Changes in Flnanclal Proflle of Cooperatives Handllng Grain

First-Handlers with $5 Million or More in Sales, 1985 and 1983

David E. Cummins and Francis P. Yager, Agricultural Economists

Cooperative Marketing Division

Agricultural Cooperative Service

U.S. Department of Agriculture

Post Office Box 96576

Washington, D.C. 20090-6576

This report presents comparative financial information by size and type on

local cooperative associations that are first-handlers of grain. These associations

had annual sales in 1985 and 1983 of at least $5 million, with grain sales

representing more than half of total value of sales. Many of the associations

handled farm supplies and provided related services. Net savings averaged lower

in 1985 than in 1983 for most type/size groups studied, most noticeably for

cooperatives in the Corn Belt and Southern Plains. This resulted from sharply

lower grain sales and higher operating expenses, particularly labor. Most type/size

groups were impacted more by increased operating expenses than by factors

affecting gross income. Considerable debt reduction occurred during this period,

but many associations were still left financially troubled in 1985.

Key words: cooperative, grain, elevators, debt, expenses

ACS Research Report Number 76

October 1988
This report is based on balance sheet and operating statement data collected

as part of an annual survey of grain marketing cooperatives by the Agricultural

Cooperative Service. Other types of information such as membership, volume of

grain handled, and storage capacity were obtained from first-handler cooperatives.

All information in this report is for first-handler local associations of two sizes,

based on total sales, and four types:

Site Groups

l Large - 146 and 155 cooperatives with $15 million or more in sales in 1965

and 1983, respectively.

l Medium - 381 and 503 cooperatives with $5 million to $14.9 million in sales

in 1985 and 1983, respectively.

Types of Cooperatives

l Corn-soybean

l Wheat-sorghum

l Wheat-barley-oats

l Wheat-barley

More than 50 percent of total sales was from sales of grain. Most cooperatives

were diversified, also handling farm supplies and providing many related services.

The associations were typed for comparison on the basis of predominant grains

handled-corn/soybeans (Corn Belt), wheat/sorghum (Southern Plains), wheat/barley/oats (Northern Plains) and wheat/barley (Pacific Northwest). Regardless of how

grouped, the associations are clearly not homogeneous. For example, net savings

for those comparable in terms of total dollar sales can vary considerably

depending on types of grains handled.

All information included is based on condensed balance sheets and operating

statements. Because of variations in accounting and auditing practices and

terminology, it was necessary to adjust financial reports to ensure data

comparability. Detail was obviously lost in the process.

The information in this report can help cooperative managers and boards

make sound business decisions as they confront new problems and the need for

increasing amounts of capital for improved or new facilities and/or services. Such

information can be used as guidelines for success and pitfalls to avoid. You can

use the information for your own cooperative to compare it with others of a similar

type and size. (See tables A-D.)

This is the fifth publication in the financial profile series. The first four covered

the associations with $15 million or more total sales (ACS Research Report 53) $5

million to $14.9 million in sales (ACS Research Report 55) $1 million to $4.9

million in sales (ACS Research Report 58) and those with $1 million or more in

sales (ACS Research Report 63).
Glossary

Current assets-The dollar value of assets that can be readily converted into

cash without interfering with the normal business operations.

Investments-The dollar value of investments in other business organizations,

mostly cooperative associations, and deferred patronage.

Fixed assets-Dollar value of property, structures and equipment (less

depreciation), land, construction in progress, and capital leases.

Other assets-All other assets such as bond cost amortization, and deferred

and prepaid expenses.

Current liabilities--The dollar value of liabilities to be paid,including that

portion of long-term debt due in a year or less and patronage refunds payable.

Long-term liabilities--The dollar value of all debts with a maturity of more

than 1 year, such as debentures, notes, industrial revenue bonds, and mortgage

notes.

Total debt-The dollar value of all long-term liabilities plus the current portion

of long-term liabilities, seasonal loans, and debenture notes.

Net worth or equity capita/-The dollar value of owners’ equity listed in the

equity sections-includes common/capital/preferred stock, allocated/unallocated

earnings, per-unit retains, and certificates of indebtedness and membership.

Gross margins-The dollar value of the sales of grain and farm supplies less

cost of goods sold.

Other operating income-The dollar value of storage and handling fees,

service revenue, load-out fees, cleaning, mixing, commissions, drying, finance

charges, etc.

Nonoperating income-The dollar value of net interest income/expenses,

gain or loss from the sale of assets, dividends on stock, and patronage refunds

from other cooperatives.

Gross Income-The dollar value of gross

margins plus other operating income and

nonoperating income.

Total expenses-The dollar value of labor, administrative, and other general

expenses, such as depreciation, repairs, utilities, and property taxes.

Labor expense-The dollar value of salaries and wages and fringe benefits,

including social security, workers’ compensation, unemployment, retirement,

hospitalization, bonuses, and other expenses directly related to labor.

Net savings (losses)-The dollar value of gross income minus total expenses

before income taxes.

Mocatlon of net savings-The dollar value of the net savings (1) paid in

cash as patronage refunds, (2) paid in cash as dividends or interest on stock, (3)

allocated to patrons on the book, (4) retained as equity or unallocated retained

earnings, (5) allocated to an educational fund, and (6) set aside for income taxes

(Federal and State).
Contents

HIGHLIGHTS AND CONCLUSIONS .................................... iv

How Does Your Association Compare? ............................... v

FIRST-HANDLER CHARACTERISTICS . . . , . . . . . . . . . . . . . . . . , . . . . . . . . . . , . 1

NETSAVINGS ..................................................... 3

Savings Versus Losses ............................................ 4

“Better Versus Worse Off” ......................................... 5

INCOME AND EXPENSES ........................................... 12

Sales and Margins ............................................... 12

Grain Marketings and Prices Received ............................... 13

Other Income Sources ............................................ 18

Operating Expenses .............................................. 18

Grain Storage Capacity and Turnover Rate ........................... 19

Membership ..................................................... 19

BALANCESHEET

Assets.. .......

29

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Equity Capital ................................................... 24

Debt Structure ................................................... 24

FINANCIAL STATEMENT ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . 37

REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

. . . 111
Highlights and Conclusions

This report presents information for 1985 and 1983 on the physical and

financial structure of four types of local first-handlers-of-grain associations with

total sales of at least $5 million. Analysis of records for their operations revealed

the following:

l Net savings per association in 1985 averaged lowest and dropped sharpest

from 1983 for corn-soybean (Corn Belt) cooperatives, with one in four reporting a

loss. The large wheat-barley-oats (Northern Plains) and the wheat-barley (Pacific

Northwest) associations reported no losses in either year and net savings

averaging higher in 1985.

l Seventy-two percent of the cooperatives studied were “worse off” in 1985

than in 1983 in terms of net savings, ranging from 77 percent for the Corn Belt to

52 percent for the Pacific Northwest, The highest incidence of “worse off” was 91

out of every 100 large wheat-sorghum cooperatives; that of “better off” was 88 out

of every 100 large wheat-barley cooperatives.

l Patronage refunds received from other cooperatives contributed

significantly to net savings in 1985 in areas hit hardest-Corn Belt (45 to 48

percent) and Southern Plains (34 to 38 percent)-and significantly more so than in

1983. Patronage refunds are relatively insignificant in the Northern Plains and the

Pacific Northwest.

l Net savings for all cooperatives reporting savings in 1985 averaged 27

percent (medium-sized) and 21 percent (large) lower than comparable savings for

1983. Net losses for all cooperatives reporting losses in 1985 averaged 54 percent

(medium-sized) larger and 28 percent (large) smaller than comparable losses for

1983.

l Debt levels for medium-sized and large associations of all types each

averaged significantly higher in both years for those that reported losses than

those that reported savings.

l Debt reduction was extensive by corn-soybean and wheat-sorghum

associations during 1983-85; debt levels rose in the Northern Plains and Pacific

Northwest. Net savings declines averaged about the same regardless of direction

of debt-41 and 48 percent for medium-sized and large cooperatives, respectively,

reduced debt; 49 and 56 percent for medium-sized and large cooperatives,

respectively, increased debt.

l Grain sales were generally lower in 1985; farm supply sales were generally

higher. Combined sales averaged $967,336 (medium-sized) and $1,350,502 (large)

lower in the Corn Belt and generally lower ($1.35 to $2.58 million) for large

cooperatives of all types.

l Unit margins were up for most type/size groups. Margins as a proportion of

total operating income was about the same in 1985 as in 1983 except in the

Northern Plains, where service income rose 75-80 percent.

l Most type/size groups were impacted more by increased operating

expenses than by gross income-related factors. Total expenses increases

averaged at least 5.5 percent, labor at least 8.7 percent, and other expenses at

least 1.8 percent.

l Total value of assets averaged lower in 1985 than in 1983 in the Corn Belt,

higher in the Pacific Northwest, and higher on medium-sized and lower on large

Plains cooperatives.

l Member equity averaged 7 to 22 percent higher in 1985 on all types of

medium-sized associations and 2 to 12 percent lower on all large cooperatives

except for wheat-barley. Most equity/asset ratios were between 0.5 and 0.6 in both

years.

iv
l Grain storage capacity expansion during 1983-85 was more prevalent

among medium-sized than large cooperatives, which tended to scale back their

operations. Those expanding tended to be undersized in 1983.

Substantial change has taken place over time in the financial structure of

cooperatives that are first-handlers of grain, as evidenced by the 1983-85 period

changes shown in this report. Key to grain-handling cooperatives adjusting

successfully to changing economic conditions is sound financial management of

debt and operating capital. Considerable effort remains to be made in both areas.

Financial management is probably the most important and most complex

managerial activity in the operation of grain-handling cooperatives today.

Determining capital needs and establishing priorities continue to be critical areas

in decisionmaking. Financial planning by grain-handling cooperatives should

include (1) the generation of more permanent capital to replace or supplement

revolving types of capital, (2) equitable membership participation in financing, and

(3) maximizing financial leverage if used.

Traditionally, much of the operating capital of cooperatives was provided by

members themselves, a generally restrictive means of financing their operations.

Many grain-handling cooperatives discovered over time, particularly during the

1970’s, that they could not expand their operations solely on internal (or equity)

financing, and thus found it necessary to borrow capital to meet their increasing

financial needs and to realize economies of scale. Creative approaches to

financing are needed if cooperativesare to continue to grow and be economically

sound.

How Does Your Assocbtion Compare?

Recognizing that adjustments by grain cooperatives result in considerable

variation in their physical and financial characteristics, balance sheet and

operating data were developed for eight different types and sales groups of

cooperative elevators for 2 years. This information can be beneficial to each

cooperative association as a guide in managerial decisionmaking. Managers and

directors alike should be familiar with their cooperatives’ profiles and should use

them as a guide in planning. The following tables (A-D) provide a format for use in

analyzing your own operating statement and balance sheet and for comparing

them with those for similar operations.
Qmup/item

Sales group (check)

Storage capacity

Grain marketed

Turnover rate

Proportion grain

Total assets

Long-term debt1

Member equity1

Sales

Margins on sales

Total expenses

Net savings (loss)

Labor of total expenses

Net savings paid in cash2

Current ratio

Debt/assets

Net savings (loss)/

total sales

Qross margins/totai sales

Tablo A-Compare your CORN-SOYBEAN cooporatlvo with l vorrgoa for slmllrr oooporatlvo oporationa

Unit

Sales group (million dollars) Your cooperative

5.0-l 4.9 15.0 or mom

Future

1993 1995 1993 1955 1993 1995 Today goal

- -

Bushels

Bushels

Times

Percent

Dollars

Percent

Percent

Dollars

Dollars

Dollars

Dollars

Percent

Percent

Number

Ratio

Percent

Percent

L-l l-l

l,l91,437 1,420,747 3555,391 3,618,023 _---

2,030,491 1,756,411 5,626,276 5,236,655 ----

1.70 1.24 1.64 1.45 ----

76.4 75.3 76.5 73.6 _---

2,961,060 2,601,996 6,769,052 7909,691 _---

13.3 10.9 16.7 17.9 ----

56.3 64.5 46.5 50.6 _---

9,109,701 6,142,363 26,666,235 25,337,733 -_--

525,666 506,122 1,676,962 1,736,005 _---

717,616 772,766 2,239,521 2,363,335 __--

139,491 43,195 327,740 160,145 ----

41.2 41.6 39.2 41.4 ----

33.1 40.0 44.6 44.4 -- --

1.47 1.61 1.30 1.37 ----

.25 .19 .32 .29 _---

1.5 0.5 1.2 0.6 ti---

5.6 6.2 6.3 6.9 _---

‘01 total liabllltles and member equity.

sol total patronage allocation.

v i
Tcbk B-Compcrc your WHEAT-SORQHUM coopcrctlvo with cvcrcgcc for clmllcr coopcrcthro opcrctlonc

QroupAtem

Sales group (check)

Storage capacity

Grain marketed

Turnover rate

Proportion grain

Total assets

Long-term debt1

Member equity’

Sales

Margins on sales

Total expenses

Net savings (lose)

Labor of total expenses

Net savings paid In cash*

Current ratio

Debt/assets

Net saving.8 (loee)/

total sales

Gross margindtotal sales

Unit

Sales group (million dollars) Your coopemtive

5.0-14.9 15.0 or more

Future

1993 1995 1993 1995 1993 1995 Today goal

l-l n

Bushels

B~shel.8

Time8

Percent

Dollars

Percent

Percent

Dollars

Dollars

Dollars

J

1,949,187 5,818,814-4,090,401

2.038,244 4,817,412 4,498,007

1.05 .83 1.10

88.8 85.8 80.7

3,838,375 11,793,300 9,288,304

11.5 11.4 11.8

84.9 58.5 83.2

8,747,084 24,445,424 22,027,481

Percent

Number

Ratio

I-.

