Bulletin L__7§_o_ Inna 1954 ' TFarmer Coollgeratiz/e; 'in Texas- \ \ .3 2*" J0me Organizatiojiwgal? spat; in cooperation with the UNITED STATES DEPARTMENT OF AGRICULTURE TEXAS AGRICULTURAL EXPERIMENT STATION R. D. LEWIS. DIRECTOR. COLLEGE STATION, TEXAS PREFACE The farmer cooperatives 0f Texas perform valuable services to their 550,000 farmer patrons. These cooperatives, as economic agencies for the exchange of goods and services, are much talked about today but little understood. They are a working part of our , economic system. As such they should be studied and evaluated. This publication—one of a series-presents facts about the agricultural cooperatives of Texas. Only organizations owned and controlled by agricultural operators are considered in the analyses. The first phase of this study is descriptive. Later phases will be analytical. Generally, in research concerned with economic matters, the numbers, the dollars- and-cents and the volume or quantity figures may change each year. However, the principles underlying the changes do not vary appreciably within periods of several years. It is. hoped that a critical examination of this publication will help the reader toward an understanding of the place of cooperatives in the overall economic picture of Texas. CQNTENTS Page Preface ............................................................................................................................................................................. .. 2 Introduction ..................................................................................................................................................................... .. 3 Role of Texas Cooperatives in the Market Place ................................................................................................... .. 3 Agricultural Producers in a Free Eniterprise Economy ........................................................................................ .. 3 Survival of Agricultural Producers in a Free Enterprise Economy ................................................................... .. 4 Cooperatives As an Economic Implement of Agricultural Producers .............................................................. .. 4 Historical Background ............... ................................................................................................................................ .. 6 Farmer Cooperatives by Major Groups .................................................................................................................. .. 3t Farmer Cooperatives by Function .................................................................................... .. 9 1 Location of Texas Farmer Cooperatives _ . . . . . . . . . . . . . . . . . . . . . . _ . . . . . . . . . . _ . _ . . . _ . . . . . . . . . . . . . . . . . . . . ._11 Ages of Active Texas Cooperatives ........................................................................................................................ ..l3 Membership and Patronage of Texas Cooperatives .................................. .......................................................... "14 Summary .......................................................................................................................................................................... ..16 Acknowledgments .......................................................................................................................................................... ..18 A i? I Y IS DESIGNED T0 GIVE the general Viclear and accurate picture of Texas pal cooperatives as they exist today, in _t their relationships to other segments ‘Mnomy may be better understood and i‘ Information also is given which the College System might use in its ing search for helpful educational pro- ld information useful to the Farm Credit ration and other lending agencies in ‘ending programs to the requirements _] armers and ranchmen. Most important ‘provides information that should be of _~ to farmers and ranchmen in their f‘ of the value of cooperatives. A? or TEXAS COOPERATIVES IN THE MARKET PLACE production and marketing costs of l» ranch products directly influence the goods to consumers, and since agricul- fperatives are a factor in the market i objective study and analysis of Texas ves should be valuable in determining ication for their existence. Such an I also should be helpful in discovering ting ways and means of bringing about erly and efficient marketing practices. blishment of such practices, in turn, l,‘ worth much to those engaged in agri- d to consumers, since more efficient i: could bring about lower prices to the , while increasing the net income of the d ranchman. Finally, this study should f value to other types of marketing p The practices and operations of coop- re similar in many respects to competing ,1org'anizations; factors of efficiency in ‘,3: are equally important to one as well f . er type of agency. aspects of Texas agricultural coopera- pch are examined in this publication are: f How does the present performance y‘ s agricultural cooperatives compare hat of the past? ely, former assistant professor, Department of Economics and Sociology; professor, Depart- f Agricultural Economics and Sociology; and _ al economist, Farmers Cooperative Service, artment of Agriculture. ' Cooperatives T6966! . .. Some Organizational WARREN LEBOURVEAU, W. E. PAULSON and FRENCH HYRE* 2. How many agricultural cooperatives are operating in Texas? 3. Where are these cooperatives lo- cated? 4. What are the kinds of agricultural cooperatives and what functions do they perform? 5. How many members do they have? 6. How many of these members are active or inactive? 7. How many non-member patrons do they have? 8. What relationships exist between the total number of farmers in Texas, and those who are members or patrons of cooperatives? 9. How do Texas agricultural ‘coopera- tives compare with those of other areas? Many questions still will remain unanswered. Later publications will deal with such factors as volume, costs and efficiency. This study is state-wide, and all types of agricultural cooperative associations are included. It covers marketing associations, purchasing associations and organizations rendering essential business services such as ginning, warehousing and the like. It also covers such rural service cooperatives as national farm loan associations, production credit associations, rural electric cooperatives and cold storage locker plants. Modern times have seen wave after wave of agricultural cooperative organizations. As a partial explanation of cooperative activity, a search was made for fundamental conditions in agriculture which caused farmers to set up their own agencies for marketing, purchasing, supply and service. AGRICULTURAL PRODUCERS IN A FREE ENTERPRISE ECONOMY Farmers and ranchmen are indispensable members of a free enterprise economy. As a matter of fact, agriculture is a basic economy within itself, as well as an integral part of the overall complex economy—free or otherwise. But, it is in the United States that the greatest meaning is attached to a free agriculture in -a~ 3 free economy. (The term free economy is used in the sense that this nation values free enterprise as an ideal.) In Texas, as in all the United States, agricul- tural producers are industrialists who use land, l.abor, materials, capital and management. They employ these tools of production to convert raw materials into semi-finished and finished com- modities for sale to the highest bidders in the open market. This concept is fundamental to a free enterprise system, but has not been given enough attention. Many factors work against agricultural producers in their economic efforts. Singly, the producer has little bargaining power in the market place. This is a natural consequence of his individual output, which is too small-in relation to the total output of other similar producers—to have any effect on the market. Agricultural production, once started, con- tinues at a relatively fixed rate; i.e. it cannot be stepped up, slowed down, stopped, or regulated in short periods as can be done in many industries. Once committed to a season’s production, agri- cultural producers must follow it through to