United States

Department of

Agriculture

Rural Business–

Cooperative

Service

RBS Research

Report 184

Strategic Planning in

Farmer Cooperatives
Abstract This report describes the degree of long-range strategic planning by farmer cooperatives in the United States. An analysis was conducted on strategic planning data provided by farmer cooperatives through the annual survey of farmer cooperatives in

1998 by USDA’s Rural Business-Cooperative Service (RBS).

The degree of long-range strategic planning is reported for respondents overall and by

cooperative type, size, and regional location. Basic strategic planning attributes such

as written formality, monitoring activity, director involvement, and planning time interval

are also reported.

The degree of strategic planning and financial position and change are compared

among all cooperatives and by major type and size categories. Financial change is

assessed by comparing statistics from two points in time—data from 1994 is compared

with 1998.

Keywords: long-range strategic planning, planners, non-planners, attributes, director

involvement, planning interval, financial position, financial change 

Strategic Planning in Farmer Cooperatives

James J. Wadsworth

Program Leader

Education and Member Relations

Rural Business-Cooperative Service (RBS)

U.S. Department of Agriculture

RBS Research Report 184

September 2001

Price: domestic--$5.00; foreign--$5.50
Preface This report examines cooperatives’ use of strategic planning, the various technical

aspects of it, and the degree of directors’ involvement in strategic planning. It also analyzes strategic planning of cooperatives, their financial position and certain aspects of

financial change.

Data for this study were collected from a survey of U.S. farmer cooperatives. They

were asked whether they conduct long-range strategic planning and if so, the amount

of director involvement, whether a written plan is developed, aspects actively monitored, and the length of the strategic planning period.

These data were sorted by use of strategic planning, type or function, membership

size, sales volume size, and by organizational structure, i.e., local, federated, regional

and mixed-regional cooperatives.

Data were collected in RBS 1998 annual survey of farmer cooperatives. Seventyseven percent of U.S. farmer cooperatives were asked to provide information on their

degree of long–range strategic planning. Of those, 45 percent, or 1,282, responded to

the survey.

i
Contents Highlights ........................................................i

Introduction ......................................................1

Survey Design and Response .......................................1

Results—Strategic Planning Incidence and Aspects .......................2

Planning by Type and Structure ..................................2

Planning by Size and Overall Type ................................3

Planning by Region and Size ....................................3

W ritten Formality and Monitoring .................................4

Directors’ Involvement .........................................7

Planning Session Interval .......................................7

Summary—Prevalence and Attributes .............................7

Financial Position and Change ......................................10

Financial Position in 1998 ......................................10

Changes: 1994 Versus 1998 ...................................16

Summary—Financial Position and Change ........................23

Study Implications ................................................24

Conclusion ......................................................25

Appendix—Summary Points of Major Findings ..........................26

Incidence of Planning .........................................26

Aspects of Planning ..........................................26

Planning Degree and Financial Position ...........................26

Planning Degree and Financial Changes ..........................27

Appendix Notes .............................................27

1. Cooperative Type or Function ..............................27

2. Survey—Strategic Planning Question ........................27

3. Study Limitations ........................................27

Appendix Tables .............................................29

References .....................................................33

i
Highlights This study provides a national perspective of farmer cooperatives’ long-range strategic

planning. The analysis examines how in depth and frequently cooperatives conduct

strategic planning and aspects of it such as how formal the plan is, how well progress

is monitored, planning intervals and involvement by the board of directors. Financial

status and how it changes are also assessed. There are cooperatives that prepare and

use strategic plans (planners) and cooperatives that do not prepare and use strategic

plans (non-planners).

The USDA survey asked 2,816 farmer cooperatives to provide information on their

long-range strategic planning and 45 percent (1,282) responded to the survey.

The first portion of this study analyzes the incidence and attributes of strategic planning. Some major findings include:

● Long-range strategic planning is being conducted by slightly over half the farmer

cooperatives in the United States, according to the sample used for this study.

● Marketing cooperatives, except those handling dairy and fruit and vegetable products conduct proportionately more strategic planning than other types of cooperatives.

● Just over half of farm supply cooperatives are planners, while most service-type

cooperatives do not conduct long-range strategic planning.

● More large cooperatives plan than do smaller ones, which is consistent when comparing regional cooperative structure to local structure—more regionals than locals

are planners.

● The North Central region has the most cooperative planners, but a higher proportion

of planners relative to the number of cooperative respondents are in the

Intermountain region.

● More than half of planners formally write their plans (58 percent), but many planners,

especially among dairy, cotton gin, and service cooperatives, do not write their

plans.

● Of cooperative types, the highest proportion of those who formally write plans are in

farm supply cooperatives followed closely by marketing cooperatives.

● Most medium and larger planners formally write their plans, while those in the small

size groupings do not write their plans.

● Most cooperative planners actively monitor their plans,with fruit and vegetable, grain

and oilseed, other marketing, and farm supply cooperatives having the highest proportion of monitoring.

● A majority of cooperative planners in all the sizes actively monitor their plans. Those

planners in the super size category monitor their plans the most.

● Ninety-eight percent of cooperative planners have directors who are either "very

involved" or "somewhat involved" in the cooperative’s strategic planning. Directors in

only 2 percent are "not involved." 

iii
Highlights ● Small cooperative planners had the lowest proportion of directors who were "very

involved" in planning, while super planners had the highest proportion of "very

involved" directors.

● More than 80 percent of dairy cooperative planners had directors who were "very

involved" while other marketing and other service had the lowest proportions of "very

involved" directors.

● The planning interval of planners did not vary greatly among regions, sizes, and

types of cooperatives and was close to the overall average of 11 months in all cases.

Major findings of cooperative strategic planning and financial position (1998) and

change (1994 vs. 1998) include:

● On average, all cooperatives surveyed (both planners and non-planners) were financially healthy in 1998.

● Average income levels were fairly high and positive for both, and average financial

ratios were either on the strong side or in relatively healthy ranges.

● On average, marketing cooperatives were largest and service cooperatives were

smallest in terms of sales and assets in the three type categories analyzed.

● Service cooperatives had the highest average profitability.

● Farm supply cooperative planners were the only grouping under double digits for the

profitability ratio (ROE).

● Service cooperative non-planners and marketing cooperative planners were the

most leveraged and service planners, farm supply non-planners, and marketing nonplanners were the least leveraged.

● The small category of cooperative planners and non-planners was the only size

grouping that had average profitability ratios (ROE) below double digits, but those

ratios were still healthy. Adequate financial strength was evident among both planning and non-planning cooperatives in all the size categories but with varying

degrees of profitability, leverage, and efficiency.

● In comparing 1994 with 1998, more cooperative planners than non-planners had an

increase in sales, net income, total assets, and total equity.

● Only slightly more planners than non-planners had an increase in long-term liabilities.

● Similar proportion findings for the financial indicator changes fit marketing cooperative planners and non-planners, but that did not hold completely true for farm supply

in that less planners had an increase in long-term liabilities.

● For service cooperatives fewer planners than non-planners experienced increases in

long-term liabilities.

iv
Highlights ● Profitability, as measured by return on equity, increased for proportionally more overall, farm supply, marketing, small, and large planners than non-planners. More service, medium, and super cooperative non-planners experienced decreased profitability.

● The current ratio increased for proportionately more overall, marketing, service,

small, large, and super planners than non-planners. However, fewer farm supply and

medium planners than non-planners had the current ratio increase.

● Proportionately fewer planners than non-planners overall and in every type and size

grouping had an increase in asset turnover.

Large farmer cooperatives, with their wide geographical boundaries and service and

greater complexity of operations, were expected to be significant planners and the

results backed up that view.

Not many cooperative planners prepared formal written plans, but the degree by which

plans were monitored shows that they understand the importance of following and perhaps adjusting plans.

Directors are involved in the strategic planning process, but not to the degree expected

in small- and medium-size cooperatives, where they are usually considered to be an

intricate part of strategic planning.

A cursory analysis of financial position and change shows little significant difference

between the financial status of planners vs. non-planners. Growth in sales and assets

and strong profitability of both planners and non-planners were found and that complicates deriving a clear picture of strategic planning results in financial aspects.

This study provides a national view of the extent and attributes of farmer cooperative

strategic planning. More research is needed to further flesh out information, details,

and implications of long-range strategic planning in cooperatives. 

v
Strategic Planning in Farmer Cooperatives

James J. Wadsworth

Agricultural Economist

Rural Business-Cooperative Service

Introduction

The concept of strategic planning has attracted

much attention in recent years. Many cooperatives

have embraced the concept, folding strategic planning

principles and practices into their operational and governance structures. A significant number have realized

a need to be proactive and visionary, developing longrange strategic plans for better cooperative positioning.

Also, strategic planning is continually being

viewed and studied by educators, economists, and

other industry analysts. Leaders and professionals

have sought to understand how best to use strategic

planning in various cooperative structures and the

prevalence of strategic planning in cooperatives and

how it affects performance and position.

Rural Business-Cooperative Service (RBS) has

published a number of reports 1 about strategic planning in agricultural cooperatives. Books, manuals, and

other resources describe the subject. Other researchers

have studied the degree of strategic planning in businesses and cooperatives in various geographic areas

and its impact on performance. The literature comparing strategic planning to performance in investorowned firms (IOFs) is fairly rich. For example, a table

in Rhyne’s research lists 14 different studies of firms

within various industries that analyzed the relationship between strategic planning and performance. His

own study did the same and there are others.

Though not extensive, a few studies compare performance to strategic planning among cooperatives.

Peterson and Stiles examined financial performance of

farm supply businesses in Michigan relative to their

degree of planning (measured by specific types of

planning conducted). Azzam and Turner looked at

various management practices, including strategic

planning, and their relevance to improved financial

performance of agricultural cooperatives in South

Dakota, Nebraska, and Iowa. Kenkel, Sanders, and

Smith examined Oklahoma and Texas cooperative

management practices, including strategic planning, as

related to cooperative strength.

Studies have added to the literature in productive

ways, providing a more comprehensive view of how

strategic planning is developed in cooperatives and in

some cases, its significance in relation to performance.

However, the extent of strategic planning by cooperatives has not been described at the national level. This

study explains the prevalence of planning among agricultural cooperatives, detailing certain aspects of its

use, and assessing its use with financial position and

change. Specifically, this study shows the extent of

long-range strategic planning among agricultural

cooperatives, how formally it is conducted by those

who use it, and how financial position and change

compare with its use.

This study assumes that farmer cooperative leaders understand long-range strategic planning and

know whether they conduct it. Limitations of the survey instrument used prevented extensive questioning

of specific aspects of strategic planning.

Survey Design and Response

Data for the study were collected using USDA’s

annual survey of farmer cooperatives. In addition to

other questions, a question with four subcategories

was asked about long-range strategic planning in the

1999 survey (for fiscal 1998).

The question asked if the cooperative conducts

long-range strategic planning. If they did, the coopera1

1 For example, RBS Research Report 112, Strategic Planning: A

Conceptual Model for Small and Midsize Farmer Cooperatives;

Research Report 103, Strategic Planning Systems of Large Farmer

Cooperatives; and Cooperative Information Report 48, Strategic

Planning Handbook for Cooperatives.
tives were asked to indicate: (1) whether plans are put

into a formal written document; (2) how involved

(very, somewhat, or not) the board of directors arein

the planning; (3) whether the plans are actively monitored; and (4) how often the plans arerevised

(months). (Appendix note 2 shows questions used in

the survey.)

