 455 1,921 495 95 590 1,331 1,921

1,399 990 3,043 955 396 1,351 1,692 3,043

1,369 854 2,871 890 373 1,264 1,607 2,871

1,298 895 2,859 838 355 1,193 1,666 2,859

1,110 818 2,534 659 289 949 1,585 2,534

1,142 776 2,423 703 188 890 1,533 2,423

1,763 912 3,250 1,224 193 1,417 1,833 3,250

1,485 860 2,908 982 163 1,146 1,762 2,908

1,352 751 2,630 857 145 1,002 1,628 2,830

Dollars in thousands

30
Appendix table m-source of cooperative debt for selected cooperatives by size and year

Item

Banks for

cooperatives

andCoBank

Commercial

Banks

Percent

Debentures

or notes

Other

(usually regional

cooperatives)

Small

1983

1984

1985

1986

1987

1988

1989

1990

Medium

1983

1984

1985

1986

1987

1988

1989

1990

Large

1983

1984

1985

1986

1987

1988

1989

1990

Super

1983

1984

1985

1986

1987

1988

1989

1990

57.89 9.78 3.50 28.83

56.32 4.46 .77 38.45

64.28 5.95 2.09 27.68

59.61 6.16 3.48 30.75

58.18 11.14 3.88 26.80

55.77 6.88 2.99 34.36

51.71 13.97 2.53 31.79

53.81 13.36 2.77 30.06

81.79 9.74 2.96 5.51

70.97 10.66 4.29 14.07

71.94 3.81 16.16 8.09

66.47 9.34 4.06 20.13

69.90 5.83 8.12 16.16

75.93 12.26 4.81 7.00

74.80 14.27 3.24 7.68

39.09 29.67 2.19 29.05

82.89 9.62 2.70 4.80

67.85 12.64 10.61 8.90

65.73 16.79 8.23 9.26

79.71 7.24 4.19 8.85

76.11 10.04 4.24 9.61

84.95 4.29 5.05 5.71

54.83 12.87 5.00 27.31

67.91 7.71 6.30 18.08

84.15 6.71 4.93 4.21

88.50 5.32 5.07 1.11

82.10 1.90 3.65 12.34

75.74 3.23 10.95 10.08

78.06 4.08 12.38 5.47

80.11 4.35 7.00 8.55

72.19 10.35 8.31 9.14

70.92 3.33 9.35 16.40

31
Appendix table A7-SourCe of cooperative debt for selected cooperatives by type and year

Item

Banks for

Cooperatives

andCoBank

Commercial Debentures

Banks ornotes

Other

(usuailyre@onal

cooperatives)

