Dairy Farmers’ Participation in Cooperatives › files › rr86.pdfECONOMIC PARTICIPATION General affiliation provides’a broad measure of dairy farmer participation, regardless

United StatesDepartment ofAgriculture

Agricultural&;m,tive

ACS ResearchReport No. 86

Dairy Farmers’Participationin Cooperatives

Abstract

Dairy Farmers’ Participation in Cooperatives

Thomas W. Gray, Roger A. Wissman, Charles A. Kraenzle,Beverly L. Rotan, and Celestine C. AdamsAgricultural Cooperative ServiceU.S. Department of Agriculture

Slightly less than 90 percent of all dairy farmers had some affiliation (viamembership or nonmember patronage) with agricultural cooperatives in1986. This was a small increase from 83 percent in 1980. When dairyfarmers participated economically it was often on an “all-or-nothing”basis, both for marketings and-though somewhat less-supply purchases.In general, as size of farm increased a greater percent participated; thoughthe proportions dropped off within the largest size category. Dairy farmerswere loyal to membership, using membership for total marketings andsupply purchases and, in particular, for high proportions of their dairyproduct marketings and feed purchases. The greatest participation overallwas in the Lake States and Northern Plains; the lowest participation wasin the Southeast, Mountain, and Pacific States.

Key words: Farmer cooperatives, dairy, economic participation, member-ship, supply purchases, marketings.

ACS Research Report 86March 1990

Preface

This study measures the various degrees of association U.S. dairyfarmers have with agricultural cooperatives, all the way from a generalaffiliation to full use of membership for large proportions of product mar-keting and supply purchasing. Selected data for 1980 and 1986 are pre-sented by region of the country and farm size by gross sales. Areas of thecountry that may provide potentials for further cooperative expansion arealso identified.

Data for this report were obtained from a sampling of all U.S. farm-ers. Survey questions were part of the June 1981 and June 1986 Acreageand Livestock Enumerative Surveys conducted by the NationalAgricultural Statistics Service (NASS), formerly the Statistical ReportingService (SRS). Personal interviews were conducted with nearly 17,000farmers. The data were expanded to the country as a whole.

Contents

OVERVIEW ................................................................................................... 1

GENERAL AFFILIATION ............................................................................. 2

ECONOMIC PARTICIPATION ...................................................................... 3

Marketings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Supply Purchases ................................................................................ 3

Dairy Product Commitment to Cooperative Marketing ..................... .4

Feed Expenditure Commitment to Cooperative Purchases . . . . . . . . . . . . . . . . 5

EFFECTIVE MEMBERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Marketings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Supply Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Dairy Product Commitment to Cooperative Marketing . . . . . . . . . . . . . . . . . . . . . . 7s

Feed Expenditure Commitment to Cooperative Purchases . . . . . . . . . . . . . . . . 9

AREAS FOR EXPANSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Effective Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Nonmember Patrons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Survey Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Definitions . . . . . . . . . . . . . . . . . . . . . . . ..f................................................................14.

OTHER PUBLICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

. . .111

Highlights

Dairy farmers are highly likely to be affiliated with an agriculturalcooperative (either as a member or as a nonmember patron). Although thepercentages affiliated have remained relatively stable, the data show a slightincrease from 83 percent of all dairy farmers in 1980 to 87 percent in 1986.

Regions of the country on the low end of affiliation have tended toremain at the low end (Pacific and Mountain), while regions at the high endremain at the high end (Lake States, Northern Plains, and Northeast).

Dairy farmers tend to be affiliated with agricultural cooperatives inincreasingly larger proportions as the farm size increases. With the largestsize farms ($500,000 and over in gross sales), the proportions affiliated tendto drop, while in the smallest size category (less than $10,000 gross sales),substantively lower proportions are affiliated.

The positive relationship between farm size and participation tends tohold irrespective of type of economic participation-purchasing or market-ing generally, marketing milk or purchasing feed specifically, or whetherfarmer or farmer-member using membership.

Dairy farmers tend to participate economically on an “all-or-nothing”basis. While about 50 percent marketed milk through a cooperative in 1986,nearly that same percentage (46 percent) committed from 81 to 100 percentof their dairy product to cooperative marketing. While 50 percent pur-chased feed from a cooperative in 1986, nearly 30 percent purchasedbetween 81 and 100 percent of their feed needs.

Dairy farmers tend to be loyal members. Nearly 50 percent of all dairyfarmers held and used a membership to market farm commodities in 1980.This number increased to just over 60 percent in 1986. Nearly 60 percent ofall dairy farmers used membership to purchase supplies, both in 1980 and1986.

Dairy members are highly likely to patronize using their membership.Seventy percent of all dairy members used membership to market farm com-modities in 1980. About 90 percent used membership to market in 1986.About 80 percent of all dairy members used membership to purchase sup-plies in both 1980 and 1986.

Dairy members using membership tend to participate economically onan “all-or-nothing” basis. About 65 percent of all dairy members used mem-bership to market dajry products. About 60 percent marketed 81-100 per-cent of their volume. About 60 percent used membership to purchase feed.Nearly 35 percent purchased 81-100 percent of their purchased feed needsfrom a cooperative.

