Farmers’ Buying and Selling Patterns

lmpllcations for Cooperatives

Emerson M. Babb, Professor, Food and Resource Economics Department,

University of Florida, under a cooperative research agreement with Agricultural

Cooperative Service, U.S. Department of Agriculture, Washington, DC.

Abstract This research analyzes farm characteristics and other factors that affect the

buying and selling behavior of farmers. Information for 1986 was obtained by

questionnaires from 2,537 farmers in the Midwest and Southeast. The major

finding of this study is that the buying and selling behavior of farmers does not

vary greatly by size and type of farm. Cooperatives are almost as successful in

getting the business of large-farm operators as that of medium- and small-farm

operators. There are, however, some differences in types and sizes of farms that

provide the basis of better service to farmers and increased patronage. These

differences relate to goals, time devoted to the farm business, sources of

information used for farm decisions, types of services used, and opinions about

commodity marketing and purchases of inputs. The business implications of these

differences for cooperatives are described.

Key Words: Cooperatives, farmer, purchasing, sales behavior, farm supplies

and services

ACS Research Report Number 73

July 1988
Preface Changes in the structure of agriculture raise questions about how cooperatives

should organize to serve an increasingly diverse group of farmers. information

concerning the needs and preferences of operators of various types and sizes of

farms is required before the question of redesign of cooperative organizations or \

their functions can be addressed. This research identifies factors that will help

cooperatives better serve farmers by analyzing farm characteristics and practices

that affect buying and selling behavior of farmers. Information regarding farm

characteristics and practices, buying and selling behavior, and farmers’ opinions

about purchase and sales activities of firms was obtained by questionnaire from

2,537 farmers in the Midwest and Southeast. The findings in this report are based

on analysis of data provided by these farmers, most of it for 1986.

Contents HIGHLIGHTS . . . . . . . . . . . . . . ..~......_....................... iv

OVERVIEW . . . . . . . . . . . I I . . . . . . . . . . . ” . . . . . . . . . . . . . . . . .

.

Problem . . . . . . .

Objectives and Procedures . .

Characteristics of Respondents

RESULTS . . .

Goals . . .

Resource Use .

Information . . .

Services . . .

Patronage . . .

Opinions . .

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IMPLICATIONS . . . . . . . . . . . . . . ..~............................. 12

REFERENCES . . . . . . . . . . . . . . . . . . . I I . . . . . 14

APPENDIX: Procedure . . . . . . . . . . . . . . . . . . . . . . . . ~ . . . 15

iii
Highlights The most striking finding of this study was that differences in buying and

selling behavior among operators of farms of various sizes and types were

modest. If cooperatives can satisfy the preferences and needs of medium-sized

farm operators, they should be able to meet the requirements of most large-farm

operators. Cooperatives in the study area were almost as successful in getting the

business of large-farm operators as that of small- and medium-farm operators.

Differences among various types and sizes of farms were identified that

provide the basis for better serving the needs of farmers. They also suggest

niches and business opportunities for cooperatives.

Some of the differences among farmers are listed below and their business

implications were described.

l Farm characteristics of major and minor users of cooperatives were not

greatly different, but farmers with more experience did have greater cooperative

patronage.

l The most important goal of farmers was economic, to reach desired net

income goals.

l The wife played an important role in all aspects of the farm business, but

spent a relatively large portion of her time in the areas of buying, selling,

managing, and planning.

l Farm magazines, family, and other farmers were important sources of

information. Large-farm operators were more willing to pay for information and they

used more sources.

l Both cooperative and noncooperative firms were used by the same farmer

for information. These firms were sources of information primarily for purchase and

sales decisions rather than management and planning.

l Use of other firms for financial and business services increased and use of

production services decreased as farm size increased. Cooperatives appeared to

have been more successful in selling production services.

l Farmers did not have a high degree of loyalty to a firm, whether

cooperative or noncooperative. The average farmer had purchase/sale transactions

with two cooperatives.

l Large differences were found in the percentage of business with

cooperatives among commodities and inputs and among States.

l Farm characteristics, which cooperatives cannot control, did not explain

much of the buying and selling behavior of farmers. Cooperatives can influence

the price, quality, and service that affects their business volume.
Farmers’ Buying and Selling Patterns

Implications for Cooperatives

Emerson M. Babbl

OVERVIEW

Farm structure has changed slowly but dramatically over

the past 30 years. In 1984, some 300,000 farms (13.5

percent of the total) grossed over $100,000, had average

net income of about $40,000 and had average equity of

about $500,000. These 300,000 farms produced 73

percent of the cash receipts from agriculture. In contrast,

about 1.4 million farms had farm sales of less than

$20,000. These farmers had income from off-farm

sources that averaged $20,000. These 1.4 million farms

produced less than 6 percent of the cash receipts. This degree of concentration was the product of many forces,

such as technology, and evolved over a long time. The

current financial crisis in agriculture will likely accelerate

this concentration. Most of the 300,000 larger farmers*

and the 1.4 million small farmers2 think of their

operations as family farms. A farm generating $100,000

cash receipts is not considered large. This level of

receipts can be produced by 400 acres of crops, or 60

farrow-to-finish sows, or 50 dairy cows, or 150 fed cattle

[6].* In fact, a farm generating $2&,000 of cash receipts

is probably needed to produce income for a modest level

of living. About 122,000 farms have sales over $200,000

(5.4 percent of all farms) and they have about 54 percent

of total cash receipts.

‘Emerson M. Babb is a professor in the Food and Resource Economics

Department, University of Florida. The research reported in this publication was supported through a cooperative research agreement between

the Agricultural Cooperative Service, U.S. Department of Agriculture,

and the University of Florida. Daniel Babione and Pongchat Chunkasut

were responsible for the management and processing of data. Helpful

comments on an earlier draft were provided by Thomas Gray, Charles

Kraenzle, and Bruce Swanson. Those desiring more detailed results

should contact the author at 1130 McCarty Hall, University of Florida,

Gainesville, FL 32611.

*Numbers in brackets refer to publications cited in reference section.

‘The phrases “large-farm operator, small-farm operator, etc.” will be

shortened to “large farmer, small farmer, etc.”

Problem

The cooperative system in U.S. agriculture was designed

to strengthen family farms. In past years, when farms

were more homogeneous, there was less need to have

diverse cooperative organizations. Different types of

organizations and operations may now be needed to serve

the greatly altered and more diverse farm structure. It

may be possible to have cooperatives that focus on large

and small farms (or other segments) without losing the

advantages of size in buying and selling that is now

performed by a single organization.

The design of cooperative organization and functions to

be performed must start with knowledge of the needs and

preferences of various types and sizes of farms. Are there

differences among large and small farmers with regard to

farm objectives, time that can be or is devoted to the

farm business, managerial skills, analytical capacity,

financial strength, and risk preferences that give rise to

different needs for products and services? Is commonality

among members important and, if so, what provides

cohesiveness?

