United States

Department of

Agriculture

Rural BusinessCooperative

Service

RBS Research

Report 161

USDA

ilizer Operations of

Local Farm Supply and

Marketing Cooperatives
Abstract This report analyzes the fertilizer operations of 497 local farm supply and marketing

cooperatives. They were surveyed about their 1996 fertilizer sales, source of product,

competitors and type of competition, and services offered or desired to offer. Four

questions focused on the relatively new use of global positioning and geographic information systems in fertilizer use and application. Fertilizer sales trends for these cooperatives during the past 11 years were compared to questionnaire responses, sales

growth, and a prior survey. The data was also divided into 10 standard U.S. farm

production regions and four cooperative sizes and types.

Key words: Cooperatives, fertilizer sales, precision agriculture, GPS/GIS technology,

services, and farm supply sales.

Fertilizer Operations of Local Farm Supply

and Marketing Cooperatives

FIBS Research Report 161

November 1997
Preface This report studied the 1996 fertilizer sales and services of 497 local farmer cooperatives and compared them with fertilizer sales trends during the past 11 years. Changes

in operations were also compared with a previous agronomy study that looked at

services offered in 1985. Regional differences, as well as cooperative size and type

differences, were a focus in this study. This information provides cooperative managers

and boards of directors with a basis with which to compare their cooperatives’ historical fertilizer sales performance and services offered with representative cooperative

data. The author thanks the cooperatives that participated in this study.
Contents Highlights

AllRespondents ......................................................

.

Quartile Rankings Based on Sales Growth .................................5

GPS/GISTechnology ...........................................

.

Regional Comparisons ................................................ .9

Size and Type Comparisons ............................................ 12

............................................ .15

Summary and Conclusions .18

..19

Appendix...........................................................2
Highlights Almost 500 local farm supply and marketing cooperatives provided information about

their fertilizer sales, sources, competition, type of competition, services, and types of

payment for services. These locals represented 19 percent of all locals that sold fertilizer. In 1996, fertilizer sales of those surveyed were $1 .l billion or 34 percent of all

locals’ fertilizer sales. The information gathered was combined with fertilizer sales data

from the last 11 years, with comparisons by region, growth in sales, services offered,

and comparisons to a 1985 agronomy study that asked similar questions.

The survey went to local cooperatives with fertilizer sales in excess of $0.5 million.

Most were larger cooperatives, whose fertilizer sales averaged $2.2 million; farm

supply sales, $8.6 million; and marketing sales, $9.9 million in 1996. Fertilizer sales

growth was fairly steady, increasing a little more than 10 percent per year from 1985 to

1996. An analysis of local cooperative fertilizer operations showed:

. Liquid fertilizer comprised 19 percent of all fertilizer sales; anhydrous ammonia, 27

percent; and dry, mixtures, and lime, 54 percent.

. Most locals got their fertilizers from regional cooperatives. More than 88 percent of

anhydrous ammonia, and dry, mixtures, and lime and almost 83 percent of the liquid

fertilizer were received from regionals.

l The primary competitors were private fertilizer suppliers. Other cooperatives were a

close second. Most often, price was the major competitive factor.

l More than 90 percent of the cooperatives provided fertilizer application, 88 percent

soil testing, 74 percent fertilizer specialists, and 62 percent fertilizer records.

Services offered varied by cooperative size. Larger cooperatives offered services

more often. Cooperatives in the Corn Belt and Lakes States more frequently offered

services. Since 1985, some cooperatives have dropped services. Also, growth in

fertilizer sales during the 11 -year study period did not have a large impact on the

frequency of offering services.

l Cooperatives were embracing precision agriculture-global positioning system

(GPS) and global information system (GIS)-in applying fertilizer only where needed.

Thirty-one percent offered field mapping using this technology. It was also used for

computerized record keeping by cooperatives with 26 percent of the fertilizer volume;

24 percent of the cooperatives with application equipment; and 14 percent of the

cooperatives that sold, rented, or leased GPS units to patrons.

. . . 111
Fertilizer Operations of Local Farm Supply

and Marketing Cooperatives

E. Eldon Eversull

Rural Business-Cooperative Service

U.S. Department of Agriculture

L

ocal agricultural cooperatives sold $3.2 billion,

or 29 percent of the $10.9 billion farmers spent

for farm production supplies-fertilizer, lime,

and soil conditioners-in 1996. Fertilizer accounted for

more than 6 percent of total farm production costs.

Increased input costs and environmental

concerns coupled with low crop prices in the 1980s

placed more emphasis on sustainable agriculture,

using less fertilizer and crop protectants. In the 1990s

precision agriculture became popular. Fertilizers were

applied based on soil fertility and crop needs in 2.5- to

5-acre grids mapped with global positioning system

(GPS) and geographic information system (GIS) technology.

Despite having a field map using this technology

that shows prior crop yields and soil fertility based on

soil tests, farmers are still left with many interpretation

problems. Farmer-owned cooperatives, recognizing

the need for better input information and analysis,

have been on the forefront in providing fertilizer application with GPS, field mapping with GPS/GIS,

computer record keeping with GPS/GIS, and fertilizer

recommendations based on this technology.

With this in mind, local cooperatives that sold

more than $0.5 million worth of fertilizers were asked

about their fertilizer sales, sources, competition, type

of competition, services, and how the cost of services

was recovered. Questions focused on the relatively

new use of GPS/GIS in fertilizer use and application.

This study analyzes information from 497 local cooperatives. They represented 19 percent of locals selling

fertilizer with $1.1 billion in sales (34 percent of total

local cooperative fertilizer sales). The information

gathered was combined with fertilizer sales information from the past 11 years and compared with a 1985

agronomy study, by region, growth in sales, and

services offered. The presentation was subdivided into

four cooperative sizes and types used in prior local

agricultural cooperative studies [Eversull and Rotan].

All Respondents

Staff of USDA’s Rural Business-Cooperative

Service (RBS) annually survey farmer cooperatives.

Data from this survey and the RBS data base are used

in this study.

Only local cooperatives with fertilizer sales in

excess of $0.5 million were surveyed. Most were larger

cooperatives with fertilizer sales averaging $2.2

million, farm supply sales $8.6 million, and marketing

sales $9.9 million in 1996 (figure 1). Fertilizer sales

increased steadily at a rate of a little more than 10

percent per year from 1985 to 1996.

Liquid fertilizer comprised 19 percent of all fertilizer sales, anhydrous ammonia, 27 percent; and dry,

mixtures, and lime, 54 percent. Liquid fertilizer was

sold by 384 respondents; anhydrous ammonia, 390;

and dry, mixtures, and lime, 488. Most locals got their

fertilizers from regionals-more than 88 percent of

anhydrous ammonia, and dry, mixtures, and lime, and

almost 83 percent of the liquid fertilizer (table 1).

Private manufacturers provided 8 percent of this

product.

With median fertilizer sales of $1.5 million that

are much smaller than average sales of $2.2 million,

more than one-half of the respondents are smaller than

average. Some variation in responses between larger

and smaller cooperatives might be expected. For

example, the highest average competitor was another

cooperative. Price was the major competitive factor

(table 2). However, by weighting the responses by

sales, larger cooperatives’ responses were more

favored. The primary competitor changes to private

suppliers, at 41 percent (weighted by sales is fertilizer

sales times survey response, so $0.5 million (fertilizer
Figure I- Respondent Sales

$ million

10

6

1990 91 92 93 94 95 96

Marketing

-Farm Supplies

Fertilizer

sales) x 1 (survey response) = .5 million while a larger

cooperative with $1 million in sales would be 1 million

x 1 = 1 million).

Combining categories is another way of looking

at the information presented in table 2. If the values for

the competition from manufacturers, dealers, and

private suppliers are combined, they are always the

greatest competition, not another cooperative. The

same is true for the type of competition. Combining

service and availability with quality service and

quality product resulted in competition that was

greater than price for all categories except the average

number one (53 versus 48 percent) and average

number three (45 versus 41 percent) competitor.

Services offered and how the cost of providing

those services was recovered is also analyzed. Eleven

services were given. The first three covered equipment

that the farmer would use to apply fertilizer. Dry fertilizer applicators (sometimes called buggies) were most

often offered by the cooperatives, 88 percent (table 3).

Usually the use of these applicators was paid for by an

additional service charge-76 percent of the time by

cooperatives in the survey.