The Lakes States, Corn Belt, Northeast, and Southeast regions suggestthemselves as likely areas for further cooperative expansion. These areashave large numbers of dairy farmers using memberships, but in amountsless than 81-100 percent of commitment.

The Lake States, Corn Belt, and Northeast regions may be likely areasfor increasing membership. Each contains substantial numbers of dairyfarmers using cooperatives as nonmember patrons.

Dairy Farmers’ Participation in CoonerativesI

Thomas W. GrayRoger A. WissmanCharles A. Kraenzle,Beverly L. RotanCelestine C. Adams l

OVERVIEW

Participation in agricultural cooperativescan occur in various ways and is highly variableamong farmers. Some farmers hold offices andsit on committees. Others may never attendeven an annual meeting, but they patronize withlarge proportions of volume. Others may beloyal in membership, use cooperatives economi-cally, but have very little product committed.Still others may have huge proportions of theirvolume committed but not hold membership.

The focus in this report is on participationby membership and patronage. There are foursections. The first section documents the pro-portion of dairy farmers who hold membershipand/or patronize an agricultural cooperative.Irrespective of type of participation, this section

c1 This is one in a series of reports on farmers’

membership and use of agricultural cooperatives. Fora detailed description of the entire data set seeKraenzle, et al., Use, ACS Research Report No. 77.

affiliation is with agricultural cooperatives.The second section is on patronage.

Irrespective of membership, it reports the pro-p o r t i o n s o f d a i r y f a r m e r s w h o p a t r o n i z e c o o p e r a -tives. Both supply and marketing patronage ared i s c u s s e d , a s w e l l a s t h e d e g r e e o f p r o d u c t c o m -mitment, i.e., feed purchases and dairy market-i n g f r o m “0-20” percent to “81-100” p e r c e n t o fpatronage. The third section focuses again onpatronage, but adds an aspect of membershiployalty. It documents the proportions of dairyfarmers who actually use cooperative member-ship in purchasing and marketing decisions, andagain the proportions of product committed infeed purchasing and dairy marketing.

These sections start from the most generalcategory of participation and proceed throughincreasingly delimited categories: from generalaffiliation to membership loyalty and productcommitment in feed purchasing and dairy mar-keting. Sections correspond to various areas dia-gramed in figure 1. The area occupied by circleA plus circle B represents the percentage of all

Figure l-Dairy Farmers’ Participation in Cooperatives l

C

Circle A: Dairy farmers holding membershipin a cooperative

Circle B: Dairy farmers patronizing a cooper-ative

Area C: Dairy farmers holding membershipand patronizing a cooperative

Area enclosed by Circles A and B: Dairyfarmer general affiliation

I Figure 1 does not represent actual numerical proportions.

1

dairy farmers who have some minimal connec-tion, or affiliation, with agricultural coopera-tives: Circle B represents dairy farmers patron-izing agricultural cooperatives. Area Crepresents farmers using membership to patron-ize. Not shown are distinctions between supplypurchases, marketings, and degrees of productcommitment.

The fourth section shows subpopulations offarmers that may represent potentials for furthercooperative servicing, e.g., nonmember patronsand patrons with small proportions of productcommitted. Data for all sections are presentedfor regions across the United States and for dif-fering farm size categories,

GENERAL AFFILIATION

Farmers may hold membership, maypatronize, or may do both simultaneously.Irrespective of type of participation, this sectiondocuments the extent dairy farmers have someconnection with agricultural coVoperatives, eitherthrough membership or nonmember patronage(table 1).

The proportion of dairy farmers affiliated

with an agricultural cooperative (as members ornonmember patrons) has remained relativelystable since 1980, the data showing a slightincrease from 83 percent to 87 percent in 1986.Relative rankings of regions did change. In 1980the regions ranged from a low of 71 percent inthe South Central States to a high of 88 percentin the Northeast. In 1986 they ranged from alow of 75 percent in the Corn Belt to a high of 93percent in the Northern Plains. Farmers in theNorthern Plains were midway (78 percent) intheir likelihood of having an affiliation in 1980,but were among the highest in 1986 (93 percent).Farmers in the South Central States shifted fromamong the lowest at 71 percent to an intermedi-ate position (82 percent).

Overall, regions on the low end of affilia-tion tended to remain at the low end (Pacificand Mountain) and regions at the high end ofaffiliation tended to remain at the high end(Lake States and Northeast). Across all regions,no less than 71 percent had some association (asmembers or nonmember patrons) in either 1980or 1986. Within each region, affiliations eitherremained stable or increased. Even at the lowestlevels of affiliation, most dairy farmers had

Table l-Dairy farmers holding membership or patronizing as nonmember, 1960 and 1986-.

NonmemberMembers patrons

Category1960 1966 1960 1966

Percent ol dairy farmersRegion

Northeast 75 74 13 15Southeast 54 71 28 15Lake States 76 85 11 7Corn Belt 69 61 8 13Northern Plains 70 82 8 11South Central 60 79 . 11 3Mountain 67 65 9 14Pacific 68 79 6 4

1960

8882877778717674

Total ’

1966

8986927593827882

Farm size$ 1,000 - $ 9,999$ 10,000 - $ 19,999$ 20,000- $ 39,999$ 40,000- $ 99,999$100,000 - $249,999$250,000 - $499,999$500,000 and over

Dairy farmers, all categories

’ Total may not add due to rounding.