About 77 percent (2,816) of 3,651 U.S. farmer

cooperatives were asked to provide information on

their degree of long-range strategic planning. The

remaining 23 percent (835)—fishery, wool and mohair,

tobacco, and other selected cooperatives—were polled,

but not on the strategic planning issue. Of those 2,816

cooperatives sent surveys with strategic planning

questions, 1,282 responded (45 percent) to the surveys.

The annual survey of farmer cooperatives collects

other data (i.e., financial, operational, structural, etc.).

Those corresponding to strategic planning question

respondents were combined with the strategic planning data. This allowed for cross tabulation of strategic

planning results by cooperative type, size, structure,

region, and financial position.

Table 1 shows response rates by overall cooperative type (marketing, farm supply, and service).

Questionnaires were sent to 1,388 marketing cooperatives, the largest type to be surveyed, of which 612 (44

percent) responded. Half of the farm supply cooperatives, the second largest group (1,101) surveyed, provided information. Of the 327 service cooperatives,

only 116 (36 percent) responded.

Appendix table 1 provides the response rates of

cooperatives with a further breakdown of type (i.e.,

marketing and service). The smallest group surveyed

was other service (90), of which 35 responded (39 percent). The lowest response rate (31 percent) was

among dairy cooperatives where only 53 out of 168

responded.

Furthermore, appendix table 2 shows survey

response rates of cooperatives by region—North

Central had 536 out of 1,026 (52 percent) responding.

The Northeast region had the lowest response (43 out

of 135 cooperatives or 32 percent).

Results arereported for respondents from cooperatives that conduct long-range strategic planning

and those that do not conduct long-range strategic

planning. The attributes related to such planning (i.e.,

degree of director involvement, the writing and monitoring of plans and length of planning interval) are

reported for those who conduct strategic planning.

Results—Strategic Planning Incidence

and Aspects

This section reports on the incidence of longrange strategic planning by cooperatives and the various aspects of it. 2

Of the 1,282 respondent cooperatives across the

United States, 673 (52 percent) conduct long-range

strategic planning, while 609 (48 percent) do not conduct long-range strategic planning (table 2). This sample indicates that strategic planning is conducted by

slightly more than half of the farmer cooperatives.

Planning by Type and Structure

Respondents were classified by type or function

categories (appendix note 1 explains methodology).

Seven categories of cooperative type are consolidated

into groupings of marketing, farm supply, and service.

In some instances, data pertaining to all seven categories (dairy,fruit and vegetable, grain and oilseed,

other marketing, farm supply, cotton gin, and other

service) are shown in appendix tables and referred to

in the text.

Table 2 shows respondents who do or do not conduct long-range strategic planning by type and structure. Marketing cooperatives (57 percent) do more

strategic planning than farm supply cooperatives (52

percent). Only 32 percent of service cooperatives are

planners.

2

Table 1—Number of cooperatives surveyed on

questions on strategic planning, and respondents,

by type, 1998

Number of Cooperatives

Cooperative type 1 Surveyed 2 Respondents3 Response Rate

--------------Number------------ Percent

Marketing 1,388 612 44.1

Farm supply 1,101 554 50.3

Service 327 116 35.5

Total 2,816 1,282 45.5

1 See appendix note 1 for description of type categories.

2 Number of cooperatives sent questionnaires with strategic

planning questions.

3 Number of cooperatives that responded to questionnaire

questions.

2 Strategic planning refers to long-range strategic planning and the

terminology planners and non-planners refers to those

cooperatives that do or do not conduct long-range strategic

planning.
The other marketing and grain and oilseed cooperative types have the highest proportions (63 and 62

percent, respectively) of planners (appendix table 3).

Excluding those and farm supply, the proportion of

cooperative planners in the other groupings is lower

than non-planners—less than 50 percent of dairy,fruit

and vegetable, cotton gin, and other marketing cooperative types were planners.

Regional and regional mixed cooperatives have

the highest proportions of planners (73 and 64 percent,

respectively). Fifty-nine percent of regional federated

cooperatives are planners. Of all four structural groupings shown in table 2, local cooperatives (51 percent)

have the lowest proportion of planners.

Planning by Size and Overall Type

To provide a deeper sense of strategic planning in

the respondent cooperatives, table 3 divides respondents by size and by size and overall type.

Cooperatives are grouped by size according to total

sales. Small cooperatives have total sales up to $5 million, medium have sales from $5 million up to $10 million, large have sales from $10 million up to $20 million, and super have sales of $20 million and more.

The small cooperatives group is the largest (436)

of which 134 (31 percent) conduct strategic planning

and 302 (69 percent) do not plan. Fifty-three percent of

the medium cooperatives and about 60 percent of the

large cooperatives are planners. Of the 357 super

cooperatives, 264 (74 percent) are planners.

An additional analysis was conducted on the

largest cooperative respondents to see if strategic planning increased as cooperatives gro w. A super category

was developed breaking sales into groups of greater

than $100 million, $50 million up to $100 million, and

$20 million up to $50 million.

Proportionally, more of the largest grouping of

super respondents are planners. Eighty-three percent

of those with over $100 million in sales conduct strategic planning, 76 percent of those in the $50 to $100 million grouping, and 70 percent of those in the $20 million to $50 million grouping.

Fifty percent or more of large and super respondents in each overall type grouping are planners. The

highest proportion of planners are super farm supply

cooperatives (78 percent), while the lowest proportion

are small service cooperatives (26 percent). Small- and

medium-sized cooperatives do the least amount of

planning across cooperative types in general, with the

exception of medium farm supply cooperatives—63

percent of those are planners.

Most farm supply respondents are small (44 percent) and a major proportion (67 percent) of those are

non-planners. On the other hand, most marketing

respondents fall into the super category (46 percent)

and the major proportion of those (73 percent) are

planners. Overall, 70 percent of large and super farm

supply cooperatives and 68 percent of the same marketing cooperatives are planners.

Planning by Region and Size

Table 4 shows respondents as grouped into six

regional categories according to the State where they

are headquartered—Pacific, Intermountain, Great

Plains, Southeast, North Central, and Northeast (table

3 footnote lists States in each region).

3

Table 2—Degree of long-range strategic planning by type and by structure, 1998

Category Planners Non-planners Total1

No. Percent 2 No. Percent No. Percent

All respondents 673 52.5 609 47.5 1,282 100.0

Marketing3 349 57.0 263 43.0 612 47.7

Farm supply 287 51.8 267 48.2 554 43.2

Service 37 31.9 79 68.1 116 9.1

Local 584 50.7 567 49.3 1,151 89.8

Regional 57 73.1 21 26.9 78 6.1

Regional federated 17 58.6 12 41.4 29 2.3

Regional mixed 14 63.6 8 36.4 22 1.7

1 Category total number and percent of all respondents.

2 Percent of total for category.

3 See appendix note 1 for explanation of type/function categories and see appendix table 2 for further breakdown of type statistics.
The North Central region is largest with 536

respondents (42 percent of all respondents). Fifty-eight

percent of those are planners and 42 percent are nonplanners. Of the 571 in the Great Plains, 188 (51 percent) are planners. Less than 50 percent of respondents

in the Northeast and Southeast regions are planners.

Proportionally,respondents in the Intermountain

region do the most strategic planning and those in the

Southeast do the least.

Strategic planing is done by proportionally more

super cooperatives (than other sizes) in all regions

except the Intermountain region—71 percent in the

Pacific region, 80 percent in the Intermountain, 76 percent in the Great Plains, 52 percent in the Southeast, 77

percent in the North Central, and 73 percent in the

Northeast. The most strategic planning is done by

medium cooperatives (90 percent) in the

Intermountain region. Across all regions, less than 40

percent of small cooperatives are planners.

W ritten Formality and Monitoring

Out of those 673 cooperatives who conduct

strategic planning, 58 percent formally write their

plans, and 74 percent actively monitor them (table 5).

By Type and Size—Table 5 shows that while monitoring plans seems to be prevalent among cooperative

strategic planners of all types and sizes, formally writing plans is not prevalent among them. A slim majority of farm supply (62 percent) and marketing planners

(57 percent) write their plans, but only 38 percent of

service planners write their plans.

The further breakdown of cooperative types

reveals more information about strategic planning. The

majority of fruit and vegetable (51 percent), grain and

oilseed (59 percent), and other marketing (59 percent)

respondents that conduct strategic planning formally

puts them in writing, while most dairy (62 percent),

4

Table 3—Degree of long-range strategic planning by overall type and size, 1998

Size/overall type 1 Planners Non-planners Total 2

No. Percent No. Percent No. Percent

All respondents 673 52.5 609 47.5 1282 100.0

Small 134 30.7 302 69.3 436 34.0

Medium 139 53.3 122 46.7 261 20.4

Large 136 59.6 92 40.4 228 17.8

Super 264 73.9 93 26.1 357 27.8

Marketing 349 57.0 263 43.0 612 47.7

Small 31 30.1 72 69.9 103 16.8

Medium 39 40.6 57 59.4 96 15.7

Large 76 57.1 57 42.9 133 21.7

Super 203 72.5 77 27.5 280 45.8

Farm Supply 287 51.8 267 48.2 554 43.2

Small 80 32.8 164 67.2 244 44.0

Medium 90 62.9 53 37.1 143 25.8

Large 59 63.4 34 36.6 93 16.8

Super 58 78.4 16 21.6 74 13.4

Service 37 31.9 79 68.1 116 9.1

Small 23 25.8 66 74.2 89 76.7

Medium 10 45.5 12 54.5 22 19.0

Large 1 50.0 1 50.0 2 1.7

Super 3 100.0 3 2.6

1 Size measured in terms of total sales: small—up to $5 million; medium—$5 million to $10 million; large—$10 million to $20 million; and

super—$20 million and more. Overall marketing includes the types of dairy, fruit and vegetable, grain and oilseed, and other marketing.

Service groups the types of cotton ginning and other service. Farm supply is the same.

