Co-ops Continue to Have a Large Impact on Montana’s Economy

In May 2018, an economic impact survey was conducted by MCDC in coordination with Montana State University (MSU). One hundred cooperative firms responded to the survey individually or through their industry associations.  Below is a summary of results from that survey:


Economic Impact of a Sample of Montana Cooperatives
October 31, 2018 

By  George W. Haynes, Ph.D.
Professor and Extension Economist
Montana State University 


Introduction

            Cooperatives are integral component of the Montana economy.  Based on a study by the University of Wisconsin’s Center for Cooperatives in 2009 there were 209 cooperatives operating in Montana. By 2018 when this study was conducted, the number of cooperative establishments had dropped to 151, which were those surveyed for this report. This study is based on data compiled in 2017 by 100 cooperative firms that responded to the survey individually or through their industry associations.  These co-ops represent agricultural marketing, services and supply (17); credit unions (51); utilities (28); and, other (4).

This sample of cooperatives generated $1.835 billion in direct sales, more than 4,000 jobs, and wages of $344 million (Table 1).  This represents approximately 1.3% of total revenue and 0.9% of jobs in Montana.  Total membership in these cooperatives exceeds 659,000, which undoubtedly overestimates the actual number of discrete individuals since those living in Montana’s smallest rural communities often belong to more than one cooperative.

Fifty-five percent of direct revenue from this sample of cooperatives was generated by agricultural cooperatives; utility coops contributed 31% and credit unions contributed 12% (Figure 1).

Figure 1  Distribution of Total Direct Revenue by Cooperative Type 


More than 30% of cooperative jobs were created by credit unions, with agricultural co-ops creating 28% and utility co-ops creating 26%.  Utility cooperatives accounted for 36% of total wages paid to cooperative employees, with credit unions contributing 23%.  The “Other” category includes the CHS refinery in Laurel , which explains why this group accounted for the last 20% of total wages paid.  Average wages and benefits, vary by type of cooperative (Figure 2).  The highest average wages, including benefits, were paid by the utility cooperatives (over $120,000); while the lowest average wages and benefits were paid in agricultural cooperatives (over $68,000).

 

 

 

Figure 2 Average Wages and Benefits by Sector

In addition, these cooperatives paid $29.6 million in property taxes; $2.1 million in scholarships, education funds, and communication contributions; and $58.7 million in member dividends and patronage.

Multiplier Effects

Direct economic activity from cooperatives ripples through the broader state economy to generate additional economic activity.  This study utilizes multiplier estimates from a similar study in the state of Wisconsin to estimate this additional economic activity, which is reported as indirect and induced effects.  Indirect effects are changes in revenue, jobs, and wages in sectors within the state that supply goods and services to these cooperatives.  Induced effects are the increased revenue, jobs, and wages within the state from household spending of the income earned in cooperatives and supporting sectors.

Cooperatives create an additional $0.70 of indirect and induced revenue for every dollar of direct revenue they generate. They create nearly 1.5 indirect and induced jobs for every job in cooperative and create an additional $0.70 of indirect and induced wages/salaries for every dollar of wages and benefits they pay. When employing these multipliers, the largest indirect and induced revenue effects were generated by agricultural cooperatives, while the largest indirect and induced job and wage effects were generated by utility cooperatives.

The estimates provide an interesting preliminary assessment of the economic impact of cooperatives and demonstrate how important cooperatives are to the economy of Montana. For more information on this study, see the 2018 Economic Impact of a Sample of Montana Cooperatives Report by clicking on the link below:
ECONOMIC IMPACT OF A SAMPLE OF MONTANA’S COOPERATIVES (2018)

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