capital & equity management survey iowa, minnesota & wisconsin agricultural cooperatives
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Capital & Equity Management Survey Iowa, Minnesota & Wisconsin Agricultural Cooperatives. University of Wisconsin Center for Cooperatives March 30, 2006. Survey was planned and prepared by the planning committee. Thank you for survey mailing assistance to: - PowerPoint PPT PresentationTRANSCRIPT
Capital & Equity Management SurveyIowa, Minnesota & WisconsinAgricultural Cooperatives
University of Wisconsin
Center for Cooperatives
March 30, 2006
Survey was planned and prepared by the planning committee.
Thank you for survey mailing assistance to:
Wisconsin Federation of Cooperatives Minnesota Association of Cooperatives
Iowa Institute of Cooperatives
Survey mailing
651 cooperatives
147 returned
22.6% response rate
73% were farm supply/grain handling
Annual gross income
Gross Revenue ($) in millions
# of IACo-ops
# of MNCo-ops
# of WICo-ops
# of Other MN or WI Co-ops*
TotalCo-ops
% of Total
Co-ops
Less than 25 22 32 29 5 88 60%25 - 74.99 19 4 9 4 36 24%75 and above 7 5 3 - 15 10%No info on revenue - 3 4 1 8 5%Total Co-ops per State 48 44 45 10 147
10 surveys did not indicate whether they were from MN or WI
Merger in the last five years
Co-op Type(By Gross Revenue)
($) in millions
# of Co-ops that Merged /
Consolidated
% of Co-ops that Merged /
Consolidated
Less than 25 14 16%25 - 74.99 12 33%75 and above 9 60%No info on revenue 3 38%For all co-ops 38 26%
Reasons for merger:
Top Four Reasons:1. Improve profitability
2. Reduce operating costs
3. Avoid or reduce duplication of facilities, equipment, services
4. Strengthen balance sheet
Other reasons for merger:
Access additional products or services
Expand economic development
Expand trade territory
Did the merger achieve these goals?
Achieved Goalsof Merger
# of Co-ops
% of Total Responses
Yes 30 79%No 4 11%
No Response 4 11%
See comments in handout
Average local net margin last 5 years by size of cooperative:
Annual gross revenue:
Local Net Margin
# of Co-ops
% of Co-ops
Negative 4 5%Less than 1% 19 22%1% to 1.9% 25 28%2% to 2.9% 10 11%3% to 3.9% 10 11%4% to 4.9% 7 8%5% or more 12 14%No response 1 1%
Less than $25 million revenue
Local Net Margin
# of Co-ops
% of Co-ops
Negative 0 0%Less than 1% 12 33%1% to 1.9% 13 36%2% to 2.9% 1 3%3% to 3.9% 3 8%4% to 4.9% 1 3%5% or more 6 17%No response 0 0%
$25-74.99 million revenue
Local Net Margin
# of Co-ops
% of Co-ops
Negative 1 7%Less than 1% 5 33%1% to 1.9% 4 27%2% to 2.9% 3 20%3% to 3.9% 1 7%4% to 4.9% 0 0%5% or more 1 7%No response 0 0%
$75 million and above revenue
Local Net Margin
# of Co-ops
% of Co-ops
Negative 6 4%Less than 1% 37 25%1% to 1.9% 44 30%2% to 2.9% 16 11%3% to 3.9% 16 11%4% to 4.9% 8 5%5% or more 19 13%No response 1 1%
For All Co-ops
Average local margin compared to 5-years ago by size of cooperative:
Annual gross revenue:
Co-op Type(By Gross Revenue )
($) in millions
# NetMargin
Improved
% NetMargin
Improved
# NetMarginSame
% NetMarginSame
# NetMargin
Deteriorated
% NetMargin
Deteriorated
Less than 25 30 35% 40 47% 16 19%
25 - 74.99 17 47% 16 44% 3 8%
75 and above 7 47% 6 40% 2 13%
No info on revenue 2 25% 3 38% 3 38%
For all co-ops 56 39% 65 45% 24 17%
Number of years with negative local net margin by size of cooperative.
