Study: Co-op business model delivers significant economic impact

Cooperatives directly generate more than $650 million in revenue and employ 2.1 million people.

The farmer-owned cooperative business model delivers economic value in its communities far exceeding the multiplier effect of other business sectors, according to Carl Casale, president and chief executive officer of CHS Inc., the nation's leading cooperative and a global energy, grain and food company.

Casale shared the results of the cooperative's major economic impact study as part of his address to the “1st Tuesday” lecture series sponsored by the University of Minnesota's Carlson School of Management.

"We've always recognized that the cooperative system is a significant economic force in the rural communities it serves and across the country," Casale told nearly 300 business and higher education leaders. "Now, we have hard data on job creation and other economic impacts that far exceed our expectations. The end game is the tremendous value CHS creates in rural America multiplies and stays in those communities."

CHS commissioned business consulting firm Ernst & Young to take an in-depth look at the company's economic impact in America. The firm analyzed data such as CHS's U.S. sales, earnings, employment, patronage to owners and capital expenditures.

Ernst & Young found that CHS's economic activity supported more than 60,700 jobs directly and indirectly, far exceeding the co-op's 12,100 employees.

"That means for every job CHS creates itself, there are four more jobs supported indirectly in the community as a result of the economic activity from the cooperative system," Casale said. "This 'job multiplier' factor far surpasses that of other sectors of the economy."

The report, based on CHS fiscal 2014 data, showed that its $33.45 billion in gross global business in the U.S. translated into direct gross economic output of nearly $18.5 billion locally. Additionally, every $1 million of CHS economic output supported an additional $600,000 in output for other U.S. businesses. The study analyzed the cooperative's economic data and impact for all U.S. states and every congressional district. For more details, visit www.valueofthecoop.com

The CHS study was released just as the U.S. marks Cooperative Month to recognize the economic and other benefits of the nation's 29,000 cooperatives, more than 2,000 of which are agricultural. Nationally, cooperatives directly generate more than $650 million in revenue and employ 2.1 million people. Minnesota was the first state to make an official Cooperative Month proclamation in 1948; it has been a nationally recognized celebration since 1964.

In his remarks, Casale addressed a wide range of economic topics and voiced continued long-term optimism for agriculture and energy despite current challenging global markets.

"In the commodity business, we're always riding ups and downs, but one constant is the cooperative system business model as a critical partner for our owners in the ag and energy industry," he said. "We're side by side with our owners creating solutions for today and innovations to ensure a bright future for the next generation of farmers and ranchers."

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