United States

Department of

Agriculture

Rural Business–

Cooperative

Service

RBS Research

Report 173

Marketing Operations of

Dairy Cooperatives
Abstract The Nation’s 226 dairy cooperatives marketed 127.4 billion pounds of milk, or 83 percent of all milk sold to plants and dealers, in 1997. These cooperatives were owned by

87,938 member-producers. Sixty-three cooperatives operated 203 dairy processing

and manufacturing plants, 25 with milk-receiving stations only and 138 with no milkhandling facilities. Cooperatives sold 14 percent of the Nation’s packaged fluid products, 6 percent of the ice cream, 61 percent of the butter, 76 percent of the dry milk

products, 40 percent of the natural cheese, 48 percent of the dry whey products, and

10 percent of the cottage cheese.

Key Words: Cooperatives, dairy products, marketing, milk, structure.

Marketing Operations of Dairy Cooperatives

K. Charles Ling

Rural Business-Cooperative Service

RBS Research Report 173

June 1999
Preface Information for this report came primarily from a survey of all U.S. dairy cooperatives.

In some cases, data were estimated for nonrespondents based on their financial statements or other sources.

Data covers cooperatives’ fiscal year ending in calendar 1997. These fiscal years vary

within the calendar year, so their data reflect some differences in time periods. This

report updates ACS Research Report 133 based on cooperative operations for the fiscal year ending in calendar 1992.

Because of the rapid cooperative structural changes in recent years, some of the larger cooperatives have significant operations in regions other than where cooperatives

are headquartered. Regional marketing data on cooperative operations based on

where cooperatives are headquartered are no longer meaningful and are discontinued

in this report.

The author acknowledges assistance from some State agencies for this study, plus

U S D A’s National Agricultural Statistics Service and particularly Federal milk market

administrators for supplying data as authorized by some cooperatives.

i
Contents Highlights ...........................................................iv

Cooperative Industry Profile .............................................1

Milk Receipts and Utilization .............................................3

Member Supply and Location ............................................3

Plant Operations ......................................................5

Dairy Products Marketed ................................................7

Raw Whole Milk ..................................................7

Butter ..........................................................7

Dry Milk Products .................................................8

Cheese .........................................................9

Packaged Fluid Milk Products ......................................10

Cottage Cheese .................................................10

Ice Cream and Ice Cream Mix ......................................10

Yogurt .........................................................10

Bulk Condensed Milk Products ......................................11

Dry Whey Products ...............................................11

Cooperative Concentration Ratios ........................................11

i
Highlights While dairy products represented 30 percent of the value of all agricultural cooperative

marketings during 1997, dairy cooperatives received or bargained for 83 percent of all

milk sold by farmers to the Nation’s plants and dealers.

Dairy cooperatives decreased 15 percent, from 265 to 226, between 1992 and 1997.

Similarly, cooperatives that processed and manufactured dairy products dropped from

86 in 1992 to 63 in 1997. Following the same pattern, the number of cooperatives selling raw whole milk fell from 230 in 1992 to 204 in 1997. But cooperatives’ share of total

volume sold by farmers to plants and dealers inched up from 82 percent to 83 percent.

Sixty-one percent of total cooperative volume was sold as raw whole milk in 1997 versus 60 percent in 1992. The other 39 percent was manufactured at plants operated by

cooperatives.

There were 87,938 member-producers delivering milk to 222 dairy cooperatives with

direct members. Three regions—East North Central, West North Central, and North

Atlantic—together accounted for 83 percent of all member-producers and 55 percent

of cooperative milk volume.

Dairy cooperatives owned 298 plants in 1997, 91 for receiving and shipping milk only.

They operated 62 plants for manufacturing American cheese, 30 for Italian cheese, 54

for packaging fluid milk products, 43 for manufacturing dry milk products, and 35 for

churning butter.

While net sales of butter and dry milk products decreased from 1992 to 1997, those of

cheese increased. However, cooperatives’ share of these products all declined during

this period.

Cooperatives’ share of butter decreased from 65 percent to 61 percent during the half

decade, as did dry milk products (nonfat dry milk, dry buttermilk, and dry whole milk),

which went from 81 percent to 76 percent.

Cheese marketed by cooperatives grew 3 percent, from 2,820 million pounds to 2,907

million pounds, while nationally cheese production increased 13 percent.

Cooperatives’ share of the natural cheese market declined from 43 percent to 40 percent by 1997.

Sales of packaged fluid milk products by cooperatives decreased both in volume and

in share of market. The 7,730 million pounds marketed was 14 percent of the Nation’s

production, down from 16 percent in 1992. Cooperatives’ sales of cottage cheese as a

percentage of national production, at 10 percent, was also lower than in 1992. Share

of ice cream decreased from 10 percent to 6 percent. In 1997, cooperatives marketed

11 percent of the Nation’s ice cream mix, 4 percent of yogurt, 65 percent of bulk condensed milk, and 48 percent of dry whey products.

