United States

Department of

Agriculture

Rural Business–

Cooperative

Service

RBS Research

Report 201

Marketing Operations 

Of Dairy Cooperatives,

2002
Abstract The Nation's 196 dairy cooperatives marketed 139.2 billion pounds of milk delivered by

its 61,390 member-producers, or 83 percent of all milk sold to plants and dealers, in

2002. (Including non-member milk, the volume marketed by dairy cooperatives was

144.3 billion pounds, or 86 percent of the U.S. total.) Forty-six cooperatives operated

174 dairy processing and manufacturing plants, 19 handled milk through receiving stations only and 131 had no milk-handling facilities. In addition, cooperatives had investment in but did not directly operate 75 dairy plants. Cooperatives marketed 71 percent

of the Nation's butter, 86 percent of the nonfat dry milk, 40 percent of the natural

cheese, 7 percent of the packaged fluid milk products, 9 percent of the cottage

cheese, 3 percent of the ice cream, 6 percent of the ice cream mix, 2 percent of the

yogurt, 53 percent of the bulk condensed milk products, 52 percent of the dry whey

products, 13 percent of the sour cream, and 34 percent of the condensed buttermilk.

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

Marketing Operations of Dairy Cooperatives, 2002

K. Charles Ling

U.S. Department of Agriculture

Rural Development

Rural Business-Cooperative Service

STOP 3252, 1400 Independence Ave., S.W.

Washington, DC 20250-3252

Research Report 201

February 2004
Preface Information for this report came primarily from the responses to a survey of all U.S.

dairy cooperatives. In some cases, data were estimated for non-respondents based on

their financial statements or other sources.

Cooperatives were asked to supply information on their milk marketing operations for

the fiscal year ending in calendar 2002. These fiscal years vary within the calendar

year, so their data reflect some differences in time periods. This report updates RBS

Research Report 173, which was based on cooperative operations for the fiscal year

ending in calendar 1997.

Industry evolution and structural changes in recent years added some new dimensions

to the operations of dairy cooperatives. This report offers some information which was

not previously recorded.

Unless otherwise specified, when calculating cooperative marketing shares of various

products, information for U.S. total volumes was from the latest statistics reported in

the annual summaries of Milk Production, Disposition and Income and Dairy Products,

published by USDA National Agricultural Statistics Service.

The cooperation of the responding cooperatives and other persons who supplied the

necessary data for this report is gratefully acknowledged. The Statistical Services staff

in RBS, especially Katherine DeVille, helped maintain the database for this survey.

i
Contents Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iii

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

Milk Volume and Utilization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Member Supply and Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Plant Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

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

Raw milk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

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

Dry milk products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Cheese . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Packaged fluid milk products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Cottage cheese . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Ice cream and ice cream mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Yogurt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Bulk condensed milk products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Dry whey products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Sour cream and condensed buttermilk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

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

ii
Highlights Dairy cooperatives' share of total milk volume sold by farmers to plants and dealers

increased from 83 percent to 86 percent between 1997 and 2002, while member-producer milk alone inched up from 82 percent to 83 percent of all milk. This occurred

despite the fact that dairy cooperatives decreased 13 percent, from 226 to 196.

Cooperatives that processed and manufactured dairy products dropped from 63 to 46.

The number of cooperatives selling raw milk fell from 204 to 174.

Sixty-two percent of total cooperative volume was sold as raw milk in 2002 versus 61

percent in 1997. The other 38 percent was manufactured at plants owned and operated by cooperatives.

There were 61,390 member-producers marketing milk through 194 dairy cooperatives

that had direct members. Three regions--East North Central, West North Central, and

North Atlantic--together accounted for 84 percent of all member-producers and 52 percent of cooperative milk volume.

Dairy cooperatives operated 209 plants in 2002, 35 for receiving and shipping milk

only, 49 for manufacturing American cheese, 21 for Italian cheese, 30 for packaging

fluid milk products, 43 for manufacturing dry milk products, and 27 for churning butter.

Dairy cooperatives also had investment in 75 dairy plants that they did not directly

operate. The most numerous were 52 plants that packaged fluid milk products, 18 that

made other dairy products, and 7 that made ice cream. (The production of these plants

is not counted as cooperative volume.)