For farmers applying anhydrous ammonia, nurse

tanks (supply tanks) were offered by 80 percent of the

cooperatives. Sixty-two percent of the time the cost of

the supply tanks was included in the product price.

Anhydrous ammonia tool bars were offered by 73

~abte I- Sources of fertilizer, weighted by sales

Fertilizer

Regional Other Private Private

cooperative cooperative manufacturer supplier Other

Percent

Anhydrous ammonia 92.00 0.93 3.96 3.05 0.06

Dry, mixtures, lime 88.87 2.53 4.70 3.72 .18

Liquid 82.83 2.96 7.73 6.45 .03

2
percent of the cooperatives. Most recovered the cost

with a service charge.

The next set of services dealt with cooperative

personnel and equipment being used to provide them

such as fertilizer application, soil testing, fertilizer

specialists, and computerized fertilizer record keeping

(table 4). Ninety-one percent of the cooperatives

applied the fertilizer. More than 92 percent recovered

application costs with an additional fee. Soil testing

was offered by 88 percent of the cooperatives with 40

percent of them including the cost in the price and 60

percent charging an additional fee. Fertilizer specialists were used by 74 percent, with about 66 percent

including the cost in the price of fertilizer.

Computerized record keeping of fertilizer usage and

performance was provided by 62 percent; another 14

percent hope to add this service in the future.

Precision agriculture’s emerging use of GPS/GIS

in fertilizer sales and application was the final service

analyzed including whether the cooperative sold,

TW 2- Top three competitors and type of competition, average and weighted by sales

Type of competition

Competitor Manufacturer Dealer

Private

supplier

Other

cooperative Price

Service and Quality service

availability and product

Number One

Average

Weighted

Number Two

Average l

Weighted 1

Number Three

Average 1

Weighted l

13.08 6.84 37.83

14.09 6.48 40.66

7.65 7.24 37.42

12.84 5.24 38.32

8.85 11.67 29.78

9.29 14.47 33.12

Percent

42.25

38.77

42.66

40.26

35.61

32.25

52.50 24.05 23.45

47.62 26.16 26.22

45.67 26.81 22.49

42.90 28.24 25.52

44.83 20.69 20.39

44.39 21.29 23.47

1 Values for competitors two and three do not add to 100 as not all cooperatives had more than one competitor.

TW 3- Equipment offered to farmers for fertilizer application and how their cost is recovered

Cost recovery method

Equipment

Currently Would like Include cost in Additional

offer to offer product price service charge

Percent

Dry fertilizer applicators

Anhydrous ammonia

nurse tanks

Anhydrous ammonia

tool bars

87.75 0.78 23.81 76.19

79.61 .89 62.02 37.98

73.10 .76 25.82 74.18

Table 4- Fertilizer services provided with cooperative personnel and equipment and how their cost is

recovered, weighted by sales

Cost recovery method

Service

Currently

offer

Would like Include cost in Additional

to offer product ptice- service charge

Percent

Application 90.57 0.83 7.94 92.06

Soil testing 87.99 1.26 39.72 60.28

Specialists 74.39 8.20 66.38 33.62

Computer records 61.97 14.11 77.69 22.31

3
rented, or leased GPS units, had application equipment using this technology, mapped fields with

GPS/GIS, provided computer records and recommendations using GPS/GIS, or would like to.

If the “currently offered” and “would like to

offer” categories are combined, between 42 and 55

percent of the cooperatives were interested in the

GPS/GIS technology (table 5). There is more use or

interest in this technology if the responses are

weighted by sales. Obviously, the larger cooperatives

were more able to adopt this technology as the

weighted responses show. But, the cost of providing

these services may be prohibitive to small cooperatives, which would also lower the average values.

The most often offered service using this new

technology is field mapping, with an average 21

percent usage and a weighted average 50 percent

higher at 31 percent. When “currently offer” was

combined with “like to offer,” these figures increase to

55 and 63 percent, respectively. As with all GPS/GIS

services, most cooperatives recovered the cost by an

additional service charge.

Computer record keeping using GPS/GIS was

the second most often offered service in this area.

Because the records were entered into the computer for

field mapping (the most offered service), computer

record keeping was a closely related service. Again,

the weighted “currently offer” response at 26 percent

was about 50 percent higher than the average (16

percent). Between 52 and 60 percent of the cooperatives do, or would like to offer computer record

keeping with GPS/GIS.

Cooperatives have application equipment using

GPS about 15 percent of the time. The weighted

average, 24 percent, is much higher and would be

expected as application equipment with GPS can be

very expensive. Several cooperatives expressed

interest in application equipment, but cited high

investment costs and doubted they had large enough

volumes to support these costs.

These cooperatives indicated that adding this

technology to existing equipment would cost $25,000

for the unit-to-control-one box (or single fertilizer

type) on the applicator. The cost increases exponentially to $200,000 to modify the equipment to apply

two fertilizers in one pass with a GPS unit. And, if the

cooperative wants to apply diammonium phosphate,

urea, potash, and impregnate liquid fertilizer in one

pass, the GPS unit capable of handling this will cost

$300,000 on existing equipment.

Larger cooperatives that are more able to spend

this amount for application equipment will be more

likely to be the early adopters of precision agriculture.

More widespread usage and higher sales of GPS units

will probably cut costs, as is the case for most new

technology.

The final service from table 5 was selling, renting,

or leasing GPS units to farmers. With a number of

competing firms providing GPS units and the systems

being a little different, the farmer is faced with a $3,000

to $10,000 investment that may be technologically

outmoded in a few years. For this reason, some cooperatives are providing GPS systems for their patrons.

Renting or leasing to patrons gets the units

quickly to innovative farmers and lets them decide if

Table 5- GPS and GIS services and equipment provided and how the cost is recovered

Cost recovery method

Sell, rent, or lease GPS units

9.05 33.80 15.56 84.44

14.44 31.91 14.50 87.15

14.89 35.61 10.81 89.19

23.83 34.06 12.85 87.15

20.93 34.21 10.10 89.90

31.36 31.96 14.39 85.61

16.30 35.61 25.31 74.69

25.54 34.32 25.93 74.07

Percent

4
they want to convert both their planting and It was hoped some trend or theme might be estabharvesting machines to GPS technology. The coopera- lished in this section that would contrast quartile 1

tive will provide field mapping, computer record cooperative fertilizer operations with those of quartile

keeping, and fertilizer application services as more 5. Instead, few differences were found in their sources

farmers acquire the units and will be able to integrate of fertilizer (appendix table l), their top three competiinformation from the farmer’s and cooperative’s GPS tors and types of competition (appendix table 2),

units. With this in mind, slightly more than 9 percent equipment offered and how cost is recovered

of the cooperatives sell, rent, or lease GPS units. The (appendix table 3), and finally, services provided with

weighted average was about 50 percent higher (14 cooperative personnel and equipment and how cost is

percent). recovered (appendix table 4).

Quartile Rankings Based on Sales Growth

This section ranks the respondents by using

fertilizer sales growth from 1985 through 1996. The top

100 cooperatives in fertilizer sales growth are called

quartile 1, the second 100 are quartile 2, etc. Twentynine cooperatives did not have overall growth in fertilizer sales. The average growth per year was a little

more than 10 percent. This means growth exceeded

price increases brought on by inflation. Average

growth for quartile 1 cooperatives was 24 percent per

year (table 6). Twenty-four percent growth would

mean sales doubled every 4 years.

One distinction emerged. Quartile 4 and 5 cooperatives had manufacturers as number one competitors

much more often than the other cooperatives. The

weighted average for a manufacturer as a number one

competitor (table 2) was 14 percent while quartile 4

reported 18 percent and quartile 5 was almost double

at 27 percent. Quartile 5 cooperatives also had more

private suppliers as number one competitors and far

fewer cooperative competitors (20 percent versus 39

weighted average).

On closer inspection, many of these cooperatives

with large increases in fertilizer sales grew through

mergers, consolidations, and acquisitions. This type of

growth was evident for 19 cooperatives in quartile 1,

15 in quartile 2, 10 in quartile 3, 12 in quartile 4, and 4

in quartile 5 for 1992 through 1996 (prior years not

readily available).

It was felt that the lower growth quartile 5 cooperatives would be especially low adopters of precision

agriculture. Knowing that their fertilizer sales growth

were the lowest and that larger cooperatives were

more able to afford the GPS/GIS technolog further

reinforces this premise. But, as shown in table 7, quartile 5 cooperatives surprisingly were leaders in

offering this technology.

