Economic impact of co-ops on the rise
By Dennis Hill
In North Dakota, cooperatives are a vital part of the state’s economy.
That’s the rightful conclusion of a new economic impact study released last month in conjunction with the October is Cooperative Month celebration.
The study, conducted by Dr. Gregory McKee, director of the Quentin Burdick Center for Cooperatives at North Dakota State University, found that the total economic value of all cooperative-related businesses operating in the state generated or induced $22.6 billion in the regional economy.
That value, according to the study, is generated in this way: The cooperatives operating in North Dakota’s electricity, farm-related, financial and telecommunications cooperatives generated $10.2 billion of value. This led to business activity for input suppliers and purchases by employee households of $12.4 billion.
Besides their economic output, cooperatives provide jobs, wages and tax revenue to the state and its political subdivisions. In 2012, the study showed that cooperatives employed approximately 10,134 people in the state, paying about $807 million in wages and benefits.
The economic contribution from cooperatives has markedly increased since the last study, released in 2010. The newest study does include the economic impact of an additional 78 cooperatives. However, it finds that a large fraction of the difference between the 2012 economic impact of $22.6 billion and the 2010 impact of $5.6 billion is attributable to growth in the farm, financial and cooperative utilities industries within the state.
North Dakota’s electric cooperatives comprise a significant portion of this economic output. Collectively, the 16 distribution cooperatives operating in the state provide electric service to about a third of the state’s population, sell more than 50 percent of all electricity sold at retail in the state, and have invested more than $1 billion in electric plant, equipment and facilities. The generation and transmission cooperatives operating in our state have invested more than $5 billion in energy generation and high-voltage transmission lines. Together, the state’s rural electric cooperative network employs more than 2,300 persons. Cooperatives are businesses organized by people (their owners) to provide goods and services. A cooperative business is founded on the principles of open membership, democratically elected boards of directors, commitment to community, cooperation with other cooperatives, limited return on investment and return of profit to their owners. The latest study reaffirms that the cooperative business model is alive and well in North Dakota. Cooperatives continue to make important and significant contributions to the economy, while greatly improving the quality of life of the members they serve.
Dennis Hill, editor-in-chief of North Dakota Living, is executive vice president and general manager of the North Dakota Association of Rural Electric Cooperatives, Mandan. Comments can be mailed to Dennis Hill, NDAREC, P.O. Box 727, Mandan, ND 58554-0727 or by email to email@example.com.