Cooperative marketing of butter, dry milk products and cheese increased from 1997 to

2002. Cooperatives' share of butter increased from 61 percent to 71 percent during the

half decade, as did dry milk products (nonfat dry milk, dry whole milk, and dry buttermilk), which went from 76 percent to 85 percent. Cooperatives continued to have an

overwhelming share of nonfat dry milk, which was 86 percent in 2002, a 5-point

increase. Cheese marketed by cooperatives grew 17 percent, from 2,907 million

pounds to 3,402 million pounds, while nationally cheese production also increased 17

percent. Cooperatives' share of the natural cheese market was unchanged at 40 percent.

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

in share of market. The 3,810 million pounds marketed was 7 percent of the Nation's

production, down from 14 percent in 1997. Cooperatives' sales of cottage cheese as a

percentage of national production, at 9 percent, were one point lower than in 1997.

Share of ice cream decreased from 6 percent to 3 percent. In 2002, cooperatives marketed 6 percent of the Nation's ice cream mix, 2 percent of yogurt, 53 percent of bulk

condensed milk, 52 percent of dry whey products, 13 percent of sour cream, and 34

percent of condensed buttermilk.

Although most dairy cooperatives continue to be relatively small business organizations, through consolidation and growth, an increasing amount of dairy products was

sold by larger cooperatives. The member-producer milk of the four largest dairy cooperatives represented 41 percent of U.S. milk sold to plants and dealers and that of the

eight largest accounted for 52 percent. The largest cooperatives also produced major

shares of commodity products such as butter and nonfat dry milk.

iii
Marketing Operations of Dairy

Cooperatives, 2002

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. Cooperatives also have investment in various dairy firms to enhance their market position.

This report, eighth 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 1997 and 2002, the number of dairy

cooperatives decreased 13 percent, from 226 to 196; the

pace was slower than the 15-percent decrease recorded

from 1992 to 1997. In 2002, 172 or 88 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 the most with 85 dairy cooperatives. It was also

the only region to show an increase of dairy cooperatives from 1997. Those numbers dropped in every

other region. The greatest reduction by 2002 was 15 in

the West North Central region. In the South Atlantic

and the Western regions, each counted six fewer cooperatives.

In 2002, 46 cooperatives (23 percent of total)

processed and manufactured dairy products, down

from 63 cooperatives (28 percent of total) in 1997.

Seventy-six percent of the decline occurred in the

Western, West North Central, and East North Central

regions. However, the East North Central region still

had the most (21) cooperatives with plant operations.

Cooperatives that operated only milk-receiving

stations decreased from 25 to 19 by 2002. The West

North Central region dropped 10 cooperatives, while

there was some gain in the East North Central, South

Central, and Western regions.

Cooperatives that did not physically handle milk

and other dairy products decreased from 138 to 131.

More than half (77 or an increase of 5 from 1997) were

in the North Atlantic region, the only region to show

an increase.

Most cooperatives (89 percent of all dairy cooperatives) sold at least some bulk raw milk (table 2), but

those marketing selected major dairy products continued to decline. Seventeen fewer cooperatives marketed

butter and 10 fewer marketed natural cheese than in

1997. The story was similar in all cheese categories--the

24 cooperatives marketing Cheddar cheese were down

by 9; the 10 handling other American cheese were

down by 4; and the 6 selling Italian cheese were down

by 6.

Proportionately, the largest drops in cooperatives

marketing various products were in Italian cheese and

yogurt (50 percent each), butter (47 percent), and ice

cream (46 percent).

Milk Volume and Utilization

In 2002, cooperatives received or bargained for

144.3 billion pounds of milk (net of inter-cooperative

transfers), or 86 percent of total volume sold by farmers to the Nation's plants and dealers (table 3).