Most dairy cooperatives continue to be relatively small business organizations.

However, through consolidation and growth, an increasing amount of dairy products

was sold by larger cooperatives. The 20 largest dairy cooperatives received 77 percent

of all producer milk marketed through cooperatives. And 89 percent of cooperative milk

processing and manufacturing was conducted by the 20 largest cooperatives with

plant operations.

iii
Marketing Operations of Dairy Cooperatives

K. Charles Ling

RBS Agricultural Economist 

Farmer owned and operated dairy cooperatives

continue to provide the most significant channel for

marketing milk from the Nation’s dairy farms.

In line with industry and dairy farm trends, the

number of cooperatives is declining but those remaining are handling larger volumes. In addition, cooperatives process, manufacture, and market a large or dominant proportion of some of the Nation’s dairy

products.

This report, seventh in a series of periodic

appraisals of the scope and performance of dairy cooperatives, describes their continuing adaptation to an

ever-changing marketing environment.

Cooperative Industry Profile

Between 1992 and 1997, the number of dairy

cooperatives decreased 15 percent, from 265 to 226, a

faster decline than the 10 percent recorded from 1987

to 1992. In 1997, 187 cooperatives, or 83 percent of all

dairy cooperatives, were headquartered in the North

Atlantic, East North Central, and West North Central

regions (table 1 and fig. 1). The North Atlantic region

had 83 dairy cooperatives, the most among all regions.

Cooperative numbers dropped in every region.

The greatest reductions by 1997 were 12 each in the

North Atlantic and the West North Central regions. In

the East North Central region, 9 fewer cooperatives

were counted.

In 1997, 63 cooperatives, or 28 percent of all dairy

cooperatives, processed and manufactured dairy products, down from 32 percent and 86 cooperatives in

1992. Seventy percent of the decline in the number of

these cooperatives occurred in the East North Central

and West North Central regions. However, the East

North Central region still had the most (24) cooperatives in this activity.

Cooperatives that operated only milk-receiving

stations decreased from 44 to 25 by 1997. They represented 11 percent of all dairy cooperatives. Twenty of

the 25 cooperatives, or 80 percent, were in the West

North Central region.

Bargaining cooperatives (did not physically handle milk and other dairy products) increased from 135

to 138. More than half (72) were in the North Atlantic

region. The only increase in the number of these cooperatives was in the East and West North Central

regions.

Nationally, the number of cooperatives marketing

selected major dairy products continued to decline

(table 2). More cooperatives (90 percent of 226 in dairy)

continued to sell raw whole milk in bulk than any

other product.

The greatest decline among the decreasing number of cooperatives marketing various dairy products

was the 47 percent among those marketing butter.

Cooperatives marketing natural cheese decreased

by 44 percent to 42 cooperatives in 1997. The story was

similar in all cheese categories—the 33 cooperatives

marketing Cheddar cheese was down 44 percent; the

14 handling other American cheese was down 63 percent; the 12 in Mozzarella, down 56 percent; the 7 in

other Italian cheese, down 42 percent; and the 12 handling other cheese, down 48 percent.

The 13 cooperatives marketing cottage cheese

were down by 9 cooperatives or 41 percent. Similarly,

the 12 selling yogurt dropped 37 percent; ice cream,

dropped 35 percent to 13 cooperatives; and packaged

fluid milk products dropped 28 percent to 21 cooperatives.

1
2

Table 1— Dairy cooperatives by type of operation and by headquarters region, 1992 and 1997

Processing and Operating milk Not physically

manufacturing dairy receiving facilities handling dairy

Region1 products only products Total

1992 1997 1992 1997 1992 1997 1992 1997

North Atlantic 12 8 6 3 77 72 95 83

East North Central 35 24 1 1 17 19 53 44

West North Central 19 14 36 20 17 26 72 60

South Atlantic 4 3 0 1 8 5 12 9

South Central 3 1 1 0 3 5 7 6

Western 13 13 0 0 13 11 26 24

— — — — —— —— —— ——

All regions 86 63 44 25 135 138 265 226

Percentage of total

cooperatives 32 28 17 11 51 61 100 100

1 See figure 1 for States included in each region.

Figure 1— Number of Dairy Cooperatives by Headquarters Region, 1997

West North Central

60

East North Central

44

North

Atlantic

83

South Atlantic

9

South Central

6

Western

24

Includes

Alaska and

Hawaii
The smallest decline in the number of cooperatives was among those marketing dry whey products

and nonfat dry milk (6 and 8 percent, respectively). In

1997, 16 cooperatives marketed dry whey products,

while 24 marketed nonfat dry milk.

Milk Receipts and Utilization

In 1997, cooperatives received or bargained for

127.4 billion pounds of milk (net of inter-cooperative

transfers), or 83 percent of total volume sold by farmers to the Nation’s plants and dealers (table 3).