2 Category total and percent of all respondents; size total and percent of type total; i.e., size category totals of all respondents shown as a

percent of all respondents, overall type totals shown as a percent of all respondents, while totals of size groupings under overall types shown

as a percent of the total overall type. 
5

Table 4—Degree of long-range strategic planning overall and by size and region, 1998

Size/Region 1 Planners Non-planners Total

No. Percent No. Percent No. Percent

All respondents 673 52.5 609 47.5 1,282 100.0

Pacific 62 51.2 59 48.8 121 9.4

Small 16 39.0 25 61.0 41 33.9

Medium 1 10.0 9 90.0 10 8.3

Large 10 47.6 11 52.4 21 17.4

Super 35 71.4 14 28.6 49 40.5

Intermountain 42 65.6 22 34.4 64 5.0

Small 7 35.0 13 65.0 20 31.2

Medium 17 89.5 2 10.5 19 29.6

Large 6 60.0 4 40.0 10 15.6

Super 12 80.0 3 20.0 15 23.4

Great Plains 188 50.7 183 49.3 371 28.9

Small 56 33.9 109 66.1 165 44.5

Medium 42 53.2 37 46.8 79 21.3

Large 29 61.7 18 38.3 47 12.7

Super 61 76.3 19 23.8 80 21.6

Southeast 50 34.0 97 66.0 147 11.5

Small 15 22.4 52 77.6 67 45.6

Medium 17 48.6 18 51.4 35 23.8

Large 4 22.2 14 77.8 18 12.2

Super 14 51.9 13 48.1 27 18.3

North Central 313 58.4 223 41.6 536 41.8

Small 32 27.1 86 72.9 118 22.0

Medium 61 53.0 54 47.0 115 21.4

Large 86 67.2 42 32.8 128 23.9

Super 134 76.6 41 23.4 175 32.6

Northeast 18 41.9 25 58.1 43 3.4

Small 8 32.0 17 68.0 25 58.1

Medium 1 33.3 2 66.7 3 6.9

Large 1 25.0 3 75.0 4 9.3

Super 8 72.7 3 27.3 11 25.6

1 Size measured in terms of total sales: small—up to $5 million, medium—$5 million to $10 million, large—$10 million to $20 million, and

super—$20 million and more. States included in each region: Pacific—CA, OR, WA, AK, and HI; Intermountain—AZ, NM, CO, UT, NM, ID,

WY, and MT; Great Plains—ND, SC, NE, KS, OK, and TX; Southeast—AR, LA, MS, AL, GA, FL, SC, NC, TN, KY, VA, and WV; North

Central—MN, IA, MO, IL, WI, IN, OH, and MI; Northeast—MD, DC, DE, PA, NY, NJ, CT, RI, MA, VT, NH, and ME. 
cotton ginning (68 percent), and other service (67 percent) cooperative planners do not write their plans

(appendix table 4).

Seventy-four percent of marketing and farm supply planners monitor plans, as do 54 percent of service

cooperative planners (table 5). Appendix table 4 shows

that the majority of most cooperative types (above 60

percent) actively monitor their plans. But only half of

the dairy and cotton ginning cooperative planners

actively monitor their plans. Most monitoring is done

by other marketing cooperatives, followed by grain

and oil, and then farm supply.

More super cooperative planners write and

actively monitor their strategic plans than those in

smaller sizes (table 6). Sixty-eight percent of super

cooperatives formally write their strategic plans and

6

Table 5—Strategic planning attributes of cooperative planners by type, 1998

Formally Don’t Formally Actively Don’t Actively

Type 1 Write Plans Write Plans Monitor Plans Monitor Plans

No. Percent No. Percent No. Percent No. Percent

All respondents (n=673) 387 57.5 286 42.5 495 73.6 178 26.4

Marketing (n=349) 198 56.7 151 43.3 257 73.6 92 26.4

Farm supply (n=287) 177 61.7 110 38.3 212 73.9 75 26.1

Service (n=37) 12 32.4 25 67.6 20 54.1 17 45.9

1 See appendix note 1 for explanation of type/function categories and see footnote 1 in table 3 for further breakdown of type statistics. 

Table 6—Strategic planning attributes of cooperative planners by overall type and size, 1998

Formally Don’t Formally Actively Don’t Actively

Type/Size 1 Write Plans Write Plans Monitor Plans Monitor Plans

No. Percent No. Percent No. Percent No. Percent

All respondents (n=673) 387 57.5 286 42.5 495 73.6 178 26.4

Small 60 44.8 74 55.2 81 60.4 53 39.6

Medium 71 51.1 68 48.9 103 74.1 36 25.9

Large 76 55.9 60 44.1 96 70.6 40 29.4

Super 180 68.2 84 31.8 215 81.4 49 18.6

Farm supply (n=287) 177 61.7 110 38.3 212 73.9 75 26.1

Small (n=80) 42 52.5 38 47.5 48 60.0 32 40.0

Medium (n=90) 50 55.6 40 44.4 69 76.7 21 23.3

Large (n=59) 40 67.8 19 32.2 45 76.3 14 23.7

Super (n=58) 45 77.6 13 22.4 50 86.2 8 13.8

Marketing (n=349) 198 56.7 151 43.3 263 75.4 86 24.6

Small (n=31) 14 45.2 17 54.8 23 74.2 8 25.8

Medium (n=39) 16 41.0 23 59.0 27 69.2 12 30.8

Large (n=76) 35 46.1 41 53.9 50 65.8 26 34.2

Super (n=203) 133 65.5 70 34.5 163 80.3 40 19.7

Service (n=37) 12 32.4 25 67.6 20 54.1 17 45.9

Small (n=23) 4 17.4 19 82.6 10 43.5 13 56.5

Medium (n=10) 5 50.0 5 50.0 7 70.0 3 30.0

Large (n=1) 1 100.0 0 0.0 1 100.0 0 0.0

Super (n=3) 2 66.7 1 33.3 2 66.7 1 33.3

1 See appendix note 1 for explanation of type/function categories and see footnote 1 in table 3 for further breakdown of type statistics. 
81 percent actively monitor them. Only 45 percent of

small planners write their strategic plans, but 60 percent actively monitor them. A slight majority of medium (51 percent) and large (56 percent) cooperatives

write their plans, but a good proportion (74 and 71

percent, respectively) of these planners monitor their

plans.

Proportionally more farm supply cooperatives

across size groupings than marketing cooperatives formally write their plans, but more marketing cooperatives across size groupings actively monitor strategic

plans. More super-sized cooperatives in both the farm

supply and marketing categories write and monitor

their strategic plans than do other sized cooperatives

in those type groupings.

By Region and Size—Proportionately more of the

cooperative planners in the Pacific and Intermountain

regions write and actively monitor their strategic plans

than do planners in the other regions (table 7).

However, 50 percent or more of the cooperative planners in every region but the Northeast write their

plans and 72 percent of those in the same regions

actively monitor their plans. More Northeast planners

do not write plans (67 percent) than do, and only 50

percent actively monitor them.

Higher proportions of small planners in the Great

Plains, Southeast, and Northeast, medium planners in

the North Central, and large in the Northeast, did not

write plans.

Super-sized planners in the Great Plains (71 percent) and North Central (70 percent) regions had the

highest proportions of formal strategic plan writers.

Ninety-three percent of super-sized cooperatives in the

North Central region actively monitor plans, the highest proportion among respondents by type and size.

Directors’ Involvement 

A majority (58 percent) of the 673 cooperative

respondents who conduct strategic planning said

directors are "very" involved in the process, while 40

percent said their directors are "somewhat" involved

(table 8). Only 2 percent indicated that their directors

are not involved.

Fifty percent or more of planners in all six

regions, in each size category, and in the three different

types, have directors who are "very" involved in the

process. The highest proportions are cooperatives in

the Pacific region (66 percent) and those of super size

(63 percent). The lowest proportions of planners with

"very" involved directors are small and in the

Northeast. Similar proportions of marketing, farm supply, and service types have "very" involved directors

(all in the 57- to 59-percent range). Planners with the

highest proportion of "somewhat" involved directors

are small (46 percent) and in the Northeast (50 percent).

Over 80 percent of dairy cooperative planners

have directors who are "very" involved in the process

(appendix table 5). Other marketing cooperatives (51

percent) have the lowest proportion of planners whose

directors are "very" involved in the process.

Planning Session Interval

Cooperative respondents who conduct strategic

planning do so every 11 months on average (table 9).

The minimum and maximum planning interval of the

respondents is 1 month and 60 months, respectively.

By Region, Size, and Type—Pacific region cooperatives have the longest average planning interval (12

months), while those in the Northeast have the shortest (9 months). A number of cooperatives in the

Pacific, Great Plains, and North Central regions have

planning intervals of up to 5 years; Intermountain up

to 3 years; Southwest up to 2 years; and Northeast up

to 1 year. The shortest planning interval is 1 month in

every region (and for all size and type categories).

Across size groupings, respondents have similar

average planning intervals—small cooperatives 11

months and medium-, large-, and super-sized cooperatives, 12 months. Small and large cooperatives had a

maximum interval of 4 years, and medium and large, a

maximum of 5 years. Marketing and farm supply planners have an average planning interval of 10.5 months.

Service planners’ interval is 12 months.

Appendix table 6 shows that dairy cooperatives

have the shortest average planning interval of 10

months, followed by fruit and vegetable, grain and

oilseed, other marketing, farm supply, and other service cooperatives at 11 months. The longest average

interval is in cotton ginning cooperatives at 13 months.

Maximum interval periods of 5 years include

some grain and oilseed, and farm supply cooperatives.

Eighteen months was the longest interval among dairy

cooperatives, while fruit and vegetable had 2 years,

and 3 years for other service, and 4 years for other

marketing and cotton ginning cooperatives.

Summary—Prevalence and Attributes

Strategic planning is conducted by slightly over

half of the farmer cooperatives. Marketing cooperatives, excluding dairy and fruit and vegetables, conduct proportionately more strategic planning than

7
8

Table 7—Strategic planning attributes of cooperative planners by region and size, 1998

Formally Don’t Formally Actively Don’t Actively

Region/Size 1 Write Plans Write Plans Monitor Plans Monitor Plans

No. Percent No. Percent No. Percent No. Percent

Pacific (n=62) 41 66.1 21 33.9 51 82.3 11 17.7

Small 9 56.3 7 43.8 13 81.3 3 18.8

Medium 1 100.0 0 0.0 1 100.0 0 0.0

Large 7 70.0 3 30.0 8 80.0 2 20.0

Super 24 68.6 11 31.4 29 82.9 6 17.1

Intermountain (n=42) 28 66.7 14 33.3 35 83.3 7 16.7

Small 4 57.1 3 42.9 5 71.4 2 28.6

Medium 11 64.7 6 35.3 15 88.2 2 11.8

Large 5 83.3 1 16.7 5 83.3 1 16.7

Super 8 66.7 4 33.3 10 83.3 2 16.7

Great Plains (n=188) 103 54.8 85 45.2 135 71.8 53 28.2

Small 22 39.3 34 60.7 33 58.9 23 41.1

Medium 23 54.8 19 45.2 31 73.8 11 26.2

Large 15 51.7 14 48.3 22 75.9 7 24.1

Super 43 70.5 18 29.5 49 80.3 12 19.7

Southeast (n=50) 25 50.0 25 50.0 37 74.0 13 26.0

Small 6 40.0 9 40.0 9 60.0 6 40.0

Medium 9 52.9 8 47.1 12 70.6 5 29.4

Large 2 50.0 2 50.0 3 75.0 1 25.03

Super 8 57.1 6 42.9 13 92.9 1 7.1

North Central (n=313) 184 58.8 129 41.2 228 72.8 85 27.2

Small 16 50.0 16 50.0 17 53.1 15 56.9

Medium 27 44.3 34 55.7 44 72.1 17 27.9

Large 47 54.7 39 45.3 58 67.4 28 32.6

Super 94 70.1 40 29.9 109 81.3 25 18.7

Northeast (n=18) 6 33.3 12 66.7 9 50.0 9 50.0

Small 3 37.5 5 62.5 4 50.0 4 50.0

Medium 1 100.0 1 100.0

Large 1 100.0 1 100.0

Super 3 37.5 5 62.5 5 62.5 3 37.5

1 States included in each region: Pacific—CA, OR, WA, AK, and HI. Intermountain—AZ, NM, CO, UT, NM, ID, WY, and MT. Great Plains—

ND, SC, NE, KS, OK, and TX. Southeast—AR, LA, MS, AL, GA, FL, SC, NC, TN, KY, VA, and WV. North Central—MN, IA, MO, IL, WI, IN,

OH, and MI. Northeast—MD, DC, DE, PA, NY, NJ, CT, RI, MA, VT, NH, and ME. Size measured in terms of total sales: Small—up to $5

million. Medium—$5 million to $10 million. Large—$10 million to $20 million. Super—$20 million and more. n=number of cooperatives in

category who conduct strategic planning.
other types of cooperatives. Just over half of farm supply cooperatives plan while most service-type cooperatives don’t plan.

