Cooperatives 2007 – A Year in Review

By: Dennis Gardiner, Partner email

It has been an interesting year for our cooperative clients.  Many have enjoyed having their balance sheets, particularly their working capital, shored up with the value of the FC Stone stock.  For local earnings though, we have found a mixed bag of results.  Many thrived during the last year with tremendous margin improvements in grain and agronomy, although those have been offset to some degree with higher interest expense. Unfortunately the high volatility of the products and commodities our clients handle had a negative affect on several income statements this last year.  The soybean basis widened to levels not seen in years, having a significant impact on grain margins this summer.  Gas and diesel prices jumped around so much last fall that several of our clients ended up taking large hits to their fuel margins.  As a whole, most of our clients ended up having pretty good years locally, and regional earnings were the most we have seen in a long time. What lesson do we take from this year?  Managing the risks associated with price volatility and having product available when your members want it are some of the bigger challenges.  Containing and right-sizing expenses have also continued to be an issue for management. For clients selling FC Stone stock and unsure of what to do with or what will become of the proceeds, be sure to contact your GT auditor.  We welcome the opportunity to consult with you now, rather than waiting until we are performing your audit. Congratulations and best of luck in the coming year!