Cooperatives’ share was up one percentage point fro m

82 percent in 1992. Cooperatives’ volume increased 4

percent in the period, while the Nation’s milk sold to

plants and dealers rose 3 percent.

Of the 127.4 billion pounds of milk received by

dairy cooperatives in 1997, 98 percent came directly

from member-producers. The rest came from nonmembers or noncooperative firms. Member milk deliveries

to cooperatives increased 5 percent, but declined fro m

other sources 38 percent (table 3).

Total cooperative milk volume sold as raw whole

milk was up 1 percentage point to 61 percent (table 4).

In other words, cooperatives processed or manufactured 39 percent of the milk received in the plants they

operated, down 1 percentage point from 1992, even

though the volume processed or manufactured actually increased.

Member Supply and Location

There were 87,938 member-producers delivering

milk to 222 dairy cooperatives with direct members

(table 5). Most (35,240 producers) were in the East

North Central region, followed by the West North

Central region (22,343 producers) and the North

Atlantic region (15,394 producers). Together, these

regions had 83 percent of total member-producers, but

only 55 percent of member milk delivered to dairy

cooperatives.

Reflecting national milk production trends, the

W estern region replaced the East North Central region

as the top source of cooperative milk volume.

Cooperatives in the Western region received 36.2 billion pounds of milk directly from member-producers.

This represented 29 percent of the milk received directlyfrom member-producers and marketed by all cooperatives, up from 26 percent in 1992 (table 5). The East

North Central region accounted for 26 percent of total

cooperative member milk volume, down from 29 percent in 1992.

3

Table 2— Cooperatives marketing seleted dairy products, 1992 and 1997 1

Item 1992 1997 5-year change

Number of cooperatives Percent

Bulk whole milk 230 204 -11

Packaged fluid milk products 29 21 -28

Ice cream 20 13 -35

Yogurt 19 12 -37

Cottage cheese 22 13 -41

Natural cheese 2 75 42 -44

Cheddar 59 33 -44

Other American 38 14 -63

Mozzarella 27 12 -56

Other Italian 12 7 -42

Other cheese 23 12 -48

Butter 68 36 -47

Nonfat dry milk 26 24 -8

Whole milk powder 9 6 -33

Buttermilk powder 21 16 -24

Dry whey products 17 16 -6

1 A cooperative may market several products.

2 Other than cottage cheese.
Farms in the West North Central and North

Atlantic regions each supplied about 15 percent of the

total U.S. cooperative member volume. The Western,

South Central, and North Atlantic regions increased

milk volumes from cooperative members, up almost

5.5 billion pounds in the Western region. Volume in the

other threeregions declined. The greatest decline was

in the East North Central region, down about 2.2 billion pounds from 1992 to 1997.

In 1997, cooperative marketings of milk for member-producers totaled 125.1 billion pounds or a market

share of 81 percent of all milk, up from 80 percent in

1992. The proportion of milk marketed by cooperatives

varied from 69 percent in the North Atlantic region to

93 percent in the West North Central.

Quantities marketed increased significantly in the

W estern region, but cooperative milk market share

declined from 80 to 73 percent. Cooperative milk volume was up in the South Central region, and regional

market share was up 22 percentage points to 89 percent in 1997. The North Atlantic region also had higher

milk volume and gained 7 market share points. The

South Atlantic region lost 2 market share points, while

East North Central’s market share was constant, even

though milk volume declined in both regions fro m

1992 to 1997. Volume also declined in the West North

Central region, but cooperatives gained 8 market share

points.

Following the national trend of decreasing dairy

farm numbers, dairy cooperatives reported a 20-percent decline in the number of member-producers in 5

years, from 110,440 to 87,938 in 1997. Most of the

decline was in the East North Central region, with

13,775 fewer member-producers in 1997 than in 1992,

or down 28 percent. The Western region had a 26-percent decline or 1,331 fewer member-producers. The

W est North Central region saw more decrease in member-producers (5,033) than the Western region,

although percentage-wise, it was a less steep decline of

18 percent. The only region to increase member-producers was South Central, up 425 or 6 percent.

Milk delivery per member-producer was highest

in the Western region at 9.4 million pounds. It was

about 12 times the milk delivery per member-producer

in the West North Central region and 10 times the East

North Central region rate. Milk delivery per memberproducer increased in all regions. Nationally,it

increased 27 percent from 1.1 million pounds to 1.4

million pounds. The Western region increased from 5.9

million pounds to 9.4 million pounds per member-producer or 59 percent.