Information about differences in needs of farmers is

necessary before the question of redesign of cooperative

organization can be addressed. If important differences

exist in farmer needs, cooperatives may lose important

segments of farmers if they use an organization designed

to serve all farmers. The cooperative system would be

drastically changed if it lost a major portion of either

small or large farmers.

Objectives and Procedures

Given the changes in the structure of agriculture, the

overall objective of this research was to identify factors

that will assist cooperatives in better serving their

members. The research examined farm characteristics and

other factors that might affect the buying and selling

behavior of farmers. Purchases of inputs and services,

1
sources and use of information, and sales of commodities

were analyzed to determine differences associated with

size of farm, type of farm, extent of cooperative

patronage, and location of farm. Opinions about purchase

and sales activities of firms were analyzed.

A questionnaire was used to obtain data from 2,537

farmers in Indiana, Illinois, Iowa, and Georgia with parts

of surrounding States (Appendix). While these farms were

larger than average, they were representative in other

respects. Data were obtained in January 1987, but most of

the information provided was for 1986.

Characteristics of Respondents

About 60 percent of the farmers returning questionnaires

had gross sales of over $100,000 (table 1).

Livestock/dairy type of farmers, farmers with 11 to 30

years of farming, and farmers in the Southeast and Iowa

Table l-Characteristics of farmers In sample

Characteristic

Gross sales of farm ($000)

l- 40- 1 oo- Over

39 99 199 199

Type of farm

Field crops

Livestock/dairy

Other

Number of farmers’

197 448 487 453

94 163 240 284

67 41 10 28

Cooperative user2

Major

Minor

199 366 426 418

141 268 298 338

Years of farming Years of farming

1 to 10 30 79 75 77 1 to 10 141 111

11 to 20 59 109 153 207 11 to 20 270 253

21 to 30 57 135 192 198 21 to 30 313 252

31 to 40 122 200 236 203 31 to 40 455 292

Over 40 87 116 69 64 Over 40 202 122

Region Region

Indiana 129 172 139 127 Indiana 274 276

Illinois 125 206 252 253 Illinois 469 341

Iowa 68 211 273 261 Iowa 474 330

Southeast 40 65 76 127 Southeast 200 102

‘Figures may not add to the same total for various categories because of incomplete responses to some questions.

2A major user of cooperatives was defined as a farm which used

cooperatives for over 50 percent of its livestock sales, its grain

sales, or its farm supply purchases.

‘A major user of cooperatives was defined as a farm which used

cooperatives for over 50 percent of its livestock sales, its grain

sales, or its farm supply purchases.

2Figures may not add to the same total for various categories because.of incomplete responses to some questions.

had higher than average gross sales. There were 169

farmers with gross sales in excess of $500,000. These

were not separated from the $200,000-and-over category

because the number of observations was small when

subdivided, particularly by type of farm or State. Further,

there were usually only minor differences in the behavior

of farmers with over $500,000 of gross sales and those

with over $200,000. Where differences were found, they

will be described for the very large farmer (gross sales

over $500,000).

Cooperative patronage rather than membership was used

to classify farmers’ involvement with cooperatives. A

major user of cooperatives was defined as a farm that

used cooperatives for over 50 percent of its livestock

sales, its grain sales, or its farm supply purchases. Using

this classification, about 57 percent of the respondents

were major users of cooperatives and 43 percent were

minor users (table 2). Farm size made little difference

between major and minor users of cooperatives. The

percentage of major cooperative users in the over

$500,000 sales class was 57 percent, exactly the same as

for the overall sample. The proportion of major users was

Table 2-Characteristics of farmers In sample, by

degree of cooperative use

Characteristic

Degree of cooperative use’

Major Minor

Type of farm Number of farmers2

Field crops 907 639

Livestock/dairy 423 348

Other 79 57

2
higher for field crop farmers than for livestock/dairy

farmers and the proportion of major users increased with

years of farming. This was consistent with results in an

earlier study, which found that years of farming was

related to favorable perceptions of cooperative

performance [2, p. 121. The proportion of major

cooperative users in Indiana was lower than for other

States.

Characteristics of farmers in the Midwest samples have

not changed greatly since 1980 [2]. Cooperative

membership was about the same, and the percentage of

farm supply purchases and commodity sales to

cooperatives was similar. About 6 percent more farmers

were classified as field crop farmers. The greatest change

concerns sales volume. In 1980, 17 percent of the sample

had sales over $200,000, compared with 27 percent in the

same States for 1986. Of course, price changes account

for some of these differences.

RESULTS

Differences in the buying and selling behavior of farmers

will be reported primarily by size of farm, type of farm,

degree of cooperative use, and region. Where differences

are minor, data are shown for the size of farm

classification only.

Goals

Farmers were asked to rank the importance of five goals

they were trying to achieve (table 3). Virtually no

differences surfaced in the ranking of goals by farmers in

different gross sales categories. This was also true for

different types of farmers, different degrees of

cooperative use and different regions. Even the percentage

Table 3-Importance of goals, by size of farm

Goal

Gross sales of farm ($000)

__-.__ ---

l- 40- 100- Over

39 99 199 199 All

- -__-

Average rank OF goaP

Increase size of farm operation 4.4 4.3 4.4 4.3 4.3

Get desired net income 2.2 2.0 2.0 2.0 2.0

Enjoy rural living 2.4 2.6 2.6 2.7 2.6

Increase net worth 2.8 2.8 2.7 27 2.7

Leave successful farm to children 3.3 3.4 3.4 3.4 3.4

‘Average rank computed on basis of 1 = most important and 5

= least important.

distributions for these goals were about the same.

Obtaining a desired income was the most important goal,

and increasing the size of farm operation was the least

important goal for all categories of farmers. These goal

rankings were undoubtedly influenced by the financial

stress in agriculture at the time the survey was made.

Some farmers who had expanded farm operations were

experiencing debt problems. Even though events may

have conditioned goal ranking, the impact of these events

appears to have been the same for all sizes and types of

farms.

Resource Use

Both husband and wife worked at off-farm jobs. And,

interestingly, both devoted about the same amount of time

in management and planning.

The average husband spent 50 hours per week on farm

work and 7 hours on off-farm work (table 4). The hours

of farm work increased with size of farm, while off-farm

work declined. The hours devoted to farm work by the

wife did not vary with farm size, but off-farm work

declined slightly as size of farm increased.

Livestock/dairy farmers spent more hours per week on

farm work than did field crop farmers, but field crop

farmers had more hours of off-farm work (table 4).