completion. Automobile manufacturers, f or example, can and do regulate their output to meet the demand. This has a decided effect upon ultimate profits in an industry. SURVIVAL OF AGRICULTURAL PRODUCERS IN A FREE ENTERPRISE ECONOMY Farmers and ranchmen must be efficient producers in a modern, complex and technological free enterprise economy. The products of the farms and ranches must flow smoothly through the market channels. Thus, agricultural producers have a direct and vital interest in the marketing of their commodities. Returns to agricultural producers should reflect equality with other segments of the economy, commensurate with the services ren- dered and functions performed. This equality is difficult for the producers since they have little or no control over their markets. Because of a need for bargaining power in the market place equivalent to that of other industries, agricultural producers have set up economic organizations which give them this bargaining power. COOPERATIVES AS AN ECONOMIC IMPLEMENT OF AGRICULTURAL PRODUCERS Cooperatives offer a workable method of meeting the economic requirements of farmers and ranchmen in a free economy. The combined weight of their patronage and volume to business organizations of their own enables them to achieve bargaining power for the group, and thus for each individual within the group. This is an age of “bigness,” a natural accom- panlment of a complex, mechanized civilization. 4 The typical small-scale, family-size units in culture gain the stature of large-scale ente ; when they join in obtaining their produ needs and in marketing their commodities thr cooperatives. - A cooperative is a means of integrating and ranch business. Instead of restrictingt selves solely to production, agricultural oper —-through their cooperatives—extend their a ties to several other fields which enable th carry their products nearer the ultimate sumer. Presumably these are all economic mea designed to protect the interests of agricul producers. There are, however, savings to on to consumers as a result of lowered produ and marketing costs. Efficiency has incr with resulting lower costs, in many cases in ~' producers have cooperatively entered the cha of processing and marketing. One outstan example of economies that can be effected in manner is the cotton ginning business. ' Texas cooperative cotton gins, in a r season, handled an average volume of 4,854. against an average of 2,586 for gins under l. types of ownership. Cooperatives, with 16 cent of all gins in Texas, handled 26 perce the total crop ginned. The savings are i diately apparent when it is realized that i costs per bale ginned decrease inversel volume increases. With an average v0, almost double that of other gins, the coopera had much lower costs. f Cooperatives are not a “way of life” ‘ “movement,” any more than modern agricu is a “way of 1ife” or a “movement.” Agricul cooperatives are competitive agencies in a I petitive economy, and they stand or fall on - ability to compete. thousands of persons, with sizable pay, They pay all local, county and state taxes, l where liable pay the federal income tax. some cases, cooperatives rank among the la taxpayers in the community. Cooperatives do not replace the “middle l As an integration of farm and ranch bus‘ cooperatives are little different from i integrated business organizations. There many examples of business concerns bri the gap from the production of raw materi the processing and distribution of finished :- to the ultimate consumers. This is the pa in rubber, petroleum and other industries.‘ principle of integration increases in impo =. in agriculture, as this industry becomes _ complex and commercialized. I An objective of doing business coopera is to provide service at cost. 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There ningfi It was not until 1878 that coope I are, ‘however, certain common elements which were launched by the Grange as a semi-o distinguish any of these associations from invest- adjunct of the general farm organization. r or-type businesses, regardless of legal origins. Grange, as early as 1875 reluctantly reco Although some ‘of these characteristics have been the inevitably close relationship between » recited in previous "paragraphs, the major ones organizations of a general nature and cooper are presented, in the following, as the principal set up to perform specific economic func ' features of cooperative operation: A COmmittQe 0f the Texas Grange (taut recommended “that the Patrons form their Trade Associations on simple plans, free the control of the Grange, State, Nation 1. Patron control (Only producers may be voting members) ‘ 2. Business at cost Subordinate.“ This idea, was followed 3 Limited interest on capital certain extent, but it is difficult to deter ' _ where Grange sponsorship and partici ~ 4- Business f0!‘ Cashiat the market Drlee began and ended, as concerns these associa 5. Promotion of economic education Sllppesediy Set up Outside its Official Sphere- i Agricultural cooperatives place no restric- These two organizations are mentioned s tions on their members insofar as production is fically because they represent the earliest y concerned. The member is free to plant or attempts at farmer cooperative business in T produce as much or as little as he desires. Mem- Throughout the years, as new groups were 0 i bers may not, however, buy the commodities of ized by agricultural people, each was accompa other producers and offer them for sale through and in some cases motivated by pressure i. the cooperative. up marketing, buying and processing facil . _ . Th‘ t f th G , th All‘ , The U. S. Congress and the legislatures of Aglriiefivitisirariiueviiiheei? thiielngieqatisuai liiprece meet ef the stetesfTexel-S among them-recog" Alliance and Cooperative Union of America nized the peculiar economic position of agricul- Farmers Edueatiohai and Cooperative Uuio tural producers, and passed laws which enable Ameriea, the Farm_Lahor Uuiou and the T them to compete with other segments of the Farm Bureau Federation Almost ah the ._ economy on equal terms. This was, in effect, an cooperative Ventures died, and the farm or establishment of Public Peiiey- zations to which these cooperatives were ' either passed out of existence or were gr HISTQRICAL BACKGRQUND reduced in effectiveness. Several excellent works have been published on the early farmer movements in Texas. Several of these are cited from time to time in these pages. Therefore, it is not proposed in this bulletin to give anything like a complete history of farmer cooperatives. A few highlights of the beginnings, the grandiose plans and the almost inevitable failures of the pioneer efforts are presented to appreciate better the size and scope of cooperative activity in Texas today. Not all of the earlier Texas cooperatives ‘ tied to general farm organizations. Indepen starts were made over the years in vale sections of the State. . Much the same fate I these single ventures. An insight into the and fall of cooperative vegetable mark efforts in the Lower Rio Grande Valley 0v 28-year period beginning in 1905 can be g from a publication of the Texas Agriculi Experiment Station? ‘ Texas agricultural cooperatives developed along with the early farm organizations of the State. The Texas State Grange was first set up at Salado in Bell county in 187 3.2 The Alliance apparently came into being in Lampasas county either in 1874 or 1875.3 Although both these organizations were founded with the idea of curing the general ailments of agriculture, specific economic panaceas soon were sought in the form The minutes of the annual meetings of ¢ of the first cooperative associations in T provide many clues to reasons for the - failures, and also provide much the same im sion that is gained from attending a present cooperative meeting. The weaknesses of to cooperatives are in many ways no different of business ventures. Enterprises were estab- gHunti R L’ opus cit” o 2a ~ lished by these farm groups to sell the produce Weist, Edward, AGRICULTURAL ORGANIZATIO‘ of pasture and field for the members, and also to THE UNITED STATES, PP- 446-450, Universi . purchase all the supplies needed by farm families ,Ke‘¥'°“°k3” April 1.9533- ~ . . Welst, E., opus c1t., p. 448. —household as well as production items. shunt, R_ L, opus cit” p_ 20_24_ i"?