4

Table 3— Cooperative share of milk delivered to plants and dealers, 1992 and 1997

Milk from 

nonmembers 

and Total milk

Milk from member- noncooperative handled by United States Cooperative 

Year producers firms cooperatives 1 total share

Million pounds Percent

1992 118,883 3,739 122,622 148,804 82

1997 125,103 2,315 127,418 153,894 83

Percent

5-year change 5 -38 4 3

1 Handled either by physical receipt or by bargaining transactions. Excludes intercooperative transactions.

Table 4— Utilization of cooperatively marketed milk,

1992 and 1997 1

Year Volume Percent

Million pounds

1992

Sold raw 73,934 60

Processed or manufactured 48,688 40 ———— — —

Total 122,622 100

1997

Sold raw 78,234 61

Processed or manufactured 49,184 39 ———— — —

Total 127,418 100

1 Excludes intercooperative volume.
Plant Operations

The 298 cooperative plants performed a variety

of marketing functions in 1997, 83 fewer than in 1992

(table 6). Seventy-one percent of them were in the East

and West North Central regions. The Western region

had 33 plants, for the first time surpassing the 28 in the

North Atlantic region.

Ninety one plants (31 percent) served only as

milk receiving and shipping stations, compared with

81 (21 percent) in 1992. Manufacturing operations were

carried out in 203 plants, down 96 plants (32 percent)

from 1992.

Most manufacturing operations were devoted to

cheesemaking—62 making American, 30 Italian, and 8

process cheese. Most cooperative cheese plants werein

the two North Central and the Western regions.

Butter was manufactured in 35 plants, down

from 48 in 1992. Cooperative butter plants were concentrated in the Western and East and West North

Central regions. Forty-three plants manufactured dry

milk products. Drying operations showed the same

regional concentration. Dry whey products were made

in 40 cooperative plants, again mostly in the same

threeregions. The number of plants making dry whey

products was the only category that remained the

same as in 1992; the number of plants making other

dairy products all declined.

Fifty-four cooperative plants packaged fluid milk

products, down from 75 in 1992. West North Central

region had the most plants, with 19, followed by 13 in

the East North Central and 9 in the Western region.

Twenty-two cooperative plants made ice cream and 14

made cottage cheese. Forty-two plants had activities

not shown in table 6.

5

Table 5— Marketing share of cooperative member’s milk by region, number of producers, and milk delivery

per producer, 1992 and 1997 1

Cooperative Number of Million pounds 

Number of volume of milk in Marketing producers of milk per 

Year and region 2 cooperatives 3 million pounds share (%) 4 delivering producer

1992

North Atlantic 94 16,502 62 17,559 0.9

East North Central 57 34,813 90 49,015 0.7

West North Central 78 18,500 85 27,376 0.7

South Atlantic 19 8,994 92 4,124 2.2

South Central 14 9,326 67 7,188 1.3

Western 29 30,748 80 5,178 5.9 — — ———— — — ———— — —

All regions 5 256 118,883 80 110,440 1.1

1997

North Atlantic 87 18,330 69 15,394 1.2

East North Central 48 32,583 90 35,240 0.9

West North Central 71 18,294 93 22,343 0.8

South Atlantic 14 8,273 90 3,501 2.4

South Central 11 11,383 89 7,613 1.5

Western 28 36,240 73 3,847 9.4 — — ———— — — ———— — —

All regions 5 222 125,103 81 87,938 1.4

1 Includes milk either physically received by cooperatives or marketed by firms.Includes only milk from member-producers, and excludes milk

from nonmembers or from cooperative or noncooperative firms. 2 See figure 1 for states included in each region. 3 Cooperatives having members in the region, but not necessarily headquartered there.

4 Cooperative member volume as a percentage of milk sold to plants and dealers.

5 Number of cooperatives do not add to totals because some receive milk from more than one region.
6

Table 6— Number of plants owned and operated by cooperatives performing various marketing functions, by plant

loacation, 1992 and 1997

Region 1

—————————————————————————————————————————————————————————————————————————————

East West

North North North South South

Marketing function Atlantic Central Central Atlantic Central Western Total

Number of plants

1992

Receive and ship milk 33 78 126 12 16 27 2 292

Make American cheese 4 39 24 0 4 9 80

Make Italian cheese 1 18 17 0 5 5 46

Process cheese 0 2 3 1 2 2 10

Churn butter 6 9 15 1 4 13 48

Package fluid milk 11 13 18 13 7 13 75

Make dry products 5 9 15 1 7 15 52

Make dry whey products 2 10 18 0 4 6 40

Make condensed products 3 6 21 28 1 8 12 76

Make cottage cheese 4 7 6 1 1 6 25

Make ice cream 5 9 13 2 2 6 37

Not operated 0 1 0 0 0 0 1

Other activities 8 16 29 0 1 2 56

Total number of plants 4 38 116 153 19 22 33 381

1997

Receive and ship milk 21 74 94 7 18 28 2 242

Make American cheese 6 28 14 0 4 10 62

Make Italian cheese 0 13 11 0 1 5 30

Process cheese 0 4 3 0 0 1 8

Churn butter 6 7 8 1 3 10 35

Package fluid milk 4 13 19 5 4 9 54

Make dry products 5 8 9 1 5 15 43

Make dry whey products 1 13 13 0 2 11 40

Make condensed products 3 4 24 16 2 3 11 60

Make cottage cheese 3 5 5 0 0 1 14

Make ice cream 2 7 7 0 1 5 22

Not operated 1 2 1 0 0 0 4

Other activities 7 21 10 0 2 2 42

Total number of plants 4 28 107 104 9 17 33 298

1 See figure1 for states included in each region. 2 Out this total, 81 were receiving and shipping stations only in 1992; 91 in 1997.