Large cooperatives plan more than smaller cooperatives, which is consistent when comparing regional

to local structure—moreregionals plan than locals.

Most planners are in the North Central region,

but a higher proportion relative to the number of

respondents are in the Intermountain region.

More than half of planners formally write their

plans (58 percent), but many do not write their plans,

especially among dairy, cotton gin, and service cooperatives. Farm supply planners are most active in writing plans. A majority of medium and larger planners

formally write their plans, while most in the small size

groupings do not. A majority of planners in the Pacific,

Intermountain, Great Plains and North Central regions

formally write their plans, 50 percent in the Southeast,

and only 33 percent in the Northeast.

Most cooperative planners actively monitor their

plans. It’s more prevalent among fruit and vegetable,

grain and oilseed, other marketing, and farm supply

cooperatives. A majority of cooperative planners of all

sizes actively monitor their plans, with super planners

doing the most monitoring. A relatively high majority

of cooperative planners in every region actively monitor their plans, but only half in the Northeast.

Directors are either "very" or "somewhat"

involved in planning in 98 percent of cooperatives that

plan while only 2 percent have directors who are "not"

involved in planning. Small cooperative planners have

the lowest proportion of directors who are "very"

involved in planning, while super planners have the

highest proportion of "very" involved directors. More

than 80 percent of dairy cooperative planners have

directors who are "very" involved compared with the

lowest proportions in other marketing and other service.

9

Table 8—Directors’ involvement in cooperative strategic planning, by region, size, and type

Directors Directors Directors

Category 1 Very Involved Somewhat Involved Not Involved

No. Percent No. Percent No. Percent

United States (n=673) 2 394 58.5 268 39.8 12 1.8

Region:

Pacific (n=62) 24 66.1 20 32.3 1 1.6

Intermountain (n=42) 24 57.1 17 40.5 1 2.4

Great Plains (n=188) 107 56.9 76 40.4 6 3.2

Southeast (n=50) 29 58.0 20 40.0 1 2.0

NorthCentral (n=313) 184 58.8 126 40.3 3 1.0

Northeast (n=18) 9 50.0 9 50.0

Size:

Small (n=134) 67 50.0 62 46.3 5 3.7

Medium (n=139) 80 57.6 57 41.0 3 2.2

Large (n=136) 81 59.6 54 39.7 1 0.7

Super (n=264) 166 62.9 95 36.0 3 1.1

Type 3

Marketing (n=349) 208 59.5 136 38.8 6 1.7

Farm supply (n=287) 164 57.1 118 41.1 5 1.7

Service (n=37) 22 59.5 14 37.8 1 2.7

1 See previous tables for explanations of region, size, and type.

2 Respondents who do long-range strategic planning.

3 See appendix note 1 for explanation of type/function categories and see footnote 1 in appendix table 3 for further breakdown of type

statistics.
The planning interval averaged 11 months among

regions, sizes, and types of cooperatives.

Financial Position and Change

Financial data from the 1998 and 1994 annual surveys—corresponding to the strategic planning survey

question respondents—were analyzed. Because pertinent financial data for some respondents were missing

for the years analyzed, the data field was narrowed to

635 observations. The analysis is conducted on those

635, or 49.5 percent of the total respondents of the

entire strategic planning data set.

Table 10 compares the cooperative long-range

strategic planning proportions between the two data

sets. Of the 635 cooperatives in the financial database,

362 (57 percent) conduct strategic planning, while 273

(43 percent) do not conduct strategic planning.

Financial Position in 1998

Table 11 shows financial data of cooperatives that

do and do not plan. Proportionally more cooperatives

in larger size categories conduct strategic planning

than do those in the smaller categories. As further

defined, average total sales of cooperatives that conduct strategic planning were $79.8 million and average

total assets were $32.4 million in 1998. In contrast,

average total sales of those that do not plan were $21.9

million and total assets averaged $5.8 million. For

planners and non-planners combined, total sales for

1998 averaged $54.9 million, and total assets about $21

million.

This relative size difference was prevalent among

all the balance sheet and income statement variables

examined. For instance, average total equity for cooperative planners was $13.7 million and $3 million for

non-planners.

10

Table 9—Strategic planning interval of cooperative

planners by region, size, and type, 1998

Planning interval (months)

Standard 

Category 1 Average Maximum 2 Deviation

United States (n=673) 11.4 60 6.3

Region:

Pacific (n=62) 12.3 60 9.1

Intermountain (n=42) 11.3 36 6.1

Great Plains (n=188) 11.6 60 7.0

Southeast (n=50) 10.4 24 5.1

NorthCentral (n=313) 11.5 60 5.4

Northeast (n=18) 9.2 12 4.2

Size:

Small (n=134) 10.8 48 6.3

Medium (n=139) 11.7 60 6.2

Large (n=136) 11.6 48 5.9

Super (n=264) 11.5 60 6.6

Type 3

Marketing (n=349) 10.5 60 5.7

Farm supply (n=287) 10.6 60 3.9

Service (n=37) 12.2 48 9.4

1 See previous tables for explanations of region, size, and type.

2 The minimum planning interval was 1 month in all cases.

3 See appendix table 5 for further breakdown of type statistics.

Table 10—Degree of long-range strategic planning, all respondents and financial data base respondents

Planners Non-planners Total

No. Percent 1 No. Percent No. Percent

All respondents 673 52.5 609 47.5 1,282 100.0

Financial data base

Respondents 362 57.0 273 43.0 635 49.5 2

1 Percent of total in row.

2 Percent of all respondents.
Selected financial ratios show mixed results

between planners and non-planners. Table 11 rations

indicate that planners and non-planners had nearly

equal profitability in 1998 and both at healthy levels.

However, planners were more leveraged and had

lower asset turnover than non-planners. On average,

planners had a significantly lower current ratio, a

higher long-term liabilities to equity ratio, and a significantly lower sales to assets ratio. Yet, most ratios were

in a healthy range.

Overall Cooperative Type—Similarly to overall

respondents, farm supply cooperative planners arelarger than non-planners (table 12). Average sales of farm

supply cooperative planners were $48.9 million in 1998

with total assets of $29.1 million, compared with nonplanners with total sales of $9 million and total assets

of $4.1 million.

Farm supply cooperative planners were more

profitable than non-planners (return on equity of 11

percent and 7.3 percent, respectively), but they were

slightly more leveraged. Asset turnover among planners and non-planners of farm supply cooperatives

was similar.

Marketing cooperative planner numbers exceed

non-planners (table 13). Average total sales of planners

were $110.1 million compared with $39.4 million of

non-planners. Total assets averaged $36.9 million for

marketing cooperative planners and about $8.4 million

for non-planners.

Marketing cooperative planners were slightly less

profitable than non-planners with return on equity—

12.4 percent versus 12.8 percent. Planners were more

highly leveraged than non-planners with a current

ratio of 1.6 and long-term liabilities to equity of 27 percent, compared with non-planners current ratio of 4.4

and long-term liabilities to equity of 15 percent. Asset

turnover was also comparatively lower among marketing planners.

Table 14 shows that service cooperatives are

smaller in terms of average sales and total assets com11

Table 11—Selected operating statement, balance sheet, and ratio data, 1998 1

Planners Non-planners All Respondents 2

Total sales $79,840,179 $21,927,617 $54,942,337

Net income 1,365,720 367,258 935,321

Current assets 16,178,122 3,241,075 10,616,210

Long-term assets 16,495,104 2,600,581 10,512,131

Total assets 32,396,469 5,841,656 20,979,990

Working capital 3,727,120 1,085,456 2,591,412

Current liabilities 12,451,002 2,155,619 8,024,798

Long-term liabilities 6,212,314 601,583 3,800,141

Total liabilities 18,663,316 2,757,202 11,824,939

Total equity 13,733,153 3,084,894 9,155,240

Ratios

Profitability:

Return on equity 11.9% 11.2% 11.6%

Solvency:

Current ratio 1.8 4.6 3.0

Long-term liabilities/equity 22.5% 17.9% 20.5%

Operations:

Sales to assets 2.9 7.0 4.7

1 Data presented are means.

2 Those in financial data base, n=635.
pared with farm supply and marketing cooperatives.

However, service cooperative planners arerelatively

larger than non-planners. Average total sales of planners was $5.8 million and total assets $3.6 million compared with total sales and total assets of non-planners

of $2.6 million and $2.4 million, respectively.

Service cooperative planners had relatively lower

average profitability than non-planners, but both had

high levels. Return on equity of planners was 15.1 percent in 1998 versus 25.1 percent for non-planners.

Planners had a lower current ratio than non-planners

(2.1 to 4.9, respectively), but were less leveraged—

long-term liabilities to equity ratio of 13.4 percent versus 49.2 percent. Asset turnover was about the same

for service cooperative planners and non-planners.

Comparison of Types—Of the three overall types

analyzed, marketing cooperatives had the highest

average total sales and the highest asset levels, followed by farm supply cooperatives. Working capital

was also highest on average for marketing cooperatives, as were total liabilities and total equity. These

findings held true among planners and non-planners

in each grouping.

Table 15 shows the selected financial ratio statistics of the cooperative planners and non-planners by

overall types. Service cooperatives had the highest relative profitability on average, followed by marketing

cooperatives, but all three groupings had healthy levels.

From highest to lowest, the order of average profitability among the cooperatives was: 1) service non12

Table 12—Selected financial statement and ratio data for farm supply cooperatives, 1998 1

Planners Non-planners All Respondents 2

Farm Supply

Total sales $48,945,586 $9,188,578 $30,937,185

Net income 1,253,394 254,631 799,411

Current assets 13,306,428 2,283,880 8,313,636

Long-term assets 16,392,212 1,843,654 9,802,273

Total assets 29,165,577 4,127,534 17,824,303

Working capital 3,593,888 1,048,723 2,441,026

Current liabilities 9,712,540 1,235,157 5,872,611

Long-term liabilities 5,517,080 441,021 3,217,821

Total liabilities 15,229,621 1,676,178 9,090,431

Total equity 13,935,955 2,451,356 8,733,872

Ratios

Profitability:

Return on equity 11.0% 7.3% 9.4%

Solvency:

Current ratio 2.1 4.7 3.3

Long-term liabilities

to equity 17.6% 14.9% 16.4%

Operations:

Sales to assets 2.0 2.5 2.2

1 Data presented are means.

2 Farm supply cooperatives (majority of sales are farm supply) in financial data base, n=287 (157 planners, 130 non-planners). 
planners, 2) service planners, 3) marketing non-planners, 4) marketing planners, 5) farm supply planners,

and 6) farm supply non-planners.

The current ratio was more than 4 for non-planner cooperatives in all three type categories and near

or slightly less than 2 for planners. Current ratios

among different cooperative types were similar.