30 30 27 30 57 6060 61 17 21 77 8163 61 14 15 77 7676 82 12 9 88 9086 84 7 8 93 9288 87 3 5 91 9268 77 10 7 78 84

71 76 12 11 83 87

2

some connection, either as members or as non-member patrons.

Both data sets show an increasing level ofaffiliation as size of farm (gross sales) increased,with a tailing off at the largest size category($500,000 and over). There were substantivelylower levels of affiliation among farmers withthe smallest size operations. The 1980 dataranged from a low of 67 percent for the smallestgross sales category (less than $10,000) to a highof 93 percent for the $lOO,OOO-$249,999 category.In 1986, the percentages ranged from a low of 60percent for the smallest gross sales category to ahigh of 92 percent for both the $lOO,OOO-$249,999 and the $250,000-$499,999 sales cate-gory. Between 1980 and 1986, within each sizecategory the likelihood of farmers having someaffiliation either increased or remained about thesame.

ECONOMIC PARTICIPATION

General affiliation provides’a broad measureof dairy farmer participation, regardless of typeof participation. In this section the focus will betightened to economic patronage irrespective ofmembership status.

Marketings

In 1986, 66 percent of all dairy farmers useda cooperative to market farm commodities (table2). This is up from 54 percent in 1980.Proportions participating increased in allregions. Dairy farmers in the Lake States andNorthern Plains were among the most likely tomarket through a cooperative, while farmers inthe Southeast and Mountain States were the leastlikely. This was the case for both 1980 and 1986.

A positive relationship was found betweenfarm size and the proportion of dairy farmersmarketing through a cooperative. The greater thegross sales, the more likely farmers use a cooper-ative for marketing. The largest size farms werean exception. In 1980 they were less likely thanthe second largest size farms to market through acooperative. In 1986 the two largest size group-ings were nearly equal, the data showing slightlymore than 70 percent of each category marketingthrough a cooperative.

Supply Purchases

In 1986, 76 percent of dairy farmers pur-chased supplies from a cooperative. This was upslightly from 72 percent in 1980. Dairy farmersin the Northern Plains and Lake States were the

Table 2-Dairy farmers using cooperatives to markettheir farm products, 1980 and 1986

Table 3-Dairy farmers using cooperatives to purchasetheir farm supplies, 1980 and 1986

Category 1960 1966 Category 1960 1966

RegionNortheastSoutheastLake StatesCorn BeltNorthern PlainsSouth CentralMountainPacific

Farm size$ 1,000 - $ 9,999$ lO,OOO- $ 19,999$ 20,000 - $ 39,999$ 40,000 - $ 99,999$ 100,000 - $249,999$250,000 - $499,999$500,000 and over

Dairy farmers, all categories 54 66 Dairy farmers, all categories 72 76

Percent of dairy farmers

52 5933 4462 7650 5859 7240 6741 4050 70

18 1646 5549 4554 7070 7668 7360 71


Farm size$ 1,000 -$ 9 , 9 9 9$ 10,000-$ 19,999$ 20,000-$ 39,999$ 40,000-$ 9 9 , 9 9 9$100,000 - $249,999$250,000 - $499,999$500,000 and over


76 7675 8074 0466 6669 9159 7668 7154 44

48 5768 5967 6577 8177 0482 8462 52

3

most likely supply patrons in 1986, whileNortheast and Southeast farmers were most like-ly in 1980. Pacific States farmers were leastlikely to purchase supplies cooperatively in bothyears. The percentages participating remainedstable or increased in nearly every region, thePacific States region being an exception(table 3).

Purchasing patterns by farm size were simi-lar to those cited for marketing. As size of farmincreased, the proportions of dairy farmers buy-ing supplies from agricultural cooperativesincreased, with a dropping off of proportionsparticipating in the largest farm size category.This was true for both 1980 and 1986.

Dairy Product Commitmentto Cooperative Marketing

Much of the discussion has centered on theextensiveness of economic participation acrossregions and farm sizes. This section continuesthat theme, but adds a measure of product com-

mitment. It focuses on the percentage of dairyproduct marketed cooperatively.

Table 4 reveals that when dairy farmersmarket their dairy product through a coopera-tive, they tend to be fully committed to coopera-tive marketing or not at all. While 52 percentmarketed their dairy product through a coopera-tive, 46 percent marketed 81-100 percent. Just 6percent marketed less than 81 percent. Dairyfarmers in the Lake and Pacific regions were themost likely to commit over 80 percent, whilethose in the Southeast and Mountain regionswere the least likely.

Though more variable, the relationshipbetween farm size and participation was similarto those discussed previously. As size of farmincreased, at the 81-100 percent level of productcommitment, greater proportions of dairy farm-ers were found committing their dairy productsto cooperative marketing. Unlike with total mar-keting and supply purchasing, however, the datashow no drop in farmers’ participation from thelargest farms.