Cooperatives' share was up 3 percentage points from

1
Figure 1—Number of Dairy Cooperatives by Headquarters Region, 2002

2

West North Central

45 East North Central

42

North

Atlantic

85

South Atlantic

3

South Central

3

Western

18

Includes

Alaska

and

Hawaii

Dairy cooperatives numbered 196 in 2002, a decrease of 30 from 1997. The North Atlantic was the only region to show an

increase of dairy cooperatives headquartered there. The numbers dropped in every other region. The greatest reduction during

the five-year study period was 15 in the West North Central region.
3

Table 1—Dairy cooperatives by type of operation and by headquarters region, 1997 and 2002

Processing and Operating milk Not operating milk

manufacturing dairy receiving facilities plants or receiving

Region1 products only facilities Total

1997 2002 1997 2002 1997 2002 1997 2002

North Atlantic 8 7 3 1 72 77 83 85

East North Central 24 21 1 5 19 16 44 42

West North Central 14 10 20 10 26 25 60 45

South Atlantic 3 1 1 0 5 2 9 3

South Central 1 0 0 2 5 1 6 3

Western 13 7 0 1 11 10 24 18

________ _________ _________ _________ _________ __________ _________ __________

All regions 63 46 25 19 138 131 226 1962

Percentage of

total cooperatives 28 23 11 10 61 67 100 100

1 Figure 1 shows states by region

2 In addition, two dairy cooperatives reported that they were winding down business in early 2003 and that they did not market milk in 2002

Table 2—Cooperatives marketing selected dairy products, 1997 and 20021

Item 1997 2002 5-year change

Number

Bulk raw milk 204 174 -30 -15%

Butter 36 19 -17 -47%

Nonfat dry milk 24 17 -7 -29%

Dry whole milk 6 4 -2 -33%

Dry buttermilk 16 11 -5 -31%

Natural cheese2 42 32 -10 -24%

Cheddar 33 24 -9 -27%

Other American 14 10 -4 -29%

Italian 12 6 -6 -50%

Swiss cheese3 5

Other cheeses4 12 11

Packaged fluid milk products 21 16 -5 -24%

Cottage cheese 13 9 -4 -31%

Ice cream 13 7 -6 -46%

Yogurt 12 6 -6 -50%

Dry whey products 16 13 -3 -19%

Ice cream mix3 8

Bulk condensed milk3 14

Sour cream3 8

Condensed buttermilk3 6

1 A cooperative may market several products.

2 Other than cottage cheese.

3 Separately counted for the first time in the current survey.

4 Five-year change was not calculated due to different definitions for the category; for 1997, other cheeses included Swiss cheese.
83 percent in 1997. Cooperatives= volume increased 13

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

plants and dealers rose 10 percent.

Of the 144.3 billion pounds of milk marketed by

dairy cooperatives in 2002, 96 percent (139.2 billion

pounds or 83 percent of all U.S. milk) was delivered by

member-producers, the rest from nonmembers or noncooperative firms. Member milk deliveries increased

11 percent, while milk from other sources more than

doubled (table 3).

Cooperatives sold 62 percent of their volume as

raw milk, up 1 percentage point from 1997 (table 4). In

other words, cooperatives processed or manufactured

38 percent of the milk in the plants they operated.

Market strategy changes and industry restructuring in recent years caused a large volume of the raw

milk to be shipped to dairy plants in which cooperatives had an investment but did not directly operate.

Declining cooperative plant numbers and decreases in

market shares of some products to some extent were

the results of this market evolution.

Member Supply and Location

There were 61,390 member-producers marketing

milk through 194 dairy cooperatives that had direct

members (two cooperatives did not have direct members). Most (24,314 producers) were in the East North

Central region, followed by the West North Central

region (14,199 producers) and the North Atlantic

region (12,886 producers). Together, these regions had

84 percent of total member-producers, but only 52 percent of member milk (table 5).

Every region of the Nation seemed to be adequately served by dairy cooperatives. The South

Atlantic and South Central regions were each served

by eight cooperatives, while 87 cooperatives had members in the North Atlantic region.

In 2002, the Western region was the top source of

cooperative milk volume. Cooperatives there marketed

49.1 billion pounds of member milk. This represented

35 percent of the member milk marketed by all cooperatives, up from 29 percent in 1997 (table 5). The East

North Central region accounted for 25 percent of the

total member milk volume, down from 26 percent in

1997. Farms in the North Atlantic and West North

Central regions, respectively, supplied 14 and 13 percent of the total U.S. cooperative member volume.