Types of fertilizers sold does not appear to influence growth. On average, all cooperatives had sales of

20 percent to 27 percent for anhydrous ammonia; 53

percent to 60 percent dry, mixtures, or lime; and 18

percent to 21 percent liquid fertilizers. Growth was

heavily influenced by volume; quartile 1 cooperatives

had fertilizer sales averaging $2.6 million, while sales

fell to $1.7 million for quartile 5 cooperatives.

Quartile rankings were developed to compare

and contrast cooperatives that had large increases in

fertilizer sales with ones that had low or little growth.

If responses are not weighted by sales, all

GPS/GIS services and equipment offered have a lower

value than the average reported in table 5. So, there

must be a few large cooperatives in this group pushing

up the technology values. This is borne out by the fact

that median fertilizer sales were $1.1 million while the

average was $1.7 million. When focusing on the 42

percent of quartile 5 cooperatives that provide field

mapping with GPS/GIS, it was found that their

average fertilizer sales were $4.1 million while their

sales growth was less than 1 percent per year. The

other contrast in table 7 is that the quartile 1 cooperatives more often (but still less than half the time in all

Table &Types of fertilizer sold based on quartile growth rankings, weighted by sales

-------_-_________________ Dollars

27.15 52.69 20.16 23.96 2,646,422

25.35 55.53 19.12 12.49 2,166,105

19.62 59.51 20.86 8.32 1,996,560

23.24 58.74 18.03 5.05 1,881,660

23.52 57.11 19.38 .93 1,677,025

5
instances) include the cost of this technology in the

product’s prices than the quartile 5 cooperatives.

GPS/GIS Technology

As established earlier, cooperatives that have

adopted precision agriculture tended to have larger

fertilizer sales, but not necessarily those that have

experienced large growth in these sales. This section

focuses on the 104 cooperatives that offer field

mapping, the most popular use of this GPS/GIS technology, and compares them with the average respondent.

The cooperatives that have adopted this technology were larger than the average respondentfertilizer sales averaged $3.3 million compared with

$2.2 million for all respondents. These cooperatives

were more likely to purchase their fertilizers from a

regional cooperative than the average (table 8). About

91 percent of all fertilizers were purchased from

regional cooperatives-98 percent for anhydrous

ammonia. The regional cooperatives-Farmland,

GROWMARK, and CENEX/Land O’Lakes-were

most likely supplying both fertilizers and precision

agriculture technology to many of these local cooperatives.

The number one and two competitors were other

cooperatives, while the average was most often a

private supplier (table 9). Services were probably

important to these cooperatives as they made fertilizer

recommendations and interpreted the field maps

based on the GPS/GIS technology. Another conclusion

is that although they felt that price was their major

competition, service was also important. These cooperatives generally rated their competition’s service and

availability and quality service and product higher

than the average respondent.

GPS/GIS equipment for fertilizer application was

generally offered more often by these cooperatives

than the average (table 10). About 94 percent of the

cooperatives offered dry fertilizer applicators and 97

gable 7- GPS and GIS services and equipment provided by quartile ranking and how the cost is recovered,

weighted by sales

Costrecoverymethod

Service

Currently

offer

Would like Include cost in

to offer pKlductpIice

Additional

servicecharge

Sell, rent, or lease GPS units

Quartile 1

Quartile 2

Quartile 3

Quartile 4

Quartile 5

Application with GPS

Quartile 1

Quartile 2

Quartile 3

Quartile 4

Quartile 5

Field mapping with GPSlGlS

Quartile 1

Quartile 2

Quartile 3

Quartile 4

Quartile 5

Computer records with GPS/GIS

Quartile 1

Quartile 2

Quartile 3

Quartile 4

Quartile 5

18.33 33.50 20.34 79.66

11.45 33.65 33.15 66.85

10.40 44.07 - 100.00

12.45 29.42 10.23 89.77

23.99 25.98 5.93 94.07

20.31 46.27 45.72 54.28

21.60 31.30 6.58 93.42

21.52 45.34 4.50 95.20

29.33 28.70 6.99 93.01

36.68 22.14 - 100.00

31.06 41.62 29.99 70.01

32.83 30.60 11.29 88.71

27.03 44.88 14.92 85.08

34.46 23.85 1.78 98.22

41.92 22.75 10.51 89.49

27.68 44.09 37.89 62.11

24.48 32.47 35.91 64.71

25.63 42.10 28.52 71.48

27.78 29.82 11.30 88.70

29.32 28.43 10.20 89.80

Percent

-= No responses.

6
Table s-Sources of fertilizer for cooperatives using GPSlGlS field mapping compared to other respondents,

weighted by sales

Fertilizer

Regional Other Private Private

cooperative cooperative manufacturer supplier Other

Anhydrous ammonia

GPS/GIS cooperatives

Weighted average

Dry, mixtures, lime

GPS/GIS cooperatives

Weighted average

Liquid

GPS/GIS cooperatives

Weighted average

- = No responses.

97.52 -

92.00 0.93

94.54 .87

88.87 2.53

90.55 1.93

82.83 2.96

Percent,

0.81

3.96

2.09

4.70

5.52

7.73

1.67 -

3.05 0.06

2.29 .21

3.72 .18

2.00 -

6.45 .03

Table s-Top three competitors and type of competition for cooperatives using GPSlGlS field mapping

compared to other respondents, weighted by sales

Type of competition

Competitor Manufacturer Dealer

Private

supplier

Other

cooperative Price

Service and Quality service

availability and product

Percent

Number One

GPS/GIS cooperatives 21.06 5.39 33.69 39.86 41.25 32.17

Weighted average 14.09 6.48 40.66 38.77 47.62 26.16

Number Two 1

GPS/GIS cooperatives 11.65 .97 42.48 43.58 37.21 32.84

Weighted average 12.84 5.24 38.32 40.26 42.90 28.24

Number Three I

GPS/GIS cooperatives 8.39 5.88 46.83 30.77 38.10 26.33

Weighted average 9.29 14.47 33.12 32.25 44.39 21.29

1 Values for competitors two and three do not add to 100 as not all cooperatives had more than one competitor.

26.58

26.22

28.94

25.52

27.45

23.47

Table to- Equipment offered to farmers for fertilizer application and how their cost is recovered for

cooperatives using GPSlGlS field mapping compared to other respondents, weighted by sales

Cost recovery method

Equipment

Currently

offer

Would like

to offer

Include cost in

product price

Additional

service charge

Percent

Dry fertilizer applicators

GPS/GIS cooperatives 93.88 1.60 20.37 79.63

Weighted average 90.74 .60 25.17 74.83

Anhydrous ammonia nurse tanks

GPS/GIS cooperatives 98.58 - 65.94 34.06

Weighted average 76.06 1.61 65.21 34.79

Anhydrous ammonia tool bars

GPS/GIS cooperatives 96.65 .24 30.23 69.77

Weighted average 68.81 1.41 24.05 75.95

- = No responses.

7
percent had anhydrous ammonia tool bars or nurse services listed. All cooperatives provided application

tanks. Offering anhydrous equipment for farmer usage services and 96 percent had soil testing. Ninety percent

was especially more frequently done so by these coop- offered a fertilizer specialist to help interpret field

eratives. Methods to recover cost were about the same maps. Computer record keeping was also more

as the average. common (83 percent).

Cooperatives offering GPS/GIS field mapping

would probably be focusing on fertilizer sales and

service and offering a full line of services. In table 11,

the GPS/GIS cooperatives more likely offered the four

Cooperatives that have field mapping using

GPS/GIS were also about three times more likely to

offer the precision agriculture services listed in table

12. About 80 percent of these cooperatives kept

Table II- Fertilizer services provided with cooperative personnel and equipment and how their cost is

recovered for cooperatives using GPS/GIS field mapping compared to other respondents, weighted

by sales

Cost recovery method

Senrice

Application

GPS/GIS cooperatives

Weighted average

Soil testing

GPS/GIS cooperatives

Weighted average

Specialists

GPS/GIS cooperatives

Weighted average

Computer records

GPSIGIS cooperatives

Weighted average

- = No responses.