1,789,989

1,782,481

1 .oo

89.0

3,848,094

11.2

82.8

8,352,199

838,587

994,454

208,237

44.3

34.7

1.59

.23

874,711

1,079,844

188,709

44.3

38.3

1.73

.21

2,220,598 1,857,989

3,277,088 2,807,847

777,792 295,551

43.9 44.3

28.5 33.0

1.35 1.82

.23 .25

Percent 2.5 1.9 3.2 1.3

Percent 7.8 7.7 9.1 8.4

-P-P

----

----

----

----

--p-p

----

----

----

---_

-P-P

----

----

-P-P

----

----

---_

101 total liabilitle8 and member equity.

10( total patronage albcatbn.

vii
Tablo C-Comparo your WHEAT-BARLEY-OATS cooporathm with l voragos for rlmllar cooporatlvo oporatlons

Groupkern

Sales group (check)

Storage capacity

Grain marketed

Turnover rate

Proportion grain

Total assets

Long-term debt1

Member equity’

Sales

Margins on sales

Total expenses

Net savings (loss)

Labor of total expenses

Net saving8 paid in cash*

Current ratio

Debt/assets

Net savings (loss)/

total sales

Gross margins/total sales

Unit

Sales group (million dollars) Your cc6perative

5.0-14.9 15.0 or more

Future

1983 1985 1983 1985 1983 1985 Today goal

i-l r-l

Bushels

Bushels

Times

Percent

Percent

Percent

Dollars

Dollars

Dollars

Percent

Percent

Number

Ratio

u

610,479 622,176 2,295,657?,919,550 -___

2,065,546 2,207,417 6,372,166 7,040,326 ---_

3.36 2.66 3.65 3.67 ~--_

65.7 62.1 91.3 66.7 ---_

2,634,265 3,191,304 12,421,643 9,953,731 -___

6.0 6.6 6.7 10.7 ----

50.3 50.6 32.5 39.6 --~-

7,556,539 6,074,722 27,269,963 24,706,201 -___

395,339 412,151 1,205,194 1,056,094 ~___

422,205 561,413 1,215,795 1,393,651 ---_

126,840 120,604 342,725 467,102 __-_

42.2 44.9 41.7 44.0 ----

32.6 27.1 20.2 25.0 _--_

1.27 1.27 1.11 1.18 ---_

.12 .ll .08 .15 ----

Percent

Percent 5.2

1.7

5.1

1.5

4.4 4.3

1.3 1.9 ---_

~---

IOf total liabilities and member equity.

201 total patronage allocation.

. . . VIII
Tablo D-Comparo your WHEAT-BMLEY ccoporatlvo wlth l vorrgor for slmllrr cooporatlva opmtkm

Group/item

Sales group (check)

Storage capacity

Grain marketed

Turnover rate

Proportion grain

Total assets

Long-term debt1

Member equity’

Sales

Margins on sales

Total expenses

Net savings (loss)

Labor of total expenses

Net savings paid in cash2

Current ratio

Debt/assets

Net savings (loss)/

total sales

Gross margins/total sales

Unit

Sales group (million dollars) Your ooopemtive

5.0-14.9 15.0 or more

Future

1983 1995 1993 1995 1983 ‘805 -w goel

n l-l

Bushels

Bushels

Times

Dollars

Percent

Percent

Dollars

Dollars

Dollars

Dollars

Percent

Number

Ratio

3,555,ooo u3.7t39.026 7,265,657-6,777,545 ----

2,313,292 2,373,766 7,552,196 6,430,961 ____

69.0

.65

67.2

.67 1.04 1.24 __-_

90.3 64.5 ----

2,996,501 3,565,172 6,407,906 10,071,369 -___

12.1 15.1 13.6 11.4 __~_

66.6 61.7 54.0 53.3 ----

9,420,393 6,592,312 29,949,266 32,770,662 ____

367,539 393,693 1,136,610 1,354,974 ____,

709,917 930,299 1,766,546 2,663,195 __~_

276,466 167,060 744,673 612,595 ____

36.7 44.4 39.2 47.1 ----

33.0 20.0 20.1 23.2 _-__

1.77 1.36 1.27 1.26 __--

.17 .25 .26 .24 ---

Percent

3.0 1.9 2.5 2.5 ----

3.9 4.6 3.6 4.1 ----

‘Of total liabilities and member equity.

201 total patronage allocation.

ix
Changes in Financial Profile

of Cooaeratbes Handlina Grain

First-tiand’iers with $5 Million or MO: in Sales,

1985 and 1983

David E. Cummins

Francis P. Yager

Agricultural Economists

FIRST-HANDLER CHARACTERISTICS

This study is an analysis of changes in the financial

structure and related operating characteristics of four

types of cooperatives that are first-handlers of grain (referred to hereafter as first-handlers, grain cooperatives, or

associations). These first-handlers had sales of at least $5

million in 1985 and 1983, of which more than 50 percent

was from grain sales. Most of these cooperatives were

diversified, handling farm supplies as well as grain and

providing related services.

Most cooperative associations in this study could be

meaningfully grouped on the basis of grains handledcorn-soybean, wheat-sorghum, wheat-barley-oats, and

wheat-barley. The corn-soybean cooperatives serve

primarily farmers located in the Corn Pelt, the wheatsorghum cooperatives serve largely farmers in the Southem Plains, the wheat-barley-oats associations provide

services to grain farmers in the Northern Plains, and the

wheat-barley associations serve Pacific Northwest

producers (fig. 1).

Figun 1. Location d So&ted Types ot First-handler Grain Cooperative

1
Figure 2

Net Savings Per Cooperative, by Size and Typs of Cooperative, 1985 and 1983

Savings ($1,000)

C-SB WH-GS WH-S-O

Large

($15.0 mil. or more sales)

WH-B C-SB WH-GS WH-B-O

Medium

($8.0 - 14.9 mil. aales)

WH-B

Tablo 1 -Not savings par assoclatlon, by typo and sales graup of coopwatlvo, 1335 and 1333

Sales group (million dollam)

Type of cooperative

1953

5.0-14.9

1985 1983

15.0 or more

lw5 lOW1983

--oo//ers-- hroent __m._ hrcmt

Corn-soybean 139,491 43,195 -69.0 327,740 180,145 -51.1

Wheat-sorghum 206,237 177,406 -14.0 777,792 295,551 -82.0

Wheat-barley-oats 126,640 120,604 -4.9 342,725 467,102 36.3

Wheat-barley 276,468 167,060 -40.0 744,873 812,595 9.1

Tablo 2-Proportlon of l ssoclatlons roportlng lassos, by typo and sales group of mopemuvo, lgm md 10)1)

Salea group (mlllbn dotlur)

Type of cooperative 5.0-14.9 15.0 or more

1963 1985 1983 1986

Corn-soybean 15.8 27.0 13.1 25.0

Wheat-sorghum 15.7 19.6 8.7 20.0

Wheat-barleyaats 4.2 2.9 0.0 0.0

Wheat-barley 0.0 18.8 0.0 0.0

2
NET SAVINGS

Net savings for first-handlers of grain were in general

substantially lower in 1985 than in 1983. Corn Belt

associations were hardest hit, followed by the Southern

Plains wheat-sorghum cooperatives (table 1 and figure 2).

First-handlers in the Northern Plains fared best during

this period. One-fourth and one-fifth, respectively, of the

first-handlers in the Corn Belt and Southern Plains

reported losses in 1985, up sharply from two years earlier

(table 2). The 1983-85 drop in net savings was quite

sharp for most type/size groups for those that reported a

savings (table 3). Period changes in losses per association

varied widely among type/size groups (table 4).

Allocations of net savings were considerably different in

1985 than in 1983. Except for the two situations where

net savings averaged higher in 1985, the proportion of net

savings allocated as patronage rose, most noticeably

where net savings dropped sharply-in the Corn Belt and

the Pacific Northwest (table 5). This rise was largely at

the expense of shrinking unallocated reserves. For most

situations, the relative proportions of patronage refunds

paid in cash and retained in 1985 were about the same by

type as in 1983.

Patronage refunds received from other cooperatives played

a significantly more important role in 1985 than in 1983,

particularly for Corn Belt and Southern Plains associations

(table 6). Patronage refunds varied from being relatively

insignificant in the Northern Plains and Pacific Northwest

in both years to accounting for nearly 50 percent of net

savings of medium-sized corn-soybean cooperatives in

1985.

Most type/size groups were affected more by increased

operating expenses than by factors affecting gross income.

In fact, with one exception, gross incomes in the three

wheat areas averaged higher in 1985 than in 1983 (table

7). These increases partially offset sharply higher

operating expenses, particularly for wheat-barley-oats

cooperatives. Higher operating expenses coupled with

Table 3-Net savings per assoclatlon for COOpOrcltlVOS reported a SAVINGS, by type and sales group, 1988 and

1983

Sales group (million dollars)

Type of cooperative

1983

5.0-l 4.9

1985 1985l1903 1983

15.0 or more

1985 1985l1983

Corn-soybean

Wheat-sorghum

Wheat-barley-oats

Wheat-barley

- - Do//am - - Percent - - Dollars - - Percent

181,495 108,087 40.4 457,637 330,371 -27.8

260,577 237,216 -9.0 838,057 476,000 -43.1

133,074 124,350 -6.8 342,725 467,102 38.3

278,468 249,444 -10.4 744,873 812,595 9.1

Table 4-Net losses per assoclatlon for cooperatives reported LOSSES, by type and sales group, 1985 and 1983

Sales group (million dollars)

Type of cooperative

1983

5.0-14.9

1985 198511983 1983

15.0 or more

1985 198511983

Corn-soybean

Wheat-sorghum

Wheat-barley-oats

Wheat-barley

- - Dollars - - Percent - - Dollars - - Percent

84,195 132,128 56.9 535,142 350,533 -34.5

84,871 67,273 -20.7 37,908 426,247 (1)

16,548 2,988 -81.9 - - -

- 189,937 00 - - -

‘More than elevenfold.

3
Table S-Allocatlon of not savings, by typo and salu group of cooporatlvo, 1988 and 1983

Type of cooperative Unit

1993

5.0-l 4.9

Sales group (million dollars)

15.0 or more

1995 1993 1995

Corn-soybean:

Net savings’ Dollars 139,491 43,195 327,740 160,145

Patronage, total Percent 53.1 62.2 55.2 60.6

Paid in cash Percent 33 40 45 44

Retained Percent 67 60 55 56

Other2 Percent 9.1 17.6 10.5 11.9

Unallocated reserves Percent 37.6 - 34.3 7.5

Wheat-sorghum:

Net savings’

Patronage, total

Paid in cash

Retained

Other*

Unallocated resewes

Dollars 206,237 177,406 777,792 295,551

Percent 64.5 95.2 79.6 96.4

Percent 35 37 29 32

Percent 65 63 71 66

Percent 3.6 3.9 1.5 3.6

Percent 11.9 .9 16.7 -

Wheat-barley-oats:

Net savings’

Patronage, total

Paid in cash

Retained

Other2

Unallocated reserves

Dollars 126,640 120,604 342,725 467,102

Percent 35.7 36.0 14.4 6.9

Percent 33 27 20 25

Percent 67 73 60 75

Percent 3.6 5.6 0.0 0.4

Percent 60.7 56.2 65.6 90.7

Wheet-barley:

Net savings’

Patronage, total

Paid in cash

Retained

Other2

Unallocated reserves

Dollars 276,466 167,060 744,673 612,595

Percent 29.2 47.0 57.7 45.7

Percent 33 20 20 23

Percent 67 60 60 77

Percent 4.9 4.2 12.3 10.4

Percent 65.9 46.6 30.0 43.9

Savings before income taxes and allocations.

zlncludes dividends/interest on equity capital, an educational provision, and Federal and State income taxes.

lower incomes were responsible for the significantly lower

net savings in the Corn Belt.

Savings Versus Losses

Operating statements and balance sheets for both years

were developed separately for associations reporting net

savings and for those with losses (table 8). There are

many differences and similarities between associations

reporting savings and those reporting losses for the same

size group and the same year.’ Key similarities include

average fixed and total assets, average grain and total

sales, and sales of grain as a proportion of total sales.

Key significant differences include gross income, which

averaged larger in both years for cooperatives with

savings; total expenses, which averaged considerably

higher for cooperatives with losses; and total debt, which

Stnple size prevented making meaningful net savings versus losses

comparisons by type of cooperative.

4
Tablo S-Net savings and patronago rotund8 rocolvod par l ssoclatlon, by typo and salos group, 1985 and 1983

Sales group (million dollars)

Type of cooperative Unit 5.0-I 4.9 15.0 or more

1993 1995 1995l1993 1993 1995 1995/l 993

Percent Percent

Corn-soybean:

Net savings’ Dollars 139,491 43,195 -69.0 327,740 160,145 -51.1

Patronage refund* Dollars 20,411 20,773 1.6 60,365 72,767 20.5

Of net savings Percent 14.6 46.1 16.4 45.4

wheat-sorghum:

Net savings’ Dollars 206,237 177,406 -14.0 777,792 295,551 -62.0

Patronage refund2 Dollars 44,773 67,242 50.2 96,562 100,160 3.7

Of net savings Percent 21.7 37.9 12.4 33.9

WheaGbatiey-oats:

Net savings’ Dollars 126,640 120,604 -4.9 342,725 467,102 36.3

Patronage refund’ Dollars 6,071 3,621 -55.1 21,064 23,059 9.5

Of net savings Percent 6.4 3.0 6.1 4.9

Wheat-barley:

Net savings’ Dollars 276,466 167,060 -40.0 744,673 612,595 9.1

Patronage refund2 Dollars 697 19,067 (3) -14,999 30,661 -

Of net savings Percent .3 11.4 - 3.6

Savings before income taxes and allocations. Weceived from other cooperatives. Wore than doubled.

was significantly larger in both years for both size groups

of cooperatives with losses.

The debt picture is strikingly different for these two

groups. Total debt, including the current portion of longterm debt, for the medium-sized and large cooperatives of

all types averaged 1.92 and 1.64 times larger in 1985 for

cooperatives reporting losses than for those reporting net

savings. Comparable figures for 1983 are 1.72 and 1.69.