- °Ibid., p. 21. _ “Hunrttylé. L., Ar HISTQFRY OF FARMER IIIYIOVEMENTS igalétrlsgrgslgb 1%}? < I-N, H ASOU HWES , 1873-1925, p; 7, exas Agricul- O 3 _ tural ,& _Mechanic_al College, (Out of Print) (Privately VALLEY, Texas Agricultural Experiment Station Ci i iM Printed by Author). No. 74, January, 1935. ’ 6 T of 70 years ago. Some of the common gs are: inancial Farmers wanted cooperatives but seldom , E invested enough to provide them with adequate capital. They wanted cash a refunds on their transactions even if i such refunds bled the association dry. Tatronage i Farmers held membership in coopera- f, tives, but on the slightest provocation took their business elsewhere. Management -~ Cooperative managers were usually ’ underpaid, and often were mishandled by directors. Hence, good managers often left. Good judgement seemed lacking in the selection of management in many cases. Economic Understanding Nothing in the average farmer’s back- ground of education or experience fitted him to cope with or to understand the workings of a complex marketing sys- tem, or to operate a corporate business. fControl A lack of limitation on ownership of stock and voting rights soon gave control of the organizations to a small group, often composed chiefly of non-producers. ~ll the farm groups mentioned were beset ese difficulties. A few men with faith, u and ability would attempt to carry the g load on their shoulders for a time. Even- v even they tired, and when they did the exas cooperative ventures might best ‘be rated by two quotations. A. J. Rose, _: ry of the Texas Cooperative Association ing statement :8 ere are very few to be found who will claim they lost more in cooperation than they have gained ysikn-owledge and saved in reduction in prices, and i- in securing better prices for their produce, and ir neighbors sharing in the benefits. . . There nf certainly very few interested in the Texas ‘perative Association that have not received full pue of their investment. The truth is there is n more than 17 percent of the total capital stock t cash was paid for it, the balance is dividends, n- in addition to this there has been near one "In thousand dollars dividends paid to stock- nders and customers. . . We have had some erience which I trust will enable us to avoid . . . uble . . . I feel that the reader wants to.ask: business coo-peration is such a good thing why " many failures? I will answer that in every p, = ce they departed from the plan, by purchasing I selling on time, for this cooperation should not pheld responsible. It is claimed that 90 percent ‘more merchants. fail in business. If you will look iTES of Texas Cooperative Association, 1894, pp. Fess collapsed. Perhaps the historical aspects ions of Husbandry) in July 1894 made the i into the cause you will find that nearly all resulted from the credit system, for whichthose that pay are the greatest sufferers. I insist that farmers andt every other interested person investigate the plan of business that the National Grange has recomi- mended. Farmers and their families can be of mutual help by associating themselves together, being governed by the fundamental principles of the order of Patrons of Husbandry.” Four years later, Mr. Rose again summarized causes of cooperative failures :9 “The Secretary presents to the Association some po-ints worthy of due consideration: “First. He calls attention to the fact that ‘in the lack of support on the part of stockholders, the business has been nearly smothered. ' “Second. That some of them have not only become indifferent, but had turned their efforts to the destruction of the business, and at the same time were complaining that no dividends were being received. “Third. He says: ‘It remains to be established that American farmers will cooperate to promote their interests in a business. Way.’ ' “Shall such an undeniable charge remain at our doors, or will we be induced by the higher manhood of patriots to turn and stand irrevocably upon grounds for the defense and propagation of our best interest, by mutually cooperating in every way to profitable and worthy ends?” Each succeeding generation of cdoperators learned far too little from the trials and errors of those who went before. However, there grad- ually evolved a body of cooperative principles which are proving sound. These, when properly applied, provide safeguards against the pitfalls which endangered the earlier groups? It is important to students of agricultural marketing, to read the history of what has takeriilplace in the field of cooperatives. . t It took many years of experimenting to learn that the “farmers stock company,” in which bot-h large and small agricultural operators partici- pated, was» nota satisfactory business form for farm groups. The concept of limiting member- ship and voting privileges to bonafide farmers and ranchmen only was along time in developing. Even the laws of the nation raised barriers to successful cooperative action for many years. It was not until the Clayton Act was passed by the U. S. Congress in 1914, that agricultural marketing associations were safe from prosecu- tion for the mere actof organization. Even then the cooperatives apparently were limited to non- stock forms until the passage of i the Capper- Volstead Act in 1922. . Texas’ first law" recognizing the unique character of agriculture’s needs in” business organization was the “Society Act” of 1917. This piece of legislation was developed by Walton Peteet, who was at that time a member of the staff of the Texas Agricultural Extension Service, The Society Act gave legal status to local non- stock associations of farmers and ranchmen set “MINUTES, 1898, p.12. 7, up to market or process agricultural commodities. The idea behind the law was sound at the time, and several hundred cooperatives were born under its sanction. However, at present there are only 35 Texas cooperatives which are operating with Society Act charters. Increasing complexity of business methods, changes in federal income tax regulations, inflexibility of procedures and other factors caused the Society Act to lose popularity. The basic law under which most Texas coop- eratives operate today is the “Texas Cooperative Marketing Act of 1921" which has been amended several times. This act, which went into effect March 1, 1921, was one of the first “Sapiro Acts,” receiving its name from Aaron Sapiro, a California lawyer who had become interested in giving legal foundation to farmer cooperatives. The purpose and intent of farmer cooperatives are clearly outlined in the opening paragraph of the Texas law. This paragraph (Art. 5737. Declaration of Policy) reads: “In order to promote, foster and encourage the intelligent and orderly marketing of agricultural products through cooperation and to eliminate speculation and waste; and to make the distribution of agricultural products as direct as. can be efficiently done between producer and consumer; and to stabilize the marketing problems of agri- cultural products, this law is passed.” Texas agricultural cooperatives show much evidence of progress since the days of the “farmers’ cooperative stores” of the 1870's and 1880's. They still have far to go if they are to fulfill completely the mandates set forth for them by law and by the economic requirements of agriculture. The following pages of this bulletin show, in part, the status of these organizations in Texas, today. FARMER COOPERATIVES BY MAI OR GROUPS Farmers and ranchmen in Texas operated 959 agricultural cooperatives of all kinds during the 1950 season. Their activities varied from those of a small irrigation cooperative to a large cottonseed oil mill and cotton marketing associa- tion; from an informal feed and fertilizer buying group to a wholesale farm supply cooperative handling thousands of different items for member associations; and, from a tiny fruit and vegetable marketing group, using rented facilities, to a vast and complex processing and sales organiza- tion whose members had a 21/3 million dollar investment. For analytical purposes, these cooperatives have been classified into nine major groups, according to the types of activities in which