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CoBank: Co-Ops Continue Consolidation Trend

16:45PM Jul 10, 2019
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Dan Kowalski, vice president, Knowledge Exchange, CoBank, says since 2004 co-ops have been putting themselves in offensive positions to adapt to new customer/member demands and offer greater scale and services.( Darrell Smith )

A new report from CoBank details from 2007 to 2017, on average, 70 co ops were consolidated annually. During the current ag economy downturn, the pace of co-op consolidation has quickened averaging 4% annually in 2016 and 2017.

The CoBank report also details by number over time the reasons for cooperative businesses decline: merging with or being acquired by another co-op; co-op dissolving or bankrupt; merging with or being acquired by non co-op; no longer co-op. 

Dan Kowalski, vice president, Knowledge Exchange, CoBank, says since 2004 co-ops have been putting themselves in offensive positions to adapt to new customer/member demands and offer greater scale and services. 

Three of the biggest impacts have been: 

  1. Location changes (USDA data shows co-op numbers close to 10,000 65 years ago, and today are less than 2,000; but facility numbers haven’t declined)
  2. Employment (The number of co-op employees nationwide has increased slightly since 2005. Also the average co-op now employs more than 100 people, a 33% increase over the past 20 years.)
  3. Financial strength (Co-ops are financially stronger than they’ve ever been)

“Co-ops have continued to consolidate even as the number of farms and farmers has stabilized,” Kowalski said in a recent news release. “That signals a transition from the defensive consolidations we’ve seen in the past to the offensive consolidations we’re seeing more recently.”  

As noted in the report, in 1983, 90% of co-ops had sales of less than $15 million. Today, only 50% have sales less than $15 million.

Breakdown Of Marketing Co-ops By Sales Volume
Breakdown Of Marketing Co-ops By Sales Volume

Looking ahead, Kowalski says he expects consolidation in the industry to continue as businesses seek competitive advantages and face challenging ag markets. 

Click here for more and the full CoBank report