Table 4-Dairy farmers using cooperatives for dairy product marketlngs, 1986

Categoryl-20

Percent of dairy product sales

21-40 41-60 61-80


81-100Total 1


Farm size$ 1,000 - $ 9,999$ 10,000 - $ 19,999$ 20,000 - $ 39,999$ 40,000 - $ 99,999$ 100,009 - $249,999$250,000 - $499,999$500,000 and over

12 I:; iij

3 35 392 25 29

1 1 2 56 62I:; 1 1 4 40 46

1:; t ;3 52 59

I:; 7 46 52

(*I “13 2 31 361 3 54 59

*

(*) (‘1 9 10f2) G

I:; fi35 40

1 (*I 26 341 1 (*) 3 49 54

A I:;2 3 56 62

1 1A 3 40 52

2 56 60


’ Total may not add due to rounding.2 Less than 0.5 percent.

1 1 1 3 46 52

Feed Expenditure Commitmentto Cooperative Purchases

On the input side, table 5 suggests a similar“all-or-nothing” commitment to cooperatives,though not as dramatic as that shown in table 4.While 50 percent of all dairy farmers purchasedfeed cooperatively, nearly 30 percent purchasedmore than 80 percent of their purchased feedneeds from a cooperative. The remaining 20 per-cent was scattered along diffcrcnt lcvcls of com-mitment from “l-20” percent to “61-80” percent.Regions with the greatest proportions of dairyfarmers committed at the 81-100 percent levelarc the Northeast and the Lake States. Regionswith the smallest proportions are the NorthernPlains and the Mountain States.

A distinct farm sizc/l>ilrticipation rclation-ship did not emerge from these farmers feedpurchase patterns. Similar to previously dis-cussed types of participation, there was a sub-stantial drop in participants in the largest sizecategory.

e

EFFECTIVE MEMBERSHIP

Central to cooperative organization is effec-tive membership, i.e., farmers using membershipin patronage. The focus in this section will beon those dairy farmers who hold and use theirmembership.

Marketings

Just over 60 percent of all dairy farmersheld and used cooperative membership to mar-ket their farm commodities in 1986-up fromslightly less than 50 percent in 1980. Dairyfarmers in the Lake States, Northern Plains, andPacific States were among the most likely to par-ticipate in this fashion, while those in theSoutheast and Mountain regions were the leastlikely. Such was the case in both 1980 and 1986.The percentages participating increased in everyregion, except for the Mountain region wherethere was a slight decrease (table 6).

Dairy farmers displayed a positive farm size

Table S-Dairy farmers using cooperatives for feed expenditures, 1986

Categoryl - 2 0

Percent of feed expenditures

21-40 41-60 61-80

Percent of dairy fanners

81-100Total ’

RegionNortheast

SoutheastLake StatesCorn BeltNorthern PlainsSouth Central8MountainPacific

Farm size3 l,OOO-$ 9 , 9 9 9$ lO,OOO-$ 19,999$ 20,000 - $ 39,999$ 40,000 - $ 99,999$ 100,000 - $249,999$250.000 - $499,999$500,000 and over


’ Total may not add due to rounding.

7 3 4 2 29 457 5 11 7 25 559 6 5 4 37 608 2 6 2 19 386 8 18 7 33 719 0 8 4 20 41

15 4 2 1 14 356 1 7 1 13 28

.

4 3 8 2 28 454 6 3 2 36 507 3 5 1 29 457 4 5 4 31 50

11 4 7 4 28 5313 8 12 2 27 626 4 4 3 8 25

8 4 6 3 28 50

5

relationship. As farm size increased, greater between size and those patronizing in 1980.percentages of dairy farmers were found using From 1980 to 1986, the percentages utilizingmemberships to market. memberships increased in all size categories.

Of dairy members (dairy farmers holdingmembership), nearly 90 percent used them formarketing in 1986, up from 70 percent in 1980.In six of the eight regions, more than 85 percentof the dairy members were loyal to membershipin marketings in 1986. Dairy members in theSoutheast and Mountain States participated inlower proportions (65 and 63 percent, respec-tively, in 1986), though increases were recordedin these and all other regions from 1980 to 1986(table 7).

Supply Purchases

Though increases were not as continuous, apositive relationship between farm size and par-ticipation was found here as well. At least 90percent of all dairy members with sales of$40,000 or more utilized their memberships tomarket commodities in 1986. Participation inthe $l,OOO-$9,999 sales category was substantial-ly less, with just over half patronizing.Members in the $lO,OOO-$19,999 and $20,000-$39,999 size categories tended to’patronize inpercentages midway between the least and mostlikely. A similar tripart relationship was found

Nearly 60 percent of all dairy farmers usedmembership to purchase farm supplies both in1986 and 1980. Dairy farmers in the NorthernPlains and Lake States were most likely to par-ticipate in this fashion in both years. Thoseleast likely were in the Pacific States region.Changes within regions were variable, with per-centages increasing in some regions and declin-ing in others (table 8).

A positive farm size relationship was foundhere as well. Dairy farmers were more likely touse membership to purchase supplies as size offarm operation increased. As with most otherparticipation categories, there was a substantivedrop in the percentage participating in thelargest size category.

