Survey Results Shed Light on Daily Co-Op Financial Performance

By Liebrand, Carolyn | Rural Cooperatives, January-February 2015 | Go to article overview

Survey Results Shed Light on Daily Co-Op Financial Performance


Liebrand, Carolyn, Rural Cooperatives


USDA's annual survey of U.S. farmer co-ops reveals a wealth of data that can be used as a yardstick for cooperatives to compare their financial ratios and overall performance to averages for their sector. The full 2013 statistics report (and those for earlier years) is posted on the USDA Rural Development website at: http://www. rurdev.usda.gov/BCP_Coop_Data_DairyFinancial.html.

The following article focuses on dairy co-op data derived from USDA's 2012 survey. It presents findings that dairy cooperatives can use to compare to their own financial records from 2012 to determine how their performance stacks up to the aggregate data.

Overview

Dairy cooperatives surveyed by USDA devoted, on average, $10.90 in total assets per hundredweight (cwt) of member milk. These co-ops averaged $8.12 per cwt in liabilities, while member equity was $2.78 per cwt in 2012. Total revenue reported for 2012 was $30.56 per cwt of total milk handled, with net margins of 19 cents per cwt.

Dairy cooperatives are surveyed by USDA Cooperative Programs every five years. This latest survey collected information for cooperatives' fiscal years ending in calendar 2012. The 89 cooperatives that provided detailed financial data represent more than two-thirds of the cooperatives that handled milk from cows in the United States. These 89 dairy cooperatives handled 80 percent of the total milk volume handled by U.S. cooperatives. Further, these cooperatives employed an estimated 93 percent of the total assets of all dairy cooperatives during 2012.

Assets

Current assets of $6.74 per cwt of member milk made up 62 percent of total assets of these dairy co-ops in 2012 (table 1). A unique characteristic of a dairy cooperative's balance sheet is the components of its current assets and current liabilities. Dairy cooperatives typically pay members for their milk twice a month. A large proportion of the current assets and current liabilities are related to such periodic cash payments to members.

Dairy cooperatives employed $4.16 per cwt in fixed assets (including investments in other cooperatives of 74 cents per cwt) in 2012. Fixed assets and investments represented 38.1 percent of total assets.

On the other side of the balance sheet, two-thirds (66 percent) of total liabilities were current liabilities, or $5.38 per cwt. Long-term liabilities were $2.74 per cwt in 2012.

Equity

Member equity was 26 percent of total assets, or 67 percent of the value of fixed assets and investments. Member equity at 102 percent of long-term liabilities was enough to cover long-term debts.

Allocated equity comprised the bulk of member equity value--84 percent of total equity--while retained earnings/unallocated equity represented just 8 percent in 2012.

Preferred stock amounted to 7 percent of total equity, while non-controlling minority interests and common stock represented a slight amount of the total value of members' equity in the cooperative. Common stock was issued by 39 percent of the profiled dairy cooperatives. Typically, it carries only a token value and is issued to signify membership. As a result, it comprised a negligible amount of co-op equity.

Operating statement

Milk and dairy product sales, which averaged $23.69 per cwt of total milk handled by the 89 co-ops, were the largest single sales and other income item, accounting for 78 percent of total revenue in 2012 (table 2). Other sales and income averaged $6.68 per cwt.

Expenses averaged $30.38 per cwt, leaving net margins before taxes of 19 cents per cwt. The profiled dairy cooperatives' net margins before tax represented 0.6 percent of total revenue in 2012. These net margins represent a 2-percent return on assets and an 8percent return on equity.

In addition to marketing their own members' milk, some cooperatives may also handle milk received from nonmember producers, other cooperatives and/or other firms. …

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