Specialized marketing

1983

1984

1985

1986

1987

1988

1989

1990

Mixed marketing

1983

1984

1985

1986

1987

1988

1989

1990

Mixedfarmsupply

1983

1984

1985

1986

1987

1988

1989

1990

Specialized farm supply

1983

1984

1985

1986

1987

1988

1989

1990

All cooperatives

1983

1984

1985

1986

1987

1988

1989

1990

Average

82.71 9.96 3.12 4.21

66.55 18.23 7.03 8.20

60.63 10.19 20.26 8.93

64.79 8.43 8.13 18.65

68.28 11.70 5.80 14.22

79.67 7.09 3.50 9.73

57.67 13.26 9.70 19.37

46.14 12.27 13.72 27.87

79.91 10.46 4.37 5.26

86.52 6.07 4.93 2.49

73.84 11.45 4.24 10.47

73.48 7.50 7.49 11.53

75.70 8.26 9.68 6.36

80.95 7.21 6.66 5.18

75.31 14.40 3.88 6.41

76.09 11.99 1.89 10.03

85.56 8.04 2.60 3.80

92.39 5.75 1.05 .82

91.25 5.00 .81 2.94

88.02 3.09 1.68 7.22

82.55 1.77 4.41 11.27

88.52 1.83 3.90 5.75

65.35 5.42 3.18 26.05

65.28 2.36 2.96 29.39

50.46 1.77 1.97 45.81

58.08 2.94 3.40 35.58

65.75 2.11 2.77 29.37

61.20 2.90 4.39 31.51

55.22 3.63 5.92 35.22

46.83 5.99 4.59 42.60

52.00 8.99 3.35 35.66

54.40 10.97 2.33 32.30

77.60 8.95 3.48 9.97

72.98 7.40 4.40 15.22

70.36 7.39 7.22 15.04

71.01 6.18 6.25 16.55

71.12 7.64 7.41 13.83

75.45 6.44 5.14 12.98

65.16 12.29 5.56 16.98

61.32 10.87 6.26 21.54

71.05 8.23 5.62 15.11

Percent

32
Appendix table Bl-Financial ratios for specialized marketing cooperatives, average of 1983-90

Item Small Medium Super

Current ratio 1.81

Quick ratio 1.28

Debt-to-asset ratio .22

Debt-to-equity ratio .24

Times-interest-earned ratio 3.18

Total asset turnover ratio 2.99

Fixed asset turnover ratio 11.19

1.45 1.39 1.21

.77 .71 .81

.21 .24 .30

.28 .30 .46

2.38 2.50 2.26

3.50 3.51 3.40

12.51 12.57 12.62

Percent

Gross profit margin 5.71 5.60 5.25 5.72

Return on total assets after tax 5.03 4.49 4.24 3.61

Return on allocated equity after tax 10.01 9.92 10.02 10.52

Based on sales of: $2,541,415 $6,942,109 $12,950,953 $35,205,055

Appendix table &-Financial ratios for mixed marketing cooperatives, average of 1983-90

Item Small Medium Super

Current ratio 1.81 1.66 1.46 1.34

Quick ratio 1.09 .90 .76 .70

Debt-to-asset ratio .25 .22 .24 .27

Debt-to-equity ratio .26 .24 .28 .35

Times-interest-earned ratio 2.91 3.55 3.10 2.61

Total asset turnover ratio 3.06 3.31 3.26 3.47

Fixed asset turnover ratio 10.37 10.43 9.85 11.33

Gross profit margin 6.83 7.78 8.45 8.26

Return on total assets after tax 3.52 4.95 4.58 4.00

. Return on allocated after equity tax 7.07 10.90 10.30 10.70

Based on sales of: $2,638,544 $6,977,821 $13,566,753 $31,632,525

33
Appendix table w-Financial ratios for mixed farm supply cooperatives, average of 1983-90

Item Small Medium Large Super

Current ratio 2.10 1.74

Quick ratio 1.17 1 .oo

Debt-to-asset ratio .24 .24

Debt-to-equity ratio .22 .22

Times-interest-earned ratio 2.32 2.11

Total asset turnover ratio 2.72 3.13

Fixed asset turnover ratio 12.45 13.78

Gross profii margin 14.24 12.00 12.93 13.74

Return on total assets after tax 2.64 3.72 4.08 4.98

Return on allocated equity after tax 4.53 8.41 10.46 9.96

Based on sales of: $2,126,529 $6,921,608 $13,840,341 $22,935,382

Percent

1.39

.70

.31

.29

2.02

2.93

12.14

1.61

.85

.29

.31

2.31

2.75

11.34

Appendix table &Financial ratios for specialized farm supply cooperatives, average of 1983-90

Item Small Medium Large Super

Current ratio 2.38

Quick ratio 1.20

Debt-to-asset ratio .22

Debt-to-equity ratio .l 1

Times-interest-earned ratio 2.52

Total asset turnover ratio 2.32

Fixed asset turnover ratio 11.70

Gross profit margin 17.26 18.12 16.46 18.63

Return on total assets after tax 4.00 4.60 2.34 4.52

Return on allocated equity after tax 6.55 8.23 5.82 6.80

Based on sales of: $2,135,206 $6,423,556 $12,771,525 $25,425,499

1.97 1.70

1.00 .81

.22 .31

.13 .19

2.91 1.50

2.48 2.64

10.77 10.10

Percent

2.05

.96

.27

.27

3.59

2.74

10.11

34

0 U.S. GOVERNMENT PRINTING OFFICE 1995 386-096/00468
U.S. Department of Agriculture

Rural Business and Cooperative Development Service

Ag tjox 3255

Washington. 0°C). 202503255

Rural Business and Cooperat.v,, 1 Q ikv@(:,pm<>nt Sewce (HBCDS) provides research,

management, and educational assistance to cooperatives to strengthen the economic

position of farmers and other curd 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 REEDS (1 j heips 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 the!r communities; and (5) encourages

international cooperative programs.

RBCDS also publishes research and edricational ntatena!s and issues Farmer

Cooperatives magazine. The !Jnited S:ta!e5 !)ec;anrnen! of Agriculture (USDA) prohibits

discrimination in its programs on tne bnsis of race, color, national origin, sex, religion,

age, disability, political beiiefs and rrlarital or famiiial status. !Not all prohibited bases

apply to all programs). Persons with a~satxliiiec, wh,*T require alternative means for

communication of program information (braille. large print. audiotape, etc.) should

contact the USDA Office of Conlm!:nl~a.tlons at (2(X?) 720-78X (TDD).

To file a complaint, write the Secretary of A~:rit:uiture, II S. Department of Agriculture,

Washington, D.C. 20250, or call (2021 72G7:327 (voice) or (20%) 720-l 127 (TDD). USDA

is an equal employment opportunity erT!plOytlr