Currently

offer

100.00

91.35

96.27

89.74

90.21

69.82

83.03

57.75

Would like Include cost in Additional

to offer product price service charge

Percent

- 5.72 94.28

2.01 9.97 90.03

.09 35.88 64.12

2.21 41.03 58.97

5.52 71.62 28.38

11.27 68.44 31.56

4.67 74.10 25.90

18.31 79.44 20.56

Table 12- GPS and GIS services and equipment provided and how the cost is recovered for cooperatives

using GPS/GIS field mapping compared to other respondents, weighted by sales

Cost recovery method

Currently Would like Include cost in Additional

Service offer to offer product price service charge

Percent

Sell, rent, or lease GPS units

GPS/GIS cooperatives 41.64 17.24 12.12 87.88

Weighted average 14.44 31.91 14.50 87.15

Application with GPS

GPS/GIS cooperatives 72.19 16.13 13.53 86.47

Weighted average 23.83 34.06 12.85 87.15

Field mapping with GPSlGlS

GPS/GIS cooperatives 100.00 - 14.39 85.61

Weighted average 31.36 31.96 14.39 85.61

Computer records with GPWGIS

GPS/GIS cooperatives 79.47 14.00 25.49 74.19

Weighted average 25.54 34.32 25.93 74.07

- = No responses.

8
computer records using GPS/GIS of patrons’ fertilizer

usage, slightly less than the 83 percent reported in

table 11. Seventy-two percent of these cooperatives

had application equipment using GPS, which was 28

percentage points lower than reported in table 11

where all the cooperatives had application equipment.

About 42 percent of these cooperatives were trying to

increase patron use of the technology by selling,

renting, or leasing GPS units to farmers.

Regional Comparisons

More so than any prior comparisons in this study,

there were differences in cooperative fertilizer operations when the data is presented by regions. Ten standard farm production regions ’ were used. The number

of cooperative respondents in each region were:

Northeast (NE), 3; Lake States (LS), 110; Corn Belt

(CB), 145; Northern Plains (NP), 119; Appalachian

(API, 32; Southeast (SE), 5; Delta States (DS), 11;

Southern Plains (SP), 33; Mountain (MT), 28; and

Pacific (PA), 11. For some of the regions, especially NE

and SE with their small number of respondent cooperatives, it would be impossible to state that the sample

population was representative of all cooperatives in

that region. But, the information may still be useful to

these cooperatives.

i Standard farm production regions used, Northeast: ME, NH, VT,

NY, MA, RI, CT, PA, NJ, DE, MD, and DC. Lake States: MI, WI,

and MN. Corn Belt: OH, IN, IL, IA, and MO. Northern Plains: ND,

SD, NE, and KS. Appalachian: VA, WV, KY, TN, and NC.

Southeast: SC, GA, AL, and FL. Delta States: MS, LA, and AR.

Southern Plains: OK and TX. Mountain: MT, ID, WY, CO, UT, NV,

AZ, and NM. Pacific: WA, OR, CA, HI, and AK.

Fertilizer sales averaged between $1.6 million

and $2.3 million in most regions (table 13). The exceptions were the NE ($0.8 million) and CB ($2.6 million).

Average growth in fertilizer sales was a little more

than 10 percent, so three regions had above average

growth and seven below average. Some of this growth

can be attributed to mergers, consolidations, and

acquisitions. From 1992 through 1996, there were 60 of

these changes by respondent cooperatives. Their

average growth was 13 percent for the study period.

By region, there were 19 mergers, consolidations, or

acquisitions in the CB; 17 in LS; 16 in NP; 4 in SP; 3 in

NP; and 1 in PA.

In most instances, the source of the majority of

respondent cooperative fertilizer was regional cooperatives (table 14). In AP and PA regions liquid fertilizers

were most often purchased from private manufacturers or suppliers.

In half the regions, the number one and three

competitors were cooperatives, and in the other half,

private suppliers or dealers (table 15). The number two

competitor was a private supplier in 7 of 10 regions.

Price was the major source of competition in 7 regions

for competitor number one and in 9 regions for

numbers two and three. Service and availability and

quality service and product still seemed important in

fertilizer sales with competitor number two, especially

if both of these types of competition were combined.

For competitor number two, combining service and

availability with quality service and product would be

more important than price alone in 7 out of 10 regions.

Dry fertilizer applicators were offered by about

90 percent of the cooperatives in each region, with the

exception being PA (60 percent, table 16). Most often

the cost of these applicators was recovered by an addiTable IS-Types of fertilizer sold by region, weighted by sales

Regions

Northeast

Lake States

Corn Belt

Northern Plains

Appalachian

Southeast

Delta States

Southern Plains

Mountain

Pacific

- = No responses.

Anhydrous Dry, mixtures, Average Average

ammonia lime Liquid growth sales

__________________________ percent __________________________ Dollars

- 93.42 6.58 5.34 786,041

18.10 68.78 13.13 10.34 2,012,622

24.48 55.06 20.46 8.37 2,567,576

38.21 35.51 26.28 13.94 1,933,908

5.36 89.95 4.68 6.31 1,769,045

23.47 58.62 17.91 3.74 1,926,305

.77 95.45 3.78 5.62 1,608,187

23.59 50.66 25.75 9.54 1,347,914

17.71 56.06 26.22 13.42 2,272,125

14.84 64.69 20.47 6.55 1,856,548

9
tional charge. DS and SP included the cost in the

product price. Anhydrous ammonia equipment was

not provided in NE or SE. This equipment was also not

provided very often in AP, DS, and PA. The cost of the

nurse tanks was most often recovered in the product

price, while the tools bars were paid for by an additional service charge.

Most cooperatives offered fertilizer application,

soil testing, specialists, and computer records of fertilizer usage (table 17). Application was most often paid

for with an additional service charge. Soil testing costs

were recovered in the product price in half the regions

and by an additional service charge in the others. The

SE and SP had the smallest percentage of specialists, at

43 percent and 48 percent. Twenty-one percent of the

cooperatives in the SP hope to add a specialist.

Computer record keeping was also low in the DS (35

percent) although an additional 33 percent would like

to offer the service.

In most regions, the use of precision agriculture

by cooperatives was very low, although there was

considerable interest in wanting to offer the services

and equipment (table 18). However, in the LS and CB,

more than 20 percent of all the services offered

included GPS/GIS technology. Common denominators

to the early adoption of the technology in these two

regions are probably the high use of nitrogen fertilizers

on corn, the predominance of corn grown, the cost of

T&I~ ~-Sources of fertilizer by region, weighted by sales

Fertilizer

Regional

cooperative

Other

cooperative

Private

manufacturer

Private

supplier Other

Anhydrous ammonia

Northeast

Lake States

Corn Belt

Northern Plains

Appalachian

Southeast

Delta States

Southern Plains

Mountain

Pacific

Dry, mixtures, lime

Northeast

Lake States

Corn Belt

Northern Plains

Appalachian

Southeast

Delta States

Southern Plains

Mountain

Pacific

Liquid

Northeast

Lake States

Corn Belt

Northern Plains

Appalachian

Southeast

Delta States

Southern Plains

Mountain

Pacific

- -

93.77 0.97

97.62 .04

89.33 .81

94.07 1.95

-

100.00

92.68

76.19

100.00

-

-

-

9.94

-

-

92.65

90.71

85.43

87.79

100.00

81.35

85.75

90.30

60.98

-

86.76

89.09

90.96

47.84

100.00

85.48

76.54

54.52

27.11

2.16 -

1.61 3.75

1.66 3.57

2.22 6.48

6.64 3.22

- -

8.00 8.36

1.29 7.94

2.42 3.57

9.93 25.16

-

2.01

.61

2.35

.95

-

12.30

.03

11.56

-

Percent

-

4.42

.47

5.36

.34

100.00

-

4.71

1.69

-

-

10.03

6.80

4.32

20.44

-

-

13.69

6.14

72.89

-

0.83

1.86

4.50

3.65

-

-

2.60

10.96

-

97.84

1.99

3.67

5.87

1.95

-

2.29

4.94

3.55

3.93

-

1.19

3.50

2.38

30.78

-

2.22

9.73

25.09

-

-

-

-

-

-

-

-

-

-

.39

-

.40

-

-

.08

.17

-

-

-

-

-

-

-

-

2.68

-

- = No responses.

10
fertilizer, and the desire of farmers and the agricultural

input providers (i.e., cooperatives) to limit the impact

of fertilizer use on the environment. Twenty-two (LS)

to 24 percent (CB) of the cooperatives sold, rented, or

leased GPS units while 39 percent (LS) would like to

do so-30 percent, CB; 42 percent, SP; 40 percent, NP;

37 percent, MT; 33 percent, DS; and 27 percent, SE.