3 Includes condensed whey.

4 Numbers of plants do not add to totals because some perform more than one function.
Dairy Products Marketed

This section and the tables that follow describe

the net volumes of major dairy products marketed by

cooperatives after subtracting transactions among

cooperatives. Comparisons are made between the net

volumes marketed by cooperatives and total U.S. production. Other tables show the number of cooperatives

marketing dairy products and the volume marketed by

selected size groupings. The tables by size groupings

show both the pounds marketed and the percentage of

total cooperative sales without adjustments for intercooperative transactions.

Raw Whole Milk

Dairy cooperatives most often sold raw whole

milk. In 1997, net raw milk sales by 204 cooperatives

amounted to 78 billion pounds or 61 percent of net

total volume received (tables 2 and 4). This represented an increase of 4.3 billion pounds in milk volume

marketed from 1992, and also an increase in the raw

milk sales as a percentage of total receipts.

Butter

Excluding inter-cooperative transfers, cooperatives marketed a net volume of 698 million pounds of

butter in 1997, down 21 percent from 1992 (table 7).

U.S. butter production was down 16 percent over the

same 5-year period. As a result, cooperatives’ shareof

U.S. production decreased from 65 percent in 1992 to

61 percent in 1997.

7

Table 7— Volume of butter marketed by cooperatives

compared with U.S. production, 1992 and 1997

Cooperative

Marketed by United States share of U.S.

Year cooperatives 1 total production production

Thousand pounds Percent

1992 885,321 1,365,164 65

1997 697,639 1,151,250 61

Percent

5-year change -21 -16

1 Adjusted for intercooperative transactions. Includes purchases

from other sources.

Table 8— Size groups of dairy cooperatives marketing butter, 1992 and 1997

Size group (1,000 pounds)

——————————————————————————————————————————————

Item and year Less than 2,500 2,500-19,999 20,000-39,999 40,000 and over Total

Number

Number of cooperatives

1992 44 9 7 8 68

1997 15 8 7 6 36

Percent 1

Percentage of cooperatives

1992 65 13 10 12 100

1997 42 22 19 17 100

1,000 pounds

Group volume 2

1992 9,087 66,469 201,774 625,446 902,776

1997 4,364 72,385 198,501 488,114 763,364

Percent 1

Group volume as percentage 

of total cooperative vollume

1992 1 7 22 69 100

1997 1 9 26 64 100

1 Percentages may not add to 100 due to rounding.

2 Volume not adjusted for intercooperative transactions.
The number of cooperatives marketing butter

continued to decline—from 68 to 36 between 1992 and

1997 (table 8). Thirteen cooperatives, each handling 20

million pounds or more, marketed 90 percent of the

volume marketed by cooperatives, compared with 15

in the same size group marketing 92 percent of the volume in 1992. The six cooperatives, each marketing 40

million or more pounds of butter, accounted for 64

percent of cooperative butter sales, down from 69 percent marketed by 8 cooperatives in the same size

group in 1992. Volume of those marketing less than 20

million pounds increased by about 2 percent from 1992

to 1997 and accounted for 10 percent of volume marketed by cooperatives in 1997 versus 8 percent in 1992.

Dry Milk Products

Cooperatives marketed 1,054 million pounds of

dry milk products, up 17 percent from 1992 (Table 9)—

nonfat dry milk, dry buttermilk, and dry whole milk.

However, U.S. production grew by 25 percent in the

same 5-year period. Cooperatives lost share of U.S.

production as a result, from 81 percent in 1992 to 76

percent in 1997.

The number of cooperatives marketing dry milk

products declined from 29 to 25 (table 10). Eighty-one

percent of cooperatives’ dry milk products was marketed by nine cooperatives in the 40-million-poundsand-greater size group, compared with 66 percent

marketed by the six cooperatives in the size group in

1992. The volume marketed by cooperatives in the

largest and smallest size groups increased, while the

volume marketed by the two intermediate size groups

declined.

8

Table 9— Volume of dry milk products marketed by

cooperatives compared with U.S. production, 

1992 and 1997

Cooperative

Marketed by United States share of U.S.