Service cooperative planners had the lowest long-term

liabilities to equity ratio, followed by farm supply nonplanners and then marketing non-planners. Service

cooperative non-planners had the highest ratio, followed by marketing planners. Marketing cooperatives

had the highest sales-to-asset turnovers of the types

with marketing non-planners well above the norm.

Position by Size—Cooperatives that conduct

strategic planning werelarger than those that didn’t in

terms of average total sales and total assets in all four

size categories. But, the difference in average size

between planners and non-planners was most significant in the super-size category.

Small cooperative planners averaged $3.1 million

in total sales and $1.8 million in total assets in 1998

(table 16). Non-planners in this grouping averaged

$2.4 million in total sales and $1.3 million in total

assets. Average total equity was larger for planners

($1.3 million) than non-planners ($900,000).

Small cooperative planners had slightly higher

average return on equity (8.6 percent) than non-planners (7.9 percent). The current ratio of planners in this

group was lower than non-planners, but so was the

long-term liabilities to equity ratio. Asset turnover was

the same for both planners and non-planners.

13

Table 13—Selected financial statement and ratio data for marketing cooperatives, 1998 1

Planners Non-planners All Respondents 2

Marketing

Total sales $110,113,176 $39,421,789 $89,924,181

Net income 1,510,875 469,409 1,110,311

Current assets 19,494,950 4,746,419 13,822,438

Long-term assets 17,584,316 794,189 12,195,165

Total assets 36,987,681 8,363,851 25,978,516

Working capital 4,035,084 1,309,073 2,986,618

Current liabilities 15,459,866 3,437,346 10,835,820

Long-term liabilities 7,175,619 794,189 4,721,223

Total liabilities 22,635,485 4,231,535 15,557,043

Total equity 14,352,196 4,133,317 10,421,858

Ratios

Profitability:

Return on equity 12.4% 12.8% 12.5%

Solvency:

Current ratio 1.6 4.4 2.7

Long-term liabilities

to equity 27.0% 15.3% 22.5%

Operations:

Sales to assets 3.8 12.9 7.3

1 Data presented are means.

2 Marketing cooperatives (majority of sales are marketing) in financial data base, n=312 (192 planners, 120 non-planners).
14

Table 14—Selected financial statement and ratio data for service cooperatives, 1998 1

Planners Non-planners All Respondents 2

Service

Total sales $5,842,931 $2,656,934 $3,807,433

Net income 359,710 454,912 420,533

Current assets 1,872,343 797,339 1,185535

Long-term assets 1,734,691 1,573,548

Total assets 3,607,034 2,370,887 2,817,273

Working capital 787,771 126,374 365,212

Current liabilities 1,084,572 670,9656 820,323

Long-term liabilities 381,325 504,196 459,826

Total liabilities 1,465,597 1,175,161 1,280,149

Total equity 2,141,137 1,195,726 1,537,124

Ratios

Profitability:

Return on equity 15.1% 25.1% 21.5%

Solvency:

Current ratio 2.1 4.9 3.9

Long-term liabilities

to equity 13.4% 49.2% 36.3%

Operations:

Sales to assets 1.6 1.8 1.7

1 Data presented are means.

2 Service cooperatives in financial data base, n=36 (13 planners, 23 non-planners). 

Table 15—Comparison of average financial ratios among types of cooperative planners

and non-planners, 1998 1

Ratio 2 R O E C R LTD/EQ S/A

Farm supply planners 11.0% 2.1 17.6% 2.0

Farm supply non-planners 7.3% 4.7 14.9% 2.5

Marketing planners 12.4% 1.6 27.0% 3.8

Marketing non-planners 12.8% 4.4 15.3% 12.9

Service planners 15.1% 2.1 13.4% 1.6

Service non-planners 25.1% 4.9 49.2% 1.8

1 Major types where farm supply is farm supply as previously determined, marketing includes all marketing, and service includes all service. 2 Ratios are ROE = return on equity, CR = current ratio, LTD/EQ = long-term liabilities to equity, S/A = sales to assets

turnover.
Medium cooperative planners were only slightly

larger than non-planners with $7.5 million to $7.4 million in total sales, and $3.7 million to $3.4 million in

total assets, respectively (table 17).

Medium planners had higher profitability than

non-planners, but were more leveraged. Average

return on equity was relatively high for both at 14.8

percent and 12.5 percent, respectively. Asset turnover

was lower for medium planners than non-planners.

Large cooperatives had average sales of $14.6

million for planners and $14.2 million for non-planners, while assets were $6.4 million and $5.3 million,

respectively (table 18). Total equity was $3.8 million for

planners and $3.4 million for non-planners.

Large non-planners were more profitable than

planners—average return on equity was 14 percent

and 11 percent, respectively. Large non-planners were

also less leveraged than planners and had higher asset

turnover.

Super cooperative planners had significantly

higher average sales than non-planners, $172 million

to $94 million (table 19). Total assets were significantly

higher also, an average $70 million for planners and

$21 million for non-planners. Total equity averaged

$28 million for planners and $9 million for non-planners.

Super cooperative non-planners had higher profitability, were less leveraged, and had higher asset

turnover than super planners.

Comparing Size—Table 20 compares the average

financial ratios among the different cooperative size

groupings for planners and non-planners. Super cooperative non-planners had the highest average prof15

Table 16—Selected financial statement and ratio data for small size grouping cooperatives, 1998 1

Planners Non-planners All Respondents 2

Small size grouping (total sales up to $5 million)

Total sales $3,112,207 $2,354,562 $2,600,284

Net income 116,392 78,773 90,902

Current assets 813,533 674,891 719,856

Long-term assets 1,004,855 625,696 747,274

Total assets 1,801,641 1,300,587 1,463,091

Working capital 396,718 405,996 402,987

Current liabilities 416,815 268,895 316,869

Long-term liabilities 104,313 114,497 111,194

Total liabilities 521,128 383,392 428,063

Total equity 1,280,513 918,155 1,035,677

Ratios

Profitability:

Return on equity 8.6% 7.9% 8.1%

Solvency:

Current ratio 2.9 6.2 5.1

Long-term liabilities

to equity 8.9% 21.1% 17.1%

Operations:

Sales to assets 2.3 2.3 2.3

1 Data presented are means.

2 Small cooperatives in financial data base, n=185 (60 planners, 125 non-planners).
itability followed closely by medium planners and

large non-planners. Small non-planners had the lowest

average profitability followed by small planners.

Small and medium non-planners had the highest

average current ratios, but all ratios were healthy.

Super planners had the lowest average current ratio

followed by large planners. Small planners had the

lowest average long-term debt to total equity ratio, followed by medium non-planners, large non-planners,

medium planners, large planners, super non-planners,

small non-planners, and super planners.

Super non-planners had the highest average asset

turnover, followed by large non-planners, medium

non-planners, and super planners. The average was in

the 2-3 range for all others.

Changes: 1994 Versus 1998

To gain some insight into whether long-range

strategic planning has been a factor in helping cooperatives make changes to their financial status, an analysis compared financial data of the cooperatives for

1994 and 1998. The previous section reviewed cooperatives’ financial status. This section provides additional

detail. Changes to sales, income, assets, liabilities,

equity, and some ratios werereviewed. Cooperatives

were grouped into categories depending on whether

they met the conditional change:

● increased sales equal to or greater 

than 15 percent

● increased sales between 5 and 15 percent

● increased sales up to 5 percent

● decreased sales

● increased pre-tax net income

16

Table 17—Selected financial statement and ratio data for medium size cooperatives, 1998 1

Planners Non-planners All Respondents 2

Medium size grouping (total sales $5 million up to $10 million)

Total sales $7,549,655 $7,398,280 $7,480,422

Net income 248,074 320,084 281,267

Current assets 1,642,952 1,613,954 1,629,689

Long-term assets 2,103,905 1,746,322 1,940,360

Total assets 3,746,857 3,360,277 3,570,049

Working capital 668,798 700,724 683,400

Current liabilities 974,154 913,231 946,290

Long-term liabilities 291,348 267,591 280,483

Total liabilities 1,265,502 1,180,822 1,226,773

Total equity 2,481,355 2,179,455 2,343,277

Ratios

Profitability:

Return on equity 14.8% 12.5% 13.7%

Solvency:

Current ratio 2.0 4.4 3.1

Long-term liabilities

to equity 14.8% 12.7% 13.8%

Operations:

Sales to assets 2.3 3.2 2.7

1 Data presented are means.

2 Medium cooperatives in financial data base, n=129 (70 planners, 59 non-planners).
● increased total assets

● decreased long-term liabilities

● increased total equity

● improved profitability (increased return on

equity ratio)

● increased current ratio

● reduced long-term liabilities to equity ratio

● increased sales to assets ratio 

A significant assumption is made in analyzing

these changes. It is assumed that the cooperatives who

conduct long-range strategic planning have been

doing it for at least 5 years to provide a 5-year window

of financial position review.Table 21 shows the percentage of cooperatives in the financial data base that

met the established change conditions grouped by

whether they do or do not conduct strategic planning.

Sales increased 15 percent or more for both planners and non-planners (57 and 41 percent, respectively). Sales increased for 76 percent of planners (24 percent had sales decrease) and for 68 percent of nonplanners (32 percent had decreased sales). Net income

before taxes increased for 63 percent of planners and

for 54 percent of non-planners.

Total assets increased for 86 percent of planners

and 81 percent of non-planners. Long-term liabilities

decreased for 30 percent of planners and for 32 percent

of non-planners indicating that both groups became

more leveraged over the period. Ninety percent of

planners had total equity increase as did 82 percent of

non-planners.

Return on equity increased for 49 percent of planners and 44 percent of non-planners signaling some

loss in profitability among cooperatives in both groups

during the period. Current asset ratio between 1994

17

Table 18—Selected financial statement and ratio data for large size cooperatives, 1998 1

Planners Non-planners All Respondents 2

Large size grouping (total sales $10 million up to $20 million)

Total sales $14,627,251 $14,156,773 $14,464,874

Net income 394,627 403,054 397,535

Current assets 2,894,404 2,584,405 2,787,414

Long-term assets 3,455,961 2,728,133 3,204,763

Total assets 6,350,365 5,312,538 5,992,177

Working capital 875,268 1,080,283 946,025

Current liabilities 2,019,137 1,504,122 1,841,389

Long-term liabilities 560,056 361,764 111,194

Total liabilities 2,579,193 1,865,886 2,333,007

Total equity 3,771,172 3,446,653 3,659,169

Ratios

Profitability:

Return on equity 11.3% 14.4% 12.4%

Solvency:

Current ratio 1.7 2.3 1.9

Long-term liabilities

to equity 17.6% 13.6% 16.2%

Operations:

Sales to assets 2.6 4.5 3.3

1 Data presented are means.

2 Large cooperatives in financial data base, n=113 (74 planners, 39 non-planners).
18

Table 19—Selected financial statement and ratio data for super size cooperatives, 1998 1

Planners Non-planners All Respondents 2

Super size grouping (total sales greater than $20 million)

Total sales $171,547,595 $94,066,129 $152,922,243

Net income 27,841,121 1,110,443 2,379,851

Current assets 34,673,895 12,088,739 29,244,771

Long-term assets 34,762,226 8,446,326 28,436,289

Total assets 68,906,432 20,535,065 57,278,699

Working capital 7,682,460 3,242,123 6,615,072

Current liabilities 26,991,435 8,846,616 22,629,700

Long-term liabilities 13,802,281 2,400,465 11,061,460

Total liabilities 40,793,716 11,247,081 33,691,160

Total equity 28,112,715 9,287,985 23,587,540

Ratios

Profitability:

Return on equity 12.2% 15.5% 13.0%

Solvency:

Current ratio 1.4 2.7 1.7

Long-term liabilities

to equity 33.3% 19.8% 30.0%

Operations:

Sales to assets 3.6 25.2 8.8

1 Data presented are means.

2 Super cooperatives in financial data base, n=208 (158 planners, 50 non-planners).

Table 20—Comparison of average financial ratios among sizes of cooperative planners

and non-planners, 1998 1

R O E C R LTD/EQ S/A

Small Planners 8.6% 2.9 8.9% 2.3

Small Non-Planners 7.9% 6.2 21.1% 2.3

Medium Planners 14.8% 2.0 14.8% 2.3

Medium Non-Planners 12.5% 4.4 12.7% 3.2

Large Planners 11.3% 1.7 17.6% 2.6

Large Non-Planners 14.4% 2.3 13.6% 4.5

Super Planners 12.2% 1.4 33.3% 3.6

Super Non-Planners 15.5% 2.7 19.8% 5.2

1 Small cooperatives have sales from $1 million up to $5 million; medium have sales from $5 million up to $10 million, large have sales from

$10 million up to $20 million, and super have sales of $20 million or more. 
and 1998 declined for 54 percent of planners and for 56

percent of non-planners. Asset turnover (sales to assets

ratio) decreased for all the cooperatives.