Application equipment with GPS was offered by

50 percent of the respondents in the CB and 25 percent

in LS. Another 26 percent would like to offer it in CB;

41 percent, LS; 52 percent, NP; 42 percent, SP; 41

percent, MT; and 40 percent, Ds.

For the cooperative to apply fertilizers with GPS

equipment, field maps have to be generated. These

maps are generally segmented in 2.5- to five-acre grids

and fertilizers are applied in the individual grids

based on soil tests and past yields. The maps are only

as good as their interpretation. Many farmers rely on

outside help. In the CB and LS, where 54 percent and

39 percent of the respondents, respectively, provide

field mapping, cooperatives also employ fertilizer

specialists more than 86 percent of the time. While the

survey did not specifically ask if the cooperative

provided interpretation of the GPS/GIS information, it

gable is-Top three competitors and type of competition for cooperatives by region, weighted by sales

Typeofcompetition

Competitor Manufacturer Dealer

Private Other

supplier cooperative Price

Serviceand Quality service

availability andproduct

Number One

Northeast

Lake States

Corn Belt

Northern Plains

Appalachian

Southeast

Delta States

Southern Plains

Mountain

Pacific

Number Two 1

Northeast

Lake States

Corn Belt

Northern Plains

Appalachian

Southeast

Delta States

Southern Plains

Mountain

Pacific

Number Three’

Northeast

Lake States

Corn Belt

Northern Plains

Appalachian

Southeast

Delta States

Southern Plains

Mountain

Pacific

-

12.43

17.15

10.67

13.21

29.21

5.58 41.98

5.23 41.07

17.66 43.04

23.47 60.94

40.50 13.57

3.90 53.33

5.99 12.16

26.97 49.85

2.01

1.08

3.76

6.46

22.48

27.08

97.99

36.46

44.53

36.63

30.17

-

13.00

5.61

6.43

-

75.71

40.68

44.63

44.92

25.60

4.71

6.08

18.61

6.78

-

4.23

14.63

14.90

31.06

72.38

33.81

42.41

25.75

22.25

43.49

9.92

24.71

42.27

62.48

Percent

97.99

54.75

35.29

43.03

26.09

-

45.93

22.34

57.48

-

50.21 24.89 24.89

57.30 19.03 23.68

40.67 28.99 30.34

51.80 26.49 21.71

55.28 25.14 19.58

18.75 15.54 65.71

48.28 31.92 19.80

54.61 26.59 18.81

41.97 25.31 32.72

53.68 35.09 11.23

- 50.90 24.55 24.55

54.39 46.94 22.98 25.75

40.31 39.75 28.73 29.40

49.72 47.04 29.82 20.74

26.19 40.90 30.34 16.74

51.37 51.47 7.75 34.83

14.47 34.77 30.08 29.56

22.71 42.44 30.82 20.14

29.85 34.51 35.21 26.83

18.17 71.27 20.44 8.30

-

39.81

31.28

35.11

49.41

-

46.06

25.16

28.78

6.46

50.21 23.89 23.89

54.90 17.05 16.42

37.49 23.15 29.23

51.36 20.37 19.14

39.12 25.08 14.23

43.49 - 27.08

28.66 27.64 3.90

35.19 32.99 9.92

49.67 11.42 35.46

36.52 10.04 53.44

1 Values for competitors two and three do notaddto 100 as not all cooperatives had more than one competitor.

No responses.

11
would be a safe assumption given the equipment and

services.

In the NP, 47 percent of the cooperatives would

like to offer field mapping; 41 percent, MT; and 40

percent, DS. Computer record keeping using GPS/GIS

information was provided by 42 percent of the cooperatives in the CB and 34 percent in LS. But, 47 percent

of the cooperatives in MT would like to do so; 43

percent, NP; 42 percent, SP; and 40 percent, DS.

Size and Type Comparison

Prior studies using the Rural BusinessCooperative Service database have found differences

in cooperative operations when the cooperatives were

classified by size and type. Cooperatives in this study

were also divided into four sizes and types, using

criteria established in prior reports (table 19).

Fertilizer sales growth over the 11-year period

increased about 10 percent per year for small, medium,

and large cooperatives, and a little more than 11 percent

for super cooperatives. By cooperative type, fertilizer

~abie 16 Equipment offered to farmers for fertilizer application and how their cost is recovered by region,

weighted by sales

Cost recovery method

Equipment

Currently Would like include cost in Additional

offer to offer product price service charge

Dry fertilizer applicators

Northeast 97.99

Lake States 97.88

Corn Belt 93.64

Northern Plains 86.68

Appalachian 95.80

Southeast 94.04

Delta States 100.00

Southern Plains 92.73

Mountain 90.70

Pacific 60.45

Anhydrous ammonia nurse tanks

Northeast

Lake States

Corn Belt

Northern Plains

Appalachian

Southeast

Delta States

Southern Plains

Mountain

Pacific

Anhydrous ammonia tool bars

Northeast

Lake States

Corn Belt

Northern Plains

Appalachian

Southeast

Delta States

Southern Plains

Mountain

Pacific

-

90.89

94.23

97.74

12.87

-

29.19

67.95

69.45

29.60

-

87.90

92.62

80.72

10.23

-

-

56.99

55.82

34.54

Percent

- 36.94 63.06

- 24.41 75.59

1.48 17.17 82.83

- 15.56 84.44

4.20 42.66 57.34

- 45.37 54.63

- 59.76 40.24

1.37 60.64 39.36

- 33.81 66.19

- 10.63 89.37

-

1.53

.64

.48

3.09

-

-

2.36

-

-

-

1.91

.64

.28

-

-

-

2.36

-

- -

61.02 38.98

60.24 39.76

62.09 37.91

20.51 79.49

- -

5.96 94.04

86.66 13.34

72.21 27.79

100.00 -

-

37.59

24.98

13.04

-

-

- -

23.76 76.24

28.55 71.45

100.00 -

-

62.41

75.02

86.96

100.00

-

- = No responses.

12
sales growth was about 11 percent for farm supply coop- tives. Some of this growth was fueled by mergers, consolieratives; 8 percent for mixed farm supply; 10 percent, dations, and acquisitions. Small cooperatives experienced

mixed marketing and 12 percent, marketing coopera- 2 mergers between 1992 and 1996; medium, 7 mergers;

TEIM 17-Fertilizer services provided with cooperative personnel and equipment and how their cost is

recovered by region, weighted by sales

Cost recovery method

Service

Currently Would like Include cost in Additional

offer to offer productprice servicecharge

Application

Northeast

Lake States

Corn Belt

Northern Plains

Appalachian

Southeast

Delta States

Southern Plains

Mountain

Pacific

Soil testing

Northeast

Lake States

Corn Belt

Northern Plains

Appalachian

Southeast

Delta States

Southern Plains

Mountain

Pacific

Specialists

Northeast

Lake States

Corn Belt

Northern Plains

Appalachian

Southeast

Delta States

Southern Plains

Mountain

Pacific

Computer records

Northeast

Lake States

Corn Belt

Northern Plains

Appalachian

Southeast

Delta States

Southern Plains

Mountain

Pacific

97.99 - 36.94 63.06

98.45 0.36 4.77 95.23

98.74 - 8.68 91.32

95.46 1.17 3.37 96.63

64.52 2.25 20.65 79.35

70.57 - 39.54 60.46

73.50 8.18 2.37 97.63

91.92 3.73 19.38 80.62

94.11 - 4.94 95.06

70.36 6.46 32.39 67.61

97.99

98.38

97.02

86.43

82.29

70.57

72.08

87.68

96.59

75.80

72.38

91.62

86.42

66.55

70.24

43.49

60.52

47.88

67.38

75.80

-

25.60 -

76.64 7.78 73.10

67.73 17.55 82.58

57.81 18.35 74.51

64.46 7.14 90.21

66.14 27.90 100.00

35.35 33.14 100.00

54.02 15.21 64.83

61.57 11.31 70.19

51.57 11.42 60.23

-

.48

-

3.28

-

-

1.74

10.89

-

-

25.60

5.24

7.59

10.52

8.13

-

8.18

21.35

14.68

-

Percent

73.87 26.13

20.85 79.15

55.04 44.96

24.15 75.85

79.43 20.57

77.92 22.08

67.07 32.93

55.19 44.81

19.60 80.40

23.51 76.49

100.00 -

58.89 41.11

78.37 21.63

38.67 61.33

95.95 4.05

100.00 -

48.22 51.78

79.85 20.15

65.50 34.50

100.00 -

-

26.90

17.42

25.49

9.79

-

-

35.17

29.81

39.77

13
large, 14; and super, 37. By cooperative type, farm supply Fertilizer sales were the lowest for small cooperaand mixed farm supply cooperatives had 11 mergers; tives, at $1 million, and increased with co-op size to $3.4