they are engaged. Table 1 shows 577, or 60 percent of all associations, in the local marketing, supply and processing group, with individual farmers as members and patrons. This type of cooperative Table 1. Number and distribution of agricultural coo l atives by major groups, Texas, 1950 , , Number of Percent 1 Kinds of cooperatives associations tot“ Marketing, supply and processing (local) 577 60.2 Federated (regional) l5 1.6 Large scale and centralized ll 1.2 National farm loan 142 14.8 Production credit 36 3.8 Rural electric (local) 76 7.9 Farmers mutual insurance 34 3.5 Artificial breeding 34 3.5 Dairy herd improvement 34 3.5 Total 959 100.0 usually limits its operations to the immedi; trade area of the community in which it is loca o The next group in Table 1 is the regional federated type of association. The members of this group is composed of the local cooperati, mentioned above, and has no individual farm y ranch operator members. These regional gro also differ greatly from the local associations area covered. Not only do some of them e over all of Texas, but a few also reach ' neighboring states. The activities of the regional or feder‘ cooperatives are diverse. Six of them u‘ cotton seed into oil and other products. c cooperative breeds and distributes certified c0 and corn planting seed. When these data _ gathered, two of the associations marketed l quantities of grain and operated feed mills, one of them also acted as a large wholesale f supply house. Two of the federated cooperat function in the citrus belt of Texas, one , processing and sales organization, the other :0 source of supply for boxes, packing mater' fertilizers and production items. Two ot_ operate in the field of rural electric distribu A One operates a cotton compress, and another set up to provide machinery and equipment cotton gins. F The third group is comprised of 11 cen , ized and large-scale cooperatives. These coo atives have memberships of individual far v but in much larger numbers than the locals. usually reach out over much greater terri than the strictly local operations, and the cen»: ized associations have several branch operati controlled from a major headquarters. These centralized and large-scale associat offer a wide range of services. Four of t market cotton and cottonseed products; t_ market milk and dairy products; of the remai four, one markets peanuts; one, livestock; wool and mohair; and one, grain and feed. l The next two groups, taken together, are agricultural credit cooperatives. Almost percent of all cooperatives are in these .; The national farm loan group, with 142 ass tions, supplies long-term land loans, while th production credit associations are set u‘ provide short and intermediate term credi ll >nlhnal_jlsg‘dl\l ll >41 .41 I I f-land ranchmen members for crop and production purposes. "1 rural electric cooperatives, which con- the next group, account for 8 percent of j associations. There are 76 of these tions supplying electricity directly to d ranch people. v ers’ mutual insurance companies, the "up, are the oldest group of cooperatives 11- and number 34 associations. These insurance at cost against loss by fire, hail, rm and like hazards. ‘tithe last group are 34 each of artificial a, L. ed. ment associations. For the most part, these two groups are so loosely organized that information on their operations was very difficult to obtain. FARMER COOPERATIVES BY FUNCTION As the 577 local marketing, supply and processing associations constitute 60 percent of all cooperatives in Texas, and, since their activi- ties are so diverse, a closer examination was made of their functions. Table 2 enables the reader to gain a com- prehensive picture of the local marketing, supply and processing groups by function. The items o , _ : associatlons and dairy herd improve- appearing in the column headed “Types of opera- hip a vn a ’ Number and type of Texas local agricultural marketing, supply and processing cooperatives, by functions, 1950 l ‘i V~ 1p ‘ N _ Grain V . _ Poul. P _ w I _ \ f o anti“ 0.01’ G_ln- hand- Slip- L k Cotton Dan-y Veg. Fruit Rose Lvstk. Seed Rice try& “z Mi a‘ °° 1 . ‘ ° p 8B8!!!- mm: "n28: ply °° "l mktg. mktg. mktg. mktg. mktz. mktg. mktg. mktz. egg n“ s“ mo‘ x, _ mktm mum mktg. air B11 = n at n 1o 10 _ 66 14 s 1o 12 1 5 1 15 2 i 67 67 13 13 ~ 11 11 ons v 6 6 6 I supply 78 78 78 cotton mktz. 25 25 25 supply 41 41 41 fl locker 15 15 15 . l misc. 2 2 2 "Ilktl. & misc. 1 1 1 ifruit 5 5 5 V, supply 15 15 15 l supply 5 5 5 ' l dairy 1 1 1 j supply 1 1 1 l cotton mktg. 1 1 1 0H8 l in 8: supply 12 12 12 12 - & cotton mktg. 4 4 4 4 t, 1y & cotton mktg‘. 105 105 105 105 ly & locker 1 1 1 1 ply & misc. 1 1 1 1 supply & locker 1 1 1 1 .,lIDoly & misc. 1 1 1 1 a ltry 8: supply 2 2 2 2 ‘ locker & supply 3 3 3 3 , ons i . supply. marketing 11 11 11 11 11 1 ly, cotton locker 1 1 1 1 1 ~ ly, cotton poultry 4 4 4 4 4 *fruit, veg” & supply 1 1 1 1 1 ,p1y, grain & locker 1 1 1 1 1 grain, wool sir, & poultry 3 3 3 3 3 ' locker, poultry & (dairy 2 2 2 2 2 5 it, supply 411K111 1 1 1 1 1 ’ nz, supply & ‘It cooperatives 577 ' cooperatives perform- _ cular function 319 95 375 37 152 11 17 34 1 5 1 15 22 2 16 3 SUMMARY BY FUNCTIONS Grain Fil- i _ No. of Gin- hand- Sup- Cotton mm Veg‘. Fruit Rose Lvstk. Seed Rice ma. PW WW1 “f “Pflatwn assns. ning linr& ply Lwk" mktg. mktg‘. mktg. mktg. mktg‘. mktg. mktg. mktg‘. egg m“ Mia“ &m°' 1 (511) mktg. mkts- ‘"1"!’ ‘i’ ' on 227 70 14 67 13 6 10 12 1 5 1 15 2 11 ons 19s 169 41 15s 15 21 1 5 2o s 1 a “ 'ons 1so¢12a 1s_—12s 5 109 2 5 2 ons 24 11 1s 214 4 1s 2 2 2 9 1 a cooperatives perform- cular function 319 95 375 37 152 11 17 34 1 5 1 15 22 2 16 3 tions” describe all the functions performed. For example, the two-function associations, listed as “Gin and grain” do two things for their patrons. They gin cotton and they market or handle grain. Because the word “Gin” appears first, does not mean that the gin is the major enterprise. The same is true in all other cooperatives with more than one function. No attempt has been made to indicate major functions. Diversification is strikingly evident among Texas marketing, supply and processing coopera- tives. Of the 577 associations, 350, or 61 percent, engage in more than one type of business activity. Only 227, or 39 percent, are single-function organizations. The 350 multi-function coopera- tives are engaged in a total of 878 enterprises, an average of 2.5 per association. j Of the multi-function cooperatives, 196 offer two services. The three-function associations account for 130 cooperatives, while the four- function cooperatives number only 24. Cooperatives handling supplies lead in num- ber with 375. This is 65 percent of the 577 marketing, supply and processing associations. Although volume will be handled in more detail in a later publication, a few statements are made in this section concerning volume in connection with supply associations. Potentially, any agricultural cooperative might handle supplies. Some would handle large quantities, others would limit themselves, or be limited, to small volumes. For the purposes of this study, all cooperatives which handled any sort of agricultural supplies with a value of at least $1,000 also were classified as being in the supply business. This brought into the group many associations which are primarily cotton gins, and which handled, perhaps, only cottonseed meal and planting seed for their patrons. They were included because they supplied their patrons with production items which otherwise would have been purchased elsewhere. As the record shows, many of the largest agricultural supply cooperatives got their start in just such a manner -exchanging cotton seed, for cottonseed meal, then taking the next step of ordering planting seed for some of the patrons. Obtaining insecti- cides at wholesale prices was another logical step, as was the gradual addition of other farm supply items. One day the manager and board of direc- tors discovered they were in the supply business in a large way, with inventories and accounts re- ceivable. Thus, it becomes clearer why such a large percentage of the 57 7 local marketing, supply and processingucooperatives are listed in the supply bracket. The range of items handled is as broad as the variety in