Total debt represented 55 and 86 percent, respectively, of

member equity for medium-sized and large cooperatives

reporting losses in 1985; while it represented 24 and 42

percent, respectively, of member equity for all those with

net savings. Figures 3 and 4 show the distributions of the

respective groups of associations on the basis of

debt/equity ratio.

“Batter Versus Worse Off”

Comparison of identical associations for 1985 and 1983

reveals clues to why many first-handlers improved their

income and financial situation during this period. Using

net savings as the criterion, 27 and 30 percent,

respectively, of the medium-size and large associations

were “better off’ in 1985 than in 1983. The proportion

“better off’ varies significantly among the association

type/size groups, as shown below. These relative

proportions are reflected in the 1983-85 changes in net

savings per association shown in table 1.

Type of cooperative

Sales group Corn- Wheat- Wheat- Wheat-

(million dollars) soybean sorghum barleyoats barley

Ament

5.0-14.9:

Better off 20 36 44 29

Worse off 80 64 56 71

15.0 or more:

Better off 30 9 50 86

Worse off 70 91 50 14

5
Table 7-Gross Income and oporatlng l xponsos par assoclatlon for tlr8t~handlws-of-graIn cooporatlvoa, by typo

and sales group, 1988 and 1983

Sales group (million dollars)

Type of cooperative 5.0-14.9 15.0 or more

1903 1985 1985/l 983 1983 1985 1985ll983

Corn-soybean:

Gross income’

Total expenses2

Income/expenses3

Wheat-sorghum:

Gross income’

Total expenses2

Income/expenses3

Wheat-barley-oats:

Gross income’

Total expenses2

Income/expenses3

Wheat-barley:

Gross income’

Total expenses”

Income/expenses3

- - Dollars -. FNrcent --Dollars-- Fwcenr

857,109 815,983 -4.8 2,567,281 2,523,480 -1.7

717,818 772,788 7.7 2,239,521 2,383,335 5.5

1.19 1.06 -10.9 1.15 1.07 -7.0

1,200,891 1,257,050 4.7 4,054,860 3,103,398 -23.5

994,454 1‘079,644 8.8 3,277.068 2,807,847 -14.3

1.21 1.18 -4.1 1.24 1.11 -10.5

549,045 682,017 24.2 1,558,520 1,880,753 19.4

422,205 581,413 33.0 1,215,795 1,393,651 14.6

1.30 1.21 -6.9 1.28 1.34 4.7

988,385 1,097,359 11.0 2,533,419 3,475,790 37.2

709,917 930,299 31 .o 1,788,546 2,863,195 48.9

1.39 1.18 -15.1 1.42 1.31 -7.7

‘Margins on sales and Other operating income plus nonoperating income.

2Labor and labor-related expenses plus all other operating expenses.

JGross income per dollar total expenses.

Factors that generally distinguished those that realized

higher net savings in 1985 from those with lower net

savings were volume and proportion grain of dollar sales,

grain volume marketed, and debt-related costs.

Cooperatives that were “better off” in 1985 had

maintained grain marketings at 1983 levels, thereby

operating elevator facilities more efficiently; boosted farm

supply sales; did a better job of braking operating

expenses increases, particularly nonlabor expenses; and

did a better job of reducing particularly short-term debt

and debt-related costs (table 9). In fact, the 11-percent

increase in gross income, coupled with the 2-percent

reduction in total expenses, resulted in a more than fivefold increase in net savings for the larger associations.

For associations “worse off’ in 1985, grain marketings

were off 9.5 to 9.7 percent and grain sales were off 13 to

14 percent. Farm supply sales were lower on mediumsized cooperatives; increases in operating expenses were

larger, particularly expenses for labor on the large ones;

and debt reduction, particularly short-term debt, was less.

Also contributing to this “worse off” group’s situation

were a number of partial/full writeoffs of investments in

other cooperatives (nonoperating income/loss item).

6
Figure 3

Distdbuth at Medium-Sized Cooperatives by Debt/Equity Ratio: Co-opr Reported Net Savings, Losses

Percent

70 ,

t

1983

80

Losses Net savings

x)1-.39 M-.89 .70 plus 00

Debt/equity ratio

M-.89 .70 plus

Fiaure 4

Distdbhlon ot Large Cooperathves by Debt/Equity Ratio: Co-ops Reported Net Savings, Losses

Percent

90

80

70

80

50

40

30

20

r 1983

Losses

Net

Savings

10

0

.Ol -.39 M-.89 .70 plus 00 .Ol -.39 M-.89 .70 plus

Debt/equity ratio

7
Tabk 8-Oporatln# statomont and balance shoot data par rssoclrtlon nportlng uvlngr and lassos, by ulm

group, 1888 and 1883

Item Unk

Savings

Sales group ($5.0-14.9 million)

1903 1985

Savings/

LCMcs 108988 Savings

Savings/

Losses losses

Gross income Dollars 924,733 801,754

Total expenses Dollars 720,784 880.738

Net savings (loss)1 Dollars 203,909 (78,982)

Total sales Dollars 8,717,788 8,579,135 1.8 8,384,822 8,087,073 ‘3.7

Grain sales Dollars 8,838,598 8,330,883 8.0 8,377,484 5,803,108 9.9

Share of total Percent 78.4 73.8 8.2 78.2 71.9 8.0

Grain storage Bushels 1,417,551 1,158,410 22.4 1,535,471 1,819,588 -5.2

Turnover rate Times 1.42 1.53 -7.2 1.28 1.08 18.5

Current assets Dollars 1,394,739 1,330.434 4.8 1,350,075 1,081,301 24.9

Investments Dollars 598,288 710,332 -18.1 800,982 738,023 -18.3

Fixed assets Dollars 1 ,130,342 1,025,153 10.3 1,122,853 1 ,198,959 -8.3

Other Dollars 18.241 35.527 48.7 18.445 34,327 48.3

Total assets Dollars 3,139,810 3,101,448 1.2 3,092,355 3,050,810 1.4

Current liabilities

Long-term liabilities

Equity

Total liabilities

and equity

Working capital2 Dollars

Current ratio -

Total debr Dollars

Member equity

Debt/equity

Net savings (loss)/

equity

Dollars

Dollars

Dollars

Percent

Ratio

Percent

Percent

15.3

-18.2

-

923,905 802,380 15.1

775,075 923.899 -18.1

148,830 (121,319) -

903,085 1,204,339 -25.0 824,140 858,417 4.0

377,188 494,484 -23.7 287,003 507,048 43.4

1,859,359 1,402.843 32.8 1,981.212 1,885.147 17.8

3,139,810

491,854

1.54

883,401

59.2

.38

10.97

3,101,448 1.2

(3)

40.0

-41.9

31.0

-55.8

-

3,050,810 1.4

128,095

1.10

3,092,355

525,935

1.84

222,884 (3)

1.28 30.2

1,141,073 478,080 48.0

45.2

.81

84.1

.24

919,280

55.2

.55

(5.83) 7.51 (7.20)

18.1

-58.4

-

‘Savings before income taxes and allocations.

Current assets minus current liabilities.

%fors than double.

4lncludes current portion of long-term debt.
Tablo 8-Opwatlng statomont and balance shoot data par l ssoclatlon nportlng swings and lassos, by srlos

group, 1888 and 1883-Contlnuod

Sales group (Sl5.0 million of more)

Item Unit

Savings

1983

Losses

Savings/

lOSee Savings

1985

Losses

Savings/

IOSSW

Gross income Dollars 2,745,117 2,823,215

Total expenses Dollars 2.191.826 3.110.102

Net savings (loss)1 Doll&s 553,291 (486,887)

Total sales Dollars 27,299,869 29,814,473 -8.4 26,021,363 25,151,158 3.5

Grain sales Dollars 21,380,941 21,638,695 -1.2 19,489,284 17,545,775 11.0

Share of total Percent 78.3 72.6 7.9 74.8 69.8 7.2

Grain storage Bushels 3,998,157 3,704,228 7.9 4,042,064 3,897,826 3.7

Turnover rate Times 1.52 1.84 -7.3 1.44 1.32 9.1

Current assets Dollars 4,460,051 4,569,896 -2.4 3,985,753 3,084,684 30.1

Investments Dollars 1,596,558 2,326,648 31.4 1,517,688 2,178,355 -30.3

Fixed assets Dollars 3,303,615 3,179,047 3.9 3,021,757 3,158,906 -4.3

Other Dollars 45.617 44,894 1.6 105.266 41.453 (3)

Total assets Dollars 9,405,841 10,120,485 -7.1 8,630,464 8,443,398 2.2

Current liabilities

Long-term liabilities

Equity

Total liabilities

and equity

Working capital2 Dollars 1,088,452 380,191 (3) 1,201,334 476,395 (3)

Current ratio - 1.32 1.09 21.1 1.43 1.18 21.2

Total debt4 Dollars 2,502,842 4,223,018

Member equity

Debt/equity

Net savings (loss)/

equity

Dollars 3,371,599 4,209,705 -19.9 2,784,419 2,588,289 7.6

Dollars 1,304,955 2,101,140 -37.9 1,108.127 2,090,269 -47.0

Dollars 4.729.287 3.809.640 24.1 4.737.918 3.764.840 25.8

Dollars 9,405,841 10,120,485 -7.1 8,630,464 8,443.398 2.2

Percent

Ratio

Percent

50.3

.53

11.70

Penxnf

4.6

-29.5

-

2,761.908 2,338,325

2.323.526 2.686.381

436,382 (350,056)

Percent

18.2

-13.5

-

1,967,066 3,231,589 -39.1

37.6

1.11

-40.7

33.8

-52.3

54.9 44.6 23.1

.42 .86 -51.2

(12.78) - 9.25 (9.30) -

‘Savings before income taxes and allocations.

Current assets minus current liabilities.

Wore than double.

4ncludes current portion of long-term debt.
Tablo g-Abbrovlatod Income and balatco shoot at8tomont for %ottor off” and Uworso off” first-handlers-ofgrain cooporatlvos,* by aalos group, lggg and 181)9

Sales group ($5.0-$14.9 million)

Item Unit

1983

Better off

1985

w0~3.3 on

lOS5l1Ow 1 OS3 1985 1 OS511 983

Percent

(2)

Percent

Net savings’ Dollars 89,253 180.957 224,017 83,153 -71.8

Gross margins Dollars 510,374 588,895 11.0 804,415 533,309 -11.8

Other operating income Dollars 389,013 433,855 17.8 434,134 409,845 -5.8

Nonoperating income Dollars /7.139) (3.928) 45.0 (23,338) (48,850) (2)

Gross income3 Dollars 872,248 996,822 14.3 1,015,213 898.104 -11.7

Labor expense Dollars 324,082 345,429 8.8 328,711 350,723 8.7

Other expenses Dollars 458.913 470,238 2.5 482,485 482,228 4.3

Total expenses Dollars 782.995 815,885 4.2 791,198 832,951 5.3

Total sales Dollars 8,811,185 8,422,737 4.4 9,597,804 8,583,838 -10.8

Grain Dollars 8,818,438 8,305,553 -7.5 7,528,980 8,548,281 -13.1

Farm supply Dollars l,QQ4.747 2,117,184 8.1 2,088,824 2,037,375 -1.5

Grain marketings Bushels 1,977,829 1,988,442

Grain storage capacity Bushels 1,318,582 1.481.979

5

1l:o

2,191,298 1,983,388 -9.5

1,547,784 1,875,411 8.2

Total debt Dollars 751,808 582,485 -22.5 738,290 811,848 -18.9

Short-term Dollars 341,129 233,729 -31.5 303,344 258,130 -14.9

Long-term Dollars 410,477 348,758 -15.0 432,948 353,518 -18.3

'Identical cooperative associations reporting for both years. Net savings is criterion for “better off” versus “worse off” in 1985.

Savings before income taxes and allocations.

*More than doubled.

Wargins on sales plus other operating income and all nonoperating inCOme.

10
Tablo @-Abbrwlatod Incomo and balance shoot statomont for “bettor off” and “worse off” first-handlerr-ofgrain cooporatlvos,* by ulos group, 1985 and l@M-Contlnued

Sales group ($15.0 million or more)

Item Untt

lg83

Better off

1985 1963

Worse off

1985 1965/l 983

Percent

Net savings’ Dollars 72,626 393,649 597,906 162,932 -69.4

Gross margins Dollars 1,570,900 1.737.900 10.6 1,696,913 1,604,493 4.9

Other operating income Dollars 1 ,Ol6,465 1,092,462 7.3 1,227,205 1,097,055 -10.6

Nonoperating income Dollars (104.773) (74,775) -26.6 (94.716) (139,712) 47.5

Gross income3 Dollars 2,464,592 2,755,567 10.9 3,029,400 2,761,636 -6.6

Labor expense

Other expenses

Total expenses

Dollars

Dollars

946,103 1,017,166 7.5 975,966 1,060,273 10.7

1.405663 1.344.750 -6.3 1 a455.526 1,496,631 3.0

2,411,966 2,361,936 -2.1 2,431,494 2,576,904 6.1

Total sales Dollars 27320,960 27,279,667 -.2 26,923,557 26,331,459 -9.0

Grain Dollars 20,756,777 20,506,442 -1.2 22,125,356 19,025,121 -14.0

Farm supply Dollars 6,564,203 6,773,245 3.2 6,796,201 7,306,336 7.5

Grain marketings Bushels 6,025,577 5,997,950 -.5 6,239,696 5,633,700 -9.7

Grain storage capacity Bushels 3,441,905 3,372,549 -2.0 4,357,699 4,590,759 5.3

Total debt

Short-term

Long-term

Dollars

Dollars

2,955,037 2,241,962 -24.1 2,659,089 2,224,091 -16.4

1,629,963 1,052,666 -35.4 1,163,934 928,137 -21.6

1,325,054 1,169,116 -10.3 1,475,155 1,295,954 -12.1

‘Identical cooperative associations reporting for both years. Net savings is criterion for “better off” versus “worse off” in 1985.

Savings before income taxes and allocations.

More than doubled.

SMargins on sales plus other operating income and all nonoperating income.