4

Table 3—Cooperative share of milk delivered to plants and dealers, 1997 and 2002

Milk from Cooperative share of U.S. total

sources other Total milk _____________________________

Milk from member- than handled by United States Member Total milk

Year producers cooperatives1 cooperatives2 total milk handled

Million pounds

1997 125,103 2,315 127,418 153,405 82% 83%

2002 139,205 5,144 144,349 168,617 83% 86%

5-year change 11% 122% 13% 10%

1 Milk from nonmembers and noncooperative firms.

2 Handled either by physical receipt or by bargaining or servicing transactions. Excludes inter-cooperative shipment.

Table 4—Utilization of cooperatively marketed milk,

1997 and 20021

Year Volume Percent

Million pounds

1997

Sold raw2 78,234 61

Processed or manufactured 49,184 39

_______ ___

Total 127,418 100

2002

Sold raw2 89,203 62

Processed or manufactured 55,146 38

_______ ___

Total 144,349 100

1 Excludes inter-cooperative volume.

2 Includes milk shipped to plants which cooperatives invested in but

did not directly operate.
5

The Western, East North Central, North Atlantic,

and South Atlantic regions increased milk volumes

from cooperative members. The greatest increase was

in the Western region, up 12.8 billion pounds in five

years. Volume in the other two regions declined, but

mostly in the South Central region--down 1.6 billion

pounds (14 percent) from 1997 to 2002.

In 2002, cooperative milk volume from memberproducers totaled 139.2 billion pounds or a market

share of 83 percent of all U.S. milk, up from 82 percent

in 1997. The proportion of milk marketed by cooperatives varied among the regions--from 72 percent in the

North Atlantic region to 95 percent in the South

Atlantic region.

The 14-percent decline in member milk volume in

the South Central region caused cooperative regional

milk market share to decline from 89 to 87 percent. The

West North Central region also lost one market share

point because of lower member milk volume.

Elsewhere, both member milk volume and cooperative

share were up in every region. Among all regions, the

South Atlantic had the lowest member milk volume

but the highest regional share. Its 5-point gain from

1997 to 95 percent in 2002 was the greatest among all

regions.

Following the national trend of decreasing dairy

farm numbers, dairy cooperatives reported a 30-percent decline in the number of member-producers in 5

years--87,938 to 61,390. The greatest decline was in the

East North Central region, which had 10,926 fewer

member-producers and accounted for 41 percent of the

total decline. However, percentage-wise by region, the

East North Central had a less steep decline (31 percent)

than the 52-percent decrease in the South Central

region or the 36-percent decrease in the West North

Central region. Member-producers declined the least

in the Western region, down 243 or only 6 percent.

Milk delivery per member-producer was highest

in the Western region at 13.6 million pounds. It was

about 11 times member delivery in the West North

Table 5—Cooperative member milk by region, number of producers, and milk delivery per producer, 1997 and

20021

Cooperative Cooperative- Numbers of Million pounds of

Number of member-producer milk in regional member-producers milk per

Year and region2 cooperatives3 million pounds share (%)4 delivering producer

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 94 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

___________ __________ __________ __________ ____________

All5 222 125,103 82 87,938 1.4

2002

North Atlantic 87 19,826 72 12,886 1.5

East North Central 53 34,210 93 24,314 1.4

West North Central 53 17,893 93 14,199 1.3

South Atlantic 8 8,448 95 2,770 3.0

South Central 8 9,752 87 3,617 2.7

Western 24 49,076 75 3,604 13.6

___________ __________ __________ __________ ____________

All5 194 139,205 83 61,390 2.3

1 Milk from member-producers only.

2 Figure 1 shows states by region.

3 Cooperatives having member-producers in the region, but not necessarily headquartered there.

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

5 Number of cooperatives do not add to all region total because some had member-producers in more than one region.
6

Central region and 10 times the East North Central

region rate. But per-member deliveries were up in all

regions in the last 5 years. Nationally, it increased 59

percent from 1.4 million pounds to 2.3 million pounds.

The Western region showed a 45-percent increase from

9.4 million pounds to 13.6 million pounds.