production requirements. Some of the more common commodities in this field are feed, seed, petroleum products, farm machinery, hardware, tires, insecticides, fertilizers, automo- l0 bile and tractor accessories, lumber, poults, chicks and home appliances. ' Cooperatives which handle supplies perform other functions in four out of five Three hundred and eight, or 82 percent, ~ supply associations fall into this category. just 67 of the 375 supply associations are ; to handle farm supplies exclusively. The usual combination of associations handlin plies with other types of enterprises is t_ cotton gin and supply. Two hundred and j teen, or 57 percent, of all supply associ feature this combination. Grain marketing , in combination with supply business in 71 ~ or 19 percent of all supply cooperatives. Cooperatives which gin cotton are the most numerous of the 577 local marketing, ~~ and processing associations. There are 319 v gins, of which 70, or 22 percent, are 3 function gins. The other 249 association found in combinations with various acti, As stated above, supply handling and ‘ ginning appear in combination in 214 co tives. Another way of saying it is that 67 p of all cotton gins are also engaged in ‘s, activities, and 57 percent of all supply associ, also operate cotton gins. Only 34 cooper which gin cotton (11 percent of all gins). market grain. I A seemingly logical combination is in th cotton ginning and cotton marketing cooperaj Almost half of the ginning associations, 47 cent, include cotton marketing as a servi the cooperative. Most of these gins woul to cease their cotton marketing function. ever, they believe that they are forced to con to “buy cotton” to maintain the ginning bus Competition for ginning often is so keen buying members’ cotton appears to be mand, even though it is done with the knowledge, a loss will be sustained. Grain marketing cooperatives are the" most numerous in the local marketing, suppl processing group. As shown in Table - associations market or handle some gra' grains, exclusive of rice. Only 14 of the single-function cooperatives. Eighty-one of also perform one or more additional services. ; 71 combinations of supply business and i handling are by far the most popular in the ; field. Eighty-eight percent of all multi-fun grain associations handle supplies. Forty-four cooperatives handle fruits 1 vegetables. This is 8 percent of the 577 ma ing, supply and processing cooperatives. =_ teen handle vegetables and 34 process and v fruits. However, 10 or more than half 0 cooperatives marketing vegetables, are s', function associations, while only 12, or =- one-third of those handling fruit, do it as Y‘ sole function. Only 7 handle both fruits bles. In other combinations, fruit market- supply appear most often. Y perative frozen food locker plants number 0f these, 13, or 35 percent, are single- O s. e ’n associations. The remaining 24 handle ll} which in many cases consist of locker p es, meats and frozen foods. at _,oultry and egg marketing are carried on by peratives. Two are single-function asso- s. Of the other 20, 19 poultry and egg itions also are in the supply business. there are 15 cooperatives in Texas concerned reprocessing and marketing rice. Five are ting associations with no storage or drying ies. The members have their rice dried and d” U3 U) ‘l’ ;t wherever they see fit, and then sell by y e through the marketing cooperative. Four n associations dry and store rice for their rs, but do no marketing. The remaining 6 F atlves extend their operations from receiv- ‘e 0 - - ;_ l‘: members’ wet r1ce to drying, storing and n ,-: the dried rough r1ce. t- l It . out? l S%R|4AN v . y MOORE HUTCHW- ROBERTS O O sou ls _ own»: POTTER ‘avatar. 0 l‘ our 5mm runoff; 1m‘ k, v o; 0 ‘l’ ° " 0 30 HQTLEY R o o o QROSQY DICKENS o O ' V OrO> emu mam’ ‘V O Auonzws STER- LtNG CUL BERSON WARD NUDSPETN CRANE REAGAN IRION REEVES ./ \./ ./\_ vO PECOS \. /. JEFF DAVIS CROCKETT GIG-D- Qv TERRELL F1 VAL VERDE le PflEStDlO aacwsrzn I1 B H Y1 n LEGEND 2 Z Q Local Marketing. Processing and Supply Q Large-Scale and Centralized d (I) Federated (Regional) _ V National Farm Loan '- 0 Production Credit l" I Rural Electric ft Q) Rural Telephone u O County Mutual Insurance ‘ D Artificial Breeding E V Dairy Herd Improvement r : d Figure 1. Location. of all O cons GREEN V SUTTON GOT TLE O WALL v SCHLEICHER — V E DWARDS CONCNO V MENARD KIMBLE I Eleven associations handle dairy products. Six do nothing else, while the other 5 include various combinations. Two of the 11 dairy cooperatives cover almost the entire eastern one-third of Texas, from the Gulf of Mexico to Red River. The remaining 9 are relatively small, both in area covered and volume handled. Twenty-three cooperatives render miscella- neous services. Among these, 1 markets rose bushes, 1 handles certified seed, 1 supplies water for irrigation to 18 members, 3 sell wool and mohair and 5 sell livestock. LOCATION OF TEXAS FARMER COOPERATIVES Texas agricultural cooperatives are found from Beaumont and Texarkana in the east, to Canutillo, northwest of El Paso in the west ; from Brownsville in the south to Texline, Kerrick and Texhoma in the north. The most southerly and westerly associations are cotton gins, the most northerly is a grain marketing association and GER II cuv n C! BAYLDR ARCHER nun»: v I g 1 a 7 MONTAGUE D ‘V - TNROCK‘ you"; “$5 uoarou y O JACK V VAN ZANDT V HENDERSON I PARKER PtNTO V 5 ummao O 0 v sun SABA Co v v O mason LLANO n, IIIII YO cactzsmc _ OO V KERR V BEXAR I ME UN‘ e . ' O _/ WILSON v LUPE v . AYASCOSA film“ - 7 — ’ FRIO V GOULD '“ ‘NE 5‘ uutcsu ‘OM QQ LA SLLLE Q JIM WELLJ‘. cooperatives in Texas. 11 QN|ONQ p ommfi E 9/32» WQKVfiwNMQQOQU 983E we Qowpmficwwmo we wmfiwfi N wfirwwm Q-ah-O- 1.05. COO-u a" ‘(Qnww-z ~ . . bmwéuv Hfimw. mswwfim _.uw...sz< u .<.m.< g .\\\\\\\\\ ~m~WZz .mc.mw< 32295.25: v.62 55G H .<._.I.Q .2.$< U585 65m m .<.m.m m .wc.wm< zvmhU comusvoi H 4.0m .mc.ww< c004 85m 3:252 H znzqwuwz fldcofimm H m I Boowémhz UCU vwuzbbcmU H U $05359: 33:2 H .3.‘ 351g QZMUHA .UI° Db-m-Hl Oi O0 O0. ON- o! OD- on- CNN .mz.mm< LC .92 12 ost easterly is a dairy herd improvement tion. e 959 cooperatives are located in 205 of ,’ 254 counties. Only 49 counties, or 19 L. have no farmers’ or ranchmen’s coopera- ‘dquarters within their borders. Undoubt- . many agricultural operators in the 49 ,3 are members of cooperatives located in _ counties. Figure 1 presents a picture of the distribution of agricultural cooperatives in V . Cooperatives usually are found in greatest ‘g- in areas of intensive agricultural pro- 3 I1. iEllis county leads with 24 cooperatives. ron has 23; Hidalgo, 21; and Nueces, 20. ty-one counties contain 10 or more coopera- j the total number of associations in these xties being 310. Thus, 8 percent of the Texas p ies contain 32 percent of all the cooperatives. Figure 1 also shows the location of the Ina] and centralized or large-scale types of ‘ultural cooperatives. These associations become the focal point of cooperative 'ty in an area. GES OF ACTIVE TEXAS COOPERATIVES The oldest active farmers’ cooperative in ‘ is a mutual insurance association which been operating since 1886. As reported ously, there were earlier efforts at coopera- in other fields, but none has survived. Dr. 3 Hunt estimated that “well over 100 coopera- stores were in operation from 1880 to .”1° However, a thorough search failed to ‘l a farmers marketing, supply or processing rative, active today, that was organized ng this early period. Figure 2 shows that of those cooperatives Sized prior to 1909, only mutual insurance iations have continued without interruption. , her evidence of the durability of farmers’ 'al insurance associations is the fact that 88 nt of the 34 associations active today were gnized in the period 1886-1914. ‘ The oldest of the active local marketing, Sly and processing associations in Texas, a ,n gin, was founded in 1913 in Rule. This, the cooperative cotton gin at Munday, which organized in 1914, have had a long and itimes colorful history.