Of dairy members, about 80 percent usedmembership to purchase supplies-the datashowing 80 percent in 1980 and slightly less, 77percent, in 1986. There was some shifting by

Table 6-Dairy farmers who used their membership tomarket their products, 1980 and 1986

Table 7-Dairy members who used their membership tomarket their farm products, 1980 and 1986

Category 1980 1986


Farm size$ l,OcQ-$ 9 , 9 9 9 14 15$ 10,000 - $ 19,999 37 45$ 20,000 - $ 39,999 43 41$ 40,009-$ 99,999 50 66$ 100,000 - $249,999 66 71$250,000 - $499,999 66 71$500,000 and over 52 69

Dairy farmers, allcategories 49 61

Percent ol a// farmers

49

I

Category 1980 1986

Percent of all d a i r y members


65 8652 6575 9364 9260 6776 9259 6373 99

Farm size$ 1,000 -$ 9,999$ 10,000-$ 19,999$ 2Q,ooo-$ 39,999$ 40,000 -$ 99,999$100,000 - $249,999$250,000 - $499,999$500,000 and over

45 5462 6266 7466 9077 9475 9077 99

Dairy members, all categories 70 69

6

region in the ordering of dairy farmers most like-ly to use membership. Northern Plains,Southeast, and Mountain farmers participated inthe greatest percentages in 1980, while NorthernPlains, Lake States, and Southeast farmers did soin 1986. Basically, farmers closely approximatedthe go-percent national average in all regions,with the exception of the Pacific in 1980 and theNortheast and Pacific in 1986. Percentages inthese latter regions were substantially below 80percent (table 9).

Among farm size categories, farmers usingmembership in the smallest and the very largestfarm sales categories were the least likely tomake cooperative purchases. This was true forboth 1980 and 1986. No other pattern betweenfarm size and sales categories emerged.

Dairy Product Commitmentto Cooperative Marketing

Forty-eight percent of all dairy farmers weremembers utilizing memberships to market dairyproducts through an agricultural cooperative.Forty-four percent marketed more than 80 per-cent. As a percent of all dairy farmers by region,

Lake and Pacific States farmers participated inthe highest proportions. Percentage participat-ing was lowest in the Southeast States (table 10).

A farm size/participation effect did emerge.As size of farms increased, greater proportions ofdairy farmers used membership to market theirdairy products. Nearly all participants commit-ted more than 80 percent, reflecting again an“all-or-nothing” pattern of patronage.

Of dairy members, 64 percent used member-ship to market their dairy product. The Pacific,Lake, and Corn Belt States were among the lead-ers, while the Southeast States’ members wereleast likely (table 11). This pattern by regionwas true for both 1980 and 1986.

A size vs. patronage pattern did not emergeas clearly among dairy members. Dairy membersin the largest size category were most likely touse membership in marketing dairy products,while members in the smallest size categorywere least likely. Percentages in between weremore variable. However, nearly all those partici-pating committed more than 80 percent of theirdairy product to cooperative marketing.

Table 8-Dairy farmers who used their membership topurchase farm supplies, 1980 and 1986

Category 1960 1966


Farm size$ 1,000 - $ 9 , 9 9 9$ 10,000 - $ 19,999$ 20,000 - $ 39,999$ 40,000 - $ 99,999$ 100,000 - $249,999$250,000 - $499,999$500,000 and over

Dairy farmers, all categories 57 56

Percent of a// dairy farmers

59 4847 5761 7055 4861 7348 6356 49 -46 35

20 2050 4051 4661 6470 6772 7152 39

Table 9-Dairy members who used their membership topurchase farm supplies, 1980 and 1986

Category


1960 1966

Percent of all dairy members

78 6587 8080 8380 7687 8880 7936 7667 45

Farm size$ l,OOO-$ 9 , 9 9 9$ lO,OOO-$ 1 9 . 9 9 9$ 20,000-$ 3 9 , 9 9 9$ 40,000 -$ 99,999$100,000 - $249,999$250,000 - $499,999$500,000 and over

Dairy members, all categories

65 6663 6581 7660 7861 7962 8276 51

80 77

7

Table lo--Dairy farmers’ proportion of sales from dairy product marketed through cooperative membership, 1996

Category

RegionNortheastSoutheastLake StatesCorn BeltNorthern Plains

South CentralMountainPacific

Farm size$ 1,000 lO,OOO-$20,000-$ 3 9 , 9 9 9$ 40,000 - $ 99,999$ 100,000 - $249,999$250,000 - $499,999$500,000 and over


’ Total may not add due to rounding.2 Less than 0.5 percent.

Percant of dairy product salesTotal ’

l-20 21-40 41-60 61-80 81-100


12 :; I:;

3 35 392 24 28

1 2 55 591 “1 4 37 43I:;

3 48 53

ji j ji j (2: 7 46 532 2 30 34

1 1 3 54 59

‘2 ‘2 I:; (2:9 11

32 36(2) (*I I:; 5 26 31

1 1 3 48 531 3 53 58

(2:i;

(43 48 52

1 2 54 58

1 1 (*I 3 44 48

c

Table 11-Dairy members’ proportion of sales from dairy products marketed through cooperative membership, 1986

Categoryl-20


21-40 41-60 61-80 81-100Total ’


Farm size$ 1,000 - $ 9,999$ lO,OOO-$ 19,999$ 20,000 - $ 39,999$ 40,000-$ 99,999$ 100.000 - $249,999$250,000 - $499,999$500.000 and over

Percxnt of dairy members

4 7 5 33 4 4 06 5 7 061 715 8 6 45 8 6 74 6 5 26 8 7 5

(23) 31 53 35 60“I (*) 1 I:; 4 43 58 64 50

(2: 2 3 3 63 56 69 601 3 70 75

Dairy members, all categories

’ Total may not add due to rounding.* Less than 0.5 percent.