11
INCOME AND EXPENSES

Key factors underlying the 1983-85 changes in net savings

were bushel and dollar volume grain sales, grain prices

received, and operating expenses. These factors varied

considerably in direction and magnitude among the

type/size groups of cooperatives studied (tables 10-I 1).

In fact, the net effect of the relative changes in gross

income and total expenses were declines of 4 to 15

percent in gross income generated per dollar of total

expenses for seven of the eight type/size groups (table 7).

For wheat-type cooperatives, this generally happened

because expenses rose more than gross income. Comsoybean cooperatives experienced the combined effect of

lower incomes and higher expenses.

When the relationship of gross income to total expenses is

viewed as an efficiency measure, the medium-sized and

large grain-handling cooperatives of each type were

equally efficient in both years. Associations handling

wheat were generally more efficient in generating income

than those handling corn and soybeans.

S&r and Marglns

In 1985, combined sales of grain and farm supplies were

lower than those in 1983 for corn-soybean cooperatives,

and generally lower for the larger cooperatives (table 10).

Farm supply sales generally averaged higher and gained

slightly as a proportion of total sales. Grain sales

averaged lower and farm supply sales higher in all

situations where total sales declined, whereas both grain

Table l&-gourcos of lncomo and oporatlng l xponsos par assoclatlon for CORN-SOYBEAN cooperatives, by

sales group, 1985 and 1983

Item

1993

5.0-14.9

1995

Sales group (million dollars)

1995l1993 1983

15.0 or more

1995 1995/l 983

- - Dollars - - Fmxnt - - Oollars - - Petcent

Grain sales

Farm supply sales

Total sales

Cost of sales

Margins on sales

Other operating

income

Nonoperating income

Gross income

7,137,771 8,131,311 -14.1 20,419,881 18,693,506 -8.5

1,971,930 2,011,052 2.0 8,288,554 6,644,227 6.0

9,109,701 8,142,383 -10.8 28,888,235 25,337,733 -5.1

-8,583,833 -7,838,241 -11.0 -25,009,273 -23,601,728 -5.6

525,888 508.122 -3.8 1,878,962 1,736,005 3.4

373,597 364,654 -2.4 1,033,605 931,930 -9.8

-42,356 -54,793 29.4 -145,306 -144,455 -0.6

857,109 815,983 -4.8 2,567,261 2,523,480 -1.7

Labor expenses 295,728 321,851 8.8 879,004 978,830 11.4

Other expenses 421,890 450,937 6.9 1,360,517 1,384,505 1.8

Total expenses 717,618 772,788 7.7 2,239,521 2,363.335 5.5

Net savings’

Gross income per

dollar expense

139,491 43,195 -69.0 327,740 160,145 -51.1

1.19 1.06 -10.9 1.15 1.07 -7.0

Percent

Proportion grain

of total sales

Proportion labor

of total expenses

Margins/total sales

78.4 75.3 -4.0 76.5 73.8 -3.5

41.2 41.6 1.0 39.2 41.4 5.6

5.77 6.22 7.8 6.29 6.85 8.9

VSavings before income taxes and allocations.

12
and farm sales averaged higher where total sales averaged

higher. Margins were up most for wheat-barley

associations in the Pacific Northwest and declined most

for the three type/size groups with the largest drop in

grain sales. Margins as a percentage of total sales tends

strongly to be highest for cooperatives in areas where the

contribution of farm supply sales is largest (Southern

Plains and Corn Belt); and, conversely, lowest in the

Northern Plains and Pacific Northwest, where grain

accounts for 85 to 90 percent of total sales.

Gn the other hand, grain marketings increased in the

Pacific Northwest while prices received averaged

significantly lower than in 1983. Barley marketings

increased sharply for both medium-sized and large

cooperatives, whereas wheat marketings were higher for

the medium-sized ones and lower for the large ones. The

shift in marketings from wheat to barley accounted for

most of the drop in the weighted average of prices

received. The weighted average of prices received was

also sharply lower for cooperatives in the Southern

Plains, largely because of the shift in marketings from

Grab Marketlngs and Prices Received wheat to grain sorghum.

Grain marketings by first-handler cooperatives in the Corn

Belt averaged about 14 percent lower in 1985 while prices

received averaged about the same as in 1983 (table 11).

Table lo-Sources of Income and operating exponsos par assoclatlon for WHEAT-SORGHUM cooperatlves, by

sales group, 1988 and 1983-Continued

Sales group (million dollars)

Item 5.0-14.9 15.0 or more

1983 1985 1985/l 983 1983 1985 1985/l 983

- - Dollars - - Percent - - Lloliars - - Percent

Grain sales

Farm supply sales

Total sales

Cost of sales

Margins on sales

Other operating

income

Nonoperating income

Gross income

5,762,502 6,004,600 4.2 16,075,365 13,376.616 -16.6

2,569,697 2,742,264 5.9 6,370,039 6,646,643 3.3

6,352,199 8,747,064 4.7 24,445,424 22,027,461 -9.9

-7,715,632 -6,072,353 4.6 -22,224,626 .20.169,492 -9.2

636,567 674,711 6.0 2,220,596 1,657,969 -16.3

490,575 540,261 10.1 1,793,656 1,297,474 -27.7

73,549 42,076 -42.6 40,604 -52,045 -

1,200,691 1,257,050 4.7 4,054,660 3.103,396 -23.5

Labor expenses 440,313 476,652 6.7 1,439,665 1,245,275 -13.5

Other expenses 554,141 600.992 6.5 19637,403 1,562,572 -15.0

Total expenses 994,454 1,079,644 6.6 3,277,068 2.807.847 -14.3

Net savings’

Gross income per

dollar expense

206,237 177,406 -14.0 777,792 295,551 -62.0

1.21 1.16 4.1 1.24 1.11 -10.5

Proportion grain

of total sales

Proportion labor

of total expenses

Margins/total sales

69.0 68.6 -0.6 65.8 80.7 -7.8

44.3 44.3 0.0 43.9 44.3 .9

7.62 7.71 1.2 9.08 8.43 -7.2

‘Savings before income taxes and allocations.

13
Table lo-9ourcer of Income and oporatlng exponror par assoclatlon for WHEAT-BARLEY-OATS cooperatives,

by sales group, 1995 and 1993-Continued

Sales group (million dollars)

Item 5.0-14.9 15.0 or more

1983 1985 1985/l 983 1983 1985 1985l1983

Grain sales

Farm supply sales

Total sales

Cost of sales

Margins on sales

Other operating

income

Nonoperating income

Gross income

Labor expenses 178,068 251,904 41.5 506,392 613,273 21.1

Other expenses 244,137 309,509 26.8 709,403 760,378 10.0

Total expenses 422,205 561,413 33.0 1,215,795 1,393,651 14.6

Net savings’

Gross income per

dollar expense

Proportion grain

of total sales

Proportion labor

of total expenses

Margins/total sales

- - Dollars - - Percent - - Oollers _ -

6,474,710 6,626,757 2.3 24,903,062 21,428,038

1,063,629 1,447,965 33.6 2,386,901 3,278,163

7,556,539 6,074,722 6.8 27,289,963 24,706,201

-7,163,200 -7,662,571 7.0 -26,084,769 -23,648,107

395,339 412,151 4.3 1,205,194 1,058,094

Percent

-14.0

37.3

-9.5

-9.3

-12.2

162,578 285,512 75.6 357,714 643,801 80.0

-8,872 -15,646 76.4 -4,388 2 158,858 -

549,045 682,017 24.2 1,558,520 1,860,753 19.4

126,840 120,804 -4.9 342,725 467,102 36.3

1.30 1.21 -6.9 1.28 1.34 4.7

85.7 82.1 -4.2 91.3 86.7 -5.0

42.2 44.9 6.4 41.7 44.0 5.5

5.23 5.10 -2.5 4.42 4.28 -3.2

Percent

‘Savings before income taxes and allocations.

Weflects gains in assets related to unexpected natural occurrences; figure would have been -29,787 otherwise.

(Continued)

14
Tablo lO=~ of home and opwatlng l xpon8os par assoclMlon for WHEAT-BARLEY coopomthma, by

ados group, loI and 1@03-Contlnuod

Sales group (million dollars)

Item

1983

5.0-14.9

1985 1985/1983 1983

15.0 or more

1985 1985/1983

Grain sales

Farm supply sales

Total sales

Cost of sales

Margins on sales

Other operating

income

Nonoperating income

Gross income

Labor expenses 260,666 412,914 58.4 700,822 1,253,799 78.9

Other expenses 449,251 517,365 15.2 1,087,724 1,409,396 29.6

Total expenses 709,917 930,299 31.0 1,708,546 2,663,195 40.9

Net savings2

Gross income per

dollar expense

Proportion grain

of total sales

Proportion labor

of total expenses

Margins/total sales

--Dollam-- Pwrcent - - Dollars - - Percent

8386.116 7,466,621 -10.7 27,034,643 27,667,403 2.4

1,034,275 1,103,491 6.7 2,914,445 53063,479 74.4

9,420.393 6,592,312 -8.6 29,949,208 32,770,002 9.4

-9,052,655 -8,196,619 -9.4 -20,812,678 -31,415,906 9.0

367,538 393,693 7.1 1,136,610 1,354,974 19.2

654,016 791,176 21.0 1,523,259 2,156,558 41.6

-33,169 -87,510 (‘1 -126,450 -35,742 -71.7

988,385 1,097,359 11.0 2,533,419 3,475,790 37.2

276,468 167,060 40.0 744,873 812,595 9.1

1.39 1.16 -15.1 1.42 1.31 -7.7

69.0 67.2 -2.0 90.3 84.5 -6.4

36.7 44.4 21.0 39.2 47.1 20.2

3.90 4.56 17.4 3.80 4.13 8.7

Percent

‘More lhan doubled.

*Saving0 before income tax08 and allocations.

15
Tablo 1 1-8oIoctad grain oporatlon data for CORIV-SOYBEAN coopocatlvoa, by ulos group, 1885 and 188S

Item Unit

lgS3

Sales group (mllllon dollars)

5.0-14.9 15.0 or more

1985 1955/lga3 1883 1885 188511883

Pefcent mcent

Storage capacity:

Per association

Per location

Locations

Bushels 1,191,437 1,420,747 19.2 3555,391 3,616,023 1.6

Bushels 630,951 945,671 13.6 1,046,006 1,030,654 -1.7

Number 1.43 1.50 4.9 3.39 3.51 3.5

Grain marketed, total Bushels 2,030,491 1,756,411 -13.5 5,626,276 5,236,655 -10.1

Wheat Bushels 59,010 57,343 -2.8 179,420 165,976 -7.5

Corn Bushels 1,392,294 1,216,366 -12.5 4,145,753 3,635,236 -12.3

Soybeans Bushels 532,319 442,342 -16.9 1,429,269 1,310,269 -6.3

Sorghum Bushels 9,512 7,196 -24.3 16,194 62,516 (‘1

Barley Bushels 296 93 -66.6 3,299 67 -96.0

Other2 Bushels 37,060 31,049 -16.2 52,341 44,569 -14.6

Turnover rate Times 1.70 1.24 -27.1 1.64 1.45 -11.6

Price received3 Collars 3.52 3.49 -0.9 3.50 3.57 2.0

%4ore than doubled.

2lncludes oats, sunflowers, rye, and flaxseed.

Weighted average price per bushel of all grain marketed.

Tablo 1 l-8oIoctod grain oporatlon data for WHEAT-SORQHUM cooporathme, by salon group, 1985 and

1 @bB-Contlnuod

Sales group (million dollare)

Item Unit 5.0-14.9 15.0 or more

Storage capacity:

Per association

Per location

Locations

1983 1885 1 ee5ll g&3 1983 1985 lg&Wgw

kbnxnt R5wxmt

Bushels 1,769,969 1,949,167 10.1 5,616,614 4,090,401 -29.7

Bushels 616,204 633,232 2.1 699,476 796,631 -11.4

Number 2.17 2.34 7.8 6.47 5.13 -20.7

Grain marketed, total Bushels 1,762,461 2,036,244 15.6 4,617,412 4,496,007 -6.6

Wheat Bushels 1,307.239 1.276,797 -2.2 3,462,621 2,634,926 -23.9

Corn Bushels 65,275 112,925 32.4 220,347 360,760 63.7

Soybeans Bushels 40,397 39,771 -1.5 66,164 76,251 -13.5

Sorghum Bushels 310,951 564,711 61.6 1905,506 1,351,636 34.4

Barley Bushels 5,196 20,764 (‘1 10,450 29,119

Othep

(‘1

Bushels 13,421 21,256 56.4 30,304 45,295 49.5

Turnover rate Times 1 .oo 1.05 5.0 .63 1.10 32.5

Price received3 Dollars 3.27 2.95 -9.6 3.34 2.97 -11.1

‘More than doubled.

2Includes oats, sunflowere, rye, and flaxeeed.

Weighted average price per bushel of all grain marketed.

16

(Continued)
Tablo 11-&Ioctod grrln oporatlon data for WHEAT-BARLEY-OATS cooperatlver, by sales group, 199s and

1993-Contlnuod

Item

Storage capacity:

Per association

Per location

Locations

Unit

Bushels

Bushels

Number

1983

610,479

395,966

1.54

5.0-14.9

1985

622,176

546,116

1.50

Sales group (million dollars)

iQQ5/1983 1983

Percent

34.7 2,295,657

36.4 616,115

-2.6 3.71

15.0 or more

1985

1,919,550

363,910

5.00

1 Q85ll Q83

¢

-16.4

-37.9

34.6

Grain marketed, total Bushels 2,065,546 2,207,417 6.9 6,372,166 7,040,326 -15.9

Wheat Bushels 1,049,034 1,159,516 10.5 4,016,536 4,655,312 20.9

Corn Bushels 62,391 60,353 -3.3 171,309 31,474 -61.6

Soybeans Bushels 66,945 93,427 39.6 120,569 5,000 -95.9

Sorghum Bushels 2,491 1,441 42.2 0 0 -

Barley Bushels 461,060 540,742 17.3 2,111,633 1,306,060 -36.1

Other1 Bushels 423,625 351,936 -16.9 1,951,697 640,460 -56.9

Turnover rate Times

Price received2 Dollars

llncludes oats, sunflowers, rye, and flaxseed.

weighted aversge price per bushel of all grain marketed.