Plant Operations

The 209 cooperative plants, down 70 from 1997,

performed a variety of marketing functions in 2002

(table 6). More than two-thirds (67 percent) were in the

Table 6—Number of dairy plants owned and operated and partially owned by cooperatives performing various

marketing functions, by plant location, 1997 and 20021

Owned and operated by cooperatives1

___________________________________________________________________________

South Partially

Atlantic owned and

East West and are not

North North North South directly

Marketing function Atlantic Central Central Central2 Western Total operated3

Number

1997

Receive and ship milk4 21 74 94 25 28 242 0

Make American cheese 6 27 14 4 10 61 1

Make Italian cheese 0 13 11 1 5 30 0

Process cheese 0 4 3 0 1 8 0

Churn butter 6 7 8 4 10 35 0

Make dry products 5 8 9 6 15 43 0

Make dry whey products 1 13 13 2 11 40 0

Make condensed products5 4 24 16 5 11 60 0

Package fluid milk 4 11 13 5 8 41 13

Make ice cream 2 6 6 1 4 19 3

Make cottage cheese 3 5 3 0 1 12 2

Other activities6 7 21 10 2 2 42 0

Total7 27 102 96 22 32 279 15

2002

Receive and ship milk4 11 48 36 5 22 122 0

Make American cheese 3 24 11 0 11 49 2

Make Italian cheese 2 13 4 0 2 21 0

Make other cheeses 0 17 3 0 0 20 1

Churn butter 5 8 4 3 7 27 3

Make dry products 6 8 7 5 17 43 0

Make dry whey products 2 12 10 0 4 28 2

Make condensed products5 4 26 14 7 18 69 1

Package fluid milk 4 12 7 1 6 30 52

Make ice cream 0 7 4 1 4 16 7

Make cottage cheese 2 5 3 1 1 12 2

Other activities8 6 6 9 2 1 24 18

Total7 18 89 52 13 37 209 75

1 Figure 1 shows states by region.

2 Combined to avoid revealing individual cooperative information.

3 Partially owned through investment and are not directly operated by the investing cooperative(s).

4 Of plants performing this function, 91 were receiving stations only in 1997, and 35 in 2002.

5 Includes condensed whey.

6 Includes other cheeses.

7 Number of plants do not add to totals because some perform more than one function.

8 Includes culture products, process cheese, dairy ingredients, etc.
7

East and West North Central regions. The Western

region had 37 plants, up 4 from 1997. It was the only

region that showed an increase in plant number from

5 years ago.

Thirty-five plants served only as milk receiving

and shipping stations, compared with 91 in 1997.

Manufacturing operations were carried out in 174

plants, down 14 from 1997.

Sixty-nine plants made condensed products.

Many manufacturing operations were devoted to

cheesemaking--49 American, 21 Italian, and 20 other

cheeses. The East North Central region had the most

cooperative cheese plants in every category, followed

by the West North Central and the Western regions.

Butter manufacturing plants declined from 35 to

27. Forty-three plants manufactured dry milk products, unchanged from 1997. But there were regional

shifts in the last five years, with the Western region

having 17 plants, the most among all regions. Dry

whey products were made in 28 cooperative plants,

mostly in the East and the West North Central regions.

Thirty cooperative plants packaged fluid milk

products, down from 41 in 1997. East North Central

had 12, West North Central had 7, and Western region

had 6. Sixteen cooperative plants made ice cream and

12 made cottage cheese. In 2002, twenty-four plants

had activities not shown in table 6.

Cooperatives had an investment in but did not

directly operate 75 dairy plants, up five times from

1997. They concentrated in making highly perishable

or nontraditional products, including 52 plants that

packaged fluid milk products, 7 made ice cream, and

18 made other dairy products.

Dairy Products Marketed

This section and the accompanying tables

describe the net volumes of major dairy products marketed by cooperatives. Comparisons are made

between the volumes marketed by cooperatives and

total U.S. production.

Raw milk—Dairy cooperatives most often sold raw

milk. In 2002, net raw milk sales by 174 cooperatives

amounted to 89 billion pounds or 62 percent of net

total volume marketed (tables 2 and 4). This

represented an increase of 11 billion pounds of milk

sold raw from 1997, up 1 point in the raw milk sales as

a percentage of total volume marketed.

Butter—Cooperatives marketed 956 million pounds

of butter in 2002, up 37 percent from 1997 (table 7).

U.S. butter production was up 18 percent over the

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

U.S. production increased from 61 percent in 1997 to

71 percent in 2002. The number of cooperatives

marketing butter declined from 36 to 19 (table 2).