mixed marketing, 22 mergers; and marketing, 16. million for super cooperatives. All cooperative types

gable la- GPS and GE services and equipment provided and how the cost is recovered for cooperatives

using GPWGIS field mapping by region, weighted by sales

Cost reccvery method

Service

Currently Would like Include cost in Additional

offer tooffer pmduct price service charge

Sell, rent, or lease GPS units

Northeast

Lake States

Corn Belt

Northern Plains

Appalachian

Southeast

Delta States

Southern Plains

Mountain

Pacific

Application with GPS

Northeast

Lake States

Corn Belt

Northern Plains

Appalachian

Southeast

Delta States

Southern Plains

Mountain

Pacific

Field mapping with GPSlGlS

Northeast

Lake States

Corn Belt

Northern Plains

Appalachian

Southeast

Delta States

Southern Plains

Mountain

Pacific

Computer records with GPS/GIS

Northeast

Lake States

Corn Belt

Northern Plains

Appalachian

Southeast

Delta States

Southern Plains

Mountain

Pacific

- -

22.42 38.53

24.22 29.76

4.22 39.99

4.24 10.61

- 27.08

- 33.08

4.05 41.60

6.32 36.98

- 20.51

-

24.88

49.54

4.55

4.12

-

1.74

4.05

9.09

-

- -

40.72 29.38

25.64 8.38

51.72 -

16.72 -

27.08 -

39.51 -

41.60 100.00

40.72 -

20.51 -

-

39.27

54.37

15.70

9.03

-

1.74

12.87

9.09

-

- -

33.17 26.18

27.19 12.21

46.69 -

23.02 -

27.08 -

39.51 -

32.79 31.48

40.72 -

20.51 -

-

34.27

41.78

15.07

9.03

-

1.74

4.05

2.76

20.51

-

36.21

34.26

42.76

18.86

27.08

39.51

41.60

47.04

-

Percent

-

21.66

5.69

28.75

100.00

-

-

100.00

-

-

-

42.93

15.97

37.79

-

-

-

100.00

-

-

-

78.34

94.31

71.25

-

-

-

-

100.00

-

-

70.62

91.62

100.00

100.00

-

100.00

-

100.00

-

-

73.82

87.79

100.00

100.00

-

100.00

68.52

100.00

-

-

57.07

84.03

62.21

100.00

-

100.00

-

100.00

100.00

14
averaged about $2 million in fertilizer sales. Mixed farm

supply and mixed marketing co-ops had slightly higher

averages than farm supply and marketing cooperatives.

Kinds of fertilizers sold, sources, competitors,

and competition analyzed by cooperative size and

type followed trends found in previous sections. Dry,

mixtures, and lime were the most frequent fertilizers

sold and usually provided by regional cooperatives.

The primary competitor was either a private supplier

or another cooperative. And, price was the type of

competition most often faced by respondent cooperatives.

Equipment offered to farmers for fertilizer application varied the most by cooperative size. Small cooperatives provided the equipment less frequently than

super cooperatives (appendix table 5). By cooperative

type, mixed farm supply and mixed marketing cooperatives tended to offer the equipment slightly more

often than farm supply and marketing cooperatives.

The cost of fertilizer application and soil testing

was recovered most often by an additional service

charge across cooperative size and type (table 20).

Small cooperatives were less likely to offer application

and soil testing than larger cooperatives. By type,

mixed farm supply andmixed marketing cooperatives

offered application and soil testing more often than

farm supply or marketing cooperatives did.

Fertilizer specialists and computer record

keeping costs were most often included in the price of

fertilizer. Both of these services were offered more

frequently by larger cooperatives. Farm supply cooperatives offered both of these services about 70 percent

of the time. Other types of cooperatives were more

likely to have a fertilizer specialist than keep fertilizer

records on the computer.

More GPS/GIS services and equipment were

offered as cooperative size increased (table 21). These

services and equipment were usually paid for through

an additional service charge. Application equipment

with GPS was offered by 8 percent of the small cooperatives; 11 percent, medium; 17 percent, large; and 38

percent, super. By type, farm supply cooperatives had

application equipment with GPS 29 percent of the

time; mixed farm supply, 20 percent; mixed marketing,

24 percent; and marketing cooperatives, 26 percent.

Many cooperatives of all sizes and types that do not

currently offer application with GPS would like to do

so-22 percent for small cooperatives to 43 percent for

mixed marketing cooperatives.

Field mapping, the precision agriculture service

offered most often, was available for more than 50

percent of super cooperative’s fertilizer volume.

Another 31 percent want to add the service. Farm

supply and mixed farm supply cooperatives offered

field mapping about 30 percent of the time. Another 37

percent of these cooperatives would like to do so.

Among mixed marketing cooperatives, 35 percent

offered field mapping with GPS/GIS. An additional 40

percent hope to do so. For marketing cooperatives, 40

percent offered the service and an additional 31

percent are considering it.

Prior Survey Comparisons

In 1985, cooperatives that sold $0.5 million of

fertilizer and crop protectants were surveyed about

volume sold, product sources, competitors, trade

radius, sales trends, services offered in conjunction

with sales, and important factors in keeping and

gaining patrons. Parts of the 1996 survey were comparable with the prior survey. Of the 867 respondents in

the 1985 survey, 234 or 27 percent no longer exist,

having merged, consolidated, or gone out of business.

This section looks briefly at the 258 cooperatives that

responded to both the 1985 and 1996 surveys.

Annual fertilizer sales growth for the 1985

respondents was 6.6 percent per year from 1983

we w-Size and type definitions, number, sales growth, and average fertilizer sales

Cooperative size

Small

Medium

Large

Super

Cooperative type

Farm supply

Mixed farm supply

Mixed marketing

Marketing

Definition

up to $5 million in total sales

$5 million to $10 million

$10 million to $20 million

$20 million and more

total net sales from farm supplies

from 50 to 99 percent

from 25 to 49 percent

less than 25 percent

cooperatives Sales growth Fertilizer sales

Number Percent Dollars

63 9.76 1,013,389

134 9.83 1,316,749

156 9.84 1,987,984

144 11.18 3,401 ,146

194 10.66 2,027,529

92 7.66 2,165,789

119 9.92 2,209,583

92 12.18 1,992,078

15
through 1985, but only 5.7 percent in the current

survey. Average fertilizer sales increased from $1.4

million in 1985 to $2.3 million in 1996. Then and now,

regional cooperatives provided about 90 percent of

fertilizers sold.

In sheer numbers, other cooperatives were an

important competitor in fertilizer sales, trailing private

suppliers and dealers in 1985. The 1996 survey sought

to find the toughest instead of the most numerous

competitor. A private supplier and another cooperative were very closely rated as the number one or two

competitor for most cooperatives.

Fertilizer price was found to be the second most

important tool for keeping fertilizer patrons in 1985

(application was most important) and price was also

the second most important tool in gaining new

patrons, following advertizing. Price was the strongest

competition faced by all cooperatives in 1996.

TW 20- Fertilizer services provided with cooperative personnel and equipment and how their cost is

recovered by cooperative size and type, weighted by sales

Cost recovery method

Service

Application

Small

Medium

Large

Super

Farm supply

Mixed farm supply

Mixed marketing

Marketing

Soil testing

Small

Medium

Large

Super

Farm supply

Mixed farm supply

Mixed marketing

Marketing

Specialists

Small

Medium

Large

Super

Farm supply

Mixed farm supply

Mixed marketing

Marketing

Computer records

Small

Medium

Large

Super

Farm supply

Mixed farm supply

Mixed marketing

Marketing

- = No responses.

