Economic Subject Matter Meetings

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Economic Subject Matter Meetings
October 2002
Cooperatives
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Farmer Cooperatives National Trends
I. Number of Cooperatives I. Number of Cooperatives I. Number of Cooperatives I. Number of Cooperatives
Type 1990 1999 Change
Marketing 2,519 1,749 -770
Farm Supply 1,717 1,313 -404
Service 427 404 -23
Total 4,663 3,466 -1,197
II. Cooperative Memberships II. Cooperative Memberships II. Cooperative Memberships II. Cooperative Memberships
Marketing 1,882 1,283 -599
Farm Supply 2,006 1,731 -275
Service 232 159 -73
Total 4,120 3,173 -947
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1. Distribution of Farmer Co-ops by Type 1999

Category Percent
Farm Supply Grain and Oilseed Service Dairy Livestock and Poultry Fruits and Vegetables Cotton Other Marketing TOTAL 37.9 25.8 11.6 6.4 2.8 6.7 0.4 8.4 100.0
Other marketing include dry beans and peas, wool,
mohair, nuts, rice, sugar, fishery and other
miscellaneous marketing cooperatives.
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Farmer Cooperatives National Trends
IV. Reasons for Decline in Coop Numbers IV. Reasons for Decline in Coop Numbers
Reason Percent
Dissolved 44.6
Mergers/Consolidations 32.2
Acquired by Other Coops 13.9
Other Reasons 9.3
Total 100.0

From 1990 to 1999, about 1,861 co-ops were removed from RBS list of Farmer Cooperatives From 1990 to 1999, about 1,861 co-ops were removed from RBS list of Farmer Cooperatives
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• Reasons for Declining Memberships
• Cooperative memberships dropped from 4.1 million
  in 1990 to 3.1 million in 1999. Reasons for this
  decline include
• Decreasing number of farms and farmers in the
  U.S.
• Most farmers belong to more than one co-op and
  each membership is counted. Retirements lead to
  double decline counts.
• Problems in data collection.
• Other Important National Trends (1998-99)
• Total gross business volume handled by co-ops
  dropped 4.7 from 121 billion to 115.3 billion.
• Total net income of 1.3 billion was down 23.8
  from 1.7 billion in 1998.
• The number of part-time and seasonal employees
  employed by co-ops increased.

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Cooperative Development in Kentucky

• KCCDMission
• KCCD Personnel in Place
• Executive Director
• Cooperative Development Specialist
• Office Manager
• KCCD Center Structure
• Board of Directors
• Executive Director
• Development Specialists
• Office Manager

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• KCCD Funding
• USDA
• Kentucky Tobacco Settlement Board
• KDA
• UK College of Agriculture
• KCCD Development Activities
• Feasibility Studies
• Business Plans
• Management Audits
• Director Training
• Managed Training
• Drafting Legal Documents

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The Management Audit

• Objective
• Identify problems and opportunities for improving
  the business
• Make recommendations for solving existing
  problems
• Recommend procedures for exploiting existing and
  potential opportunities that will result in more
  efficient and profitable operations.
• Identify opportunities to provide educational and
  technical assistance to the Board and Management.

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Audit Procedure

1. Select an Agribusiness that will benefit from
   Audit.
2. Collect relevant operating and marketing data and
   industry standards prior to the Audit.
3. Review business plans, policies, financial
   statements, and relevant firm documents.
4. Observe and analyze all physical operations and
   conduct a time and motion study.
5. Interview board, manager(s), employees and
   selected farmers to ascertain and evaluate goals,
   plans, organization structure, guidance and
   direction in the firm, coordination of business
   and operations activities, and communications
   within the firm.
6. Analyze financial data and the control system in
   the firm.

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Audit Procedure (continued)

1. Process data from the time management study
   information from the interviews, financial
   statements, and relevant documents.
2. Compare firm performance with industry standards.
3. Identify problems and opportunities and make
   specific recommendations for improving or solving
   each entity.
4. Make preliminary oral report to the board
   immediately after the audit.
5. Write final report and submit to board and
   manager.

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• The Alliance of Produce Growers-Shippers
• Overall Purpose
• To support a unified network of produce shipping
  point facilities that will reduce the cost of
  imports while maximizing profits from products
  marketed.
• CORE Activities
• Purchase supplied together for cost savings
• Conduct joint promotions of alliance members
  produce.
• Develop fresh and processed markets for alliance
  members to cooperatively supply.
• Transition the Alliance into an independent,
  self-funded industry marketing and promotion
  organization.

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• Relationship With KCCD
• The Alliance Director will work closely with KDA
  Produce Marketing Specialist to design and carry
  out
• Special Promotions
• Trade Show Displays
• Point of Purchase Materials, and
• Create an Alliance website featuring member
  produce and facilities
• The Alliance Director will report to the
  Executive Director of
• KCCD who in turn shall report to KDA on progress
  made.

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• Future Challenges for cooperatives served by
  KCCD
• Equity Investments
• Financing
• Product Quality
• Member Loyalty
• Quality Management
• Strong Boards of Directors
• Hiring and Retaining Good Managers
• Legal Issues

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This presentation was presented with the
Agricultural Situation and Outlook, Fall 2002,
publication number ESM-28, published by the
Department of Agricultural Economics at the
University of Kentucky with an additional
contribution from Kentucky State University in
October 2002. The entire publication can be
accessed on the WWW at http//www.uky.edu/Ag/AgEco
n/publications/esm_28.pdf.   This article
presents information on the economic situation
and outlook for Kentucky agriculture and is
intended to assist farmers, agribusiness
professionals, Extension filed staff, and others
with interest in agriculture and agribusiness.
Information presented here is based on the most
recent information and research available.
However, the rapidly changing economic and policy
conditions for agriculture limit the usefulness
and life span of conclusions and recommendations
cited here. Decision makers should keep these
facts in mind. Feel free to use the information
included in this publication for other uses, but
please provide professional citation about the
source. This paper is published without formal
review and the views expressed are those of the
authors and do not necessarily reflect the views
of the University of Kentucky, the Agricultural
Experiment Station, or the Cooperative Extension
Service.   If you need additional information
or if you would like to provide comments or
suggestions about this slideshow, please contact
Lionel Williamson at lwilliam_at_uky.edu.
University of Kentucky, Department of
Agricultural Economics 400 Charles E. Barnhart
Bldg., Lexington, KY 40546-0276  Phone
859-257-5762, Fax [phone] URL
http//www.uky.edu/Ag/AgEcon/