Dry milk products—A total of 1,423 million pounds

of dry milk products (nonfat dry milk, dry whole

milk, and dry buttermilk) was marketed by 17

cooperatives in 2002, up 35 percent from 1997 (tables 2

and 8). U.S. production of these dry milk products

grew by 20 percent in the same 5-year period.

Table 8—Volume of dry milk products marketed by

cooperatives compared with U.S. production, 1997

and 2002

Cooperative

Marketed by United States share of

Year cooperatives total production U.S. total

Thousand pounds

1997

Dry whole milk 27,564 122,091 23%

Nonfat dry milk 984,946 1,222,853 81%

Dry buttermilk 42,386 49,308 86%

_________ _________ ____

Total 1,054,896 1,394,252 76%

2002

Dry whole milk 22,425 47,411 47%

Nonfat dry milk 1,352,016 1,576,556 86%

Dry buttermilk 48,104 54,886 88%

_________ _________ ____

Total 1,422,545 1,678,853 85%

5-year change 35% 20%

Table 7—Volume of butter marketed by cooperatives

compared with U.S. production, 1997 and 2002

Cooperative

Marketed by United States share of

Year cooperatives total production U.S. total

Thousand pounds

1997 697,639 1,151,250 61%

2002 956,211 1,355,148 71%

5-year change 37% 18%
8

Cooperatives gained share of U.S. production as a

result, from 76 percent in 1997 to 85 percent in 2002.

Cooperatives marketed 47 percent of the Nation’s

dry whole milk, up from 23 percent in 1977. Their

shares of nonfat dry milk and dry buttermilk were

overwhelming, at 86 percent (up from 81 percent in

1997) and 88 percent (up from 86 percent), respectively.

Cheese—In 2002, cooperatives marketed 3,402

million pounds of natural cheese, excluding cottage

cheese, up 17 percent (table 9), the same growth rate as

the volume of natural cheese made by all U.S. firms.

As a result, cooperatives' share of the natural cheese

market remained unchanged at 40 percent.

Among the 3,402 million pounds of natural

cheese marketed by cooperatives, the vast majority

(2,436 million pounds or 72 percent) was American

cheese, followed by Italian cheese (765 million pounds

or 22 percent).

American cheese marketed by cooperatives grew

15 percent from 1997, while U.S. production increased

13 percent, resulting in cooperative share increased by

one point, from 65 percent to 66 percent in 2002.

In the same five years, cooperative Italian cheese

marketing increased by 11 percent, half the U.S.

growth rate of 22 percent. Hence, cooperative share of

U.S. total dipped two points, from 24 percent to 22 percent.

Table 9—Volume of natural cheese1, by type, marketed by cooperatives compared with U.S. production, 1997

and 2002

Cheese type 1997 2002 5-year change

Thousand pounds

Marketed by cooperatives

American types 2,119,394 2,435,938 15%

Italian varieties 687,646 765,426 11%

Swiss cheese2 39,509

Other cheeses3 100,407 160,817

___________ ___________ __________

Total, natural cheese 2,907,447 3,401,691 17%

U.S. total production

American types 3,285,558 3,709,015 13%

Italian varieties 2,881,445 3,506,478 22%

Swiss cheese 254,096

Other cheeses3 1,163,411 1,129,889

___________ ___________ __________

Total, natural cheese 7,330,414 8,599,478 17%

Cooperative share of U.S. total

American types 65% 66%

Italian varieties 24% 22%

Swiss cheese2 16%

Other cheese3 9% 14%

___________ ___________

Total, natural cheese 40% 40%

1 Includes all types of natural cheese except cottage cheese.

2 Cooperative Swiss cheese was separately counted for the first time in the current survey.

3 For 1997, other cheeses included Swiss cheese.
Cooperative Swiss cheese was separately counted

for the first time in the current survey. The 40 million

pounds marketed by cooperatives had a 16-percent

share of U.S. production in 2002.

Cooperatives also marketed 161 million pounds

of natural cheese other than American, Italian, or

Swiss in 2002. This accounted for 14 percent of U.S.

production of other cheeses. Cooperative marketing of

other cheeses (even excluding Swiss cheese in 2002)

showed very substantial increases through the years.