Year cooperatives 2 total production production

Thousand pounds

1992 904,411 1,111,470 81

1997 1,054,896 1,394,252 76

Percent

5-year change 17 25

1 Includes nonfat dry milk, and dry buttermilk.

2 Adjusted for intercooperative transactions. Includes purchases

from other sources

Table 10— Size groups of dairy cooperatives marketing dry milk powder 1, 1992 and 1997

Size group (1,000 pounds)

——————————————————————————————————————————————

Item and year Less than 10,000 10,000-19,999 20,000-39,999 40,000 and over Total

Number

Number of cooperatives

1992 8 10 5 6 29

1997 7 6 3 9 25

Percent 2

Percentage of cooperatives

1992 28 34 17 21 100

1997 28 24 12 36 100

1,000 pounds

Group volume 3

1992 16,387 151,898 136,642 601,721 906,648

1997 22,762 89,592 84,318 863,448 1,060,120

Percent 2

Group volume as percentage 

of total cooperative vollume

1992 2 17 15 66 100

1997 2 8 8 81 100

1 Includes nonfat dry milk, dry whole milk, and dry buttermilk.

2 Percentages may not add to 100 due to rounding.

3 Volume not adjusted for intercooperative transactions.
Cheese

In 1997, cooperatives marketed 2,907 million

pounds of natural cheese, excluding cottage cheese, up

3 percent from 1992 (table 11). During this period, the

volume of total cheese made by all U.S. firms increased

13 percent. As a result, cooperatives’ share of the

national cheese market decreased from 43 percent to 40

percent.

Among the 2,907 million pounds of natural

cheese marketed by cooperatives, the vast majority

(1,844 million pounds or 63 percent) was Cheddar

cheese. Cooperative Cheddar cheese sales were 70 percent of the nation’s production. Cooperatives marketed 576 million pounds of Mozzarella cheese or 26 percent of U.S. production in 1997. Other American

cheese, at 275 million pounds, was the third major

cheese category of cooperatives’ sales, accounting for

43 percent of U.S. production.

Cooperative shares in the three major categories

of cheese all declined from 1992, while their shares of

other Italian cheese and other cheese increased.

Sales of other Italian cheese by cooperatives was

112 million pounds or 18 percent of U.S. production.

Cooperatives also marketed 100 million pounds of natural cheese other than American or Italian, a 9 percent

share of U.S. total production of this category of

cheese.

The number of cooperatives marketing cheese

declined from 75 in 1992 to 45 in 1997, reflecting consolidations in the cooperative sector (table 12).

Cooperatives marketing less than 10 million pounds

annually declined from 51 to 26, while those marketing

10 million or more pounds dropped from 24 to 19.

Ninety-two percent of all cooperative cheese sales in

1997 was conducted by the largest 13 cheese marketers.

The 100-million-pounds-and-larger size group

had seven cooperatives, accounting for 2,254 million

9

Table 11— Volume of natural cheese 1, by type, marketed by cooperatives and comparisons with U.S. total

production, 1992 and 1997

Cheese Type 1992 1997 5-year change

1,000 pounds Percent

Marketed by cooperatives 2

Cheddar 1,804,341 1,844,261 2

Other American 290,210 275,133 -5

Mozzarella 568,877 575,576 1

Other Italian 77,364 112,070 45

Other cheese 79,183 100,407 27

Total, natural cheese 2,819,975 2,907,447 3

U.S. total production

Cheddar 2,400,700 2,639,526 10

Other American 535,861 645,677 20

Mozzarella 1,969,106 2,244,005 14

Other Italian 539,471 636,399 18

Other cheese 1,043,153 1,163,411 12

Total, natural cheese 6,488,291 7,329,018 13

Percent

Cooperative percentage of U.S. total production

Cheddar 75 70

Other American 54 43

Mozzarella 29 26

Other Italian 14 18

Other cheese 8 9

Total, natural cheese 43 40

1 Includes all types of cheese except cottage cheese.

2 Does not include purchases from other cooperatives.
pounds (77 percent) of total cooperative cheese volume. That volume was 14 percent higher than the

1,977 million pounds marketed by the five cooperatives in the same size group in 1992.

Packaged Fluid Milk Products

Cooperatives marketed 7,730 million pounds of

packaged fluid milk products in 1997, down in volume

and share of total sales of all U.S. firms (table 13).

Cooperative volume of packaged fluid milk products

decreased 13 percent in 5 years. At the same time, U.S.

total beverage milk decreased only a fraction of a percent. This lowered cooperative market share to 14 percent, a drop of 2 percentage points.

The number of cooperatives marketing packaged

fluid milk products decreased from 29 to 21 in the 5-

year period (table 2).

Cottage Cheese

In 1997, cooperatives marketed 122 million

pounds of cottage cheese, down 27 percent from 1992

(table 14). Cooperative share of total U.S. production

declined from 13 to 10 percent. The cooperative market

share drop resulted from a 10 percent decline in U.S.

cottage cheese production, which was slower than

decline in cooperative production. Cooperatives marketers of cottage cheese dropped from 22 to 13 during

the half decade (table 2).