Wives of livestock/dairy farmers also worked more hours

on the farm. Both husbands and wives on the type of

farm designated “other” had a lot of off-farm work. This

Table 4-Average hours per week devoted to farm

and off-farm work

Characteristic

Husband Wife

Farm Off-farm Farm Off-farm

Gross sales of farm

($000) Average hours

l- 39 35.6 17.1 14.1 13.9

40 - 99 45.9 10.0 14.9 12.5

100 - 199 51.9 5.2 14.7 11.8

Over 199 57.1 3.0 15.4 10.7

All 49.6 7.4 14.9 11.9

Type of farm

Field crops 47.3 7.2 14.0 12.2

Livestock/dairy 57.2 4.7 17.2 10.6

Other 33.1 26.0 12.7 16.1

3
category included farmers who obtained most of their

gross income from poultry, fruits and vegetables, custom

farm work, and nonfarm work.

Only minor differences were found in the allocation of

time for both husband and wife between major and minor

users of cooperatives. Differences among regions were

also small. Iowa and the Southeast had slightly higher

hours of farm work, but this probably reflected somewhat

higher proportions of livestock/dairy farms.

The percentage of time devoted to three classes of farm

activities by husbands did not vary greatly with farm size

(table 5). Farmers with sales over $500,000 did devote 6

percent more time to management and planning and 6

percent less to outside farm work than did the average

husband. Based on articles in farm magazines, time

devoted to buying inputs and selling outputs and to

management and planning was expected to increase with

farm size to a greater extent than was found.

Livestock/dairy farmers spent a greater proportion of their

time on outside farm work and less time on management

and planning than did field crop farmers (table 5).

Regional differences and differences between major and

minor users of cooperatives were small.

The wife spent about 27 hours a week on farm and offfarm work, in addition to work in the home. About half

of her time for farm work was outside work, and she

spent a substantially higher percent of her time in

management and planning than did her husband (table 6).

Table B-Average percentage of time devoted to

farm actlvltles by husband

Table B-Average percentage of time devoted to

farm activities by wife

Characteristic

Outside

farm

work

Buying

and

selling

Management

and

planning Characteristic

Outside

farm

work

Buying

and

sellmg

Management

and

planning

Gross sales of

farm ($000)

l- 39

40 - 99

100 - 199

Over 199

All

Type of farm

Field crops

Livestock/dairy

Percent

Gross sales of

farm ($000) Percent

68.7 14.1 17.2 l- 39 48.6 18.8 32.6

89.4 14.3 16.3 40 - 99 50.4 16.9 32.7

71.5 13.8 14.7 100 - 199 52.0 14.8 33.2

67.5 14.2 18.3 Over 199 40.5 16.6 42.9

69.3 14.1 16.6 All 47.5 16.4 36.1

67.5 14.7 17.8

74.7 12.2 13.1

In fact, she spent almost as much time on this activity as

the husband. For farms with gross income greater than

$500,000, the wife spent 48 percent of her farm related

time on management and planning, 20 percent on buying

and selling and only 32 percent on outside work. The

other major difference in time allocation was in the

Southeast where wives spent 49 percent of their farm

related time on management and planning and 38 percent

on outside work.

The degree of specialization declined with farm size,

although the differences were not large (table 7). For very

large farms, 67 percent of their gross income came from

their largest income-producing enterprise. A higher

percent of field crop farmers received 100 percent of their

income from one enterprise, but on average were no more

specialized than livestock/dairy farmers. Farms in Iowa

were slightly more diversified than those in other States.

Information

Information influences the decisions of farmers regarding

purchases of inputs and services and the sale of

commodities. It is critical to the achievement of goals set

by farmers. Firms that are reliable in supplying the

informational needs of farmers may have an advantage in

obtaining their business.

Farm magazines, other farmers, and family members are

the most important sources of information for farmers

(table 8). Persons in cooperative and noncooperative firms

were also important sources of information. Cooperatives

Type of farm

Field crops

Livestock/dairy

47.2 16.4 36.4

49.0 15.3 35.7

4
were used slightly more as sources of information. Paid

sources of information such as commercial farm

management services, brokers and commodity analysts,

paid advisers and consultants, and computer data bases or

networks were not widely used. In the face of the

information revolution, it is surprising how little the

importance of information sources has changed during the

past 30 years. Sources of information reported in the

Table 7-Percentage of gross farm income from largest income producing enterprise, by farm characteristic

Characteristic

Percent of gross farm income

Average

l- 26- 51- 76- percentage

25 50 75 99 100

Size of farm ($000)

l- 39

40 - 99

100 - 199

Over 199

All

Type of farm

Field crops

Livestock/dairy

Percent of farmers

19 40 23 16 71

21 42 23 13 70

21 43 25 10 69

24 42 25 9 68

22 42 24 11 69

22 41 23 14 69

21 45 28 5 69

Interstate Managerial Survey were ranked as follows:

farm magazines, newspapers, neighbors and relatives,

radio, persons in firms, county agent/vocational

agricultural teacher/university specialists, university

publications [7, p. 311. The use of information sources

did not vary greatly with size of farm (table 9).

Table 8-Percentage of farmers using various

sources of information

Source of information

Much Some No

use use use

Percent

Banker/financial institution

Commercial farm management

services

County extension person

Farm magazine

Brokers/commodity analysts

Persons at universities

USDA news services

Commercial newsletters/advisory

Persons in noncooperative firms

Persons in cooperative firms

University/USDA publications

Paid advisers/consultants

Other farmers

Family members/friends’

Computer data base/network

17.3 60.7 22.0

4.2 25.2 70.6

14.5 73.3 12.2

36.8 60.3 2.9

5.5 37.2 57.4

4.9 58.0 37.2

7.1 70.7 22.2

15.6 54.6 29.8

12.0 56.3 31.7

14.6 63.3 22.1

10.7 73.8 15.5

4.8 21.1 74.1

21.2 72.9 5.9

22.7 69.5 7.8

3.0 22.1 74.9

Table O-Use of information sources, by size of farm

Source of information

l39

Gross sales of farm ($000)

40- 1 oo99 199

Over

199 All

Average importencel

Banker/financial institution 2.2 2.1 2.0 2.0 2.0

Commercial farm management service 2.8 2.7 2.7 2.6 2.7

County extension person 2.0 2.0 2.0 1.9 2.0

Farm magazine 1.7 1.7 1.6 1.7 1.7

Brokers/commodity analysts 2.7 2.6 2.5 2.3 2.5

Persons at universities 2.5 2.4 2.3 2.2 2.3

USDA news services 2.2 2.1 2.2 2.2 2.2

Commercial newsletter/advisory 2.4 2.2 2.2 2.0 2.1

Persons in noncooperative firm 2.3 2.2 2.2 2.1 2.2

Persons in cooperative firms 2.2 2.1 2.0 2.1 2.1

University/USDA publication 2.2 2.0 2.0 2.0 2.0

Paid advisers/consultants 2.9 2.8 2.7 2.5 2.7

Other farmers 1.8 1.8 1.9 1.9 1.8

Family members/friends 1.8 1.8 1.9 1.9 1.8

Computer data base/network 2.8 2.8 2.7 2.6 2.7

‘Average importance computed on the basis of 1 = much use, 2 = some use, and 3 = no use.