Farm Supply Cooperatives—Fifty-two percent of

planners increased sales by 15 percent or more, but

only 33 percent of non-planners increased their sales

by 15 percent or more (table 22). More farm supply

cooperatives that don’t plan had sales decrease than

those that do plan (32 percent versus 23 percent). Net

income before taxes increased for 54 percent of planning farm supply cooperatives and for 47 percent of

non-planners.

A high percentage of both planning and nonplanning cooperatives had increases in total assets and

total equity from 1994 to 1998. A high percentage of

both groups also increased long-term liabilities—74

percent of planners and 75 percent of non-planners.

Return on equity increased for 36 percent of the

farm supply cooperative planners and for 29 percent of

the non-planners. The number who had current ratio

increases was about the same—40 percent for planners

and 42 percent for non-planners. Sales to assets ratio

increased for 25 percent of both groups.

Marketing Cooperatives—Sales increased more

than or equal to 15 percent for 62 percent of planners

and 49 percent of non-planners for the years studied.

Sales decreased for 23 percent of planners versus 32

percent of non-planners.

Total assets increased among many planner and

non-planner cooperatives (84 percent and 78 percent,

respectively) as did long-term liabilities (66 percent

and 63 percent, respectively). Total equity increased

among more planners than non-planners, but both had

a majority increase (91 percent and 77 percent, respectively).

Return on assets increased for 62 percent of the

marketing cooperatives that plan, and for 59 percent of

those that don’t plan. Asset turnover increased for 46

percent of the planner cooperatives and for 55 percent

of the non-planners.

Service Cooperatives—Only 46 percent of these

planners had increased sales, while 61 percent of nonplanners had an increase. Sales decreased for 54 percent of planners, but for only 39 percent of non-planners. Total assets increased for 54 percent of the

planners and for 57 percent of the non-planners and

long-term liabilities increased for 69 percent of planners and for 52 percent of non-planners.

More non-planner cooperatives had increased

profitability than planners (44 percent to 31 percent,

respectively), but profits in a majority of both groups

declined. Still, the average return on equity of both

groups remained at high levels for 1998. The current

ratio increased for 69 percent of the planners and for 48

percent of the non-planners. Sales to assets ratio

increased for only 38 percent of planners and for 48

percent of non-planners.

19

Table 21—Change in selected financial indicators, comparing 1994 to 1998 1

Change Effect Planners Non-planners

Percent of cooperatives 2

Sales increased greater than or equal to 15 percent 57.2 41.0

Sales increased greater than or equal to 5 percent,

but less than 15 percent 12.4 18.7

Sales increased, but by less than 5 percent 6.1 8.4

Sales decreased 24.3 31.9

Net income before taxes increased 63.3 54.2

Total assets increased 86.7 81.3

Long-term liabilities decreased 30.4 32.2

Total equity increased 90.3 81.7

Return on equity increased 49.4 43.6

Current ratio increased 46.1 44.3

Sales to assets increased 36.5 40.3

1 Those in financial data base, n=635.

2 Cooperatives that plan, n=362; cooperatives that don’t plan, n=273. 
20

Table 22—Change in selected financial indicators, by type, comparing 1994 to 1998 1

Change Effect Planners Non-planners

Percent of cooperatives 

Farm Supply (n=130)

Sales increased greater than or equal to 15 percent 52.9 33.1

Sales increased greater than or equal to 5 percent,

but less than 15 percent 19.7 22.3

Sales increased, but by less than 5 percent 4.5 12.3

Sales decreased 22.9 32.3

Net income before taxes increased 54.1 46.9

Total assets increased 92.9 89.2

Long-term liabilities decreased 26.1 25.4

Total equity increased 92.4 88.5

Return on equity increased 36.3 29.2

Current ratio increased 40.1 42.3

Sales to assets increased 24.8 25.4

Marketing (n=120)

Sales increased greater than or equal to 15 percent 61.9 49.2

Sales increased greater than or equal to 5 percent,

but less than 15 percent 7.3 15.8

Sales increased, but by less than 5 percent 7.3 5.0

Sales decreased 23.4 30.0

Net income before taxes increased 73.4 63.3

Total assets increased 83.8 77.5

Long-term liabilities decreased 33.8 36.7

Total equity increased 90.6 76.7

Return on equity increased 61.5 59.2

Current ratio increased 49.5 45.8

Sales to assets increased 45.8 55.0

Service (n=23)

Sales increased greater than or equal to 15 percent 38.5 43.5

Sales increased greater than or equal to 5 percent,

but less than 15 percent 0.0 13.0

Sales increased, but by less than 5 percent 7.7 4.4

Sales decreased 53.8 39.1

Net income before taxes increased 23.1 47.8

Total assets increased 53.8 56.5

Long-term liabilities decreased 30.8 47.8

Total equity increased 61.5 69.6

Return on equity increased 30.8 43.5

Current ratio increased 69.2 47.8

Sales to assets increased 38.5 47.8

1 Those in financial data base, n=635.
Small Cooperatives—Thirty-five percent of the

planner group increased sales 15 percent or more, versus 29 percent of non-planners (table 23). Sales

decreased for 42 percent of planners and for 43 percent

of non-planners.

Net income before taxes increased for 46 percent

of the planners and for 39 percent of non-planners.

Long-term liabilities decreased for 30 percent of the

planners and for 29 percent of the non-planners. Total

equity increased for 83 percent of the small planners

and for 78 percent of the non-planners.

Return on equity increased for 37 percent of the

planners and for 29 percent of the non-planners while

the current ratio increased for 58 percent of the planners and for 45 percent of the non-planners. Asset

turnover decreased for more than 70 percent of both

planners and non-planners.

Medium Cooperatives—Sales increased for 76 percent of cooperative planners in this group and for 73

percent of non-planners (table 23). Fifty-four percent of

planners increased sales by 15 percent or more, versus

46 percent of the non-planner group.

Net income increased for 60 percent of the medium planners and 66 percent of the non-planners. Most

of these planners and non-planners increased total

assets, but for more planners (94 percent) than nonplanners (78 percent). Long-term liabilities decreased

21

Table 23—Change in selected financial indicators, by size—small and medium, comparing 1994 to 1998 1

Change Effect Planners Non-planners

Percent of cooperatives 

Small—up to $5 million in sales (n=185)

Sales increased greater than or equal to 15 percent 35.0 28.8

Sales increased greater than or equal to 5 percent,

but less than 15 percent 10.0 19.2

Sales increased, but by less than 5 percent 13.3 8.8

Sales decreased 41.7 43.2

Net income before taxes increased 46.7 39.2

Total assets increased 76.7 78.4

Long-term liabilities decreased 30.0 28.8

Total equity increased 83.3 77.6

Return on equity increased 36.7 28.8

Current ratio increased 58.3 44.8

Sales to assets increased 20.0 28.8

Medium—sales from $5 million up to $10 million (n=129)

Sales increased greater than or equal to 15 percent 54.3 45.8

Sales increased greater than or equal to 5 percent,

but less than 15 percent 17.1 18.6

Sales increased, but by less than 5 percent 4.3 8.5

Sales decreased 24.3 27.1

Net income before taxes increased 60.0 66.1

Total assets increased 94.3 78.0

Long-term liabilities decreased 34.3 32.2

Total equity increased 88.6 86.4

Return on equity increased 41.4 50.8

Current ratio increased 41.4 45.8

Sales to assets increased 34.3 47.4

1 Those in financial data base, n=635.
for 34 percent of planners and 32 percent of the nonplanners. More than 85 percent of both medium planners and non-planners had total equity increase.

Return on equity increased for only 41 percent of

planners, but for 51 percent of the non-planners. Fortyone percent of medium planners increased current

ratio, while 46 percent of non-planners increased it.

Asset turnover increased for more medium non-planners than planners.

Large Cooperatives—Sales increased for 82 percent

of these planners from 1994 to 1998 and for 87 percent

of non-planners (table 24). However, net income

increased for 70 percent of planners compared with 62

percent of non-planners. Long-term liabilities

decreased for 34 percent of planners and for 39 percent

of non-planners. Equity increased for 95 percent of

planners and for 87 percent of non-planners.

Return on equity increased for more planners

than non-planners, 61 percent to 54 percent, respectively. Current ratio increased for both planners and

non-planners, 41 percent to 39 percent, respectively.

Asset turnover increased for 34 percent of large planners and 39 percent of large non-planners.

Super Cooperatives—Seventy percent of planners

increased sales by 15 percent or more, compared with

56 percent of non-planners. Overall, 84 percent of plan22

Table 24—Change in selected financial indicators, by size—large and super, comparing 1994 to 1998 1

Change Effect Planners Non-planners

Percent of cooperatives 

Large—sales from $10 million up to $20 million (n=113)

Sales increased greater than or equal to 15 percent 51.4 53.8

Sales increased greater than or equal to 5 percent,

but less than 15 percent 17.6 23.1

Sales increased, but by less than 5 percent 2.7 10.3

Sales decreased 28.4 12.8

Net income before taxes increased 70.3 61.5

Total assets increased 81.1 94.9

Long-term liabilities decreased 33.8 38.5

Total equity increased 94.6 87.2

Return on equity increased 60.8 53.8

Current ratio increased 40.5 38.5

Sales to assets increased 33.8 38.5

Super—sales of $20 million or more (n=208)

Sales increased greater than or equal to 15 percent 69.6 56.0

Sales increased greater than or equal to 5 percent,

but less than 15 percent 8.9 14.0

Sales increased, but by less than 5 percent 5.7 6.0

Sales decreased 15.8 24.0

Net income before taxes increased 67.7 72.0

Total assets increased 89.9 82.0

Long-term liabilities decreased 27.2 36.0

Total equity increased 91.8 82.0

Return on equity increased 52.5 64.0

Current ratio increased 46.2 46.0

Sales to assets increased 44.9 62.0

1 Those in financial data base, n=635.
ners and 76 percent of non-planners had some

increased sales. Net income increased for 68 percent of

planners and for 72 percent of non-planners.