Ice Cream and Ice Cream Mix

Cooperatives were a minor player in the ice

cream business. Their share of the Nation’s production

decreased from 10 to 6 percent (table 15).Icecream

sales by cooperatives decreased 33 percent while U.S.

production increased 11 percent. Only 13 cooperatives

marketed ice cream versus 20 in 1992 (table 2).

In 1997, cooperatives reported sales of 78 million

gallons of ice cream mix or 11 percent of U.S. production (table 16). This does not include mixes used by

cooperatives to make ice cream or ice milk.

Yogurt

Dairy cooperatives played an even smaller role in

yogurt than in ice cream. Although the volume of

yogurt marketed by cooperatives increased 59 percent

since 1992, cooperative market share was only 4 percent in 1997 (table 17).

10

Table 12— Size groups of dairy cooperatives marketing cheese, 1992 and 1997

Size group (1,000 pounds)

——————————————————————————————————————————————

Less than 10,000- 20,000- 40,000- 100,000 and

Item and year 10,000 19,999 39,999 99,999 and over Total

Number

Number of cooperatives

1992 51 8 5 6 5 75

1997 26 1 5 6 7 45

Percent 1

Percentage of cooperatives

1992 68 11 7 8 7 100

1997 58 2 11 13 16 100

1,000 pounds

Group volume 2

1992 72,538 115,573 160,458 506,129 1,977,245 2,831,943

1997 70,670 * 150,258 435,300 2,253,662 2,909,890

Percent 1

Group volume as percentage

of total cooperative volume

1992 3 4 6 18 70 100

1997 2 * 5 15 77 100

1 Percentages may not add to 100 due to rounding.

2 Volume not adjusted for intercooperative transactions.

* Included in the previous group.
Bulk Condensed Milk Products

In 1997, U.S. firms produced 1,248 million

pounds of bulk condensed milk products, down 23

percent since 1992. Simultaneously, cooperatives had

an 86-percent production increase to 817 million

pounds. Cooperative share was 65 percent of total U.S.

production, up substantially from 27 percent in 1992

(table 18).

Dry Whey Products

The percentage of dry whey products sold by

cooperatives dipped from 52 percent to 48 percent of

total U.S. production (table 19). In 1997, cooperatives

marketed 907 million pounds of dry whey products,

net of inter-cooperative transfers. Dry whey products

production by cooperatives was down 1 percent fro m

1992 to 1997, while U.S. production increased 7 percent

in the same period.

Cooperative Concentration Ratios

The largest cooperatives’ proportion of all cooperatives’ receipts of milk from farmers (both members

and nonmembers), milk processed or manufactured,

and sales of selected products for 1992 and 1997 are

shown in table 20. The larger cooperatives’ proportion

ofreceipts, processed or manufactured volume, and

sales are also shown as a percent of total U.S. production. However, the cooperatives in each size group are

not necessarily the same for each product.

11

Table 13— Volume of packaged fluid milk products

marketed by cooperatives compare with all

processors, 1992 and 1997

Total Cooperative

Marketed by beverage percentage

Year cooperatives 1 milk 2 oftotal

Million pounds Percent

1992 8,917 55,204 16

1997 7,730 55,122 14

Percent

5-year change -13 -0.1

1 Adjusted for intercooperative transactions. Includes purchases

from other sources.

2 Livestock, Dairy and Poultry Situation and Outlook, LDP-M-52,

Economics Research Service, U.S. Department of Agriculture,

July 16, 1998.

Table 14— Volume of cottage cheese marketed by

cooperatives compared with all processors, 1992

and 1997

Cooperative

Marketed by Total percentage

Year cooperatives 1 manufactured oftotal

Million pounds Percent

1992 166 1,289 13

1997 122 1,165 10

Percent

5-year change -27 -10

1 Adjusted for intercooperative transactions. Includes purchases

from other sources.

Table 15— Volume of ice cream marketed by

cooperatives compared with all processors, 1992

and 1997

Cooperative

Marketed by Total percentage

Year cooperatives 1 manufactured oftotal

Million gallons Percent

1992 123 1,204 10

1997 83 1,332 6

Percent

5-year change -33 11

1 Adjusted for intercooperative transactions. Includes purchases

from other sources.

Table 16— Volume of ice cream mix marketed by

cooperatives compared with all processors, 1992

and 1997

Cooperative

Marketed by Total percentage

Year cooperatives 1 manufactured oftotal

Million gallons Percent

1992 81 644 13

1997 78 705 11

Percent

5-year change -4 9

1 Adjusted for intercooperative transactions. Includes purchases

from other sources.
The 20 largest cooperatives, in terms of receipts

of producer milk, received 63 percent of the total U.S.

volume of milk sold to plants and dealers, up from 58

percent in 1992. Their volume represented 77 percent

of producer milk marketed by farmers through cooperatives, up from 71 percent.