5
Larger farmers did make greater use of paid sources such

as brokers and commodity analysts, commercial

newsletters or advisory services, and paid advisers and

consultants. They made less use of other farmers and

family members. The USC of information sources showed

almost no variation among farmers in different regions,

types of farm or degree of cooperative use. Major users

of cooperatives did use cooperatives as a source of

information slightly more than noncooperative firms. A

Table lo-Average number of information sources

used by farmers according to degrees of use

-_-~-~

Degree of use

Gross sales

of farm ($000) Much Some No

use use use

-.__.-. -__.-.___

Number

1- 39

40” 99

100 - 199

Over 199

All

1.6 6 9 5.9

1.9 7.7 5.1

1.8 8.2 4.7

2.2 8.7 3.9

2.0 8.1 4.7

____~___.

great deal of overlap existed in farmer use of cooperative

and noncooperative firms for information. Major users of

cooperatives made extensive use of noncooperative firms

and minor users of cooperatives made extensive use of

cooperatives for information. Both cooperative and

noncooperative firms had a great deal of access to farmers

as customers by virtue of their informational contacts.

While the degree of use of various sources of information

did not vary greatly with farm size, larger farmers used

more different sources of information (table 10). Larger

farmers spend much more time on farm related work and

have greater incentive to expand the search for

information. Their return on investment for information

from commercial sources may be higher. No differences

showed up in the number of information sources used by

different types of farmers, farmers in different regions, or

major and minor users of cooperatives.

As was found in the Interstate Managerial Survey 30

years ago [7J, farmers were discriminating in their use of

information sources (table 11). Farmers used cooperative

and noncooperative firms extensively as their most

important source of information for decisions about

buying and selling. Cooperatives were more heavily used

Table II-Percentage of farmers indicating various sources of information were most important for nine farm

decisions

Farm dewion’

Source of Information’

Sell

grain

Sell

livestock

Buy

feed

Buy Buy Crops Bid on Farm Use

ferti- chemi- to conser. invest- of

lizer cals plant reserve ment credit

_---

Percent

Banks 4 4 1 1 1 2 5 43 82

Farm managers 2 1 2 2 2 2 2 2 1

County ext. 1 1 2 2 4 10 23 2 0

Farm magazine 5 4 ? 3 4 7 6 3 1

Brokers 12 7 2 0 0 1 1 2 0

Univ. person 0 0 1 1 1 2 2 1 0

USDA news 5 8 1 0 0 5 11 1 0

Comm. newsletter 15 11 5 2 2 4 5 2 0

Noncoop. firm 15 24 31 28 28 11 3 5 2

Coop. firm 18 8 32 40 37 6 2 1 2

Univ. publication 1 1 1 2 2 8 10 1 0

Paid adviser 4 4 2 2 2 2 2 3 1

Other farmers 5 10 7 5 6 12 10 4 1

Family/friends 9 12 9 6 6 22 12 28 8

Computer network 1 1 0 0 0 1 1 1 1

--__-

‘See table 8 for more complete description of sources of information and farm decisions. Percentages for decisions may add to less than

100 because some panel members did not record a primary source of information.
for these decisions except for selling livestock where they

played a more minor role. The advice of extension

agents, other farmers, and family members was more

heavily sought for decisions involving crops to plant and

responses to farm policy. Banks, financial institutions, and

family members were important sources of information

for farm investments and use of credit.

Respondents indicated other sources of information used

for the nine decisions in table 11. While farm magazines

were seldom the most important source of information,

they were among the main secondary sources of

information for all decisions. This accounts for their high

rating as a source of information (table 9). Other farmers,

family members, cooperative and noncooperative firms,

county extension agents, and university publications were

other heavily used secondary sources of information.

Characteristics of farmers making the greatest use of

different information sources are summarized in table 12.

Smaller farmers made greater use of county extension

Table 12-Characteristics of farmers making the

greatest use of various sources of Information

Farm characteristic*

agents, farm magazines, and other farmers for

information, while larger farmers made greater use of

commercial sources. Livestock farmers used farm

magazines and noncooperative firms more for

information, and crop farmers used commercial sources

and other farmers more. Major users of cooperatives

made greater use of public sources of information and

minor users relied more heavily on private sources.

Farmers in the Midwest made greater use of commercial

sources of information. Farmers in the Southeast made

substantially more use of county extension agents for

information than did those in the Midwest.

Services

Services are an important component of the sales of

agribusiness firms and are often interrelated with input

sales and commodity purchases. Sales of services have

been and are likely to continue to be a major source of

growth. Substantial differences existed in the use of other

firms to perform farm activities and these varied by size

of farm (table 13). Use of other firms for financial and

business services increased, and use for production-related

services such as mixing feed, harvesting crops, and

applying chemicals decreased as farm size increased.

Spreading fertilizer was the most frequently used

production service and it was not related to farm size.

Source of information’ Size Type Degree of

of of coopera- Regions

farms farm4 tive uses

Major users of cooperatives hired other firms for

performance of farm activities more than did minor users

Banks

Farm managers

County ext.

Farm magazine

Brokers

Univ. person

USDA news

Comm. newsletter

Noncooperative firm

Cooperative firm

Univ. publication

Paid adviser

Other farmers

Family/friends

Computer network

S

S

L

L

L

L

s

L

C

L P

C P

C

C

L P

C

C

C P

C P

IO, SE

IL

SE

IN

SE

SE

IO

IN, IL

IN, IL

IO, SE

IL, 10

IN, SE

IN

‘See table 9 for more complete description of sources of information.

*Blank spaces indicate no major difference in use of information source by

farmers who vary with respect to a characteristic.

SGreater use of information source by larger (L) or smaller (S) farmer.

“Greater use of information source by livestock (L) or crop (C) farmer.

SGreater use of information source by major (C) or minor (P) user of

cooperative.

6Greater use of information source by farmer in Iowa (IO), Illinois (IL), Indiana (IN) or Southeast (SE).