Currently

offer

87.72

88.61

95.95

98.51

92.46

97.85

98.41

94.68

82.40

86.94

93.73

95.44

88.20

97.55

97.47

89.25

58.90

56.79

78.73

88.48

69.35

87.02

98.04

77.94

56.55

55.36

61.94

72.14

68.86

64.94

61.07

64.02

Would like Include cost in Additional

to offer product price servics charge

Percent

1.34 8.94 91.06

2.59 9.45 90.55

.73 8.22 91.78

.29 7.16 92.84

.89 8.55 91.45

.64 7.46 92.54

.92 5.15 94.85

1.02 11.37 88.63

4.68 29.37 70.63

2.83 44.43 55.57

1.87 42.11 57.89

.oo 37.84 62.16

2.63 38.33 61.67

- 49.39 50.61

.40 64.89 35.11

.64 32.39 67.61

11.80 75.35 24.65

17.88 70.13 29.87

7.70 64.40 35.60

5.47 65.84 34.16

10.62 73.58 26.42

8.36 65.28 34.72

.88 38.94 61.06

7.56 64.39 35.61

22.27 86.08 13.92

16.79 86.76 13.24

17.77 69.48 30.52

11.33 78.79 21.21

13.46 85.84 14.16

17.48 68.58 31.42

14.87 72.67 27.33

14.99 75.90 24.10

1 6
Fertilizer application and application equipment

were important in keeping patrons in 1985. Only one

cooperative that offered its members equipment to

apply fertilizer on their own did not do so in 1996.

Nine cooperatives that applied fertilizer in 1985 no

longer did so in 1996. Even though they had dropped

the service, three cooperatives indicated that they

would like to be able to offer fertilizer application.

Part of the 1985 survey drew attention to the then

relatively new trend of low-input sustainable agriculture. Soil testing and crop management specialists

were found as necessary tools the cooperative could

use to help farmers lower their use of inputs. Lowinput agriculture is still used, but the new trend is

toward precision agriculture that uses GPS/GIS technoloby. Soil testing and crop management specialists

are still very important with this new technology. Soil

testing was done by 10 more cooperatives in 1985 than

in 1996, although 3 of those that dropped the service

would like to offer it again. Crop management specialgable 21- GPS and GIS services and equipment provided and how the cost is recovered for cooperatives

using GPWGIS field mapping by cooperative size and type, weighted by sales

Cost recovery method

Service

Currently

offer

Would like Include cost in Additional

to offer product price servicecharge

Percent

7.64 22.13 - 100.00

6.16 28.37 25.66 74.34

10.36 39.79 27.45 72.55

22.59 33.08 10.25 89.75

17.24 27.83 17.21 82.79

9.57 41.13 - 100.00

14.16 37.84 18.04 81.96

18.54 31.70 13.39 86.61

Sell, rent, or lease GPS units

Small

Medium

Large

Super

Farm supply

Mixed farm supply

Mixed marketing

Marketing

Application with GPS

Small

Medium

Large

Super

Farm supply

Mixed farm supply

Mixed marketing

Marketing

Field mapping with GPWGIS

Small

Medium

Large

Super

Farm supply

Mixed farm supply

Mixed marketing

Marketing

Computer records with GPWGIS

Small

Medium

Large

Super

Farm supply

Mixed farm supply

Mixed marketing

Marketing 31.28 36.54 38.20 61.80

7.64 22.13 - 100.00

11.10 29.86 2.46 97.54

16.88 42.01 2.77 97.23

37.67 35.27 16.50 83.50

28.63 29.91 10.54 89.46

19.58 36.97 14.64 85.36

23.71 43.04 16.47 83.53

25.55 37.11 12.08 87.92

10.74 28.75 - 100.00

15.17 29.34 9.88 97.54

19.63 41.29 9.06 90.94

50.97 31.02 16.58 83.42

30.04 29.36 19.83 80.17

30.13 36.58 2.42 97.58

34.69 39.61 16.92 83.08

40.17 31.17 12.32 87.68

7.92 28.35 25.28 74.72

11.76 30.34 9.88 90.12

17.30 41.41 13.39 86.61

41.00 36.04 29.08 70.92

25.42 30.87 19.61 80.39

28.06 33.86 15.30 84.70

25.16 45.50 33.78 66.22

17
ists were offered by 16 more cooperatives in 1985, but

7 who lost them again wanted to have them in 1996.

Cost may be the biggest factor why 9 cooperatives no longer apply fertilizer, 10 do not test soil, and

16 no longer employ crop management specialists.

These three services, while important in keeping fertilizer customers in 1985, are expensive. Fertilizer application requires expensive equipment and well-trained

operators. Soil testing, especially in grids, is labor

intensive. Trained crop management specialists and

fertilizer applicators have a skill that can command a

higher salary at another cooperative or other

competitor.

Summary and Conclusions

Local cooperatives studied in this report generally had strong growth in fertilizer sales- more than

10 percent on average per year from 1985 through

1996. These cooperatives supported the cooperative

agricultural inputs system, purchasing more than 80

percent of their liquid fertilizers; 89 percent of their

dry, mixtures, and lime; and 92 percent of their anhydrous ammonia from regional cooperatives.

The respondent cooperatives sold almost $1.1

billion worth of the $3.2 billion worth of fertilizers sold

by local agricultural cooperatives in 1996. Their

primary competitor for fertilizer sales to farmers was a

private supplier, closely followed by another cooperative. Fertilizer price was the strongest form of sales

competition, but competition based on service and

availability of product, as well as quality of service

and product was also evident.

Most cooperatives provided fertilizer application

equipment to the farmers. The cooperatives also

applied fertilizer using their own equipment and

personnel. Soil tests were often provided to determine

nutrient needs and fertilizer specialists to assist the

farmer in making decisions. Many cooperatives also

provided a computerized record service to track

farmers’ use of fertilizers.

Precision agriculture’s use of GPS/GIS technology has been championed by local agricultural

cooperatives. Field mapping is available to about 30

percent of the fertilizer volume.

There were large regional differences in use of

precision agriculture. The Corn Belt and Lake States

appeared to be early adopters of the technology

because of use of nitrogen-based fertilizers to support

large amounts of corn grown. The GPS/GIS technology is expensive, so larger cooperatives were more

likely to offer it. Almost a third of all respondents

want to offer it in the future.

Compared with cooperative fertilizer operations

in 1985, there were many similar responses. Local

cooperatives were still strongly supported by the

regional cooperative procurement and distribution

system. Private suppliers and other cooperatives were

strong competitors, especially on price. Low-input

sustainable agriculture is still practiced, but it is

evolving into precision agriculture.

Precision agriculture, with fertilizers used only

where needed, was an excellent partner to farmers’

stewardship of natural resources and their cooperatives’ provision of valuable fertilizer services and

equipment. Cooperative fertiiizer application equipment with GPS/GIS technology combined with

farmers’ use of it to vary plant populations on planters

in the spring and check yields with monitors on

harvesting equipment in the fall is an example of integrated use of the technology.

With all this information, most farmers need help

in interpretation. Local cooperatives, with long experience in fertilizer application and employing fertilizer

specialists, are natural providers of field maps.

Working with regional cooperative personnel, local

cooperatives have provided fertilizer record keeping

programs and innovative ways to combine field maps,

yield monitors, and fertilizer application equipment.

Precision agriculture is expensive. Almost onethird of the respondents that do not offer the technology would like to do so, but may be unable due to

the high fixed costs and large volume of fertilizer

required. Smaller cooperatives may be able to offer

GPS/GIS application units by purchasing the equipment with another cooperative(s) and sharing the use

and expenses. These cooperatives might also consider

setting up a fertilizer subsidiary to share the use and

expenses. Adding a fertilizer specialist to help the

farmer interpret the information also may be affordable if shared by several cooperatives.

18
Bibliography

Boyle, Jennifer, “Cooperating with Nature-Co-ops

Lead Agriculture into Era of Environmental

Stewardship,” Rural Cooperatives, U.S.

Department of Agriculture, Rural BusinessCooperative Service, Vol. 64, No. 2, pp. 16-23,

May/June 1997.

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

Eversull, Agronomy Operations of Locd

Cooperatives, US. Department of Agriculture,

Agricultural Cooperative Service, RR 109,

January 1993.

Eversull, E. Eldon, and Beverly L. Rotan, Analysis of

Financial Statements: Local Farm Supply, Marketing

Cooperatives, U.S. Department of Agriculture,

Rural Business-Cooperative Service, RR 154,

March 1997.

Vogelsang, Donald L., E. Eldon Eversull, and Warren

E. Mather, Cooperative Agrichernicnl nnd Seed

Operations, U.S. Department of Agriculture,

Agricultural Cooperative Service, CIR 1 Section

22, April 1990.

