ILLINOIS CO-OP FUTURES DISSOLUTION VOTE SET The shareholders of Illinois Cooperative Futures Co., the futures trading arm of many Midwest farm cooperatives for more than 25 years, will vote Wednesday on its possible dissolution. The directors of the company called a special meeting and recommended its dissolution last month, citing falling volume and increasing costs. Sources close to the organization told Reuters the pullout of Growmark, Inc., which holds more than 70 pct of the capital stock, led to the call for dissolution. The possible demise of the cooperative has set clearing houses scrambling for the trading business of the 85 regional and local cooperatives that comprise its membership. Ironically, it was Growmark, at that time a regional farm cooperative with major river terminal elevators, that founded Illinois Cooperative Futures on December 1, 1960. But Growmark became affiliated last year with Archer Daniels Midland of Decatur, Ill., and markets its grain through a joint subsidiary of the two companies, ADM/Growmark. With that relationship, Growmark no longer needs to trade futures through the cooperative, said Tom Mulligan, president of the co-op. Membership in the company, which Mulligan termed a cooperative of cooperatives, has declined from 99 in 1982. A notable loss was AgriIndustries of Iowa, which became affiliated with Cargill, Inc. Illinois Co-op's other members include such regional cooperatives as Indiana Grain, based in Indianapolis, Goldkist, of Atlanta, Ga., Midstates in Toledo, Ohio, Farmland Industries in Kansas City, Mo., Farmers Commodities, Des Moines, and Harvest States in Minneapolis. Some observors said the demise of Illinois Cooperative Futures Co. is a serious blow to the cooperative system. Instead of banding together, the individual cooperatives are forced to go their own ways, said the floor manager of one cash house at the Chicago Board of Trade. Such a move would destroy the cohesiveness that gives farm cooperatives an advantage in the market at a time that a few major commercial companies are growing dominant, he said. Don Hanes, vice president for communications with the National Council of Farm Cooperatives, said 5,600 cooperatives exist today, down from 6,700 five years ago. "The period we've gone through in the past five years has been quite a crunch," he said. "There's been a lot of consolidation in the marketing co-ops." One problem, he said, is the co-ops sell the grain to the major commercials for export, rather than exporting it themselves, losing potential profits. But exporting grain requires heavy investments, and the multi-million-dollar loss posted six years ago by Farmers Export Co., a co-op set up to export grains, served "to make folks gun-shy," Hanes said. Mulligan said he believes the dissolution, if it is approved, is a result of change in the futures industry rather than a change in U.S. agricultural economics. A grain dealer at one member co-op said the futures arm "was a convenience, something that saved us a little bit of money. (Its dissolution) will force us to change our way of doing business." "We're sorry to see the co-op go by the wayside," he said. "But there are lot of people out there to do business with. There are plenty of capable firms." Steven W. Cavanaugh, vice president for grain marketing with Indiana Grain, said he would prefer to trade futures through a Chicago-based cooperative. "In terms of clearing our business as a unit as opposed to individuals, there would be economic savings," he said but added, "The times change and with changing times, come different opinions of what businesses ought to be around." Cavanaugh said the possible demise of the futures arm had nothing to do with its profitability. "I would guarantee you that this company is not in trouble. It is a sound, healthy organization." In the year ended February 28, 1986, the Illinois Cooperative reported income of 10.2 mln dlrs and members' equity, or net worth, of 8.3 mln dlrs. The annual report for the most recent year has not been filed. Under the cooperative system, income from operations is returned as "patronage refunds" to the members. Income and refunds in the past five years have been declining. In the year ended February 28, 1982, the co-op reported income of 17.4 mln dlrs and patronage refunds of 17.0 mln dlrs. Patronage refunds in the year ended February 28, 1986, totalled 9.5 mln dlrs. "You're dealing with substantially lower volume," Mulligan said. "Lower volume translates into higher costs." According to the company's 1986 annual report, Growmark owns 90 pct of the preferred shares and four pct of the common shares of Illinois Cooperative Futures Co. Mulligan declined to speculate on how much of the capital Growmark is entitled to. He said he could not determine the figure unless the shareholders decide in favor of dissolution. Equity is distributed according to each member's trading volume and, as a result, changes from year to year. However, Mulligan said the company could continue to meet minimum capital requirements to trade futures even if Growmark pulled out.