The number of cooperatives marketing natural

cheese decreased by 10, from 42 in 1997 to 32 in 2002

(table 2). Of the 32 cooperatives, 24 marketed Cheddar

cheese; 10, other American cheese; 6, Italian cheese; 5,

Swiss cheese; and 11, other natural cheese.

Packaged fluid milk products—Cooperatives

marketed 3,810 million pounds of packaged fluid milk

products in 2002, down in volume and share of total

packaged sales of all U.S. firms (table 10). Cooperative

volume of packaged fluid milk products decreased 51

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

beverage milk decreased only 1 percent. This halved

cooperative market share to 7 percent.

The number of cooperatives marketing packaged

fluid milk products decreased from 21 to 16 in the 5-

year period (table 2). There were 41 cooperative plants

that packaged fluid milk products in 1997 versus 30 in

2002 (table 6).

On the other hand, cooperatives had investment

in 52 plants in 2002 that packaged fluid milk products,

but did not directly operate them. The production of

these plants is not counted as cooperative volume.

Cottage cheese—in 2002, cooperatives marketed 111

million pounds of cottage cheese, down 9 percent

(table 11). Cooperative share of total U.S. production

declined from 10 to 9 percent. The drop resulted from

a 2-percent increase in U.S. cottage cheese production,

while cooperative volume declined by 9 percent.

Cooperative marketers of cottage cheese dropped from

13 to 9 during the half decade (table 2).

Ice cream and ice cream mix—Cooperatives were

a minor player in the ice cream business, marketing 38

million gallons in 2002. Their share of the Nation's

production decreased from 6 to 3 percent (table 12). Ice

cream sales by cooperatives decreased 54 percent

while U.S. production increased 2 percent. Only seven

cooperatives marketed ice cream versus 13 in 1997

(table 2).

In 2002, eight cooperatives reported sales of 47

million gallons of ice cream mix or 6 percent of U.S.

production (tables 2 and 13). This was a drop from 11

percent share in 1997. In the 5-year period, cooperative

volume decreased 40 percent while U.S. production

increased 5 percent.

Yogurt—Dairy cooperatives played an even smaller

role in yogurt than in ice cream. The volume of yogurt

marketed by cooperatives decreased 57 percent since

1997; market share occupied by the 6 cooperatives was

only 2 percent in 2002 (tables 2 and 14).

Bulk condensed milk products—In 2002, U.S.

firms produced 1,189 million pounds of bulk

condensed milk products, down 7 percent. At the same

time, the volume sold by cooperatives had a 23-percent 

9

Table 10—Volume of packaged fluid milk products

marketed by cooperatives compared with U.S. total,

1997 and 2002

U. S. total Cooperative

Marketed by beverage share of

Year cooperatives milk sales1 U.S. total

Million pounds

1997 7,730 54,782 14%

2002 3,810 54,216 7%

5-year change -51% -1%

1 Livestock, Dairy, and Poultry Outlook, LDP-M-108, Economic

Research Service, U.S. Department of Agriculture, June 24, 2003;

2002 preliminary.

