Cooperatives-What We Have Seen in 2012

Agribusiness

By: Dave Thomsen, CPA, Partner|  email

  • Because of drought, yields were substantially below “normal;” yields varied state to state and county to county.
  • Most clients were more profitable in 2012 compared to 2011. Local savings were steady to lower and regional earnings were up considerably.
  • Higher commodity prices along with increased or steady grain and agronomy volumes meant sales dollars were considerably higher in 2012 than 2011.
  •  Agronomy margins were as good as or better than past years.
  • Grain margins decreased from the past few years because of little or no carry in the markets.
  •  With little or no carry in the grain markets, borrowing was down, reducing interest expense.
  • Significant increases in storage revenues.
  • Early year-end closes had great fall fertilizer sales and application revenues; later year-end closes down depending on moisture.
  • Increased depreciation expense, a by-product of the “construction explosion.”
  • The increased presence of OSHA early, then decreasing later in the year.
  • “Speed and space” construction continued.
  • Members’ equity studies related to redemption practices; conversion from age to revolvement by year earned.
  • A lot of discussion about bringing on outside equity; a few parties have been reaching out to larger cooperatives to gauge the interest level.
  • Several meetings about converting or changing the cooperative to a different corporate structure to allow outside equity.
  • Large grain companies making moves into our cooperatives’ trade territories. Big moves by these companies are driving concerns for the cooperatives.
  • Slowing down book depreciation.
  • A quiet year in the merger arena; some discussions on joint ventures between cooperatives.
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