Long-term liabilities decreased for 27 percent of

planners and for 36 percent of non-planners. Most of

both groups increased equity. Return on equity ratio

increased for 53 percent of planners and for 64 percent

of non-planners while the current ratio increased for

46 percent of both planners and non-planners. Asset

turnover increased for 62 percent of non-planners and

for 45 percent of planners.

Summary—Financial Position and Change

Both planners and non-planners were financially

healthy in 1998. Their income levels were fairly high

and positive and average financial ratios were either

strong or relatively healthy.

Marketing cooperatives werelargest and service

cooperatives the smallest in terms of sales and assets

in the three type categories analyzed. Service cooperatives had the highest average profitability. The only

cooperative grouping under double digits for the profitability ratio (ROE) was farm supply planners. Service

non-planners and marketing planners were the most

leveraged and service planners, farm supply non-planners, and marketing non-planners were the least.

The small category of cooperative planners and

non-planners was the only size grouping that had

average profitability ratios (ROE) below double digits,

but were still healthy. Adequate financial strength was

evident among both planning and non-planning cooperatives in all the size categories although profitability,

leverage, and efficiency varied.

In comparing 1994 with 1998, more cooperative

planners experienced an increase in sales, net income,

total assets, and total equity than non-planners (table

25). Also, only a slightly higher proportion of planners

than non-planners had an increase in long-term liabilities.

Similar proportion findings for the indicator

changes fit marketing cooperative planners and nonplanners, but that did not hold completely true for

farm supply in that less planners had an increase in

long-term liabilities. Opposite proportional results

were found for service cooperatives—fewer planners

than non-planners experienced increases.

Profitability, as measured by return on equity,

increased for proportionally more overall, farm supply,

marketing, small, and large planners than non-planners (table 26). Profitability decreased among service,

medium, and super cooperative non-planners.

The current ratio increased for proportionately

more overall, marketing, service, small, large, and

super planners than non-planners. However, fewer

farm supply and medium planners than non-planners

had the current ratio increase. Fewer planners than

non-planners, overall and in every type and size

grouping, increased asset turnover.

23

Table 25—Change in selected financial indicators, comparing 1994 to 1998 1

Sales Income Assets L-T Liab Equity

------------Indicator increased for proportionately more planners than non-planners------------

Overall Yes Yes Yes Yes Yes

Farm Supply Yes Yes Yes No Yes

Marketing Yes Yes Yes Yes Yes

Service No No No No No

Small Yes Yes No No Yes

Medium Yes No Yes No Yes

Large No Yes No Yes Yes

Super Yes No Yes Yes Yes
Study Implications

Even with all the attention given to long-range

strategic planning in cooperatives in recent years,

planning is being conducted by only half the farmer

cooperatives in the United States. While this was

somewhat surprising, the higher incidence of planning

among larger cooperatives was not surprising. Large

cooperatives, most regionals with wide and expanding

geographic boundaries of service and greater complexity of operations, were expected to be significant planners. More planners were found in the large and super

categories of varied types.

The region in which cooperatives operate has little to do with planning incidence, but size is a determining factor. This implies cooperatives are more likely to be strategic planners as they grow in size.

However, it was rather surprising to find that many

cooperative planners do not formalize their plans into

writing. But, a significant majority monitors what it

has planned which indicates the importance of following and perhaps adjusting plans.

One explanation for lack of formal plans may be

that for many cooperatives, strategic planning goals,

strategies, and results get recorded and written into

meeting (board, strategic planning, or otherwise) minutes and that practice alone acts as the formal documentation of long-range strategic plans. Cooperatives

may simply feel it’s more important to do the strategic

planning to determine a general or implicit direction

that is then monitored.

The degree of director involvement in planning

provided some interesting findings. Expectations were

that many small- and medium-sized cooperatives

would have "very" involved directors. Instead, only

half of small and slightly more than half of medium

cooperatives indicated that type of involvement.

However, the high proportion of cooperative planners

with directors either "somewhat" or "very" involved

indicates that cooperatives are involving directors in

the process to some degree. Very few planning cooperatives exclude directors from the strategic planning

process.

The average planning interval of cooperative

planners of slightly less than a year was not surprising. An annual interval is generally recommended.

Financial analyses indicated a great size difference between planner and non-planner cooperatives,

but did not show a significant performance difference

in terms of average ROE. Both planners and non-planners had strong profitability. These findings may have

to do more with the cooperatives who decided to

answer the survey in that those that were more profitable decided to respond to the strategic planning

questions.

The fact that cooperative planners had higher

current and long-term liabilities to equity ratios and

lower asset turnover ratios than non-planners may

indicate that planners had leveraged assets to a greater

degree and expanded operations.

The mixed results in comparing financial position

of cooperative types between planners and non-planners appear to indicate a lack of correlation between

planning and financial position. Similarly, the findings

that small and medium cooperative planners had higher profitability than non-planners, but non-planners in

the large- and super-size groupings had higher profitability than planners seem to show the same lack of

correlation. Another explanation may be that cooperatives with an unstable or inadequate financial standing

feel the need to plan, while those with stable earnings

do not feel they need to plan.

Financial changes when comparing the cooperative’s financial position in 1994 with 1998 showed

some interesting characteristics. Total assets and equity

increased for a greater proportion of planners than

non-planners, which suggests that long-range strategic

planning brings about desired change. Of course, the

24

Table 26—Change in selected financial ratios,

comparing 1994 to 1998 1

R O E C R Sales to

Assets

Ratio increased for proportionately 

more planners than non-planners

Overall Yes Yes No

Farm Supply Yes No No

Marketing Yes Yes No

Service No Yes No

Small Yes Yes No

Medium No No No

Large Yes Yes No

Super No Yes No
assumption in this study is that the cooperative

respondent planners have been conducting their planning at least since 1994. Even with that assumption,

care is necessary because information as to what the

long-range strategic planning actually entailed was not

obtained. It is further assumed that financial progress

or positive financial change in terms of sales growth,

asset growth, equity growth, and profitability (return

to members’ equity) arestrong underlying reasons for

cooperatives to conduct long-range strategic planning.

The finding that all the respondent cooperatives

showed a decreased return to members’ equity during

the timespan signals that little or no progress was

made, whether planned for or not. However, fewer

planners than non-planners had a decrease in ROE,

suggesting that some planning did help.

Implications as to cooperative leverage levels are

most difficult to make. This is because planning might

entail working toward lowering debt levels or increasing them to expand operations/assets. A cooperative

with a high level of debt might try to lower it, while

another needing to expand operations might plan to

take on additional debt.

Increases in equity among more planners than

non-planners implies that planners are working

toward increasing equity, but the reverse could be true

in some cases. In other words, some cooperative planners may seek to increase equity pay out and revolvement to members as part of the strategic plan.

Conclusion

Long-range strategic planning in cooperatives

has been discussed and promoted at length. Most

cooperative and other business leaders believe that it

is an extremely important practice given today’s complex and rapidly changing business environment.

This study provides a nationwide broad view of

long-range strategic planning in farmer cooperatives.

The resulting implications are difficult to clearly evaluate, but the degree of planning and specific planning

attributes in farmer cooperatives are provided.

Analysis of the financial information of the respondent

cooperatives provides additional information.

Moreresearch is needed to fully understand

long-range strategic planning in U.S. farmer cooperatives. A survey seeking similar and yet much more

detailed information would increase understanding of

the long-range planning efforts of farmer cooperatives

and their implications.

As an example, it would be interesting to be able

to distinguish planning because of financial pressure

or urgency from that seeking insight and strategic

positioning in the future. That could show how well

planning worked in each case.

Additional questions need to get at the heart of

long-range strategic planning. What are the strategic

goals of farmer cooperatives? What major goals do

planners want to achieve—financial, structural, operational, positioning, etc.? Why is strategic planning

conducted? Are cooperative planners doing what they

seek to do; what proportion of goals are met; what

strategies are implemented? Are standards of success

outlined and monitored? What are the standards?

How well does planning work? Does it improve cooperative operations and profitability? Does it better

position cooperatives for the future?

Answers to such questions would further

advance the understanding of strategic thinking and

direction for cooperative leaders, policy makers,

researchers, and educators. A clear view of what does

or doesn’t work and how and when long-range strategic planning should be used would improve the

knowledge of planning effectiveness.

This study indicates that nearly half of all farmer

cooperatives do not conduct long-range strategic planning. This finding alone begs an important question: Is

planning one of the ways to gird farmer cooperatives

for future challenges? Moreresearch is needed to help

cooperatives begin or improve their planning efforts.

25
Appendix—Summary Points of Major Findings

Incidence of Planning

● Fifty-two percent of farmer cooperatives conduct long-range strategic planning.

● Marketing cooperatives have the highest proportion of respondents conducting strategic planning, ahead of farm

supply and service cooperatives, respectively.

● The highest proportions of planners among cooperative structural types are regional and regional-mixed.

● In order, the highest proportion of planners by size are super, large, medium, and small. 

● Seventy-four percent of super and 60 percent of large cooperatives plan.

● Most small cooperatives do not conduct strategic planning.

● Seventy percent of large and super farm supply cooperatives and 68 percent of the same size marketing

cooperatives are planners.

● Super size cooperatives had the highest proportion of planners, and higher proportions of planners were found

still as super cooperatives got larger.

● Most respondents are from the North Central region—58 percent of them are planners.

● Cooperatives in the Intermountain region do the most planning, those in the Southeast do the least.

● Medium cooperatives in the Intermountain region did the most planning—90 percent of those were planners.

Aspects of Planning

● Of those that plan, a 58-percent majority formally write their plans and a larger 74-percent majority actively

monitor them.

● A majority of marketing and farm supply planners write their plans, but most service planners do not write their

plans.

● A high proportion of both marketing and farm supply planners and a majority of service planners monitor their

plans.

● More super cooperative planners write and monitor plans than do large, medium, and small planners.

● More planners in the Pacific and Intermountain regions write and actively monitor their plans than do planners in

the other regions.

● Planners in the Northeast region are more lax about writing and monitoring their plans than planners in other

regions.

● Super planners in the Great Plains and North Central regions had the highest proportions of plan writers. 

● Almost all super planners in the North Central region actively monitor their plans.

● Most planners have directors who are either very involved or somewhat involved in the planning process.

● A slight majority of planners have directors who are "very involved" in the planning process.

● A very small proportion of planners have directors who are "not involved" in strategic planning.

● Planners with the highest proportion of "somewhat involved" directors are small and located in the Northeast.

● Most dairy cooperative planners directors’ are "very involved" in the process.

● The average planning interval of planners is 11 months; the maximum is 5 years and the minimum interval is 1

month.

● There wasn’t much variation of planning intervals among planners of different types, sizes, and locations.

Planning Degree and Financial Position

● Planners are significantly larger, on average, in terms of total sales, total assets, and other major financial

variables.

● Planners and non-planners had near equal relative profitability, but both were at healthy levels.

● Planners are more highly leveraged and have lower asset turnover than non-planners.

● Farm supply planners were more profitable than farm supply non-planners, but were slightly higher leveraged.