Annual gross revenue:
# YearsNegative Net
Margin# of
Co-ops% of
Co-ops
None 57 65%One year 15 17%Two years 7 8%Three years 8 9%Four years 1 1%Five years 0 0%
Less than $25 million revenue
# YearsNegative Net
Margin# of
Co-ops% of
Co-ops
None 20 56%One year 7 19%Two years 5 14%Three years 3 8%Four years 1 3%Five years 0 0%
$25-74.99 million revenue
# YearsNegative Net
Margin# of
Co-ops% of
Co-ops
None 12 80%One year 1 7%Two years 1 7%Three years 1 7%Four years 0 0%Five years 0 0%
$75 million and above revenue
# YearsNegative Net
Margin# of
Co-ops% of
Co-ops
None 95 65%One year 25 17%Two years 13 9%Three years 12 8%Four years 2 1%Five years 0 0%
For All Co-ops
Capitalization:
Percent of total assets locally owned (member equity):
Co-op Type(By Gross Revenue)
($) in millions
Range of Percent Assets
AverageValue
Less than 25 18 to 100% 58%25 - 74.99 20 to 100% 51%75 and above 14 to 50% 37%No info on revenue 42 to 100% 64%For all Co-ops 18 to 100% 52%
Percentage of total assets locally owned (member equity)5-years ago:
Co-op Type(By Gross Revenue)
($) in millions
# withHigher
Percentage
% withHigher
Percentage
# withLower
Percentage
% withLower
Percentage
# withSame
Percentage
% withSame
Percentage
Less than 25 33 38% 19 22% 36 41%
25 - 74.99 13 36% 13 36% 10 28%
75 and above 3 20% 9 60% 3 20%
No info on revenue 4 50% 3 38% 1 13%
For all co-ops 53 36% 44 30% 50 34%
Member Equity Allocation
Type of equity
# Co-ops having type
% Co-ops having type
Average % equity held by type
Qualified allocated
138 94% 71%
Non-qualified allocated
41 28% 38%
Un-allocated 114 78% 33%
Co-ops having preferred stock:
28 co-ops (21%) had equity held as preferred stock.
For these co-ops, the average percent of equity held as preferred stock was 47%.
Changes in equity structure past 5=years:
Change in Equity Structure
# of Co-ops
% of Total Responses
Yes 44 30%No 75 51%
No Response 28 19%See handout for comments.
Percentage of equity held by active and past members and outside investors
Equity held by: Average percent held
Current active members 75%
Past members 27%
Outside investors 10%
In past 10-years, has there been changes in percentage of equity held by active and past members and outside investors?
Equity held by:
% Co-ops with higher percentage
% Co-ops with lower percentage
% Co-ops with no change
Current active members
29% 26% 44%
Past members
24% 28% 47%
Outside investors
3% 1% 96%
Is non-member business an important source for building un-allocated or permanent equity?Co-op Type :
(Gross revenue $ in millions)
No.
Yes
%
Yes
No.
No
%
No
Less than 25 30 37% 52 63%
25 to 74.99 19 53% 14 42%
75 and above 7 50% 7 50%
No info on revenue 4 50% 4 50%
All co-ops 60 44% 77 56%
See handout for comments onequity from non-members.