“ Only three other marketing, supply and processing coopera- 4 had been operating as long as 35 years in J l. The 577 local marketing, supply and process- cooperatives operating during 1950 had a t, R. L., opus cit., p. 24. detailed story of these gins, as well as other pioneer 1 slat ginning cotton cooperatively, see W. E. Paul- Bulletin 636, Texas Agricultural Experiment Station, 1943, SUCCESSFUL COOPERATIVE COTTON GIN OCIATIONS IN TEXAS. combined total of 7,461 years of business life. This was an average of 13 years per association. Figure 2 shows that 163 of these, or 28 percent, were organized during the period 1935-39, and had an average age of 13 years. One hundred and thirty-two of the 577, or 23 percent, were organized during the post World War II period. These had an average age of 3 years. One of the oldest groups of agricultural cooperatives active in Texas today is the national farm loan associations. Thirty-one, or 22 percent, were in operation 32 years at the time these data were gathered. More than this number had been organized at one time or other, but some dropped by the wayside, while another large group reor- ganized and consolidated in 1940. The 36 Texas production credit associations were all the same age, 15 years, during 1950. They were organized in 1933 in response to a pressing need for short and intermediate term agricultural credit. The nation was in a depres- sion and the Farm Credit Administration was organized that year for just such a purpose. Of the Texas cooperatives now operating, the rural electric associations were the next group to appear on the scene.” The greatest develop- ment took place during the 5-year period ending in 1939. Information available on organization indicates that probably 61 rural electric coopera- tives had obtained charters by the end of 1939. The 5-year span ending in 1949 saw the development of the 34 dairy herd improvement associations and a like number of artificial breeding associations. These two groups seem to vary in number, from year to year so that it is difficult to make any statements concerning them. According to the records, there has been no spectacular development in the number of the federated, centralized or large-scale cooperatives. There are, in the two groups combined, only 26 associations. These were organized mostly by ones and twos in each 5-year period, beginning in 1919. It was during the same period, 1919-24, that the first of the now active large-scale coop- eratives was organized in Texas. The Perryton Equity Exchange is one of the 2 sole Texas survivors of the ‘Equity Union Society which sprang up in the early 1900’s. This cooperative has, for many years, handled large volumes of wheat and other grains grown by its members in the Texas Panhandle. The organization also operates a large feed manufacturing plant. The 1935-39 span did witness the birth of 5 federated associations, as did the following 5-year period. This latter time also saw 4 large-scale cooperatives come into the picture. The 15 Texas federated cooperatives had a total life span of 155 years, or an average of 10 "In many instances the data on the rural electric coopera- tives 1n Texas are scanty. 13 Table 3. Members in Texas cooperatives, originally and in 1950 l Number of associations Average membership Number of members Percent l‘ l . t. l Cooperative group . . per associa ion mmbe" l Original l 1950 Original l 1950 l Original l 1950 " Local marketing, supply and processing 577 577 59,350 132,249 103 229 23 Centralized and large-scale 11 11 13,456 65,845 1,223 3,077 11 National farm loanl 138 138 4,232 31,606 31 229 5 Production gygdit 36 36 8,174 32,332 227 898 * Mutual insurance 2 34 2 61,250 2 1,801 10 _ Rural electric (local) 76 ' 76 23,357 251,744 307 3,312 43 , Total or average 838 872 108,579 576,027 130 66,1 100 1 No data available on 4 national farm loan associations. 2 No data available on original membership. years of operation during 1950. The 11 central- restrictions. Of the 231,427 members i { ized associations have a total span of 173 years, or an average age of 16 years. MEMBERSHIP AND PATRONAGE OF TEXAS COOPERATIVES Memberships in 87213 Texas agricultural cooperatives in 1950 totaled 576,027, an average of 661. The original membership in 838 associa- tions was 108,579, or an average of 130. This averages a fivefold increase over the original membership (Table 3). Table 3 shows the following breakdown by major groups: for every 100 memberships, the rural electric cooperatives account for 44; local marketing, supply and processing, 23; centralized and large-scale cooperatives, 11; mutual insur- ance, 10; and production credit and national farm loan associations, 6 each. The column in Table 3 headed “Average membership per association” shows that the centralized and large-scale cooperatives lead with an average total membership of 6,077. Next in order are rural electric associations with 3,312, mutual insurance organizations with 1,801, pro- duction credit associations with 898 and local cooperatives and national farm loan associations each with 229. Not all members of cooperatives are active (Table 4). In the rural electric, mutual insurance and national farm loan groups, there are no inactive members because of organizational "Fifteen large-scale federated associations and 68 artificial breeding associations and dairy herd improvement asso- ciations are not included in the section on membership and patronage. The former deal only with other cooper- atives. The data on the artificial breeding associations and dairy herd improvement associations were considered insufficient. Table 4. Active and inactive cooperative members, by groups, Texas 1950 remaining three groups, 79,675 are inactive. * § means that 34 percent of the members o, three groups do not patronize their coopera One of the centralized cooperatives is ca ~ 35,000 inactive members on its rolls and‘ 15,000 active members. By removing jus » 1 association, the percentage of inactive me drops from 34 to 25 percent. ’ 1 The percentage of active members in. three groups which permit inactive membe remain on the rolls, shows that the local as tions are highest, with 80 percent of all me active. The production credit group comes i with 61 percent active members. The centr and large-scale cooperatives are lowest with 39 percent of their members doing business their associations. j The part played by the non-member p is shown in Table 5. Only two groups p’ non-member patronage—the local mark supply and processing cooperatives, and centralized and large-scale associations. I total number of patrons using these two g, was 187,354. Of these, 55,209 are not me l This means that 30 percent of the patrons non-members. ' A point worthy of mention is the exc total members over total patrons, understa that the term patrons includes non-membe“ well as members. While there were 57 i members in all Texas cooperatives, there only 551,561 patrons, or 24,466 less patrons A’ there were members. As has been stated J, the great number of inactive members as 1, active members in the centralized and larg ' group is largely responsible for this cond Reduced to an average per association, and re ing the centralized cooperative with the Number of associations with Number of members Average number members l Percent of mem i Cooperative group Active Inactive l Inactive l Inactive l members members Active Active Active I Local marketing, supply and processing 577 388 106,048 26,201 184 67 80.2 Centralized and large-scale 11 5 26,097 40,749 2,373 8,150 39.0 National farm loanl 138 -0- 31,606 -0- 229 -0- 100.0 Production credit 36 36 19,607 12,725 545 353 60.6 Mutual insurance 34 -0- 61,250 -0- 1,801 -0- 100.0 Rural electric 76 -0- 251,744 -0- 3,312 -0- 100.0 T6131 or average s12 429 490,352 19,675 569 1&6 86.2 1 No data available on 4 national farm loan associations. 14 Table 5. Member and non-member patrons of cooperatives, by groups, Texas, 1950 Number of associations which had patrons Total and average number of Average number of patrons Percent of patrons Number of patrons "ve “elm who were patrons wh” ""9 who were wh° were Members and b NMI- {M b N00‘ Me bu, Nlm‘ y Members nemmembem Total Average Mem ers members em ers members m s members - eting, supply easing‘ 577 546 151,242 262 106,048 45,194 184 83 70.1 29.9 . 