3.36 2.66 -20.7 3.65 3.67 0.5

3.13 3.00 -4.2 2.97 3.04 2.4

(Continued)

Tablo 1 1-&lectod grain oporatlon data for WHEAT-BARLEY cooporrtlvw, by sales group, 199s and

1 QQB-Continued

Item

Storage capacity:

Per association

Per location

Locations

Unit

Bushels

Bushels

Number

lQ83

3,555,oOO

1,103,276

3.22

5.0-14.9

1985

3,769,026

1 ,143,656

3.31

Sales group (million dollars)

1985/i 983 1983

Percent

6.6 7,265,657

3.7 605,466

2.6 12.00

15.0 or more

1985

6,777,545

659,761

10.27

lQ85llQ83

Pmcent

6.7

9.0

-14.4

Grain marketed, total Bushels 2,313,292 2,373,766 2.6 7,552,196 6,430,961 11.6

Wheat Bushels 1,690,923 1,573,924 -6.9 6,066,455 6,412,654 5.3

Corn Bushels 31,736 0 -100.0 76,101 115,267 47.6

Soybeans Bushels 0 0 - 0 191,066 0 0

Sorghum Bushels 0 0 - 0 0 -

Barley Bushels 523,637 745,909 42.4 1,339,569 1,654,577 23.5

Other1 Bushels 66,996 53,933 -19.5 46,071 57,375 24.5

Turnover rate Times

Price received* Dollars

IIncludes oate, sunflowers, ye, and flaxseed.

Weighted average price per bushel of all graln marketed.

.65 .63 -3.1 1.04 1.24 19.2

3.63 3.15 -13.2 3.67 3.26 -10.6

17
Other Income Sources

Operating income from sources other than margins on

sales accounted for about one-third to two-thirds of total

operating income in 1985. Its relative contribution was the

same for medium-sized and large cooperatives in each

respective area and was about the same in both years in

three of the four areas. Other operating income averaged

substantially higher per association in the Northern Plains,

and rose sharply as a proportion of total operating income

as margins in 1985 averaged about the same as in 1983 to

significantly lower (table 10).

Nonoperating income-in most cases largely patronage

refunds received from other cooperatives and a net

interest adjustment-was a negative income component for

most type/size groups in both 1985 and 1983 (table 10).

Except for the wheat-sorghum associations, medium-sized

cooperatives were affected most in both years by debt

interest paid, particularly in 1985. Patronage refunds

received contributed heavily to income on wheat-sorghum

cooperatives.

Corn-soybean associations were affected most in both

years by debt interest paid. Also affecting these

cooperatives, particularly in 1985, was the partial/full

writeoff of the value of their investments in other

Figure 5

:

cooperatives. In the Southern Plains, patronage refunds

received contributed most to the additions to operating

income realized by medium-sized grain handlers in both

years and by large cooperatives in 1983. Debt interest

paid and value writeoffs were predominant among large

wheat-sorghum cooperatives in 1985. Debt interest paid,

with one exception, was predominant among wheatbarley-oats and wheat-barley cooperatives both years.

Substantial gains in assets related to unexpected natural

occurrences is reflected by the addition to operating

income in 1985 for large Northern Plains associations.

Operating Expenses

Total operating expenses averaged higher in 1985 for all

association type/size groups except for large wheatsorghum (table 10 and fig. 5). Operating expense changes

for large cooperatives were not significant, whereas,

except for medium-sized wheat-sorghum, operating

expense increases for medium-sized cooperatives were

significant. This is essentially the pattern for labor and

labor-related costs and for other operating expenses. In

virtually all situations, labor costs increased more than

other expenses and as a proportion of total costs. This

was particularly true for grain-handling associations in the

Northern Plains and Pacific Northwest, reflecting their

substantial increases in grain marketings and/or farm

supply sales.

Labor and Other Operating Expenses Per Cooperative, by Size and Type of Cooperative, 1985 and 1983

Expenses ($1,000)

3,500 ,

I

0

C-SE WH-GS WI-l-B-0 WH-B C-SB WH-GS WH-B-O WH-B

Large Medium

($15.0 mil. or more sales) ($5.0 - 14.9 mil. sales)

18
Grain Storage Capacity and Turnover Rata

Grain storage capacity averaged larger in 1985 than in

1983 for medium-sized cooperatives of all four types

(table 11). Bushel increases per association were similar,

ranging from about 180,000 bushels in the Southern

Plains to 234,000 bushels in the Pacific Northwest.

Storage capacity averaged smaller for the large

cooperatives in the three wheat areas and about the same

in the Corn Belt. It appears that medium-sized

cooperatives were more inclined to expand storage

capacity while the tendency among large cooperatives was

to reduce it.

More cooperatives increased their storage capacity than

reduced capacity for all type/size groups and, except for

first-handlers in the Southern Plains, far more so for the

medium-sized ones than for the large ones of each type.

Those that expanded storage capacity during the 1983-85

period reported considerably smaller storage capacities in

1983 than did those that reduced capacity.

Turnover rates, a measure of grain storage capacity use

efficiency, were unchanged-to-lower in 1985 for mediumsized cooperatives and unchanged-to-higher for large

ones. They dropped most noticeably in the Corn Belt,

where increased storage capacity combined with sharply

reduced grain marketings (table 11). Rates were highest in

both years in the Northern Plains and lowest in both years

for medium-sized and large associations in the Pacific

Northwest and Southern Plains, respectively.

Momborshlp

Reported cooperative membership averaged lower in 1985

than in 1983 for most type/size groups, usually because of

fewer grain-producer members. Nongrain-producer

members averaged higher for half of the groups and rose

as a proportion of total membership for all but the large

wheat-barley-oats associations (table 12). In many cases,

these membership figures are not well maintained, and

thus are probably not accurate.

Table IP-Membarshlp composltlon oi first-h~ndlors-of-gr8ln cooporatlvos, by typo and salor group, 1995 and

1993

Type of cooperative

Corn-soybean:

Grain producers

Other members

Total

Grain of total

Wheat-sorghum:

Grain producers

Other members

Total

Grain of total

Wheat-barley-oets:

Grain producers

Other members

Total

Grain of total

Wheat-barley:

Grain producers

Other members

Total

Grain of total

Unit

Number

Number

Number

Percent

Number

Number

Number

Percent

Number

Number

Number

Percent

Number

Number

Number

Percent

t903

402

221

623

64.5

611

404

1,015

60.2

503

171

674

74.6

247

7 2

319

77.4

5.0-14.9

1965

371

222

593

62.6

561

446

1,027

56.6

431

230

661

65.2

232

71

303

76.6

Sales group (million dollars)

1985/1983 1983

Percent

-7.7 1,331

.5 476

-4.6 1,607

73.7

-4.9 1,630

10.4 1.679

1.2 3,509

52.2

-14.3 1,465

34.5 495

-1.9 1,960

74.7

-6.1 716

-1.4 173

-5.0 669

60.5

15.0 or more

1985

1,015

646

1,661

61.1

1,172

!,266

2,436

46.1

1,105

137

1,242

69.0

450

402

660

53.3

1985/l 903

Percent

-23.7

35.7

-6.1

-36.0

-24.6

-30.5

-24.6

-72.3

-36.6

-36.0

132.4

-3.3

19
BALANCESHEET

Assets

Total value of assets per association in 1985 ranged from

$2.8 million to $3.8 million for medium-sized firms to

$7.9 to $10.0 million for the large ones (table 13). Asset

values averaged lower in 1985 than in 1983 in the Corn

Belt and higher in the Pacific Northwest. For cooperatives

in the Northern and Southern Plains, they were higher for

the medium-sized ones and lower for the large ones. This

was the pattern for current assets and, except for the

large Northern Plains cooperatives, the pattern for fixed

assets. Changes in inventory value accounted for most of

the current assets changes for .most type/size groups. Net

book value of fmed assets as a proportion of total assets

was smallest in both years for the wheat-barley-oats

cooperatives (those with the smallest grain storage

capacities) and highest for the wheat-barley cooperatives

(those with the largest grain storage capacities). Member

ownership (equity) of assets averaged higher per

association in 1985 than in 1983 for the medium-sized

Tablo 13-Condonsod balance shoot data for CORN-SOYBEAN co~po~athms, by ulna group, 1985 and 1983

Item

1983

5.0-14.9

1985

Sales group (million dollars)

1985/l 983 1983

15.0 or more

1985 198511983

Current assets 1,319,916 1,112,149

Investments 583,498 810,893

Fixed assets 1.080,432 1,058,585

Other assets 17,238 22,571

Total assets 2.981,080 2,801,998

Percent

-15.7

8.4

-.4

31 .O

-5.4

- - Oollera - -

3,985,387 3,419,287

1.819.485 1,804,271

3,188,788’ 2,784,174

37,434 122,179

8,789,052 7,909,891

Percent

-13.8

9

.1;:7

(‘)

-10.0

Current liabilities

Long-term liabilities

Equity

Total liabilities

and equity

899,088 889,888 -23.3 3,055,353 2,491,828 -18.4

394,528 305,895 -22.5 1,488,789 1,414,821 -3.5

1,887,488 1,808,417 8.3 4,288,930 4,003,244 -8.2

2,981,080 2,801,998 -5.4 8,789,052 7,909,891 -10.0

Working capital2 420,830 422,283 .3 910.014 927,441 1.9

Total sales/dollar assets 3.08 2.91 -5.5 3.04 3.20 5.3

Net savings/equity 8.37 2.39

Current ratio 1.47 1.81 9.5 1.30 1.37 5.4

Liabilities/net worth (equity) .78 .55 -29.5 1.08 .98 -7.5

Equity/total assets .58 .84 14.3 .49 .51 4.1

Total debt/total asse1s .25 .19 -24.0 .32 .29 -9.4

Total debt/equity .44 .30 -31.8 .88 .58 -12.1

--ooliam--

Peloent

-71.4 7.89 4.00

Rat/o

47.9

Wore than doubled.

Furrent assets minus current liabilitie6.

(Continued)

20
cooperatives and the large wheat-barley ones, and lower

for the other large cooperatives. The proportion of total

assets owned by the membership (equity/assets) improved

during 1983-85 except in the Pacific Northwest, and was

at least 51 percent in 1985 except for the large

cooperatives in the Northern Plains (table 13). Mediumsized first-handler associations of all types owned a higher

proportion of their assets in both years than did their

larger counterparts, but in general the large cooperatives

improved their ownership position more during this

period.

Tablo 13-Condoned balance shoot data for WHEAT-SORGHUM coopwatlvo8, by saloa group, 1095 and

1993-Contlnuod

Item

1983

5.0-14.0

1985

Sales group (million dollan)

ls55/lw3 1653

15.0 or mora

1055 19s50953

Current assets

Investments

Fixed assets

Other assets

Total assets

Current liabilities

Long-term liabilities

Equity

Total liabilities

and equity

Working capital2

Total sales/dollar assets

Net savings/equity

Current ratio

Liabilities/net worth (equity)

Equity/total assets

Total debt/total assets

Total debt/equity

1507,334 1,584.815

868.707 975,089

1.252.291 1,274,718

19,762 23,775

3.648,094 3,838,375

949,337 904,885

407,788 441,800

2,290,989 2,491,890

3648,094 3,838,375

557,997 859,930

2.29 2.28

9.00 7.12

1.59 1.73

.59 .54

.83 .85

.23 .21

.36 .32

hoant - - &//m _ _

3.8 5,121,855 3,788,752

12.2 2,801,058 2,214,588

1.8 4,019,131 3,285,081

29.3 51,458 39,903

5.2 11,793,300 9,288,304

4.7 3,787,044 2,320,349

8.3 1348,401 1,093,794

8.8 8.857,855 5.874,181

5.2 11,793.300 9.288,304

18.3 1,334,811 1448,403

-.4 2.07 2.37

Puoant

-20.9 11.88 5.03

RaUo

8.8 1.35 1.82

-8.5 .77 .58

3.2 .58 .63

-8.7 .23 .25

-11.1 .41 .39

Percent

-28.4

-14.9

-18.8

-22.5

-21.2

-38.7

-18.9

-11.8

-21.2

8.5

14.5

-56.9

20.0

-24.7

12.5

8.7

4.9

More than doubled.

Furrent assets minus current liabilities.

21
Tablo 13-Condonud balance shoot data for WHEAT-BARLEY-OATS cooporatlv08, by uhs @roup, 1995 and

1993-Contlnuod

Item

19&3

5.0-I 4.9

19s5

Sales group (million dollars)

19s5llQss 1983

15.0 or more

1985 19ssl19s3

Current assets 1,465,609 1,722,960

Investments 410,402 453,715

Fixed assets 727,323 994,206

Other assets 30,951 20,403

Total assets 2,634,265 3,191,304

Percent - - oouars - -

17.6 6,376,673 5,633,731

10.6 1,371,290 1,191,408

36.7 2,649,696 2,922.461

34.1 21,762 6,131

21.1 12,421,643 9,953,731

Percent

30.4

-13.1

10.3

-71.9

-19.9

Current liabilities

Long-term liabilities

Equity

Total liabilities

and equity

1,149,676 1,360,392 16.3 7,561,566 4,924,562 -34.9

156,303 216,369 36.7 626.615 1,067,069 26.7

1,326,306 1,614,523 21.7 4,031,240 3,962,060 -1.7

2,634,265 3,191,304 21.1 12,421,643 9,953,731 -19.9

Working capital2 315,933 362,566 14.6 617,265 909,169 11.2

Total sales/dollar assets 2.67 2.53 -11.6 2.20 2.46 12.7

Net savings/equity 9.56 7.47

Current ratio

Liabilities/net worth (equity)

Equity/total assets

Total debt/total assets

Total debt/equity

--oollers--

1.27 1.27 0.0

.99 .98 -1.0

.50 .51 2.0

.12 .ll -6.3

.25 .21 -16.0

Peroent

-21.9 6.50 11.79

Flab

1.11 1.16 6.3

2.06 1.51 -27.4

.32 .40 25.0

.06 .15 67.5

.25 .37 46.0

36.7

*More than doubled.

