Magazine article Rural Cooperatives

Farmer Co-Ops Set Net Income Record; Gross Business Volume Hits $126.5 Billion

Magazine article Rural Cooperatives

Farmer Co-Ops Set Net Income Record; Gross Business Volume Hits $126.5 Billion

Article excerpt

Farmer cooperatives had a record $3.2 billion in pre-tax net income in 2006, fueled by farm supply sales--especially by higher prices for petroleum products. This marks the second consecutive year that a new net income record was set. Net income shot up by 24 percent from 2005, when $2.5 billion in net income was reaped by the nation's farmer-owned cooperatives.

Overall farm supply sales increased by almost 17 percent, with petroleum sales alone registering a $5 billion gain. On the marketing side, sale of crops, livestock and value-added products by cooperatives decreased 2 percent. The biggest reason was lower milk prices, which resulted in a $2 billion decline in dairy sales. However, milk prices in 2007 are sharply higher, and with corn prices up, co-op marketing sales appear poised for a possible new record in 2007.

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Gross business volume of $126.5 billion for farmer cooperatives increased $5 billion from 2005, nearing the record $128 billion recorded in 1996, according to USDA Rural Development. Although not a record, gross business volume continued the general upward trend in sales that started in 2004 (figure 1).

Equity capital held by co-ops increased 2 percent, to almost $20 billion, but remains low at 42 percent of all assets. Cooperative assets grew by 3 percent, to almost $48 billion, while liabilities grew to $28 billion (figure 2).

Patronage refunds grew 24 percent to $500 million, up from $400 million in 2005.

Farmer cooperatives remain one of the largest employers in many rural communities, with overall employment of 181,000 workers. The number of fulltime employees fell 2 percent, to 123,000, while part-time and seasonal employees grew to 57,000.

Farm numbers continue to decline and grow in size, as do farmer cooperatives. Cooperative memberships were 2.6 million in 2006, slightly lower than in 2005. …

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