Table 11—Volume of cottage cheese marketed by

cooperatives compared with U.S. production, 1997

and 2002

United States Cooperative

Marketed by total share of

Year cooperatives production U.S. total

Million pounds

1997 122 1,165 10%

2002 111 1,185 9%

5-year change -9% 2%
10

Table 12—Volume of ice cream marketed by

cooperatives compared with U.S. production, 1997

and 2002

United States Cooperative

Marketed by total share of

Year cooperatives production U.S. total

Million gallons

1997 83 1,340 6%

2002 38 1,371 3%

5-year change -54% 2%

Table 13—Volume of ice cream mix marketed by

cooperatives compared with U.S. production, 1997

and 2002

United States Cooperative

Marketed by total share of

Year cooperatives production U.S. total

Million gallons

1997 78 709 11%

2002 47 748 6%

5-year change -40% 5%

Table 14—Volume of yogurt marketed by cooperatives

compared with U.S. production, 1997 and 2002

United States Cooperative

Marketed by total share of

Year cooperatives production U.S. total

Million poundss

1997 89 1,574 6%

2002 38 2,135 2%

5-year change -57% 36%

Table 15—Volume of bulk condensed milk1 marketed by

cooperatives compared with U.S. production, 1997

and 2002

United States Cooperative

Marketed by total share of

Year cooperatives2 production U.S. total

Million pounds of solids

1997 817 1,275 64%

2002 630 1,189 53%

5-year change -23% -7%

1 Bulk condensed whole milk and skim milk.

2 Includes ultrafiltered milk solids in 2002.

Table 16—Volume of dry whey products1 marketed by

cooperatives compared with U.S. production, 1997

and 2002

United States Cooperative

Marketed by total share of

Year cooperatives production U.S. total

Million pounds

1997 907 1,925 47%

2002 1,104 2,130 52%

5-year change 22% 11%

1 Includes dry whey, dry whey protein concentrate and lactose.

Table 17—Volumes of some other dairy products

marketed by cooperatives compared with U.S.

totals, 2002

Cooperative

Marketed by U.S. total share of

cooperatives volume1 U.S. total

Million pounds

Sour Cream 133 1,031 13%

Condensed buttermilk 19 56 34%

1 U.S.total sour cream sales is from Livestock, Dairy, and Poultry

Outlook, LDP-M-108, Economic Research Service, U.S.

Department of Agriculture, June 24, 2003; 2002 preliminary.
decrease to 630 million pounds. The 14 cooperatives

had a share of 53 percent of total U.S. production,

down from 64 percent in 1997 (tables 2 and 15).

Dry whey products—The percentage of dry whey

products sold by cooperatives increased from 47

percent to 52 percent of U.S. production in 5 years. In

2002, 13 cooperatives marketed 1,104 million pounds

of dry whey products, up 22 percent from 1997, while

U.S. production increased 11 percent in the same

period (tables 2 and 16).

Sour cream and condensed buttermilk—For the

first time, this survey separately counted sour cream

and condensed buttermilk sold by cooperatives. Eight

sold 133 million pounds of sour cream in 2002 and had

a 13-percent share of U.S. production. Six marketed 19

million pounds of condensed buttermilk and had a 34-

percent share of the production by all firms (tables 2

and 17).

Concentration Ratios

The largest cooperatives' proportion of all cooperative milk from member-producers and sales of

selected products for 1997 and 2002 is shown in table

18. It shows their shares as a percent of total U.S. production. (The cooperatives in each size group are not

necessarily the same for each product.)

The eight largest cooperatives’ member milk represented 52 percent of the total U.S. volume of milk

sold to plants and dealers, up from 42 percent in 1997.

Their volume represented 63 percent of member milk

marketed through all cooperatives, up from 52 percent.

In 2002, the eight largest cooperatives had an overwhelming share among cooperatives of these products: packaged fluid milk, 91 percent; butter, 95 percent; nonfat dry milk, 93 percent; natural cheese, 91

percent; and dry whey and dry whey products, 91 percent.

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

largest cooperatives sold only 6 percent of the Nation's

packaged fluid milk, 36 percent of cheese, and 47 percent of dry whey and dry whey products. They dominated only in marketing butter and nonfat dry milk.

The four largest cooperatives accounted for 49

percent of milk delivered by member-producers. The

four largest cooperatives also marketed more than

two-thirds of cooperative volume of each of the selected products. Except for the packaged fluid milk products, their shares of U.S. production of the selected

products increased from 1997 to 2002, following the

same trend as in the case of the eight largest cooperatives.

11
12

Table 18—Share of milk received from farmers, milk processed or manufactured, and selected product

marketed for largest dairy cooperatives1, 1997 and 2002

Share of cooperative volume Share of U.S. volume2

_____________________________________________________________________________________

4 largest 8 largest 4 largest 8 largest

Item cooperatives cooperatives cooperatives cooperatives

Percent of all cooperatives Percent of U.S. production

Milk from member-producers

1997 36 52 30 42

2002 49 63 41 52

Packaged fluid milk

1997 76 95 10 12

2002 73 91 5 6

Butter

1997 53 76 32 46

2002 80 95 56 67

Nonfat dry milk

1997 52 80 41 64

2002 76 93 66 80

Natural cheese

1997 63 81 25 32

2002 74 91 29 36

Dry whey and dry whey products3

2002 67 91 34 47

1 Cooperatives included may change from product to product.

2 In the case of milk, it was the volume of milk sold to plants and dealers.

3 Market share calculated for the first time for 2002.
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.