Current assets minus current liabilities.

22
Tablo 13-Condonsod balance shoot data for WHEAT-BARLEY cooporatlvos, by ralos group, 1985 and

1 SW-Contlnued

Item

1903

5.0-14.9

1985

Sales group (million dollars)

1985l1983 1983

15.0 or more

1985 190511983

Current assets 1,023,161 1,137,160

Investments 245,604 267,167

Fixed assets 1,676,994 2,127,632

Other assets 46,542 13,173

Total assets 2,996,501 3,565,172

- - Dollars - - Percent - - Do//ars - -

11.1 3,470,665 4,566,116

16.6 631,626 1,061,194

26.7 3,943,659 4,376,177

-72.9 161,956 47,662

19.0 6,407,906 10,071,369

Current liabilities

Long-term liabilities

Equity

Total liabilities

and equity

Working capital* 446,456 310,195 -30.5 736,517 1 ,011,675 37.4

Total sales/dollar assets 3.14 2.41 -23.2 3.56 3.25 -6.7

Net savings/equity 13.54 7.59

Current ratio 1.77 1.36 -22.0 1.27 1.26 0.6

Liabilities/net worth (equity) .46 .62 34.6 .65 .67 2.4

Equity/total assets .69 .62 -10.1 .54 53 -1.9

Total debt/total assets .17 .25 47.1 .26 .24 -7.7

Total debt/equity .25 .40 60.0 .49 .45 -6.2

576,703 626,965 43.4 2,734,146 3,554,241 30.0

363,206 536,256 46.2 1,137,116 1,144,110 .6

2,056,592 2,199,931 7.0 43536,642 5,373,016 16.4

2,996,501 3,565,172 19.0 6,407,906 10,071,369 19.6

Percent

43.9 16.42 15.12

Ratio

31.6

30.0

11.0

-70.4

19.6

-7.9

'More than doubled.

current assets minus current liabilities.

23
Equity Capltrl

Equity capital represents the member-ownership and

control of the cooperative, and serves as a buffer for

creditors in absorbing operating losses as well as declines

in asset values. Many cooperatives found themselves

adjusting to both during 1983-85.

Equity capital usually takes on the form of stock

(common and preferred), the noncash portion of patronage

refunds declared, and retained earnings. The relative

importance of these forms of equity varies considerably

among types of cooperatives, and was similar for

medium-sized and large associations for both years (table

14).

Common stock, generally tied to voting or membership

by grain cooperatives, is a relatively minor source (less

than 10 percent) of equity capital for wheat-barley-oats

and wheat-barley cooperatives. Allocated capital credits,

mostly patronage refunds, was uniformly the most

important form of equity, and relatively more so for the

wheat-barley-oats and wheat-barley associations.

Unallocated equity accounted for one-fifth to one-fourth of

the total for most type/size groups.

Debt Structure

The extent and nature of hdebtedness varied significantly

among the grain-handling associations studied. The

Northern Plains and Pacific Northwest local first-handlers

tended to have the lowest debt levels per association in

1983 (table 15 and figure 6). Total debt levels for these

four type/size groups averaged higher 2 years later. In

contrast, debt levels, particularly of short-term debt, for

the Corn Belt and Southern Plains cooperatives averaged

considerably lower in 1985 than in 1983. Despite this,

cooperatives in the Corn Belt, particularly the large ones,

for which debt to equity ratios averaged 0.66 and 0.58 in

1983 and 1985, respectively, remained financially

troubled. Not only were their net savings levels relatively

lower in both years, but their 1983-85 declines in savings

Tablo 1 C-Typos and amount of mombor oqulty capital, by &a and uko group of coopwathro, 1988 and 1883

Sales group (million dollars)

Type of cooperative Unit 5.0-14.9 15.0-or more

1883 1955 lQ53 1955

Corn-soybean:

Member equity Dollars 1,667,406 1,806,417 4,266,930 4,003,244

Common/preferred stock Percent 29.5 29.0 27.2 29.3

Allocated Percent 43.0 43.2 50.4 47.6

Unallocated Percent 27.5 27.8 22.4 23.1

wheat-sorghum:

Member equity Dollars 2,290,909 2,491,890 6,057,855 5,874,161

Common/preferred stock Percent 30.6 27.8 36.8 24.7

Allocated Percent 45.6 47.2 44.5 56.3

Unallocated Percent 23.8 25.0 18.7 19.0

Wheet-berleyoets:

Member equity Dollars 1,326,306 1,614,523 4,031,240 3,962,080

Common/preferred stock Percent 8.5 4.6 1.7 5.8

Allocated Percent 74.8 73.6 82.0 75.2

Unallocated Percent 18.7 21.6 16.3 19.0

Wheat-berley:

Member equity Dollars 2,056,592 2,199,931 4,536,642 5,373,016

Common/preferred stock Percent 7.1 8.7 8.1 7.9

Allocated Percent 65.5 68.8 73.2 65.3

Unallocated Percent 27.4 22.5 18.7 26.8

24
Short-and-Long-Term Debt Par Coo~omttve, by Size and Type of Cooperative, 1985 and 1983

Debt ($1,000)

3,000

2,500

2,000

1,500

1,000

500

0

1983

Short-term

Long-term

WH-OS WI-l-B-0 WH-B C-SB WH-GS WH-B-O WH-B

Large Medium

($15.0 mil. or more sales) ($5.0 - 14.9 mil. sales)

were very sharp (table 1).

Except for the large wheat-sorghum cooperatives, longterm debt averaged higher in 1985 for the wheat

associations, particularly the medium-sized ones.

A look at first-handler associations for which data were

available for both years provides insight into their

handling of their debt situation during 1983-85. Their

adjusting was far from uniform. Overall, 70 to 72 percent

of the cooperatives reduced their debt while about 26

percent took on more debt. These percentages varied

widely among the type/size groups studied (table 16).

Retrenching was most prevalent in the Corn Belt, where

close to 80 percent reduced debt load and fewer than one

in five increased debt. Dollar reductions for medium-sized

cooperatives there averaged second to those of the wheatsorghum area while increases averaged relatively small.

Key factors associated with and affected by changes in

debt structure are summarized for all types of cooperative

associations in table 17 and for selected type/size groups

in table 18. First-handler cooperatives of both sixes that

reduced debt load tended to be more highly leveraged in

1983 than were those that increased debt load. With

member equity levels about the same in both years for the

medium-sized cooperatives, their ratios of debt to equity

for the two debt groups were reversed between 1983 and

1985 (table 17). Large cooperatives were considerably

more highly leveraged than medium-sized ones in both

years, which helps explain why their expansion rates were

considerably slower than those for medium-sized

cooperatives that increased debt.

Typifying first-handlers that reduced debt between 1983

and 1985 were a reduction of over 8 percent in net value

of fixed assets; modest increases in grain storage capacity

and total expenses, particularly labor; and lower grain

marketings and sales, particularly of grain. The net effect

of all income and expenses changes during this period

were drops in net savings of 48 and 41 percent. Increased

indebtedness paid off, at least in the short run, for a

slightly higher proportion of the large cooperatives and of

those that increased debt load. For example, among all

large associations, 36 percent of those that increased debt

reported higher net savings in 1985 than in 1983,

compared with 29 percent of those that reduced debt

(table 19). These relationships varied significantly among

cooperative type/size groups, and reflect the

comparatively poor economic conditions that confronted

cooperatives in the Corn Belt. Interestingly, gross income

generated per dollar expended averaged about the same

for both size groups in each year. This also held true for

the cooperatives that expanded.

25
Table l&D&t structure ot tlr~-h~ndlor~of-gr~ln cooporatlvoq by typo and ulos group, 1888 and 1883

Sales group (million dollars)

Type of cooperative Unit

1993

5.0-14.9

1985 198511993

Percent

1993

15.0 or more

1985 1985H993

Corn-soybean:

Short-term debt

Long-term debt

Total

Long-term of total

Dollars 343,283 232,153

Dollars 394.528 305.695

Dollars 737,811 537,848

Percent 53.5 56.8

-32.4

-22.5

-27.1

-33.9

-3.5

-18.2

1,367,182 903,516

1,466.769 1,414.821

2,833,951 2,316,339

51.8 61.0

Wheat-sorghum:

Short-term debt

Long-term debt

Total

Long-term of total

-16.3

8.3

-4.1

-12.3

-18.9

-15.5

Dollars 415,478 347,842

Dollars 407.788 441.600

Dollars 823,266 789,442

Percent 49.5 55.9

1,384,192 1,214,411

1348,401 1,093,795

2,732,593 2,308,206

49.3 47.4

Wheat-barley-oats:

Short-term debt

Long-term debt

Total

Long-term of total

Dollars 170,606 119,227

Dollars 158.303 216.369

Dollars 326,909 335,616

Percent 48.1 64.5

-30.1

36.7

2.0

(1)

28.7

46.0

164,428 383,261

628,815 1,067.089

993,243 1,450,350

83.4 73.6

Wheat-bar/ey:

Short-term debt

Long-term debt

Total

Long-term of total

(‘1

46.2

73.6

16.5

.6

8.4

Dollars 144,460 343,006

Dollars 363.206 538,256

Dollars 507,666 881,262

Percent 71.5 61.1

1,089,951 1,269,868

1,137.116 1,144.110

2,227,067 2,413,998

51.1 47.4

Wore than doubled.

26
Tabk l&Proportlon of flmt-hmdloro roducod and InCrCCCCd &bt*, by typo l nd ~1.8 group, 180345

Type of cooperative

Corn-soybsen:

Proportion reduced

Amount

Proportion increased

Amount

Unit

Percent

Dollars

Percent

Dollars

Sales group (million dollars)

w-14.9 15.0 or more

79.2 77.8

318,988 1,070,587

17.8 19.8

240,831 703,107

Whest-sorghum:

Proportion reduced

Amount

Proportion increased

Amount

Percent 59.8 38.4

Dollars 344,925 1,885,919

Percent 40.4 83.8

Dollars 419,928 1,022,127

Wheat-berley-oafs:

Proportion reduced

Amount

Proportion increased

Amount

Percent 89.8 33.3

Dollars 282,903 275,400

Percent 30.4 88.7

Dollars 438,080 488,813

Whsst-berley:

Proportion reduced

Amount

Proportion increased

Amount

Percent 28.8 71.4

Dollars 178,882 505,785

Percent 71.4 28.8

Dollars 473,240 1,189,223

*Based on cooperatives reporting comparable data for both years.

27
Tablo 17-Fmton aeaocl~tod wtth mducod md lncfomod debt, ali flr8t-hmdlor8 ot grain, l by ulor group,

la05 l d 1903

Sale9 group (S5.0 - $14.9 million)

Item Unit

1993

Reduced debt Increased debt

1999 199w999 1993 1995 199!5/1993

889,088 553,884 -38.3 521,788 840,451 81.1

383,040 229,121 40.2 181,070 354,298 95.7

488,028 324,783 -33.2 340,718 488,153 42.7

Total debt Dollars

Short-term Dollars

Long-term Dollars

Net savings Dollars 175,497 90,511 48.4 207,128 90,470 -58.3

Total expenses Dollars 834999 847,078 1.4 712,837 825,493 15.8

Labor Dollars 347,899 358,733 3.1 297,385 347,077 18.7

Other Dollars 487,109 488343 .3 415,472 478.418 15.1

Total sales Dollars 9,838,214 8,395,558 -12.9 8,884,091 9,088,287 2.1

Grain Dollars 7438,392 8,217,258 -18.4 7,080,124 7,218,423 2.0

Farm supplies Dollars 2,199,822 2,178,308 -1.0 1,803,987 1847,844 2.4

Grain marketing8 Bushels

Grain storage capacity Bushels

1,875,108 -13.3 2,058,989 2,287,803 10.1

1,548,942 7.3 1,838,823 1,855,981 13.2

Fixed assets Dollars

2,182,072

l/W,872

1,271,489 1,184,974 -8.4 1,185,208 1,351,045 14.0

Ratios:

Current

DebVequity

Number 1.48 1.55 4.7 1.48 I .42 4.1

Number .43 .28 34.9 .28 44 57.1

Gross income per

dollar expenses

Net savings/equity

Dollars

Percent

1.21

8.8

1.11

4.5

-8.3

48.9

1.29

11.0

1.11

4.7

-14.0

-57.3

‘8arM on cooperativea repotting compambk data for both years.

20
Table 17-Factors aswclatod wlth nducod and Incroawd d&t, all flr8t-hmdlors of grain,* by l aloa group,

1995 and 1993-Contlnuod

Item Unit

1983

Sales group ($15.0 million or more)

Reduced debt

1985 1985/1983 1989

Increased debt

1985 1985/l 983

Total debt Dollars 2,892,819 1,889,492

Short-term Dollars 1,418,385 701,419

Long-term Dollars 1,478,434 1,188,073

Net savings Dollars 389,972 218,983 40.8 598,857 303,805 49.3

Total expenses Dollars 2,281,595 2,317,585 1.8 2847,095 3,075,315 8.0

Labor Dollars 892,979 989,892 8.8 1,181,557 1,332,192 12.7

Other Dollars 1,388,818 1347,893 -2.9 1885,538 1,743,123 4.7

Total sales Dollars 27,210,499 25,221,147 -7.3 31,898,581 31,050,877 -2.7

Grain Dollars 21,101,824 18,773,128 -11.0 23,420,950 21,587.884 -7.8

Farm supplies Dollars 8,108,875 8,448,019 5.8 8,477,831 9,482,993 11.8

Grain marketings Bushels 8,181,403 5,573,907 -9.5

Grain storage capacity Bushels 3,987,885 4,089,884 3.1

Fixed assets Dollars 3,288,752 2,999.498 -8.2

Ratios:

Current

Debt/equity

Gross income per

dollar expenses

Net savings/equity

Number

Dollars 1.18 1.09 -8.0

Percent 8.3 4.8 42.2

“Based on cooperatives reporting comparable data for both yeara.