3nd large-scale 11 6 36,112 3,283 26,097 10,015 2,373 1,669 72.3 27.7 _ mm loan 13s -0- 61,606 229 31,606 -0- 229 -0- 100.0 -0- 1’ ~ credit 36 -0- 19,607 545 19,607 -0- 545 -0- 100.0 -0- " ehllurance s4 -0- 61,250 1,801 61,250 -0- 1,601 -0- 100.0 -0- : f » e 76 -0- 251,744 3,312 251,744 -0- 3,312 -0- 100.0 -0- average 872 552 551,561 633 496,352 55,209 569 100 90.0 10.0 l've membership, the following is obtained: e total members per association, 591; gge total patronage, 599. 16 65' As stated in previous publications,“ an ' nt index of growth or decline of agricul- ‘cooperatives is the ratio of members gained mbers lost. Table 6 shows that this gain- UEM‘ Texas’ tives and the total number of farmers in Texas. 0 y, According to the 1950 Census, there are 331,567 I- Number 6g Number 6r farm operators in Texas. Table 7 presents some S Quve group 2213mm‘ ".‘°“"’°'“ pertinent comparisons among the total numbers I. " members members Gain“ M“ of members, active members, non-member patrons i - A ‘fjmlflocming m 268 m,“ 3,94,, and total patrons, and the total number of farmers Y ~ -- and large-scale 6 7 6,148 4,038 1n Texaglf’ 1 “m '3“ “é ‘ZZ i233 i332 _ 4. “$12: i6 1a 41060 666 Table 7 rests on the assumption that farmers * ‘m 7:: 5;: rarely belong to two or more cooperatives of the 1 ’ ’ same type—that is, the same operator seldom t v belongs to two cooperative gins or two cooperative ', ‘atio for e11 cooperatives m Texas, taken as elevators. The effect of any duplicate member-m 9 le, for 1950 was about 2.3 to 1, or for every Shlpiheld bY_th_e Same Persons m two Smgle‘ 3 w members acquired, 10 01d members function associations are more than offset by the 5 ,., out. farmers who hold memberships 1n multi-functlon em greatest influence on this ratio was ht to bear by the rural electric cooperatives u gained 45,458 members, an average of and lost 17,440, an average of 296. The oss figures for the rural electric coopera- § do not necessarily represent this many farmers coming in and going out. The hange is somewhat less because the gross CULTURAL COOPERATIVES IN C O A S T A L f 1| AREA OF TEXAS, Progress Report 1378, Texas ' i ltural Experiment Station, June 11, 1951, p. 3. 5 L COOPERATIVES IN THE HIGH PLAINS- ANDLE AREA OF TEXAS, Progress Report 1411, mgricultural Experiment Station, October 28, . P- (Us \v flaw‘ v1 r-q ble 7. change is affected by tenants and renters shifting on the land, both within and between rural electric cooperatives. Exact analysis of this point is difficult since the electric associations carry the changes in their records only as new connections and disconnects. A question is sometimes raised concerning the relationship between the total numbers of farmers and ranchmen who patronize coopera- associations, which are counted only once. Because such assumptions are fully warranted, certain comparisons can be made for the separate types of cooperatives. Texas farmers and ranchmen hold 576,027 memberships in cooperatives, which are 73 per- cent more memberships than there are farm operators in the State (Table 7, “Total members” column). Thus, on the average, if spread across “F. A. Harper, in his COOPERATIVE PURCHASING AND MARKETING ORGANIZATIONS IN NEW YORK STATE, published by the Cornell University Agricultural Experiment Station in 1931, made effective use of com- parative relationships between members of cooperatives and the total number of farmers in New York State. Relation of number of members and patrons of cooperatives to total number of farmers in Texas, 1950‘ Total members Total active members Total non-member patrons Total patrons , five group Percent of Percent of Percent of Percent of Number total farmers Number total farmers Number total farmers Number total farmers in Texas in Texas in Texas in Texas rketing, supply 7proeessing 132,249 39.9 106,048 32.0 45,194 13.6 151,242 45.6 ‘ - and large-scale 66,846 20.2 26,097 7.9 10,015 3.0 36,112 10.9 farm loan 31,606 9.5 31,606 9.5 -0- -0- 31,606 9.5 credit 32,332 9.7 19,607 5.9 -0- -0- 19,607 5.9 insurance 61,250 18.5 61,250 18.5 -0- -0- 61,250 18.5 ectric 251,744 75.9 251,744 75.9 -0- -0- 251,744 75.9 576,027 173.2 496,352 149.7 55,209 16.6 551,561 166.3 on 331,567 farm operators in Texas from Vol. 1, pt. 26, Texas, 1950 Census of Agriculture, Bureau of the Census. 15 all operators, each agricultural operator would hold membership in slightly less than 2 associa- tions. Actually, the range is from membership in no cooperatives for some farmers to membership in perhaps as many as 4 cooperatives for others. Furthermore, this column of Table 7 reveals the details of membership distribution among farmers and ranchmen in Texas cooperatives. The rural electric cooperatives are the largest factor for exposure to cooperative membership in Texas, with 76 out of every 100 farmers belonging to such associations. The local marketing, supply and processing associations are next, claiming, on the average, membership from 40 out of every 100 Texas farmers and ranchmen. The next two groups, in descending order of importance in this connection, are the centralized and large-scale group, and the mutual insurance group with 20 and 19 percent, respectively, of Texas farmers and ranchmen as members. Apparently, the opportunities for exposure to cooperative member- ship are least accepted in the cases of the produc- tion credit and national farm loan associations, inasmuch as each group contains only 10 percent of the total number of agricultural operators in Texas. Table 7, in the column headed “Total non- member patrons,” shows that 17 out of every 100 Texas farmers and ranchmen do business with cooperatives as non-members. In this case, only the two groups which permit non-member busi- ness are represented—locals with 14 percent, and centralized and large-scale with 3 percent of the total. The last column in Table 7—“Total patrons” —shows the percent of all Texas farmers doing business with each cooperative group. For every 100 farmers, there are 166 actual exposures to cooperative activity, an average of 1.66 exposures per farmer. Again the heavy influence of the rural electric cooperatives stands out. With this group removed, the percentage of cooperative patrons to total farmers in Texas drops to 90. In other words, without the rural electric associa- tions, 100 Texas farmers would produce only 90 exposures to cooperative business. SUMMARY Organizational aspects of Texas agricultural cooperatives were examined to provide a basis for evaluating their efficiency as marketing and service agencies. All types of farm cooperative organizations were included: local marketing, supply and processing; federated or regional; large-scale and centralized; national farm loan; production credit; mutual insurance; rural elec- tric; dairy herd improvement; and artificial breeding associations. Farmers and ranchmen are industrialists in the sense that they use land, labor, capital and management to convert raw materials into semi- 16 finished and finished commodities. Ho, the unique character of the agricultural ind prevents the same degree of control over .1 that other industries are able to maintain. , individual farm or ranch operator, Wit relatively small output, is at a distinct w vantage in bargaining power. Over the ~ agricultural people, through cooperatives: developed a business form adapted to their in procuring marketing, supply, processin service facilities. QOOQCIJD Cooperatives represent both vertical. horizontal integration of farm and ranch bus They permit the individual to carry his a‘ tural commodities nearer the ultimate cons while at the same time giving him the barg power that goes with the combined volu a number of producers. Cooperatives, a patron type of bus differ from the investor type of busin several respects. Profits accrue to the ll and patrons of cooperatives in direct prop to the use made of them; profits accrue stockholders of investor enterprises in prop to the amounts of stock held; patronag being a factor. S3 A major objective of cooperatives ' provide efficient service. This is accomp in several ways, the differences arising fro mode of operation selected by particular 0 ' zations. " Q3». N» Texas agricultural cooperatives first into being along with general farm organiz in the 1870’s. Of the many early ventu several fields, only farmers mutual insu associations have been continually in oper The oldest association active today dates q 1886. There are several reasons for the fa, of the pioneer groups. QJQEF! Smfifiif-‘(Sl There are approximately 959 agricu cooperatives in Texas. The exact number c 1 almost daily because of new charters and c _ cancellations. 