1 1 1 4 58 64

Feed Expenditure Commitmentto Cooperative Purchases

Forty-three percent of all dairy farmers usedmembership to purchase feed in 1986. Mostbought more than 80 percent of their total feedpurchases from cooperatives. However, a sub-stantial number-18 percent of all dairy farm-ers-did buy less than 81 percent. NorthernPlains and Lake States farmers participated mostin utilizing membership to purchase feed.Pacific and Mountain States dairy farmers wereleast likely to participate in this fashion (table12).

Farm size did appear to affect the level ofpurchasing commitment. As size of farmincreased, greater percentages of farmers werefound using membership to purchase feed needs.Similar to previously discussed types of partici-pation, those farmers in the largest size categorywere substantially less committed than the nextlargest sized units.

Fifty-seven percent of all dairy membersused membership to purchase feed. Thirty-three

percent purchased more than 80 percent of theirfeed needs. No obvious farm-size effect emergedfrom the data, though again a large drop in thepercentage participating occurred among dairyfarmers in the largest size category (table 13).

AREAS FOR EXPANSION

Effective Members

The data indicate dairy farmers are highlyinvolved with agricultural cooperatives, both forsupply and marketing needs. It is not clear whatwould be a reasonable expectation or goal forpercent total involvement. Kimble 1 suggests theentire farm population cannot be regarded as apotential. Gasson * suggests that membershipalone may not be a good proxy for maximumextensiveness.

Central to cooperative organization is effec-tive membership, i.e., farmers using their mem-

1 See Other Publications list at end of report.

Table 12-Dairy farmers’ proportion of total expenditures on feed purchased through cooperative membership, 1996

Category


Farm size$ 1,000 - $ 9,999$ lO,OOO-$ 19,999$ 20,000-5 3 9 , 9 9 9$ 40,000 - $ 99,999$ 100,000 - $249,999$250,000 - $499,999$500,000 and over

l-20

556649

133

(*I156

10134

Percent of feed expendituresTotal 1

21-40 41-60 61-60 61-100

Percent ol dairy I armers

2 2 1 21 323 11 7 20 475 4 4 35 562 3 2 17 32

16 7 29 63(4 6 19 373 2

(2:13 31

1 6 1 13 24.

t2) 2 11 193

(42 32 37

2 3 1 25 373 3 4 29 454 6 4 25 496 11 2 27 614 4 3 6 21


( Toral may not add due to rounding.2 Less than 0.5 percent.

7 3 5 3 25 43

9

Table 13-Dairy members’ proportion of total expenditures on feed purchased through cooperative membership, 1986

Categoryl-20


21-40 41-60 61-80 61-100Total 1


Farm size$ 1,000 - $ 9,999$ 10 ,000 - $ 19,999$ 20,000 - $ 39,999$ 40,000 -$ 99,999$ 100,000 - $249,999$250,000 - $499,999$500,000 and over

Dairy members, all categories 9 4 6 4 33 5 7

77

10125

1120

4

t2)297

12155

Percenr of dairy members

3 35 166 43 5

f;1910

5 22 8

210448

G1

1 74 34 6 14 4 55 7 4

10 13 25 5 4

29 4 429 6 64 2 6 62 8 5 23 5 7 62 4 4 72 0 4 816 3 0

36 6 452 6 241 6 035 5 530 5 831 7 0

8 2 7

’ Total may not add due lo rounding.* Less than 0.5 percent. c

Table 14-Dairy farmers who purchased feed from cooperatives in which they held membership, 1986

Category

RegionNortheastSoutfTeastLake StatesCorn BeltNorthern PlainsSouth CentralMountainPacific

Farm size$ l,OOO-$ 9 , 9 9 9$ lO,OOO-$ 1 9 , 9 9 9$ 20,000-$ 39,999$ 40,000 - $ 99,999$ 100,000 - $249,999$250,000 - $499,999$500,000 and over

l-20

1,863741

5,6012,476

307724566304

f2)113

1,3773,6795,5601,530

324


21-40 41-60 61-80

Number

745 788 482511 1,660 1,027

3,540 2,441 2,446513 1,041 706605 1,222 518

t21 625 197141 69 (*I131 592 50

*

28 555 214215 (*) 131643 886 131

1,848 2,190 2,5212,169 3,150 1,9721,003 1,342 227

281 314 231

61-100

7,7272,990

23,9975,6602,2591,535

5591,283

1,0352,5816,503

18,26713,8943,272

457

Total ’

11,6056,928

38,02510,397

4,9113,0811,3362,360

1,8333,0399,540

28,50526,7457,3741,608

Total dairy farmers 3 12,583 6,186 8,438 5,427 46,009 78,643

’ Total may not add due to rounding.* None found in NASS sampling.3 Either category.