Percent

30.1

53.7

11.0

8,285,808 1.3

4,851,008 4.7

3,888,308 7.2

1.25 -4.8

.80 27.7

-9.1

-50.5

1.31 1.44 9.9

.85 .42 -35.4

2,531,443 3,294,437

1 ,134,055 1,743,174

1,397,388 1,551,283

8,205,841

4442,285

3,825,493

1.31

.47

1.21

11.1

1.10

5.5

29
Table 18-Factors associated with reduced and Incroasod debt, corn-soybem tlrst-handlers of graln,* by sales

group, 1988 and 1983

Sales group ($5.0 - $14.9 million)

Item Unit

1993

Reduced debt Increased debt

1995 1995/1993 1983 1985 190511903

Peffient

36.0

-36.6

-35.4

513,256 753,667 46.9

231,164 366,061 56.3

262,072 367,626 37.5

Total debt Dollars 665,676 566,690

Short-term Dollars 370,555 234,051

Long-term Dollars 515,123 332,639

Net savings (loss) Dollars 169,742 50.244 -70.4 149,005 (15,294)

Total expenses Dollars 616,604 623,339 .6 666,650 763,513 17.5

Labor Dollars 337,666 347,611 2.9 276,696 316,475 14.3

Other Dollars 460,936 475,526 -1.1 367,954 465.036 19.9

Total sales Dollars 10,074,920 6,430,544 -16.3 6,776,356 6,711,190 -.6

Grain Dollars 7,650,645 6,220,996 -20.6 6,996,540 7,027,493 .4

Farm supplies Dollars 2,224,275 2,209,546 -.7 1,779,616 1,663,697 -5.4

Grain marketings Bushels 2,214,045 1,773,593 -19.9 1,916,692 1,996,202 4.1

Grain storage capacity Bushels 1,356,275 1,456,996 7.3 1,066,925 1,469,429 34.9

Fixed assets Dollars 1,263,505 1 ,136,709 -10.0 947,056 1,049,696 10.6

Ratios:

Current

Debt/equity

Number 1.50 1.56 4.0 1.60 1.39 -13.1

Number .45 .29 -35.6 .31 .47 51.6

Gross income per

dollar expenses

Net savings/equity

Dollars 1.21 1.06 -12.4 1.22 .9s -19.7

Percent 6.7 2.6 -70.1 9.0 (1 .O) -

‘Based on cooperatives reporting comparable data for both years.

(Continued)

30
Tablo lO_Factors auoclatod with roducod and Incroasod debt, wheat-8orghum first-handlon of gcaln; by sales

group, 1995 and 1983-Contlnuod

Item Unit

1953

Sales group ($5.0 - $14.9 million)

Reduced debt

1995 1995/l 993 1983

Increased debt

1995 19w1993

Total debt Dollars 988,384 821,480 -37.8 580,237 980,184 75.0

Short-term Dollars 448,523 277,478 -37.9 215,342 435,753 102.4

Long-term Dollars 519,881 343,982 -33.8 344,895 544,411 57.8

Net savings Dollars 238,335 234,599 -1.8 274,517 128,010 -54.1

Total expenses Dollars 1,121,384 1,097,833 -2.1 905,817 990,404 9.3

Labor Dollars 493,433 479,844 -2.8 397,543 430,129 8.2

Other Dollars 827,951 817,789 -1.8 508,274 580,275 10.2

Total sales Dollars 9,451,048 8,397,007 -11.2 8,829,115 9,174,219 8.3

Grain Dollars 8,580,739 5,881,881 -14.0 8,098,219 8,882,012 9.8

Farm supplies Dollars 2,870,307 2,735,348 4.7 2,532,898 2,492,207 -1.8

Grain marketings Bushels 2,035,402 1,988,989 -3.3 1,907,388 2,238,093 17.2

Grain storage capacity Bushels 2,031,888 2,220,984 9.3 1,888,088 1,884,385 -. 1

Fixed assets Dollars 1,519,052 1,398,280 -8.0 1 ,107,399 1,208,201 9.1

Ratios:

Current

Debt/equity

Number 1.81 1.84 14.3 1.88 1.60 -3.8

Number .38 .22 -38.9 .28 .45 73.1

Gross income per

dollar expenses

Net savings/equity

Dollars

Percent

1.21 1.21 . O 1.30 1.13 -13.1

9.0 8.3 -7.8 12.7 5.8 -54.3

‘Based on cooperatives reporting comparable data for both years.

(Continued)

31
Tablo M-Factors assocl8ted with reduced and Increased debt, wheat-fm/ey-oats first-handIon of grain,* by

salor group, 1985 and 1993-Continued

Sales group ($5.0 - $14.9 million)

Item Unit

1983

Reduced debt Increased debt

1985 19s5/19a3 1983 1985 1985/l 983

Total debt Dollars 800,814 317,912 47.1 328,975 785,035

Short-term Dollars 317,954 144,438 -54.8 102,735 202,088

Long-term Dollars 282,880 173,474 -38.7 224,240 582.987

134.0

98.7

151.1

Net savings Dollars 124,582 103.511 -18.9 109,742 118,548 8.0

Total expenses Dollars 474,311 515,238 8.8 837,182 708,741 10.9

Labor Dollars 210,232 237,873 13.1 278,550 308,238 10.7

Other Dollars 284,079 277,585 5.1 358,812 398,503 11.1

Total sales

Grain

Farm supplies

Dollars

Dollars

7,522,709 7,094,701 -5.7 12,231,887 11,057,888 -9.8

8,128,858 5,797,820 -5.4 10,400,838 8,982,483 -13.8

1,393,851 1,298,881 -7.0 1,831,031 2,075,423 13.3

Grain marketings Bushels 1,987,212 1,882,431 -5.3

Grain storage capacity Bushels 832,875 759,825 20.0

Fixed assets Dollars 878,888 840,841 -4.1

3,078,875

1,030,288

1,235,920

2,941,048 4.5

1,075,288 4.4

1,514,494 22.5

Ratios:

Current

Debt/equity

Number 1.22 1.24 1.8

Number .49 .24 -51 .o

1.14

.44

.9

144.4

Gross income per

dollar expenses

Net savings/equity

Dollars 1.28 1.20 4.8

Percent 10.1 7.9 -21.8

1.13

.18

1.17

8.0

1.17 .O

8.8 13.3

l 8assd on cooperatives reporting comparable data for both years.

32
Saler, group ($5.0 - $14.9 million)

ttem Unit

lg53

Reduced debt Increased debt

1995 1995/1953 1993 1995 1955l1993

Percent

-228

-18.4

-31.9

580,885 1,033,928 84.4

89,872 333,058 378.7

490,813 700,870 42.8

Total debt Dottars 775,152 598,270

short-term Dollars 453,889 379,583

Long-term Dollars 321,283 218,707

Net savings Dollars 231,018 48,073 -80.1 282,812 212,828 -24.7

Total expenses Dollars 1,137,522 1,313,534 15.5 594,011 802,884 35.2

Labor Dollars 482,083 574,177 24.3 208,735 388,882 78.8

Other Dollars 875,439 739,357 9.5 385,278 434,182 12.7

Total sales Dollars 10,489,050 10,180,244 -3.1 8,388,724 8,391,507 .l

Grain Dollars 8583,303 8,709,082 1.5 7,822,577 7347,185 -3.8

Farm supplies Dollars 1905,747 1,451.182 -23.9 784,147 1,044,322 38.7

Qrain marketings Bushels

Grain storage capacity Bushels

2,551,142

3,748,500

1,777,958

2845,121 3.7 2,127,228 2,378,178 11.8

3849,000 2.7 3,458,800 3,892,845 12.5

Fixed assats Dollars 1 ,a14347 2.0 1,822,319 2,418.240 32.8

Ratios:

Current

Debtkqutty

Number

Number

1.58

.30

1.20

9.0

1.53 -3.2 1.74 1.30 -25.3

.23 -23.3 .30 .47 58.7

Gross income per

dollar expenses

Net savlngskquity

Dollars

Percent

1.04 -13.3 1.48 1.27 -14.2

1.8 -80.0 14.9 9.7 -34.9

‘Saaed on oooporative~~ nporllng comparabk data for both years.

33
Tabk l&Facton aswclatod with roducod and Incrouod debt, corn-8oybean first-handlon of grain,” by solos

group, lggg and lgW-Contlnuod

Sales group ($15.0 million or more)

Item Unit

lg63

Reduced debt Increased debt

1885 1985/1983 lge3 1995 1985/l 983

Total debt

Short-term

Long-term

Net savings Dollars 275,205 131,724 -52.1 420,339 157,460 -62.5

Total expenses Dollars 2,246.279 2.267,636 1.6 2,546,165 2,701,362 6.1

Labor Dollars 671,656 953,222 9.3 960,175 1,109,979 15.6

Other Dollars 1,376,423 1,334,614 -3.0 1,565,990 1,591,363 .3

Total sales

Grain

Farm supplies

Grain marketings Bushels 6,064,967 5.245,993 -13.6 6,106,661 5,576,909 -6.6

Grain storage capacity Bushels 3.700,952 3,729,632 .6 4,036,669 4,449,936 10.2

Fixed assets

Ratios:

Current

Debt/equity

Gross income per

dollar expenses

Net savings/equity

Dollars

Dollars

Dollars

Dollars

Number 1.26 1.40 9.4 1.27 1.22 -3.9

Number .71 .46 -35.2 .65 .60 23.1

Dollars 1.12 1.06 -5.4 1.17 1.06 -9.4

Percent 6.6 3.2 -51.5 9.6 3.6 -62.5

l 9aeed on cooperatives reporting comparable data for both years.

2,962,990 1,692,346 -36.1 2,646,469 3,551,576

1,423,500 623,771 -56.2 1,309,346 1,973,473

1,539,490 1,266,575 -17.6 1,539,121 1,576,103

Percent

24.7

50.7

2.5

26,906,442 24,704,133 -6.2 30.659,303 29,414,450 -4.7

20,796,910 16,206,630 -12.5 24,306,259 22,010,591 -9.4

6,107,532 6,497,503 6.4 6,553,044 7,403,659 13.0

3,203.549 2,663,166 -10.6 3,313,002 3,390,592 2.3

34
Tablo lb_Factora amodmtod with rodted l d hmn@d dObt, Whoa&8o@wn flrat-handlers of grdn; by ulna

group, labs and 1983-ConUn~

Item Unit

1983

Sales group ($15.0 million or more)

Reduced debt

1985 19sYl Qa3 19&J

Increased debt

19s5 lssYl9s3

funxnt

55.7

101.5

19.5

Total debt Dollars 4,049,610 2,163,690 -46.1 1,632,922 2,655,049

Short-term Dollars 2,641,121 1,396,297 -47.1 610,926 1,634,055

Long-term Dollars 1,406,469 767,393 -44.1 1,021,994 1,220,994

Net savings Dollars 639,032 216,617 56.1 743,466 256,110 65.3

Total expenses Dollars $247,174 2,610,627 -13.4 2,956,232 3,294,297 11.4

Labor Dollars 1,355,322 1,234,452 -6.9 1.377,132 1,462,795 7.7

Other Dollars 1,691,652 1,576,175 -16.7 1,579,lOO 1,611,502 14.7

Total sales Dollars 22,742,026 16,697,Oll -17.6 24,219,466 25,696,7&J 6.1

Grain Dollars 15,920,766 11,163,530 -29.9 14,221,179 14,661,639 3.2

Farm supplies Dollars 6,621,240 7,533,461 10.4 9,996,309 11,016,955 10.2

Grain marketings Bushels 4,715,710 4,039,627 -14.3 4,259,551 5,047,346 16.5

Grain storage capacity Bushels 4,624,661 4,936,002 2.3 3,961,233 4.466,312 12.6

Fixed assets 3,577,033

1.22

.70

1.20

11.1

3,421,901 4.3 3,510,707 3,633,031 3.5

Ratios:

Current

Debt/equity

Number

Number

1.16 -4.9 1.72 1.62 -5.6

.36 45.7 .26 .43 53.6

Gross income per

dollar expenses

Net savings/equity

Dollars

Percent

1.06 -10.0 1.25 1.06 -13.6

3.6 65.6 11.3 3.9 -65.5

‘Based on cwpsrstiveo reporting comparable data for both years.

35
Table 19-ProportIon of woporatlvoa bmttor l nd WOmO off III 1@88*, by debt -BbY tYP@ l nd ~~ QrouP

Type of cooperative

Ssln group (mlllkn ddlsm)

6.0 - 14.0 15.0 or more

Reduced debt kreanddsbt Reduced debt Increaeed debt

Better worse Better worm Better worse Better worae

‘Based on cooperatives reporting comparable data for both yeam. Better versus worse off measure used was change in net savings.

