When Management Retires, Agricultural Cooperatives Look to Consolidate

(GREENWOOD VILLAGE, CO) Agricultural cooperatives have been in a steady state of consolidation for decades. But despite the decline in the number of cooperatives, their influence in rural America is not shrinking: but it is changing. According to a report from CoBank, fewer but larger co-ops have changed the competitive landscape in agriculture and have also affected the role of the co-op in rural communities. Perhaps one of the most significant impacts of consolidation has been the increase in average net income. From 1993-2017, average co-op net income grew by nearly ten percent but income really began to surge in 2003. Between 2003 and 2017, net income grew at a rate of 16 percent despite income declines in 2016 and 2017. The boost in income has strengthened balance sheets, enabled co-ops to better weather downturns, and made capital investments possible for many. The main driver of consolidation today is not found on the balance sheet, instead, it’s the lack of qualified talent to lead the coop when long-time managers retire.