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Largest 100 agriculture co-ops post strong margins in 2004.

Article Excerpt
The rapid rate of change impacting the nation's 100 largest agricultural cooperatives slowed considerably in 2004 from the previous several years. It was not only a year of stabilization, but of strong performance, as the top 100 ag co-ops posted record gains in sales and margins (table 1), based on USDA's preliminary survey results. Total operating revenue for the top 100 jumped 19 percent, to $70 billion. All co-op commodity groups reported increased revenue. Dairy and diversified cooperatives led the way, accounting for two-thirds of the total revenue increase.

Gross margins were up 28.4 percent, reaching $6.9 billion. The largest increase was in the dairy sector, which accounted for 61.5 percent of the total jump in gross margins for the top 100 co-ops. Fruit/vegetable and rice were the only sectors to record a decline in gross margins. Despite higher sales for these two sectors, fruit/vegetable and rice cooperatives paid a higher cost of goods sold. Thus, it appears likely that these cooperatives returned more to their members up front, rather than as patronage later on.

Operating expenses also jumped 24.2 percent, to $5.4 billion. Dairy co-ops again had the biggest jump in operating expenses, which increased $859 million. That jump accounted for nearly three-fourths of the top 100 co-ops' total increase in operating expenses.

Operating margins soar $1.4 billion

Operating margins for the top 100 shot up a whopping 47.8 percent, to $1.4 billion. Leading the increase were poultry/livestock cooperatives, a reversal of fortune from 2003, when poultry/livestock cooperatives were the only commodity group to post operating losses. In 2004, top 100 cooperatives in this sector had operating margins of $238 million, a 634-percent jump from the year before.

Fruit/vegetable and rice cooperatives saw operating margins decline from 2003 to 2004, mostly due to lower gross margins. However, fruit/vegetable cooperatives still posted solid operating margins of $204 million. Rice cooperatives continue to operate with tight margins.

Despite...