19
Appendix table I- Sources of fertilizer by quartile rankings, weighted by sales

Fertilizer

Regional

cooperative

Other

cooperative

Private

manufacturer

Private

supplier Other

Anhydrous ammonia

Quartile 1

Quartile 2

Quartile 3

Quartile 4

Quartile 5

Dry, mixtures, lime

Quartile 1

Quartile 2

Quartile 3

Quartile 4

Quartile 5

Liquid

Quartile 1

Quartile 2

Quartile 3

Quartile 4

Quartile 5

91.35 0.97

90.89 .72

93.68 .07

92.58 2.70

92.40 .07

93.07 1.29

88.79 1.40

85.49 2.72

84.63 5.51

91.97 2.08

84.40 2.90

79.80 2.00

92.53 .14

72.57 5.99

90.17 .13

Percent

4.81

3.82

1.41

2.00

7.33

3.47

5.72

6.21

5.20

2.72

10.08

5.03

3.85

16.82

5.66

2.88 -

4.32 0.25

4.85 -

2.73 -

0.20 -

2.17 -

4.02 .06

5.32 .25

4.21 .44

3.01 .22

2.63 -

12.09 1.08

3.48 -

4.62 -

4.04 -

-= No responses.

APP~MI~X table 2- Top three competitors by quartile ranking and type of competition, weighted by sales

Type of competition

Private Other Service and Quality service

Competitor Manufacturer Dealer supplier cooperative Price availability and product

Percent

Number One

Quartile 1 12.43 3.26 28.46 55.85 49.25 27.44 23.31

Quartile 2 11.15 5.39 41.94 41.52 46.08 28.53 25.40

Quartile 3 8.62 12.58 41.24 37.56 53.67 19.80 26.53

Quartile 4 17.96 6.51 34.27 41.26 48.58 23.51 27.91

Quartile 5 27.30 7.83 45.21 19.66 43.27 29.36 27.37

Number Two 1

Quartile 1 4.17 4.91 38.78 47.49 38.82 27.58 28.97

Quartile 2 11.95 2.35 40.99 41.24 48.89 20.96 26.67

Quartile 3 6.01 5.82 37.56 49.15 47.20 27.78 23.55

Quartile 4 8.46 6.13 51.13 28.67 44.70 28.19 21.50

Quartile 5 12.02 9.52 33.26 43.30 37.40 37.74 22.97

Number Three’

Quartile 1 13.12 7.56 38.34 30.03 45.84 20.15 23.06

Quartile 2 11.70 11.12 33.48 31.24 47.67 18.09 21.78

Quartile 3 7.68 11.77 38.49 32.42 49.76 18.12 22.48

Quartile 4 7.14 12.04 28.48 35.95 40.82 21.68 21.12

Quartile 5 7.55 7.50 34.16 43.36 38.89 26.71 26.96

1 Values for competitors two and three do not add to 100 as not all cooperatives had more than one competitor.

20
A~PWICNX table s- Equipment offered to farmers for fertilizer application by quartile ranking and how their cost is

recovered, weighted by sales

Cost recovery method

Equipment

Currently

offer

Would like Include cost in

to offer product price

Additional

service charge

Dry fertilizer applicators

Quartile 1 89.02

Quartile 2 94.73

Quartile 3 98.53

Quartile 4 92.05

Quartile 5 87.98

Anhydrous ammonia nurse tanks

Quartile 1 88.33

Quartile 2 88.97

Quartile 3 77.82

Quartile 4 80.09

Quartile 5 81.56

Anhydrous ammonia tool bars

Quartile 1 75.66

Quartile 2 78.48

Quartile 3 76.47

Quartile 4 78.19

Quartile 5 76.46

2.08 26.07 73.93

-

22.68 77.32

1.19 29.75 70.25

.32 24.27 75.73

- 13.31 86.69

1.50 61.43 38.57

.59 57.02 42.98

1.67 67.49 32.51

-

68.77 31.23

.66 56.43 43.57

1.32 29.34 70.66

.59 24.63 75.37

.79 24.10 75.90

-

21.35 78.65

1.16 29.06 70.94

Percent

- = No responses.

21
~ppendht table 4- Fertilizer services provided with cooperative personnel and equipment by quartile ranking and

how their cost is recovered, weighted by sales

Cost recovery method

Service

Application

Quartile 1

Quartile 2

Quartile 3

Quartile 4

Quattile 5

Soil testing

Quartile 1

Quartile 2

Quartile 3

Quartile 4

Quartile 5

Specialists

Quartile 1

Quartile 2

Quartile 3

Quartile 4

Quartile 5

Computer records

Quartile 1

Quartile 2

Quartile 3

Quartile 4

Quartile 5

Currently

offer

95.66

96.12

96.66

93.59

94.56

90.22

92.94

94.54

91.46

95.37

70.98

82.91

82.71

80.71

76.24

69.36

71.39

62.72

55.80

64.58

Would like Include cost in Additional

to offer product price service charge

Percent

0.90 6.10 93.90

44 7.61 92.39

.72 6.36 93.64

.32 13.88 86.12

2.20 6.65 93.35

2.80 38.46 61.54

1.32 39.44 60.56

.35 46.15 53.85

1.33 36.56 63.44

.18 37.76 62.24

12.91 55.58 44.42

10.04 65.00 35.00

5.56 65.85 34.15

4.89 73.93 26.07

8.27 75.87 24.13

14.02 77.43 22.57

10.60 76.38 23.62

19.12 84.63 15.37

14.77 71.28 28.72

16.71 78.19 21.81

22
AJIPWKJIX tab18 L Equipment offered to farmers for fertilizer application and how their cost is recovered by

cooperative size and type, weighted by sales

Cost recovery method

Equipment

Currently Would like Include cost in Additional

offer to offer product price service charge

Dty fertilizer applicators

Small 86.55

Medium 90.24

Large 95.26

Super 92.19

Farm supply 88.00

Mixed farm supply 99.08

Mixed marketing 96.76

Marketing 88.44

Anhydrous ammonia nurse tanks

Small 59.59

Medium 61.25

Large 82.37

Super 96.17

Farm supply 68.74

Mixed farm supply 83.98

Mixed marketing 97.47

Marketing 96.42

Anhydrous ammonia tool bars

Small 52.03

Medium 52.20

Large 78.03

Super 98.51

Farm supply 61.50

Mixed farm supply 83.74

Mixed marketing 90.96

Marketing 82.69

-

2.25

.77

1.25

.61

-

-

3.33

2.00

2.25

1.43

-

1.23

1.20

.40

.77

2.00

1.46

1.43

-

1.00

1.20

.40

.52

Percent

26.79 73.21

31.00 69.00

20.48 79.52

23.08 76.92

30.80 69.20

15.09 84.91

24.58 75.42

18.37 81.63

61.21 38.79

64.82 35.18

61.76 38.24

61.59 38.41

59.78 40.22

56.79 43.21

64.89 35.11

66.22 33.78

25.78 74.22

22.66 77.34

28.44 71.56

25.02 74.98

35.99 64.01

17.93 82.07

24.54 75.46

20.36 79.64

- = No responses.

2 3
U.S. Department of Agriculture

Rural Business-Cooperative Service

Stop 3250

Washington, D.C. 20250-3250

Rural Business-Cooperative Service (FIBS) provides research, management, and

educational assistance to cooperatives to strengthen the economic position of farmers and

other rural residents. It works directly with cooperative leaders and Federal and State

agencies to improve organization, leadership, and operation of cooperatives and to give

guidance to further development.

The cooperative segment of RBS (1) helps farmers and other rural residents develop

cooperatives to obtain supplies and services at lower cost and to get better prices for

products they sell; (2) advises rural residents on developing existing resources through

cooperative action to enhance rural living; (3) helps cooperatives improve services and

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

cooperatives work and benefit their members and their communities; and (5) encourages

international cooperative programs. RBS also publishes research and educational

materials and issues Rural Cooperatives magazine.

The United States Department of Agriculture (USDA) prohibits discrimination in its

programs on the basis of race, color, national origin, sex, religion, age, disability, political

beliefs and marital or familial status. (Not all prohibited bases apply to all programs.)

Persons with disabilities who require alternative means for communication of program

information (braille, large print, audiotape, etc.) should contact USDA’s TARGET Center at

(202) 720-2600 (voice and TDD).

To file a complaint, write the Secretary of Agriculture, U.S. Department of Agriculture,

Washington, D.C. 20250, or call l-800-245-6340 (voice) or (202) 720-l 127 (TDD). USDA

is an equal employment opportunity employer.