● Marketing planners were slightly less profitable than marketing non-planners and more highly leveraged.

● Service planners had relatively lower average profitability than service non-planners, but both groups had high

average levels.

● Service planners were less leveraged than service non-planners.

● Service cooperatives had the highest relative profitability on average among the three types of cooperatives,

followed by marketing cooperatives, but all three groupings had healthy levels on average.

● Current ratios were fairly strong among all three type groupings of planners, but non-planners of the three

groupings had significantly higher ratios than planners.

26
● Super-size non-planners had the highest average profitability of the four size categories, followed closely by

medium planners and large non-planners.

● Small non-planners had the lowest average profitability among the size groupings, followed by small planners.

Planning Degree and Financial Changes

● Sales increased 15 percent or more for 57 percent of the cooperatives that plan while 41 percent of non-planners

had sales increase by that much.

● Sales increased for 76 percent of planners while 24 percent of planners had sales decrease.

● Sales increased for 68 percent of non-planners and decreased for 32 percent.

● Net income before taxes increased for 63 percent of planners and for 54 percent of non-planners.

● Total assets increased for most planners and non-planners (86 and 81 percent, respectively).

● Long-term liabilities increased for 70 percent of planners and 68 percent of non-planners.

● A high proportion of planners and non-planners had equity increase (90 and 82 percent, respectively).

● Return on equity increased for less than a majority of planners and non-planners (49 and 44 percent,

respectively).

● Asset turnover decreased for both planners and non-planners.

Appendix Notes

1. Cooperative type or function

Type and segment classifications are made according to a cooperative’s major business activity. Marketing

cooperatives derive most of their total dollar volume from the sale of members’ farm products. These

cooperatives were segmented into commodity groups of dairy, fruit and vegetable, grain and oilseed, and other

marketing (cotton, livestock, poultry, nut, sugar, dry bean, rice, miscellaneous marketing cooperatives)

depending upon which accounts for most of the cooperative’s business volume. Farm supply cooperatives

derive most of their business volume from the sale of farm production supplies. These cooperatives handle a

wide variety of supplies, farmstead equipment, and building materials. Many also handle farm and home items

such as heating oil, lawn and garden supplies and equipment, and food. Service cooperatives provide

specialized business operations of farmers, ranchers, or cooperatives such as cotton ginning and other

services (trucking, storing, drying, artificial insemination, livestock shipping). Many cooperatives handle

multiple commodities and provide both marketing and farm supply services, as well as facilities and equipment

used to perform these services. These associations were classified according to the predominant commodity

or function, as indicated by their business volume.

2. Survey—Strategic Planning Question 

Does your cooperative conduct long-range strategic planning? NO ____ YES ____

a. If "YES," are the strategic plans put into a formal written document? YES ____ NO ____

b. How involved is your board of directors in long-range strategic planning?

V E RY INVOLVED _____ SOMEWHAT INVOLVED _____ NOT INVOLVED _____

c. Is the strategic plan actively monitored? YES _____ NO _____

d. How often are the plans revised? MONTHS ______

3. Study Limitations

The major limitations to this study are the assumptions that coincide with the survey instrument and financial

implications. The major assumption is that cooperative respondents have a full understanding of what long-range

strategic planning is all about and thus, were correct in their indication of whether they did or did not conduct it. Of

course, surveys do not always define every component of a question. 

The other major assumption is for the financial change section of the study. This relates to the length of time that

27
cooperatives have been conducting strategic planning. It is assumed that the cooperative respondents who

indicated that they conduct long-range strategic planning have been doing it at least 5 years back from 1998. It is

also assumed that financial progress or change is a major goal of strategic planning in farmer cooperatives. 

Overall, this study provides some important information on long-range strategic planning in farmer cooperatives.

The range of data collection was extensive and provides a window into farmer cooperative strategic planning

activity on a national basis.

Further research is needed to clarify the extent of long-range strategic planning and its implications to farmer

cooperatives. Well-defined questions about strategic planning could provide a wealth of information in these areas.

28
29

Appendix table 1—Number of cooperatives surveyed on questions on strategic planning, and respondents, by

type, 1998

Cooperative type

Number of Cooperatives

or function 1 Surveyed 2 Respondents 3 Response Rate

--------------Number------------ Percent

Dairy 168 53 31.5

Fruit and vegetable 184 91 49.5

Grain and oilseed 4 869 406 46.7

Other marketing 5 167 62 37.1

Farm supply 1,101 554 50.3

Cotton gin 237 81 34.2

Other service 6 90 35 38.9 ——— ——— — —

Total 2,816 1,282 45.5

1 See appendix note 1 for description of type/function categories.

2 Number of cooperatives sent questionnaires with strategic planning questions.

3 Number of cooperatives who responded to questionnaire questions.

4 Excludes cottonseed.

5 Includes cotton, livestock, poultry, nut, sugar, dry bean, rice, and miscellaneous marketing cooperatives.

6 Includes artificial insemination, storage, transportation, livestock shipper, rice drier, and other service.

Appendix table 2—Number of cooperatives surveyed and response to questions on strategic planning, by region,

1998

Number of Cooperatives

Region 1 Surveyed 2 Respondents 3 Response Rate

--------------Number------------ Percent

Dairy 168 53 31.5

Pacific 267 121 45.3

Intermountain 145 64 44.1

Great Plains 905 371 41.0

Southeast 338 147 43.5

North Central 1,026 536 52.2

Northeast 135 43 31.8

Total 2,816 1,282 45.5

1 States included in each region: Pacific—CA, OR, WA, AK, and HI. Intermountain—AZ, NM, CO, UT, NM, ID, WY, and MT. Great Plains—

ND, SC, NE, KS, OK, and TX. Southeast—AR, LA, MS, AL, GA, FL, SC, NC, TN, KY, VA, and WV. North Central—MN, IA, MO, IL, WI, IN,

OH, and MI. Northeast—MD, DC, DE, PA, NY, NJ, CT, RI, MA, VT, NH, and ME.

2 Number of cooperatives sent questionnaires with strategic planning questions.

3 Number of cooperatives who responded to questionnaire questions.
30

Appendix table 4—Strategic planning attributes of cooperative planners by type, 1998

Formally Don’t Formally Actively Don’t Actively

Type/size1 Write Plans Write Plans Monitor Plans Monitor Plans

No. Per. No. Per. No. Per. No. Per.

All respondents (n=673) 387 57.5 286 42.5 495 73.6 178 26.4

Dairy (n=21) 8 38.1 13 61.9 11 50.0 11 50.0

Fruit and veg. (n=39) 20 51.3 19 48.7 30 76.9 9 23.1

Grain and oil 2 (n=250) 147 58.8 103 41.2 184 73.6 66 25.7

Other marketing 3(n=39) 23 59.0 16 41.0 32 82.1 7 17.9

Cotton gin (n=22) 7 31.8 15 68.2 11 50.0 11 50.0

Other service 4 (n=15) 5 33.3 10 66.7 9 60.0 6 40.0

Farm supply (n=287) 177 61.7 110 38.3 212 73.9 75 26.1

1 See appendix note 1 for explanation of type/function categories. Size categories given for overall cooperative types: farm supply and all

marketing; all service cooperatives left out due to small number of data.

2 Excludes cottonseed.

3 Includes cotton, livestock, poultry, nut, sugar, dry bean, rice, and miscellaneous marketing cooperatives.

4 Includes artificial insemination, storage, transportation, livestock shipper, rice drier, and other service.

Appendix table 3—Degree of long-range strategic planning by type, 1998

Cooperative type

or function 1 Planners Non-planners Total 2

No. Percent No. Percent No. Percent

All respondents 673 52.5 609 47.5 1,282 100.0

Dairy 21 39.6 32 60.4 53 4.1

Fruit and vegetable 39 42.9 52 57.1 91 7.1

Grain and oilseed 3 250 61.6 156 38.4 406 31.7

Other marketing 4 39 62.9 23 37.1 62 4.8

Farm supply 287 51.8 267 48.2 554 43.2

Cotton gin 22 27.2 59 72.8 81 6.3

Other service 5 15 42.9 20 57.1 35 2.7

1 See appendix note 1 for explanation of type/function categories.

2 Category total number and percent of all respondents.

3 Excludes cottonseed.

4 Includes cotton, livestock, poultry, nut, sugar, dry bean, rice, and miscellaneous marketing cooperatives.

5 Includes artificial insemination, storage, transportation, livestock shipper, rice drier, and other service. 
31

Appendix table 5—Directors’ involvement in cooperative strategic planning, by type, 1998

Directors Directors Directors

Category 1 Very Involved Somewhat Involved Not Involved

No. Percent No. Percent No. Percent

United States (n=673) 2 394 58.5 268 39.8 12 1.8

Type

Dairy (n=21) 17 81.0 4 19.0

Fruit and veg (n=39) 23 59.0 16 41.0

Grain and oil (n=250) 148 59.2 99 39.6 4 1.6

Other marketing (n=39) 20 51.3 17 43.6 2 5.1

Farm supply (n=287) 164 57.1 118 41.1 5 1.7

Cotton gin (n=22) 14 63.6 7 31.8 1 4.5

Other service (n=15) 8 53.3 7 46.7

1 See previous tables for explanations of region, size, and type.

2 Respondents who do long-range strategic planning.

Appendix table 6—Strategic planning interval of cooperative planners, by type, 1998

Planning interval (months)

Category 1 Average Maximum 2 Standard Deviation

United States (n=673) 11.4 60 6.3

Type

Dairy (n=21) 9.6 18 4.3

Fruit and veg (n=39) 10.6 24 3.9

Grain and oil (n=250) 11.1 60 6.4

Other marketing (n=39) 10.7 48 8.0

Farm supply (n=287) 10.6 60 3.9

Cotton gin (n=22) 13.1 48 10.8

Other service (n=15) 11.3 36 7.9

1 See previous tables for explanations of region, size, and type.

2 The minimum planning interval was 1 month in all cases.
32

Appendix table 7—Selected average cooperative statistics of respondents, 1998 

Planners N0n-planners All respondents

Full-time employees 1998 94 26 68

Full-time employees 1997 92 26 66

Full-time employees 1996 97 26 70

Part-time employees 1998 41 19 33

Part-time employees 1997 48 18 37

Part-time employees 1996 48 17 36

Voting members 1998 1,328 648 1,068

Voting members 1997 1,347 677 1,089

Voting members 1996 1,359 686 1,100

Have branches (no.) 2 343 194 537

1 Those in financial data base, n=592. Data presented are means unless otherwise noted. 2 Number of cooperatives who indicated they have branch locations.
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Vitins, "The Comprehensiveness of Strategic

Decision Making and Its Relationship to Business

Unit Performance," Unpublished Paper.

W adsworth, James J. "Strategic Planning Systems of

Large Farmer Cooperatives," Research Report

103, USDA, RBS, Washington, DC, 1992.

W adsworth, James J., James Staiert, and Beverly

Rotan, "Strategic Planning: A Conceptual Model

for Small and Midsize Farmer Cooperatives,"

Research Report 112, USDA, RBS, Washington,

DC, 1993.

Namkin, Jerry C. and Galen W. Rapp. "Strategic

Planning Handbook for Cooperatives,"

Cooperative Information Report 48, USDA, RBS,

W ashington, DC, Reprinted July, 1997.

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33
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.