The 20 largest cooperatives with processing and

manufacturing operations accounted for 89 percent of

cooperative processing milk volume, up from 85 percent in 1992. The volume was 34 percent of the total

U.S. milk volume sold to plants and dealers, down

from 36 percent 5 years ago.

In 1997, the 20 largest cooperatives had an overwhelming share among cooperatives of these products:

packaged fluid milk distribution, 100 percent; butter,

99 percent; dry milk products, 100 percent; and natural

cheese, 98 percent.

However, compared with the Nation’s total production, their shares were less significant. The 20

largest dairy cooperatives sold only 13 percent of the

Nation’s packaged fluid milk and 39 percent of cheese.

They dominated only in marketing the so-called last

resort products: butter and dry milk products, even

though their market shares of these two products

declined.

The four largest cooperatives in each product line

continued to sell a significant proportion of total cooperative volume. Their shares of total U.S. production of

butter increased somewhat, while their shares of U.S.

cheese and dry milk products have declined.

12

Table 17— Volume of yogurt marketed by cooperatives

compared with all processors, 1992 and 1997

Cooperative

Marketed by Total percentage

Year cooperatives 1 manufactured oftotal

Million pounds Percent

1992 56 1,757 3

1997 89 1,990 4

Percent

5-year change 59 13

1 Adjusted for intercooperative transactions. Includes purchases

from other sources.

Table 19— Volume of dry whey products marketed by

cooperatives compared with all processors, 1992

and 1997

Cooperative

Marketed by Total percentage

Year cooperatives 1 manufactured oftotal

Million pounds Percent

1992 920 1,781 52

1997 907 1,905 48

Percent

5-year change -1 7

1 Adjusted for intercooperative transactions. Includes purchases

from other sources.

Table 18— Volume of bulk condensed milk marketed by

cooperatives compared with all processors, 1992

and 1997

Cooperative

Marketed by Total percentage

Year cooperatives 1 manufactured oftotal

Million pounds Percent

1992 439 1,624 27

1997 817 1,248 65

Percent

5-year change 86 -23

1 Adjusted for intercooperative transactions. Includes purchases

from other sources.
13

Table 20— Share of milk received from farmers, milk processed or manufactured, and selected product sales

for largest dairy cooperatives, 1992 and 1997 1

Milk

Receipts of processed or Packaged Nonfat dry Natural

producer milk manufactured fluid milk Butter milk cheese

Item ———————————————————————————————————————————

1992 1997 1992 1997 1992 1997 1992 1997 1992 1997 1992 1997

Percentage of all cooperatives

Share of total cooperative volume 2

4 largest cooperatives 30 35 35 46 61 76 46 53 54 52 66 63

8 largest cooperatives 44 52 56 65 85 95 69 76 75 80 80 81

20 largest cooperatives 71 77 85 89 100 100 97 99 98 100 96 98

Percentage of U.S. production 

Share of total U.S. volume

4 largest cooperatives 25 29 15 18 10 10 30 32 49 41 29 25

8 largest cooperatives 36 42 24 25 13 12 45 46 67 64 35 32

20 largest cooperatives 58 63 36 34 16 13 63 60 88 80 42 39

1 Group of cooperatives may change from product to product.

2 Volume adjusted for intercooperative transactions.
U.S. Department of Agriculture

Rural Business–Cooperative Service

Stop 3250

Washington, D.C. 20250-3250

Rural Business–Cooperative Service (RBS) provides research,

management, and educational assistance to cooperatives to

strengthen the economic position of farmers and other rural

residents. It works directly with cooperative leaders and

Federal and State agencies to improve organization,

leadership, and operation of cooperatives and to give guidance

to further development.

The cooperative segment of RBS (1) helps farmers and other

rural residents develop cooperatives to obtain supplies and

services at lower cost and to get better prices for products they

sell; (2) advises rural residents on developing existing

resources through cooperative action to enhance rural living;

(3) helps cooperatives improve services and operating

efficiency; (4) informs members, directors, employees, and the

public on how cooperatives work and benefit their members

and their communities; and (5) encourages international

cooperative programs. RBS also publishes research and

educational materials and issues Rural Cooperatives magazine.

The U.S. Department of Agriculture (USDA) prohibits

discrimination in all its programs and activities on the basis of

race, color, national origin, gender, religion, age, disability,

political beliefs, sexual orientation, and marital or family

status. (Not all prohibited bases apply to all programs.)

Persons with disabilities who require alternative means for

communication of program information (braille, large print,

audiotape, etc.) should contact USDA’s TARGET Center at

(202) 720-2600 (voice and TDD).

To file a complaint of discrimination, write USDA, Director,

Office of Civil Rights, Room 326-W, Whitten Building, 14th and

Independence Avenue, SW, Washington, D.C. 20250-9410 or

call (202) 720-5964 (voice or TDD). USDA is an equal

opportunity provider and employer.