Tablo 20-&loctod flnrnclrl pwformmco Indloatora tOr flrmt=hamWmof=g rrln wopoCatlv.8, by typa and 8al.a

group, 1985 and 1983

,Saba group (mlllbn dottam)

Performance Indicator 5.0-14.0 15.0 or more

1983 1985 1985lls83 1083 lS85 108511883

--NUlFlbW-- Rromt --NUlllbW-- mment

current ratio:

Corn-soybean

Wheat-sorghum

Wheat-barley-oats

Wheat-barley

1.47 1.61 9.5 1.30 1.37 5.4

1.59 1.73 8.8 1.35 1.62 20.0

1.27 1.27 0.0 1.11 1.18 6.3

1.77 1.38 -22.0 1.27 1.28 .8

Liabilites/ner

worth (equity) ratio:

Corn-soybean

Wheat-sorghum

Wheat-barley-oats

Wheat-barley

.78 .55 -29.5 1.06 .98 -7.5

.59 .54 -8.5 .77 58 -24.7

.99 .98 -1 .o 2.08 1.51 -27.4

.46 .62 34.8 .85 .87 2.4

Debt/eqully ratio:

Corn-soybean

Wheat-sorghum

Wheat-barley-oats

Wheat-barley

A4 .30 -31.8 .86 .58 -12.1

38 .32 -15.8 .41 .39 4.9

.25 .21 -16.0 .25 .37 48.0

.25 .40 80.0 .49 .45 -8.2

mcmlt

Net savlngsbqulty:

Corn-soybean

Wheat-sorghum

Wheat-barleyoats

Wheat-barley

8.37. 2.39 -71.4 7.88 4.00 -47.9

9.00 7.12 -20.9 11.88 5.03 -56.9

9.56 7.47 -21.9 8.50 11.79 38.7

13.54 7.59 43.9 16.42 15.12 -7.9

36
Associated with increased indebtedness between 1983 and

1985 were increases in net value of fued assets, grain

storage capacity, and total expenses, particularly labor. In

contrast to the associations that reduced debt, gram

marketings were up and total sales were about the same

in 1985. Farm supply sales by large cooperatives

increased significantly, offsetting about half of their 1.8

million dollar drop in grain sales. The net effect of these

key and other factors were declines of 56 and 49 percent

in net savings. The debt equity ratio of 0.60 for the large

associations indicates that many among them became

financially troubled during this period and remained so

beyond 1985.

FINANCIAL STATEMCNT ANALYSIS

Financial analysis entails isolating various factors and

constructing key relationships, usually ratios, for

evaluating the cooperative’s overall economic condition.

Important factors to consider are an association’s ability

to (1) meet current obligations, (2) earn a competitive

return on investment, (3) cope with external and internal

financial problems, (4) raise needed capital, and (5)

operate efficiently.

Ratios showing relationships between items in the

financial and income statements of a business operation

are constructed to aid in analyzing a cooperative’s

economic and Grancial situation. They are largely

descriptive and can indicate problem areas, but cannot be

used to solve problems. Ratios can serve as guidelines for

planning purposes and can aid meaningfully in

formulating actions. Caution must be exercised in their

use because both items in a ratio are subject to

considerable variation, and their interpretation is largely

subjective in the absence of fixed standards or hard and

fast rules.

At best, ratios are approximations, and their application is

limited because of differences attributed to factors like

type of cooperative, time of year closing, different

accounting procedures, and use of financial resources.

Several ratios have value for the cooperative associations

in this study.

Calculation of the current ratio reveals short-run liquidity

for all type/size groups of first-handlers in both years and

improved liquidity in 1985 for most situations (table 20).

Closer examination reveals that this ratio varied

significantly by association type in both years. Favorable

current ratio positions can be misleading in terms of the

overall financial health of a cooperative or group of

cooperatives and, even though improved in 1985, should

be viewed with caution in the absence of information

pertaining to their ability to generate revenue to meet

current debt obligations. For example, the current ratio of

1.37 for 1985 for the large corn-soybean associations

looks respectable among the type/size groups, but is

inconsistent with what their equity-based relationships

indicate (table 20).

The liabilities to net worth (equity) ratio, which indicates

the amount of money members owe creditors in relation

to that invested by members, varied significantly among

association types and between sales groups in both years.

This ratio was lower in 1985 for most type/size groups,

since the majority of associations took steps to reduce

their liabilities. Even so, wheat-barley-oats and large

corn-soybean cooperatives in 1985 owed creditors about

as much as their members had invested. Comparable

ratios for all other groups except one were 54 to 62 cents

owed for every dollar owned.

The debt to equity ratios for 1985 and 1983 reveal that

the corn-soybean associations generally and wheat-barleyoats associations consistently had the largest and smallest,

respectively, amount of debt capital in relation to the

amount of member investment dollars (table 20).

Explanations for ratio changes between the 2 years varied

from largely debt reduction for cooperatives in the Corn

Belt to increased debt for larger cooperatives in the

Northern Plains and medium-sized ones in the Pacific

Northwest.

The debt to equity ratio can be used to reflect the

universal importance of debt to a cooperative’s solvency.

Associations with high debt to equity ratios reported

significantly lower net savings than those with low ratios.

This was true for both years and all type/size groups

(table 21). This also was the pattern for net savings as a

percentage of member equity (return to equity) (table 22).

Rates of return averaged nominal to negative for most

type/size groups for associations with debt to equity ratios

of at least 0.70-13 and 28 percent, respectively, of all

medium-sized and large cooperatives in 1985.

Calculation of the net savings to equity ratio, the one used

most often to measure return on member investment,

shows returns on member investment in both years were

highest for wheat-barley associations and lowest for comsoybean cooperatives. Returns in 1985 for the cornsoybean and large wheat-sorghum first-handlers were

37
&arly lowest and below even nominal competitive rates

of return to investment capital.

Financial Profile of Cooperatives Handling Grain: FirstHandlers, $1 Million to $4.9 Million in Sales. Francis P.

REFERENCES

Yager and David E. Cummins, ACS Research Report 58,

January 1987.

Comparative Financial Profile of Cooperatives Handling

Grain: First-Handlers With $1 Million or More in Sales.

Financial Profile of Cooperatives Handling Grain: FirstHandlers, $5 Million to $14.9 Million in Sales. David E.

David E. Cummins and Francis P. Yager, ACS Research

Report 63, June 1987.

Cummins and Francis P. Yager, ACS Research Report

55, May 1986.

Tablo 21-Not uvlngr of first-hmdks-of -grdn aasoclNon8 by hbtloqulty ratlo, by typo l d utoa group, lag5

and 1923

Sales group ($5.0$14.9 mlllbn)

CeM/equity

ratio

All

aasociationo

Comsoybean

Type of cooperative

wheat- Wheat- Wheatsorghum bart9Qam barley

0.0 174,301 165,385

.Ol-.39 127,640 78,689

.40-69 54,348 -4,023

.70 plus -74,948 -120,233

Donem

1085

267,256

81,842

23,675

185,614 -

111,723 286,533

136,100 201,585

72,932 -15,985

0.0 214,519 198,994

.Ol-.39 227,850 200,807

.40-.69 121,697 105,315

.70 plus 60,611 59,143

7083

327,863

103,503

-11,757

123,012 413,124

132,861 284,175

115,647 161,780

111,676 -

0.0 533,978 503,163 -

.Ol-.39 398,057 280,099 492,098

.40-.69 314,998 221,226 239,846

.70 plus -50,626 -83.670 -238,380

0.0 633,694 033,094

.Ol-.39 614,595 468,610

.40-.69 015,838 406,479

.70 plus 99,045 41,267

Salea group ($15.0 mlllbn or more)

Type of coopemtive

All Com- wheat- wheat- Wheatassociations soybean sorghum barlOy~t0 barley

1083

1,000,025

538,888

349,999

- -

409,QQQ 1,030,060

174,538 702,154

359,811

‘Too few obsetvations for meaningful data.

3 8
Financial Profile of Cooperatives Handling Grain: FirstHandlers, $15 Million Sales or Larger. Francis P. Yager

and David E. Cummins, ACS Research Report 53,

January 1986.

Regional Grain Cooperatives, 1980 and

Thurston and David E. Cummins, ACS

27, April 1983.

Cooperative Involvement in Grain Marketing. David E.

Cummins, Francis P. Yager, Charles L. Hunley, Michael

D. Kane, and Bruce J. Reynolds, ACS Research Report

38, August 1984.

1981. Stanley K.

Research Report

Tablo 22-Roturn to momkr oqulty for first-handlorwfgraln naocl~tlona by dobUoqulty ratlo, by typo and

ulna group, 1981 and 1903

Sales group (S5.oS14.9 mllllon)

Debt/equity Type of cooperative

ratio

All COm- Wheat- Wheat- Wheatassociations soYb=J sorghum barleyoats barley

odlars

0.0

.Ol-.39

.40-.69

.70 plus

0.0

.Ol-.39

.40-.69

.70 plus

8.58

6.30

2.77

-5.99

14.50

11.47

8.71

4.23

All

associations

1986

8.49 - 7.32 -

4.13 9.23 7.54 10.85

-1.11 3.91 8.11 8.81

-11.07 1.34 8.59 -5.09

1983

18.05 - 11.00 17.21

10.52 12.49 10.28 14.04

8.40 4.71 8.50 8.58

4.43 -.80 7.01 -

Sah group ($15 million or more)

Type of cooperative

Com- whaat- Wheat- Wheatsoybean sorghum barleyoats barley

DOllUS

0.0 9.91

.Ol-.39 8.27

.40-.69 8.59 .70 plus -1.51

0.0 20.67

.Ol-.39 12.42

.40-.69 12.58

.70 plus 2.34

‘Too few observations for meaningful data.

I@85

9.98 - ('1

8.88 8.89 ('1

4.44 5.45

I:;

-2.77 -8.25 ;:I ('1

1983

20.87 - - -

12.08 12.70 8.89 18.82

9.95 13.81 8.77 18.22

.96 8.08 - 11.08

39
Appondlx tablo l-&we08 of Income and oporatlng l xponaoa par aaaoclath fof all coopwatlvw, by uieo

group, 1965 and 1983

Salon group (mllllon dollars)

Item

Grain sales

Farm supply sales

Total sales

Cost of sales

Margins on sales

Other operating

income

Nonoperating income

Gross income

Labor expenses

Other expenses

Total expenses

Net savings’

Gross income per

Dollar expense

Proportion grain

of total sales

Proportion labor

of total expenses

Margins/total sales

5.0-l 4.9 16.0 or more

lQQ3 1985 lQQYlQQ3 1QW 1085 lQwlQQ3

--Dews-- ¢ -_~..

6,773,973 6,247,619 -7.6 21,409,211 19,194,090 -10.3

1,926,171 2,049,639 6.4 6,166,453 6,788,511 9.8

6,700,144 8,297,458 4.6 27,575,684 25,Q62,801 -5.8

-6,173,579 -7,785,920 -5.0 -25,841,963 -24,244,552 -6.2

526,565 531,538 .9 1,733,701 1,718,049 -.9

397,161 401,858 1.2 1,104,066 1,066,489 -3.4

-14,641 -36,922 C) -108,020 -110,079 3.8

909,065 896,474 -1.4 2,731,747 2,674,459 -2.1

308,947 341,513 10.5 917,@43 1,009,371 10.0

432,171 467,110 8.1 1,374,597 1388,714 1.0

741,118 808,823 9.1 2,292,540 2,398,085 4.8

167,967 87,851 47.7 439,207 278,374 -37.1

1.23 1.11 -9.8 1.19 1.12 -5.9

77.9 75.3 -3.3 77.8 73.9 4.8

41.7 42.2 1.2 40.0 42.1 5.2

6.05 6.41 8.0 8.29 6.82 5.2

%evings before income taxes and allocations.

Wore than doubled.

40
Appendix table 2-Wetted grain operation data for all cooperatives, by salor group, 1988 and 1883

Item Unit

1903

5.0-14.9

1985

Sales group (million dollars)

1995l1993 1993

15.0 or more

1985 1995l1983

Storage capacity:

Per association

Per location

Locations

Grain marketed, total Bushels 1,988,038 1 ,912,865 -3.8 8,089,683 5,888,584 -8.6

Wheat Bushels 520,367 497,851 4.3 1 ,175,442 1,316,517 12.0

Corn Bushels 883,153 808,729 -6.3 3,138,588 2,743,658 -12.6

Soybeans Bushels 332,581 297,258 -10.6 1,210,572 951,497 -21.4

Sorghum Bushels 117,758 144,416 22.6 213,654 313,360 48.7

Barley Bushels 69,630 88,571 27.2 175,107 234,659 34.0

Other1 Bushels 84.547 76.040 -10.1 176,322 128,895 -28.9

Turnover rate Times 1.44 1.23 -14.8 1.54 1.42 -7.8

Price received* Dollars 3.41 3.27 -4.1 3.52 3.37 4.3

Bushels 1,384,579 1,554,453 12.3 3,965,919 4,012,428 1.2

Bushels 830,087 909,749 9.8 947,178 931,342 -1.7

Number 1.67 1.71 2.4 4.19 4.31 2.9

Percent

‘Includes oats, sunflowers, rye, and flaxseed.

*Weighted average price per bushel of all grain marketed.

41
Appondlx table 3-Condensed balance sheet data for all cooperatives, by sales group, 1985 and 1983

Item

1983

5.6-14.9

1985

Sales group (million dollars)

198511983 1983

15.0 or more

1985 1985/l 983

Current assets 1,386,557 1,289,407

Investments 610,798 631,464

Fixed assets 1 ,116,958 1 ,140,031

Other assets 20,441 22,030

Total assets 3,134,754 3,062,932

- - DoNars - - Percent - - Dollars - -

-7.0 4,472,099 3,796,492

3.4 1,676,632 13653,442

2.1 3,289,953 3,049,938

7.8 45,538 92,154

-1.7 9,484,222 8,592,026

Current liabilities

Long-term liabilities

Equity

Total liabilities

and equity

Working capital2 445,142 457,530 2.8 1,008,579 1,052,374 4.3

Total debt 724,179 577,684 -20.2 2,691,507 2,226,900 -17.3

Total sales/dollar assets 2.78 2.69 -3.2 2.91 3.02 3.8

Net savings/equity 9.33 4.59

Current ratio 1.47 1.55 5.4 1.29 1.38 7.0

Liabilities/net worth (equity) .74 .61 -17.6 1.05 .89 -15.2

Equity/total assets .57 .62 8.8 .49 .53 8.2

Total debt/total assets .23 .19 -17.4 .28 .26 -7.1

Total debt/equity .40 .30 -25.0 .58 .49 -15.5

941,415 831,877 -11.6 3,463,520 2,744,118 -20.8

392,091 338,672 -14.1 1,392,279 1,309,937 -5.9

1,801,248 1,914,383 6.3 43628,423 4,537,971 -2.0

3,134,754 3,082,932 -1.7 9,484,222 8,592,026 -9.4

Percent

-50.8 9.49 6.09

Ratio

-35.8

‘More than doubled.

*Current assets minus current liabilities.

*U.S. Government Printing Office : 1988 - 617.741/UO61i

42
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.