Who receives distribution of earnings?By size of co-op (Million $ gross revenue)
Gross revenue
Number Members only
% members only
Number members & non-members
% members & non-members
Less than 25
68 78% 19 22%
25 to 74.99 28 80% 7 20%
75 and above
12 80% 3 20%
No info 7 88% 1 13%
All co-ops 115 79% 30 20%
Does the co-op have an equity redemption policy? By size of co-op (million $ gross revenue)
Gross revenue No. Yes
%
Yes
No. No
%
No
Less than 25 73 84% 14 16%
25 to 74.99 25 76% 8 24%
75 and above 13 87% 2 13%
No info 7 88% 1 13%
All co-ops 118 83% 25 17%
Equity redemption practices by size of co-op:
Annual gross revenue (million $)
Equity RedemptionPractice
# of Co-ops
% of Co-ops
Revolvement 50 57%Percentage of equities 9 10%Base capital plan 0 0%Targeted base capital plan 0 0%Settle estates 67 76%Retirement 38 43%Other 15 17%
Less than $25 million revenue
Equity RedemptionPractice
# of Co-ops
% of Co-ops
Revolvement 17 47%Percentage of equities 1 3%Base capital plan 0 0%Targeted base capital plan 0 0%Settle estates 28 78%Retirement 16 44%Other 10 28%
$25-74.99 million revenue
Equity RedemptionPractice
# of Co-ops
% of Co-ops
Revolvement 12 80%Percentage of equities 4 27%Base capital plan 0 0%Targeted base capital plan 0 0%Settle estates 10 67%Retirement 3 20%Other 3 20%
$75 million and above revenue
Equity RedemptionPractice
# of Co-ops
% of Co-ops
Revolvement 83 56%Percentage of equities 15 10%Base capital plan 0 0%Targeted base capital plan 0 0%Settle estates 111 76%Retirement 62 42%Other 28 19%
For All Co-ops
See handout for comments onequity redemption practices.
Years of revolvement & ability to consistently maintain that period
Gross revenue (million $)
Range in years
Average years
No. Able to
maintain
% Able to maintain
Less than 25
1 to 30 17.9 31 62%
25 to 74.99 5 to 31 17.9 8 47%
75 and above
10 to 25 14.4 4 33%
No info 15 to 29 22.3 0 0%
All co-ops 1 to 31 18.2 43 52%
With current equity practices, will the co-op beable to fully fund redemption obligations?
Co-op Type(By Gross Revenue )
($) in millions # Yes % Yes # No % No
Less than 25 56 66% 29 34%25 - 74.99 25 71% 10 28%75 and above 12 80% 3 20%No info on revenue 5 63% 3 38%For all co-ops 98 69% 45 31%
With current equity practices, will the co-op beable to maintain adequate equity capital forbusiness growth?
Co-op Type(By Gross Revenue )
($) in millions # Yes % Yes # No % No
Less than 25 53 64% 30 36%25 - 74.99 22 69% 10 31%75 and above 11 73% 4 27%No info on revenue 4 50% 4 50%For all co-ops 90 65% 48 35%
Do the co-op’s equity redemption practices provide a positive image of the co-op to members?
Co-op Type(By Gross Revenue )
($) in millions # Yes % Yes # No % No
Less than 25 66 75% 22 25%25 - 74.99 23 68% 11 32%75 and above 12 80% 3 20%No info on revenue 6 86% 1 13%For all co-ops 107 74% 37 26%
Have active/past members expressed concern with the co-op’s equity redemption practices?
Co-op Type(By Gross Revenue)
($) in millions # Yes % Yes # No % No
Less than 25 32 36% 56 64%25 - 74.99 25 69% 11 31%75 and above 11 73% 4 27%No info on revenue 5 63% 3 38%For all co-ops 73 50% 74 50%
See handout for member concerns about equity practices.
Co-op Type(By Gross Revenue )
($) in millions # Yes % Yes # No % No
Less than 25 22 30% 51 70%25 - 74.99 12 36% 21 64%75 and above 7 50% 7 50%No info on revenue 1 13% 7 88%For all co-ops 42 33% 86 67%
Were there changes to equity redemption practices in the last 5-years?
See handout for comments on changesin equity redemption practices.
Cooperatives currently considering changes in equity redemption practices.
Co-op Type(By Gross Revenue)
($) in millions # Yes % Yes # No % No
Less than 25 27 31% 60 68%25 - 74.99 18 50% 18 50%75 and above 6 40% 9 60%No info on revenue 5 63% 3 38%For all co-ops 56 38% 90 61%
Change in equity redemption practice beingConsidered.
Equity Redemption Practice# of Co-ops that Chose Reason
% of Co-ops that Chose Reason
Discounting past equity 19 35%Retain portion of allocatedequity in vested capital account
15 28%
Increase unallocated reserves 31 57%
See handout on discount equity practice being considered
See handout on other concerns about equityand equity redemption issues.