10

bership in patronage. These farmers know, per-haps better than any other farmers, the advan-tages of cooperation. They hold membershipand patronize, thereby contributing to and bene-fiting from organized cooperation. They are like-ly to be knowledgeable about cooperatives, andtheir predisposition toward them, positive.Given limited resources, possibilities for expan-sion can be perhaps best centered on these mem-bers.

Effective members committing more than 80percent of their patronage are perhaps the bestany cooperative can hope for. However, there isroom for expansion among members using theirmembership in amounts less than 81 percent ofsupply and marketing needs.

In 1986, 32,600 dairy farmers (20 percent ofall dairy farmers) used membership to purchasefeed in amounts less than 81 percent of theirneeds. About 14,000 of these farmers were inthe Lakes States region. Over 11,000 purchasedless than 61 percent. Other regions with largenumbers included the Corn Belt, with nearly5,000, and the Northeast and Southeast, each

with about 4,000 effective members, i.e., mem-bers using membership in patronage (table 14).

There is not quite the same margin forexpansion among effective members marketingtheir dairy product. Since most milk marketedthrough a cooperative is under an exclusionarycontract (the farmer-member must market allmilk sold through cooperative membership), lit-tle room is left for expanding levels of commit-ment. Between 8,000 and 8,500 dairy farmers inthe entire United States used memberships tomarket milk in amounts less than 81 percent oftotal marketings. The greatest numbers were inthe Lake States (2,600), followed by the CornBelt (1,900) and the Northeast (1,500) (table 15).

Nonmember Patrons

Many farmers use cooperatives as nonmem-bers. Reasons to bring these patrons in as mem-bers are many. In part, it is central to coopera-tion itself. Agricultural cooperatives aredesigned by farmers to meet their mutual needs.Nonmember patrons represent incomplete orga-

Table 15-Dairy members’ proportion of gross sales from dairy products marketedthrough cooperative membership, 1986

CategoryI-20


21-40 41-60 61-60 61-100Total ’


327350612

;:I

Farm size$ l,OOO-$ 9 , 9 9 9$ lO,OOO-$ 19,999$ 20,000 - $ 39,999$ 40,000 - $ 99,999$100,000 - $249,999$250,000 - $499,999$500,000 and over

(9 t2)124 214VI t2)

692 585384 175

t21 4389 50

Total dairy members 3 1,289

17543

395404

I:,’

t2150

.

1,068

I:;156347170

t2185

103

I:;792

69t2)

860

1,030269

1,4641,145

201

91336

124 887 1,012t21 2,609 2,948

1,197 6,759 7,9551,920 30,095 33,2921,378 29,206 31,935

306 5,862 6,230180 4,141 4,461

5,104

12,502 14,0343,521 4,183

37.240 39,86712,136 14,0333,767 4,1373,779 4,3471,273 1,4495,342 5,332

79,559 87,682

’ Total may not add due to rounding2 None found in NASS sampling.3 Either category.

11

Table 16-Nonmember dairy patrons’ proportion of feed expenditures purchased through cooperatives, 1986

Categoryl-20


21-40 41-60 M-60Total ’

01-100


310 276264 (2)251 396238 246

170(2) 1957 24

208 (2)

Number

395t2)

723795165

I:;

76

173

I:;

if

14057t21

1,676 2,829627 891986 2,356583 1,861349 684146 28728 166t21 284

Farm size$ l,OOO-$ 9 , 9 9 9$ 10,000 -$ 19,999$ 20,000 - $ 39,999$ 40,000 - $ 99,999$ 100,000 - $249,999$250,000 - $499,999$500,000 and over

234 (2) 173 1,645 2,052173 273 250 219 914330 246 364 57 897 1,894347 399 471 313 855 2,385294 24 765 605 1,68843 130 t21 17376

I:t21

;i

175 251

Total nonmember patrons 3

’ Total may not add due to rounding.2 None found in NASS sampling.3 Either category.

1,497 942 2,154 369 4,395 9,357

r

Table 17-Nonmember dairy patrons’ proportion of dairy product marketed through cooperative membership, 1986

Categoryl-20


21-40 41-60 61-60Total ’

81-100


Farm size$ 1,000 - $ 9,999$ 10,000 - $ 19,999$ 20,000- $ 39,999$ 40,000- $ 99,999$100,000 - $249,999$250,000 - $499,999$500.000 and over

181

I?140

181140

Number

I:;t2)

17992

I:;

184 276130 130

1,503 1,684887 887165 344

t21 14057 57

I21 t21

t2) t2)219 219545 726914 1,233

1,092 1,184t2) 12)

156 156

Total nonmembe patrons 3

’ Total may not add due to rounding.2 None found in NASS sampling.3 Either category.

322 t21 271 12) 2,926 3,519

12

nizational participators. Since they are notinvolved in membership structures, they have, atbest, very poor vehicles to represent their inter-ests. The cooperative cannot account very wellfor their changing needs in a planning sense.Leadership talent cannot be tapped. There isgreater chance these patrons will not receiveimportant information that could affect theirown operations. Better information and moreinvolvement by membership could result ingreater product commitment and membershiployalty.