9+5‘? E For analytical purposes, the associati Texas have been segregated into nine S groups. The 577 local marketing, suppl processing cooperatives constitute 60 perc all farmer cooperatives in Texas. These , directly with farmers in local areas and ctl deal only in the primary markets. Multi-fu m local associations number 350, or 61 pe p1 227, or 39 percent, are single-function 0r tions. The multi-function cooperatives‘ engaged in 878 enterprises, an average r per association. The actual number of fun performed by Texas local associations from one to four. st The supply function appears in 375, A percent, of the locals. However, only 67 of» are single-function supply associations. ‘i 'tton ginning, the most usual combination, ent in 217 associations. ; peratives which gin cotton are the next pumerous 0f the locals, with 319 associations. i , or 22 percent of all cooperatives which ton are single function. The remainder _- ginning organizations appear in various ations with other functions. inety-five Texas cooperatives market or grains, exclusive of rice. Only 14 of these "gle-function organizations, the remainder l“ multi-function. The most common combi- in is grain marketing and supply, being er a t in 71 cooperatives. ruit or vegetable marketing functions r in 44 cooperatives, or 8 percent of all Of these, 17 handle vegetables and 34 et or process fruits. Only 7 handle both . and vegetables. ere are 37 frozen food locker cooperatives. j en are single function, while the rest also e supplies of various sorts. oultry and egg marketing functions are on by 22 Texas cooperatives, but in only l s as a single function. Supply functions r in 19 of the remaining 20 associations g in poultry and eggs. ice is handled in some form by 15 Texas G tives. Five associations are solely market- encies with no storage or other facilities. irice associations dry and store rice for their rs but do no marketing. The remaining l cooperatives receive, dry, store and market members’ rice. ilk and milk products are handled by 11 i cooperatives. Six of these are engaged in Aer activities. Two of the 11 associations l, an area equal to almost one-third of the Viscellaneous types of local cooperatives or 23. These perform various services, such growing, nursery stock marketing, tion, wool and mohair marketing and live- sales. ricultural cooperatives operate in all parts as. Only 49 counties, or 19 percent of all es, have no cooperative headquarters within boundaries. As a rule, cooperatives are general in areas of intensive agricultural tion. Qllis county leads in the number of coopera- ith 24. Eight percent of the counties of contain 32 percent of all cooperatives. e oldest of the active local marketing, ~ and processing organizations is a cotton ich began operations in 1913. Only three ssociations had been functioning as long years in 1950. The 577 local marketing, supply and processing cooperatives had an aver- age age of 13 years in 1950. Three hundred and thirty-six of these, or 58 percent, have been in business 10 years or more, the average age being 19 years. The greatest number of active locals- 163—came into being during the 5-year period 1935-39. This was double the number which started business during the preceding period. 1930-35. The next greatest period in terms of numbers organized was the post-war time, 1945- 49, when 132 locals were organized. Thirty-one of the presently active national farm loan associations were organized in 1917. Eighty-four national farm loan associations were organized during the period 1940-44. In many cases, the new organizations resulted from consol- idations of 2 or more associations which had been operating for a number of years previously. The 36 Texas production credit associations came into existence shortly after the passage of federal legislation establishing the Farm Credit Administration. In 1950, they had been in existence 15 years. The greatest number of rural electric cooper- atives were established in the period 1935-39, when about 61 associations came into being. Exact data were not available on this point. The federated and the large-scale and cen- tralized cooperatives developed by ones and twos. Apparently they came into being in response to the need for extension of purely local facilities to reach broader markets. The average age of the federated cooperatives in 1950 was 10 years, and the average age of the centralized and large-scale was 16 years. Membership in all Texas cooperatives in 1950 totaled 576,027, an average of 661. This was a fivefold increase from the average original membership of 130. In terms of total membership, the rural electric cooperatives account for 44 out of every 100 cooperative members in Texas. This is almost double that of the next highest group, the local associations which account for 23. Not all cooperative members are active. Organizational restrictions prevent the rural electric, mutual insurance and national farm loan associations from retaining inactive members on their rolls. The remaining three groups, with 231,427 members, indicated 79,675 inactive mem- bers, or 34 percent of the members not using the cooperatives. The picture is somewhat distorted by the fact that one large association showed 35,000 inactive as against only 15,000 active members. Removing this association from the data reduces the percentage of inactive members from 32 to 25. Of those cooperatives which permit inactive members, the local marketing, supply and process- ing cooperatives had the best record for active 17 members with 80 percent. The production credit associations were next with 60 percent of their members active, and the large-scale and central- ized cooperatives were lowest with only 39 percent of their members active, on the average. Non-member business is allowed by only two of the major groups--the local associations and the centralized and large-scale. Of a total of 187,354 patrons, the two groups had 55,209, or 3 out of 10 patrons who were not members. The ratio of members gained to members lost in any 1 year is an index of growth or decline. In Texas, this ratio for all cooperatives as a whole was 2.3 to 1, or 23 new members gained for every 10 members lost. The rural electric cooperatives heavily influenced the totals for the State with 45,458 gained and 17,440 lost. Removing the rural electric associations, the gain-loss ratio as a whole became 1.95 to 1. An index of the acceptance of cooperatives is the proportion of farmers using these organi- zations to the total number of farmers in Texas. According to the 1950 Census of Agriculture, there were 331,567 farmers and ranchmen in Texas. Total membership in Texas cooperatives, at that time, numbered 576,027, which means that, if memberships were evenly divided, as an average, every farmer in Texas held membership in slightly less than 2 cooperatives. Actually, the range in memberships held by individuals is from none to perhaps four or five. l8 Rural electric cooperatives take the h‘ proportion of Texas farmers and ranchm members, with 76 out of every 100. An analysis of non-member patron relation to total farmers indicates that 1 of every 100 farmers are non-member =v of cooperatives. Finally, in the case of » patrons of cooperatives-—active members .- non-members—there are approximately 166 1; exposures to cooperatives on the averag every 100 farmers. As an average, every f» and ranchman in Texas would patroniz cooperatives. ‘A ACKNOWLEDGMENTS This study was conducted cooperativ the Texas Agricultural Experiment Statio the Farmers Cooperative Service, Federal Relations, U. S. Department of Agriculture. Regional cooperatives of Texas fu I schedule takers who collected two-thirds ~~ field schedules. The managers of the v' cooperatives cooperated with the schedule » in compiling the data and information f0 the basis of this report. " George Blair, former executive secre :1 the Texas Federation of Cooperatives, did, to facilitate the field work. The Statistical Laboratory of the Agricultural Experiment Station made a p contribution in the processing of data.