Table 1 a--Percentage of farm actlvlties performed

by other flrms, by size of farm

Gross sales of farm ($000)

Farm activity l- 40- 1 oo- Over

39 99 199 199 All

Spread fertilizer 36.3 42.2 40.1 41.7 40.6

Mix feed 33.3 24.1 15.4 18.0 20.3

Farm planning 4.0 4.6 4.2 5.5 4.7

Harvest crops 21.2 11.0 3.6 4.0 7.9

Apply chemicals 39.8 32.7 26.4 19.1 27.4

Buy animals/poultry 5.2 5.8 10.1 11.5 9.0

Store grain 16.6 15.3 12.7 11.4 13.4

Sell animals/poultry 10.4 9.6 10.8 12.1 10.9

Prepare tax 57.6 59.5 60.8 68.9 62.4

Farm records 2.5 4.8 6.1 10.4 6.7

Estate planning 32.8 39.0 41.4 46.4 41.6

Market analysis 23.0 21.6 26.6 30.6 26.6

Percent

7
of cooperatives, especially to spread fertilizer, mix feed,

and store grain. Field crop farmers made greater use of

other firms for spreading fertilizer, mixing feed, and

storing grain than did livestock/dairy farmers. The use of

outside firms to perform services was relatively constant

among regions except Southeastern farmers who

purchased substantially higher fertilizer spreading

services, Indiana farmers who had more feed mixed, and

Illinois farmers who made greater use of chemical

application and grain storage services.

Cooperative involvement in providing services was

measured by the percentage of farmers using cooperatives

or both cooperative and noncooperative firms for services.

This percentage overstates the “cooperative share” of the

service market and is used to show only the relative

involvement of cooperatives among different services. The

percentage of farmers using cooperatives or both

cooperative and noncooperative firms to perform farm

activities did not vary greatly with farm size (table 14).

The use of cooperatives to spread fertilizer and store

grain did tend to increase slightly with farm size, but was

often highest for the mid-size farms (gross sales of

$40,000 to $199,999). As would be expected, major users

of cooperatives relied much more heavily on cooperatives

for all services, but they also purchased a large amount of

services from noncooperative firms (table 15). Likewise,

minor users of cooperatives purchased substantial volumes

of services from cooperatives. This suggests that

something other than type of organization determined the

Table 14-Cooperative involvement in farm actlvlties, by size of farm

Farm activity

Gross sales of farm ($000)

l- 40. 1 oo- Over

39 99 199 199 All

Cooperative as a percentage of all firmsl.

Spread fertilizer 58 60 65 65 63

Mix feed 53 52 59 58 56

Farm planning 48 53 56 48 52

Harvest crops 10 10 9 11 10

Apply chemicals 50 50 60 50 53

Buy animals/poultry 0 21 21 18 19

Store grain 47 60 65 64 62

Sell animals/poultry 44 30 33 29 32

‘Number of farmers using cooperative or both cooperative and

noncooperative firms as a percentage of farmers using all types

of other firms to perform a specific farm activity.

choice among suppliers of service. Both cooperative and

noncooperative firms had access to a common pool of

farmers. Differences in cooperative involvement with

services among types of farms were minor as were most

differences among regions.

Cooperatives in the Southeast applied relatively more

fertilizer and provided more farm planning, and those in

Iowa stored more grain and mixed more feed.

Some specialized services were highly related to farm size

(table 16). The use of futures markets, purchase and sales

Table 15-Cooperative Involvement in farm activities, by degree of cooperative use

Farm activity

Degree of cooperative use’

Major Minor

Cooperative as a

percentage of

all firms2

Spread fertilizer 79 42

Mix feed 74 32

Farm planning 60 43

Harvest crops 11 9

Apply chemicals 70 30

Buy animals/poultry 27 8

Store grain 79 34

Sell animals/poultry 41 16

‘A major user of cooperatives was defined as a farm which used

cooperatives for over 50 percent of its livestock sales, its grain

sales, or its farm supply purchases.

2Number of farmers using cooperatives or number of farmers using both cooperative and noncooperative firms as a percentage of

farmers using all types of outside firms to perform a specific farm

activity.

Table 16-Percentage of farmers using selected

services, by size of farm

Gross sales of farm ($000)

Service used 1. 40- 100. Over

39 99 199 199 All

Percent

Futures market 10 21 20 33 23

Purchase/sale contract 29 45 55 61 51

Lawyer 17 29 32 49 34

Supplier credit 40 44 48 49 46

Computer (own) 6 6 10 24 12
contracts, and legal services increased sharply with farm

size. Use of supplier credit increased with farm size to a

lesser extent. The percentage of farmers owning a

computer for use in the farm business increased greatly

with farm size. Except for use of supplier credit, these

percentages increased further for the very large farmer.

Field crop farmers made greater use of futures markets

and contracts than did livestock/dairy farmers. Contracts

were used slightly more by major cooperative users, but

other specialized services were the same as for minor

users of cooperatives. The only regional difference was

greater use of legal services in Iowa.

Patronage

Farmers had many patronage choices. While some

farmers used only one firm, most used two or more (table

17). Farmers patronizing cooperatives used an average of

1.8 cooperatives during 1986 and this number did not

vary greatly for size and type of farm or region. The use

of more than one cooperative is fairly common for U.S.

farmers [ 111. The number of firms (all types) used by

farmers for the sales of livestock/dairy/poultry and

grain/soybeans was about the same for farms of different

size and in different regions. Farmers purchased farm

supplies from almost twice as many firms (4.5 on

average) as they used for the sale of commodities, and the

number of firms used did increase with farm size. The

buying and selling behavior of farmers indicated that they

do not have strong ties to a single firm, either cooperative

or noncooperative. They may shift among firms because

of more favorable prices or other terms of trade at the

time a transaction is considered, or they may use one firm

as the only source of a particular service and another as

the sole outlet for a commodity. For whatever reasons,

farmers did exercise their options and used a variety of

firms.

Cooperatives in the study area were much more heavily

involved with grain/soybean marketing and sales of farm

supplies than with livestock/dairy/poultry marketing (table

18).

While the percentage of business with cooperatives

declined only slightly as farm size increased, even small

differences have important consequences for business

volume. An earlier study found that favorable perceptions

of cooperatives declined with farm size [2, p. 121. For

the very large farmer, (gross sales over $500,000), the

percentage of livestock/dairy/poultry business with

cooperatives dropped to 12.0 percent, but the

grain/soybean percentage was 4 1.9 and the percentage of

Table 17-Average number of firms used during

1986 by farmers for sales of farm commodltles and

purchase of farm supplles, by farm characteristic

Characteristics

Livestock/

Cooperative dairy1 Grain/ Farm

firms’ poultry 2

soybeans2 supplies?

Size of farm

l- 39 2.2 1.9 1.7 3.7

40 - 99 1.6 2.7 1.9 4.0

100 - 199 1.8 2.8 2.2 4.8

Over 199 1.8 2.6 2.2 5.1

All 1.8 2.6 2.0 4.5

Type of farm

Field crops

Livestock/dairy

Region

Indiana

Illinois

Iowa

Southeast

Cooperative user3

Major 2.0 2.3 1.9 3.9

Minor 1.5 3.1 2.2 5.4

1.7 2.2 2.1 4.1

1.9 3.1 1.8 5.4

1.8 2.8 2.3 4.5

2.0 2.3 1.9 4.6

1 .Q 2.7 2.0 4.6

1.6 2.6 2.0 4.4

Average

‘Average computed on the basis of the number of farmers reporting the use of one or more cooperatives.

