United States

Department of

Agriculture

Rural Business–

Cooperative

Service

RBS Research

Report 187

Structural Change in 

the Dairy Cooperative

Sector, 1992-2000
Abstract There was a net decline of 52 U.S. dairy cooperatives between 1992 and 2000. Eightyfour cooperatives went out of existence via dissolution, merger, acquisition, or by

reducing dairy to a minor share in their operations. During this same period, 32 new

dairy cooperatives were formed, either by new groups of producers or by consolidation

of existing cooperatives. Structure of the dairy cooperatives sector headed in two

divergent directions. Some cooperatives became more vertically integrated (engaging

in further manufacturing and processing, differentiating their products and strengthening ties in the marketing chain). In contrast, others focused their operations on bargaining only.

Key Words: Cooperatives, milk marketing, milk, structure, vertical integration.

Structural Change in the Dairy Cooperative Sector, 1992-2000

Carolyn Liebrand

Rural Business-Cooperative Service

RBS Research Report 187

October 2001

Top two photos courtesy Agri-Mark; bottom cover photo courtesy 

Land O’Lakes
Preface Information for this report came primarily from data collected from annual surveys of

U.S. dairy cooperatives conducted by the Rural Business-Cooperative Service (RBS).

Supplemental information came from industry literature—magazines, newspapers,

newsletters, and web-sites--and industry experts. A cooperative was considered a

dairy cooperative if 50 percent or more of its total sales came from the sale of milk and

dairy products. Thus, some cooperatives that handled milk for their members, but had

greater activity in other enterprises such as supplies or feed, were not included in this

study.

Dairy cooperatives’ size categories at the beginning of the period were determined by

an RBS survey of U.S. dairy cooperatives conducted in 1993 for 1992 milk volumes.

Likewise, the size categories for the end of the period were based on a 1998 survey

for 1997 data. However, for cooperatives formed after 1997, their milk volumes were

based on the most current available information.

Some of the dates that cooperatives went out of business were unavailable. The date

of exit was then based on the available information. In addition, financial information

on the exiting dairy cooperatives was incomplete. However, the information available

gives a glimpse of some cooperatives’ financial conditions at the time of their exit.

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

Introduction ..........................................................1

Overview ............................................................1

Location of Headquarters ...........................................4

Characteristics of Dairy Cooperatives .................................4

Cooperative Operations and Change ......................................9

First Level Coordination ...........................................10

Increasing Market Coordination .....................................10

Summary and Conclusions .............................................13

References .........................................................14

i
Highlights Structural adjustment between 1992 and 2000 shows U.S. dairy cooperatives diverging in the way they represent members in the marketplace. Some cooperatives

became more vertically integrated (engaging in further manufacturing and processing,

differentiating their products and strengthening ties in the marketing chain). In contrast,

others focused their operations solely on bargaining for milk prices and negotiating

terms of trade for members’ raw milk.

Bargaining cooperatives, the least vertically integrated, increased their share of total

cooperative numbers and showed a relatively low rate of net decline. On the other

hand, many diversified cooperatives became part of newly merged entities. These

new, large diversified cooperatives were more vertically coordinated than the other

operating types of dairy cooperatives. Some of the diversified cooperatives had national reach, having attained both horizontal and vertical integration.

Between 1992 and 2000, 84 of the Nation’s dairy cooperatives went out of existence,

through dissolution (36), merger with another dairy cooperative (36), acquisition by

another dairy firm (8), or by reducing dairy to a minor share in cooperative operations

(4). During this same period, 32 new dairy cooperatives were formed, either by new

groups of producers (26) or by consolidation of existing cooperatives (6). Thus, 52

dairy cooperatives in the United States disappeared between 1992 and 2000. More

exits occurred during the earlier part of the 9-year period, while entries were more frequent during the latter part. 

In 1992, 34 States contained one or more dairy cooperative headquarters. By 2000, 28

States had lost one or more dairy cooperatives while just 12 States gained newly

formed dairy cooperatives, leaving 29 States with dairy cooperative headquarters. All

regions showed a net loss in number of cooperatives headquartered in their area.

There was a net decline of 22 bargaining dairy cooperatives. The number of manufacturing/processing dairy cooperatives shrunk by a net of 30 cooperatives, more than

twice the rate of bargaining cooperatives. 

The distribution of dairy cooperatives according to size in 2000 was similar to 1992.

