Farm Progress

Study finds economic impact of agricultural cooperatives

Blair Fannin

March 16, 2010

3 Min Read

A Texas AgriLife Extension Service study that sampled 96 agricultural cooperatives across the state found they contribute to 20,000 jobs and $1.7 billion in sales.

Agricultural cooperatives, which provide everything from livestock feed to apparel, are vital to rural economies, said Dr. John Park, AgriLife Extension Service economist and Roy B. Davis professor in agricultural cooperation.

He said the economic values would be higher “if you considered more than the operational activities” that support the selling of goods and services.

Overall, Park said it’s important to recognize the economic contributions of cooperatives in rural economies.

“People don’t realize how valuable that little shed out there on the highway selling feed and other supplies is to a local, rural economy,” Park said. “I really believe the cooperative structure will be the last thing in rural Texas to go away.”

“They’re the backbone of rural Texas,” said Jonathan Baros, Extension program specialist, who co-authored the study with Park and Dr. Rebekka Dudensing, AgriLife Extension economist.

The Texas Agricultural Cooperative Council commissioned AgriLife Extension to conduct the study, which evaluated more than 90 cooperatives across the state. The report was recently shared with council members.

“We initiated this study so that we could do a better job of telling our story,” said Tommy Engelke, president of the Texas Agricultural Cooperative Council. “Many don’t realize the multiplier effect an agricultural cooperative has. Not only do agricultural cooperatives provide goods and services to produce food and fiber, but they also have tremendous spinoff effects in term of job creation.”

Of the 20,000 jobs supported by the cooperatives, every two jobs support five more in the economy, according to the study.

When considering only retail sales, warehousing and store-front activities, the cooperatives in the study accounted for more than $631 million in additional sales across the economy for 2007.

“These sales increased the region’s value-added or gross domestic product component by $233 million, income by $117 million and employment by 2,001 jobs for 2007,” Park said.

It was also found that 30 cooperatives were among the top three property tax paying entities in their counties.

“That sizable investment continues to drive the economies of rural communities,” Park said.

Agricultural cooperatives statewide stretch as far south as the Rio Grande valley to the Texas Panhandle.

“These cooperatives contribute to a vibrant Texas economy in ways that go beyond the simple numbers they report,” Park said. “They represent the heart of rural Texas.”

Park said the study found that cooperatives provide an additional 9.2 percent to total output when compared to non-cooperative businesses.

“Also, we found an additional 11.6 percent in value added to the economy and an additional 82.8 percent to personal income when compared to a traditional corporate structure that is less likely to retain its income at a local level.”

The 96 cooperatives in the study covered 130,435 square miles – nearly the size of Montana, Park said.

“They have the potential to impact the lives of 8.2 million people or about every one of three Texans,” he said.

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