*Average computed on the basis of the number of farmers reporting the use of one or more firms of any type.

3A major user of cooperatives was defined as a farm which used

cooperatives for 50 percent of its livestock sales, its grain sales,

or its supply purchases.

Table 1 a--Percentage of buslness with cooperatives,

by size of farm

Sales or purchases of

Livestock/dairy/poultry

Grain/soybeans

Farm supplies

Gross sales of farm ($000)

l- 40- 1 oo- Over

39 99 199 199 All

Percent

19.1 15.9 18.7 14.8 16.8

44.8 44.6 46.1 41.2 44.0

48.1 48.9 49.2 46.5 48.1

9
farm supply business was 48.0, the same as the average

for all farmers. A study of Texas cotton farmers reported

lower use of cooperatives by very large farmers [9]. Crop

farmers marketed a larger percent of their grain/soybean

production (46.2 percent) with cooperatives than did

livestock/dairy farmers (39.3 percent). Livestock/dairy

farmers sold more of their production to cooperatives

(19.2 percent) than did crop farmers who sold

livestock/dairy/poultry production (14.2 percent). Both

types of farmers purchased the same percent of their farm

supplies from cooperatives (48 percent).

Regional differences showed up in cooperative shares of

business (table 19). The percentages of business with

cooperatives were higher than those that have been

reported for the U.S. [3, 8, 121, but they were lower than

reported for 1986 in a sample of Indiana, and Illinois

counties [4, 51. The percentage of farm supplies farmers

purchased from cooperatives in the Indiana counties was

55 and they sold 44 percent of their grain to cooperatives.

The percentage of farm supplies purchased from

cooperatives in the Illinois counties was 50 and farmers

sold 67 percent of their grain to cooperatives. Given the

range in cooperative shares of different commodities

handled in different regions, the shares reported here

should not be generalized.

Table 1 Q-Percentage of business with cooperatives,

by State and region

Sales or purchases of

Livestock/dairy/poultry

Grain/soybeans

Farm supplies

Indiana Illinois Iowa S.E. All

Percent

23.5 17.9 11.5 17.1 16.6

38.7 42.3 51.5 37.0 44.0

41.6 46.1 50.2 59.9 48.1

Table 20-Distribution of farmers by percentages of ’

business with cooperatives

Percentage of business with cooperatives

Sales or purchase of l- 26- 51- 76.

0 25 50 75 99 100

Percent

Livestock/dairy/poultry 74.5 6.0 4.9 1.1 3.9 9.6

Grain/soybeans 36.6 9.3 12.7 4.8 7.1 27.5

Farm supplies 14.6 22.7 21.7 11.5 14.5 15.0

The distribution of percentages of business with

cooperatives revealed wide differences in the buying and

selling behavior of farmers (table 20). Almost 75 percent

of farmers sold no livestock, dairy or poultry production

to cooperatives while only 15 percent purchased no farm

supplies from cooperatives. A much larger percent of

farmers sold all of their grain/soybeans to cooperatives

(27.5 percent) than was the case for sellers of

livestock/dairy/poultry (9.6 percent) or buyers of farm

supplies (15.0 percent).

The percentages of livestock/dairy/poultry, grain/soybean,

and farm supply business done with cooperatives were

related to farm size, type of farm, region, years of

farming, degree of specialization, time allocations, goals

of the farmer, and number of firms patronized by using

statistical methods. The results were consistent with these

shown in tables, but few of the relationships were

significant. The relationships for farms with over

$200,000 gross sales were usually negative, but none

were significant. Farmers that patronized more firms did

a smaller percent of business with cooperatives and this

relationship was significant in all cases. For some

farmers, this result may reflect a limited number of

cooperatives with which they can do business. The

percentage of business with cooperatives increased as the

degree of specialization increased (percentage of gross

income from the largest income producing enterprise), but

the relationship was significant for only half of the cases.

Less than 20 percent of the variation in cooperative

patronage (percent of business with cooperatives) was

associated with variables used in the analysis. This means

that cooperatives attract farmers with favorable price,

quality, service, and terms of trade. Farm characteristics

and other factors over which they have no control have

little influence on cooperative patronage.

Opinions

Farmers expressed their opinions about commodity

marketing, purchases of inputs, and importance of

services (table 21). While opinions varied considerably

about the 18 statements posed, the variation among

farmers of different size was modest. Larger farmers

more strongly believed that they would buy more

customized products, that on-farm computers were

needed, that volume discounts influenced their purchase

decisions, that government programs had an important

effect on their income, that they would be willing to

purchase information, that they were more knowledgeable

about marketing, that concentrating purchases and sales at

one place would not be a good idea, and that agribusiness

10
Table 21-Oplnlons of farmers about their business, by size of farm.

Gross sales of farm ($000)

Statement l- 40-

39 99

-

1 Brand names influence my purchase decisions.

I will buy more products direct from the manufacturer.

More farmers should use the futures market.

2.4 2.4

Average agreements

2.4 2.4 2.4

2. 2.8 2.8 2.8 2.6 2.7

3. 2.9 2.9 2.9 2.8 2.8

4. More of the inputs I buy will be customized to fit my needs. 2.4 2.4 2.3 2.2 2.3

5. I expect suppliers to advise me on production practices. 2.1 2.0 2.1 2.1 2.1

6. On-farm computers will be needed for successful farming. 3.4 3.2 3.1 3.0 3.1

7. I do not need local agribusiness firms. 3.8 4.1 4.2 4.3 4.1

8. Discounts on volume purchases is an important factor in my choice of

suppliers. 2.4 2.5 2.3 2.1 2.3

9. Visits by fieldmen to my farm affect my purchase decisions. 2.9 2.7 2.7 2.7 2.7

10. I check my judgment with several persons whose opinions I respect. 2.2 2.2 2.2 2.2 2.2

11. Gov’t agriculture policies will have little effect on my income. 3.4 4.0 4.0 4.2 4.0

12. It is wise to find a good buyer of my products and stick with him. 2.2 2.3 2.2 2.4 2.3

13. I prefer to purchase information and advice from independent sources

rather than from firms I patronize. 3.4 3.4 3.3 3.2 3.3

14. I know more about marketing farm commodities I produce than most

buyers in my area. 3.5 3.4 3.3 3.2 3.4

15. I expect to remain in agriculture even if farm prices decline further. 2.4) 2.4 2.4 2.2 2.3

16. I can afford to spend time shopping around for the beat prices of

products I use on my farm. 2.2

17. The supermarket approach, doing all buying and selling at one place,

would be good for me. 3.4

18. I wish agribusiness firms were open evenings and on weekends. 2.8

2.2

3.5

2.9

2.2 2.1

3.6 3.6

2.9 3.0

2.2

3.5

2.9

1 oo199

Over

199 All

‘Average agreement with statements is based on a five point scale where 1 = strongly agree, 2 E agree, 3 = neutral, 4 = disagree and

5 = strongly disagree.

