Economic Subject Matter Meetings

1. Economic Subject Matter Meetings October 2002 Cooperatives

2. Farmer Cooperatives: National Trends

3. Distribution of Farmer Co-ops by Type 1999 Other marketing include dry beans and peas, wool, mohair, nuts, rice, sugar, fishery and other miscellaneous marketing cooperatives.

4. Farmer Cooperatives: National Trends

5. 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.

6. Cooperative Development in Kentucky • KCCD—Mission • KCCD Personnel in Place • Executive Director • Cooperative Development Specialist • Office Manager • KCCD Center Structure • Board of Directors • Executive Director • Development Specialists • Office Manager

7. 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

8. 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.

9. Audit Procedure • Select an Agribusiness that will benefit from Audit. • Collect relevant operating and marketing data and industry standards prior to the Audit. • Review business plans, policies, financial statements, and relevant firm documents. • Observe and analyze all physical operations and conduct a time and motion study. • 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. • Analyze financial data and the control system in the firm.

10. Audit Procedure (continued) • Process data from the time management study information from the interviews, financial statements, and relevant documents. • Compare firm performance with industry standards. • Identify problems and opportunities and make specific recommendations for improving or solving each entity. • Make preliminary oral report to the board immediately after the audit. • Write final report and submit to board and manager.

11. 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.

12. 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.

13. 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

14. 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/AgEcon/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@uky.edu. University of Kentucky, Department of Agricultural Economics 400 Charles E. Barnhart Bldg., Lexington, KY 40546-0276  Phone: 859-257-5762, Fax: 859-323-1913 URL: http://www.uky.edu/Ag/AgEcon/