About 11 percent (19,300) of U.S. dairyfarmers were nonmember marketing and pur-chasing patrons in 1986, with nearly 80 percentlocated in the Northeast, Lakes States, and CornBelt regions. The leading regions regarding feedpurchases were the Northeast (nearly 3.000), theLake States (approximately 2,500). and the CornBelt region (slightly less than 2,000) (table 16).These farmers bought substantial proportions oftheir feed needs from cooperatives as nonmem-ber patrons.

The data do not show many nonmemberpatrons marketing dairy products through acooperative. The Lake States region is the onlyarea of the country having more than 1,000 non-member patrons marketing milk through a coop-erative (table 17).

A third population of farmers that mightlogically provide room for expanding the pres-ence of effective members is inactive members,i.e., members who do not patronize cooperatives.The data show, however, that this population isvery small. Just 2 percent (about 2,500 farmers)of the entire U.S. dairy farmer population holdmemberships and do not use them. No regionhas more than 1,000 inactive members.

Other areas hold promise, though do no)have proportionate farmer membership andpatronage experiences to build on. Given theirlimited resources, cooperatives may most easilyincrease participation by directing their effortstoward a) members who are patronizing, but inamounts less than 80 percent of volumes, and b)farmers patronizing as nonmembers. In otherregions of the United States, cooperatives mayhave to go farther afield to help farmers with nocooperative exposure to identify their joint andunmet agricultural needs.

Finallv. the oarticioation rates droo among

the largest farmers across the United States.While fewer, these farmers represent volumepotential, so cooperatives would be well advisedto pursue these farmers as well through member-ship and patronage commitment. Further, sub-stantively lower rates of participation existamong the smallest volume farmers across theUnited States. If operational efficiencies permit,these farmers might be pursued, not only fortheir volumes, but as farmers in need, capable ofincreasing community awareness of cooperativeadvantages.

13

APPENDIX

Survey Description

This report is based on questions included in the June 1981 and June1986 Acreage and Livestock Enumerative Survey conducted by the NationalAgricultural Statistics Service (NASSJ, formerly the Statistical ReportingService (SRS). Information was obtained from personal interviews of nearly17,000 farmers. The population of farms sampled was about 211,000 lessthan the total population of U.S. farms. It was assumed that those farms notin the population surveyed were representative of the farms in the survey.Consequently, data were expanded to represent the total population.

Definitions

Marketing and Farm Supply Cooperatives are farmer cooperatives oper-ating as marketing, farm supply, or both. Bargaining associations are count-ed as marketing cooperatives. Also included are cooperatives providing ser-vices related to marketing or furnishing farm supplies, such as cotton ginsand rice dryers, and transportation cooperatives. These cooperatives usual-ly provide for one vote per member, a limited return on invested capital,and return of net margins to member patrons or all patrons on a patronagebasis. They also obtain more than half their business from members.

Excluded from this study are cooperatives organized by farmers to pro-vide production services, such as farm management, credit, fire insurance,electricity, and irrigation, Also excluded are cooperatives providing person-al services and products, such as cooperative hospitals and medical clinics,burial societies, community [cooperative) water systems, and cooperativegrocery stores.

Member patrons are farmers holding membership in a marketing and/orfarm supply cooperative and who either market products through or pur-chase farm supplies from it.

Nonmember patrons are farmers who do not hold membership in amarketing and/or farm supply cooperative but who market products throughor purchase farm supplies from it.

Farms are places of business from which $1,000 or more of agriculturalproducts are sold, or normally would be sold, during the year.

Dairy Farms are farms where dairy products are the main source offarm income.

OTHER PUBLICATIO_NS

Casson, Ruth, “Farmers’ Participation In Cooperative Activities,”Sociologia Ruralis, Vol. 17, 1977.

Kimble, Helen, Effective Membership of Agricultural Co-operatives,Oxford, England: The Plunkett Foundation for Cooperative Studies, October1974.

Kracnzle, C.A., R.A. Wissman, T.W. Gray, B.L. Rotan, and C.C. Adams.Farmer Cooperatives: Members and Use, ACS Res. Rpt. 77, U.S. Dept. ofAgriculture. Washington, D.C., January 1989.

14*U.S. Government Printing Office : 1990 - 261-497/20054

Agricultural Cooperative Service (ACS) provides research, management, andeducational assistance to cooperatives to strengthen the economic position of farmersand other rural residents. It works directly with cooperative leaders and Federal andState agencies to improve organization, leadership, and operation of cooperatives andto give guidance to further development.

U.S. Department of AgricultureAgricultural Cooperative ServiceP.O. Box 96576

Washlngton, D.C. 20090-6576

The agency (1 > helps farmers and other rural residents develop cooperatives to obtainsupplies 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 toenhance rural living; (3) helps cooperatives improve services and operating efficiency;(4) informs members, directors, employees, and the public on how cooperatives workand benefit their members and their communities; and (5) encourages internationalcooperative programs.

ACS publishes research and educational materials and issues Farmer Cooperativesmagazine. All programs and activities are conducted on a nondiscriminatory basis,without regard to race, creed, color, sex, age, marital status, handicap, or nationalorigin.

Dairy Farmers’ Participation in Cooperatives › files › rr86.pdfECONOMIC PARTICIPATION General affiliation provides’a broad measure of dairy farmer participation, regardless

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