11
firms did not need to be open evenings and on weekends.

The greatest differences between major and minor users

of cooperatives were that major users more highly valued

the supermarket approach of concentrating business at one

place and were less concerned with firms being open

evenings and on weekends. Field crop farmers more

strongly believed that farmers should use futures market,

that government programs influenced their income, and

that the supermarket approach to buying and selling was

good. Farmers in the Southeast more strongly believed

that they would buy more customized inputs, that on-farm

computers were needed, that volume discounts were

important, that they were more likely to quit farming if

prices declined further, and that the supermarket approach

was good. Opinions of farmers in the Midwest were quite

similar, although Iowa farmers expressed less interest in

using futures markets and Indiana farmers thought that

volume discounts were more important and that

agricultural programs had a greater impact on their

income.

Farmers were provided an opportunity at the end of the

questionnaire to make comments on subjects of their

choice and about 500 did so. Most comments related to

the performance of firms and their opinions were

favorable by about a 2 to 1 margin. About 35 farmers

made comments to the effect that quality and service were

more important than price. Comments relating to

economic conditions in agriculture were pessimistic by a

wide margin. Over 40 farmers expressed concern about

the future of small farms and rural towns.

IMPLICATIONS

Many stories have been written about the large, high-tech

farmer who is a breed apart from the family farmer.

While there are some new species of farmers, the

prevalence of space age farmers is greatly exaggerated, at

least in the States covered by this research. The relatively

modest differences among farmers of various sizes and

types were the most striking finding of this study. Most

large farmers are just ordinary family farmers who have

grown to be larger than most [lo]. Their purchase and

sales behavior is not greatly different than that of other

farmers. If cooperatives can successfully satisfy the

preferences and needs of medium-sized farmers they

should be able to meet the requirements of most large

farmers.

At present, cooperatives are almost as successful in

getting the business of large farmers as that of medium

and small farmers (table 18). But, getting 1 percent less

of the business of large farmers (sales over $200,000) is 4

times more serious than getting 1 percent less of the

business of small farmers (sales less than $40,000). A

loss of 1 percent of the large farmers as patrons is also 4

times more serious than the loss of 1 percent of the small

farmers. In terms of business volume, the loss of one

large farmer is equivalent to the loss of over 50 small

farmers. Given the importance of sales and purchases of

large farmers, cooperatives need to continue offering

prices, terms of trade, and voice in the organization that

are attractive to large farmers. It is also important to

recognize the differences among the various types and

sizes of farmers to serve their needs better. Cooperatives

may find business niches among the wide variety of

farmers, including large corporate farmers, organic

farmers, farmers involved with alternative agricultural

crops, professional farm management services, and the

like. Business implications of differences among farmers

are discussed below.

The analysis of characteristics of major and minor users

of cooperatives did not reveal any special group to target

as a source of increased business. But, the greater

cooperative patronage by farmers with more years’

experience (table 2) could be a problem in the future. The

efforts of cooperatives to attract younger farmers seem

justified.

The most important goal of farmers was economic, to

reach desired net income goals (table 3). Cooperatives

will better serve farmers by helping them achieve their

goals. Quality, service, and advice as well as prices are

important in achieving the income goal.

The wife played an important role in all aspects of the

farm business, but spent a larger portion of her time than

did her husband in the areas of buying and selling,

managing, and planning (tables 4, 5, and 6). Cooperatives

may be able to provide greater assistance to the wife in

the performance of her responsibilities. She is a patron of

the cooperative.

Farm magazines were an important source of information

for farmers (table 8) and may thus be a good place to

communicate with current and prospective patrons. Family

and other farmers were also important information sources

and may have a positive effect on volume if their

experiences with the cooperative are favorable.

Larger farmers were more willing to pay for information

(tables 9, 21). Cooperatives may be more attractive to

12
these farmers if they have greater involvement with

private information services, commercial newsletters, and

the like. They may provide economies

for farmers in obtaining information.

Farmers relied heavily on both cooperative and

noncooperative firms for information (tables 8, 11). Both

types of firm had access to a common pool of patrons as

a result of information seeking by farmers. Quality of

information may be used to differentiate a firm and

thereby attract patrons.

Cooperatives and noncooperative firms were primarily

sources of information for purchase and sales decisions

rather than management and planning decisions (table 11).

Cooperatives may improve their attractiveness by

providing information over a broader range of decision

areas.

Large farmers used more different sources of information

(table 10) and were thus in a position to evaluate the

quality of information. To be a source of information for

this group, it is important to be identified as reliable and

accurate.

Use of other firms for financial and business services

increased and use of production services decreased as

farm size increased (table 13). Cooperatives appeared to

emphasize production related services and they were

successful in marketing these services. Major cooperative

users purchased more production services. Cooperatives

may need to strengthen the business and financial services

they offer. This may attract patronage of larger farmers

and there may be some spillover effects through purchases

of other services and farm supplies and for sale of

commodities.

Larger farmers make distinctly more use of some

specialized services such as futures markets, legal

services, and computers (table 16). Cooperatives may

need to expand their services in these areas.

There was not a high degree of loyalty to a firm, whether

cooperative or noncooperative (table 17). This study did

not reveal the reasons farmers use numerous firms, but it

was apparent that farmers were exercising their option to

use a variety of firms.

Some of the regional differences in the share of business

for cooperatives were large (table 19). Cooperatives may

be able to learn from each other as there are reasons for

such wide differences.

Large differences existed in the percentages of business

with cooperatives among commodities and inputs (table

20). Cooperatives need to examine whether it would be

more effective to attract farmers who do no business with

them or to increase the proportion of business done with

farmers who use several firms.

Substantial differences of opinion were reported about

commodity marketing, purchase of supplies, and

importance of services (table 21) that can be used to

target activities to specific groups of farmers and to

improve the attractiveness of the cooperative to farmers.

For example, volume discounts were important, especially

to larger farmers while the supermarket approach to

buying and selling was not highly valued.

The farm characteristics analyzed in this study did not

explain much of the buying and selling behavior of

farmers. These are factors over which the cooperative

does not exercise control. The good news is that

cooperatives can influence the buying and selling behavior

of farmers. They do have control over price, quality,

service, and terms of trade.

A great deal of interest has been expressed over whether

changes in cooperative organization are needed to serve

an increasingly heterogeneous farm sector. Based on

responses of Midwest and Southeast farmers, the answer

could easily be “no” on the grounds that (1) differences

in the needs of various types and sizes of farmers were

modest, and (2) cooperative shares of business were about

the same for different types and sizes of farms. There are

three problems with this answer. First, it is not known

whether there have been changes in the percent of

business with cooperatives by different sizes and types of

farmers. Large farmers may now be doing a smaller

percent of their business with cooperatives than earlier.

Second, large farmers may have shifted from cooperatives

so that the share of large farmers doing business with

cooperatives may have declined. The loss of large farmers

as patrons could be serious for cooperatives. Third, it is

not known whether cooperative shares of the business of

large farmers would be greater if cooperatives were

organized in a different manner. For example, would a

cooperative for large farmers attract more such farmers

because mutual interests are more easily recognized? Such

a cooperative may be more cohesive and problems related

to equal treatment of members would be diminished. It

would be useful to experiment with several types of

cocperative organization to determine their effectiveness.

13
REFERENCES

1. Baker, T.G., E.M. Babb, and L.F. Schrader.

Midwestern Farmer Use of and Attitudes Toward Sources

of Agricultural Credit, Station Bulletin 453, Indiana

Agricultural Experiment Station, July 1984.

2. Boynton, R.D. and E.M. Babb. Farmers’ Perceptions

of the Comparative Performance of Cooperative and

Proprietary Agribusiness. Station Bulletin 383, Indiana

Agricultural Experiment Station, July 1982.

3. Caves, Richard E. and B.C. Petersen. “Cooperatives’

Shares in Farm Industries: Organizational and Policy

Factors‘, Agribusiness, 2(1986) 1-19.

4. Chambonnet, C. and L.F. Schrader. An Analysis of

Cooperative Operations: Report to Cooperative Managers

in East Central Illinois. Department of Agricultural

Economics, Purdue University, July 1987.

5. Chambonnet, C. and L.F. Schrader. An Analysis of

Cooperative Operations: Report to Cooperative Managers

in East Central Indiana. Department of Agricultural

Economics, Purdue University, July 1987.

6. Kadlec, J.C. “Extension’s Role With Large

Commercial Family Farms”. Paper presented at North

Central Regional Farm Management Extension Workshop,

May 1985.

7. Mawby, R.G. and C.B. Haver. “Types and Sources of

Information Used by Farmers‘, pp. 2440 in Johnson,

G.L., A.N. Halter, H.D. Jensen and D.W. Thomas

(eds.), Managerial Processes of Midwestern Farmers,

Ames, Iowa: Iowa State University Press, 1961.

8. O’Day, Lyden. Growth of Cooperatives in Seven

Industries. Cooperative Research Report 1, Agricultural

Cooperative Service, U . S . Department of Agriculture,

July 1978.

9. Smith, E.G., J.W. Richardson and R.D. Knutson. Cost

and Pecuniary Economies in Cotton Production and

Marketing. B -1475, Texas Agricultural Experiment

Station, August 1984.

11. Wilkins, P.C. Marketing and Farm Supply

Cooperatives. ACS Research Report 42, Agricultural

Cooperative Service, U.S. Department of Agriculture,

July 1984.

12. Wissman, Roger. “Co-op Shares of Marketing,

Purchasing Stabilizes After Period of Growth‘, Farmer

Cooperatives, February 1985, pp. 18-19.

10. Thomas, Craig. “What is Your Image of California

Dairy Farms‘, Hoard’s Dairyman, September 10, 1987,

p. 685, 689.

14
Appendix: Procedure

A questionnaire was developed to obtain data from

farmers regarding farm characteristics and farm purchases

and sales. The questionnaire was reviewed by farm

management specialists and field tested. The revised

questionnaire was sent to members of a privately managed

panel in Indiana, Illinois, and Iowa. Panelists received a

reward for completion of the questionnaire (points earned

toward gifts). No demographic or farm organization

questions were included in the questionnaire as these data

were maintained by the panel operator. While not

randomly chosen, the panel members have been found to

match population parameters (age, education, farm type)

of farmers in the three states [ 1, 21. The main difference

is that panel members are larger than the average farmer

and projections to the population should be based on

weighing responses of panel members in various size

categories by the census proportions. Especially when

interpreting averages, the effects of having a higher

proportion of large farmers in the sample must be

considered. The demographic and farm organization data

were obtained by the panel operator in January 1986.

The questionnaire was also sent to a group of farmers

associated with a Southeastern cooperative. These farmers

were located in Georgia and parts of surrounding States.

Their association with a cooperative was not deemed a

source of bias since 85 percent of farmers in the midwest

panel were members of one or more cooperatives. As

previously indicated, analysis of cooperative involvement

was based on patronage rather than membership. Three

questions regarding farm size, type of ‘farm, and years of

farming were added to the questionnaire for the Southeast

sample, since this information was not available for this

group.

All questionnaires were mailed to farmers on January 12,

1987, and most of the information provided was for the

1986 calendar year. Midwestern farmers returned their

questionnaires to the panel operator by the end of

January. A second mailing was made to farmers in the

Southeast who had not responded by the end of January.

The response rates (usable returns as a percentage of

number mailed) were 84 percent for Iowa, 93 percent for

Illinois, 90 percent for Indiana and 39 percent for the

Southeast. A total of 2,537 usable questionnaires were

returned.

Data from questionnaires were entered in a data base

using a microcomputer, and entries were verified. Checks

were made for internal consistency. Data entry accuracy

was further checked by random sampling from the data

base and comparison with the original questionnaires.

Commercial software was used for analysis of data.

15
U.S. Department of Agriculture

Agricultural Cooperative Service

Post Office Box 96576

Washington, D.C. 20090-6576

Agricultural Cooperative Service (ACS) provides research,

management, and educational assistance to cooperatives to

strengthen the economic position of farmers and other rural residents. It works directly with cooperative leaders and Federal and

State agencies to improve organization, leadership, and operation of cooperatives and to give guidance to further development.

The agency (1) helps farmers and other rural residents develop

cooperatives to obtain supplies and services at lower cost and

to get better prices for products they sell; (2) advises rural residents on developing existing resources through cooperative action to enhance rural living; (3) helps cooperatives improve

services and operating efficiency; (4) informs members, directors, employees, and the public on how cooperatives work and

benefit their members and their communities; and (5) encourages international cooperative programs.

ACS publishes research and educational materials and issues

Farmer Cooperatives magazine. All programs and activities are

conducted on a nondiscriminatory basis, without regard to race,

creed, color, sex, age, handicap, or national origin.

cU.S.GOVERNbKNT PRSNTINC 0ff1CE:198&20~-032r60775/ACS