However, small cooperatives--with the lowest rate of decline of the three size groups--

increased their representation of total cooperative numbers. 

Cooperatives that dissolved were most likely to be small, bargaining cooperatives that

went out of business by the end of 1996. In contrast, one-half of the cooperatives that

exited by merging into another cooperative were medium- or large-sized manufacturing-processing cooperatives. Half of the cooperative mergers took place in the last 3

years of the 9-year period.

None of the six new cooperatives formed by a merger of existing dairy cooperatives

was small. They were evenly split between the bargaining and manufacturing-processing types. In contrast, those formed by new groups of producers were predominately

small, bargaining cooperatives, and formed after 1996. 

iii
Structural Change in the Dairy 

Cooperative Sector, 1992-2000

Carolyn Liebrand

Agricultural Economist

Introduction

As the 20th century drew to a close, the dairy

industry continued to adapt to dynamic market conditions. There were advances in production technology,

both on the farm and in the milk plant, consolidation

and growth of retail food chains, vertical and horizontal integration in milk manufacturing/processing sectors, changes in trade rules and practices, changes in

Government programs, and unprecedented swings in

the price of raw milk (fig. 1).

Agriculture and agribusiness are characterized by

increasing size and productivity of production units

and reduction in the number of production plants.

Likewise, total milk production has continued to gro w

for the past quarter century despite declining milk cow

and dairy farm numbers (fig.2). Dairy cooperatives

have followed a similar pattern—fewer cooperatives

handling a larger milk volume (fig.3).

The waning years of the past century and the

opening of the new century saw a wave of rapid consolidation in the dairy sector. For example, Suiza

Foods Corporation entered the dairy sector at the end

of 1993, became a publicly-traded stock firm in 1996,

and by 2000 had acquired 39 dairy firms, becoming the

largest U.S. manufacturer and distributor of dairy

products (Dairy Foods Online, Suiza Foods

Corporation).

Simultaneously, the top four grocery retailers’

market sharerose from 16 percent of food retail sales in

1992 to 29 percent in 1998. Most of this growth occurred

after 1996. The 20 largest retailers’ market share, 37 percent in 1992, reached 51 percent in 1999. This consolidation has had significant impact on grocery suppliers

such as wholesalers, manufacturers, and farmers—all of

which arerepresented in the dairy cooperative sector

(Kaufman).

To adapt to these changes, dairy cooperatives

have also consolidated. In 1998, four major dairy cooperatives combined to create a new cooperative, Dairy

Farmers of America (DFA). DFA is national in scope,

having 19,500 dairy producers spread across 45 States.

Around the same time, Land O’Lakes, based in

Minnesota, merged with dairy cooperatives on East

and West coasts and it too became nationwide. This

report examines the changes in the U.S. dairy cooperative sector, and describes the structural changes that

have occurred in the closing years of the 20th century—1992-2000.

Overview

Overall, there were 52 fewer dairy cooperatives

in 2000 than in 1992. However, a closer look reveals

that 84 cooperatives went out of existence (by either

dissolving, merging with another cooperative, being

acquired by another dairy firm, or by reducing dairy to

a minor share of their operations). New producer

groups and mergers of existing cooperatives created 32

new cooperatives between 1992 and 2000 (table 1 and

appendix tables 1 and 2). The largest net declines in

dairy cooperative numbers occurred in 1993-95, and 56

had exited by the end of 1996. In 1997 and 2000, more

new cooperatives formed than went out of existence,

the only 2 years where the number of entries exceeded

exits. And, 22 of the 32 new cooperatives were formed

after 1996.

Coincidentally, 36 cooperatives dissolved--leaving no successor organization—while 36 merged with

other dairy cooperatives (table 2). Twenty-six of these 

1
2

Figure 2—U.S. dairy cow numbers. milk production and

number of operations with milk cows, 1964-99

500

450

400

350

300

250

200

150

100

50

Thousand

1964 73/74 87 92 97 99

Cows (100 head)

Operations

Milk (mill. lbs.)

Figure 1—Minnesota-Wisconsin (MW) basic formula prices and support price, 1978-99 (M-W to May 1995; BFP

to Dec. 1999)

18

17

16

15

14

13

12

11

10

9

8

Dollars per cwt

1978 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99

Source: Dairy Market News, USDA selected issues

M-W/BFP

Support Price

Figure 3—Trends in dairy cooperative numbers and

milk volume handled,1964-97

900

800

700

600

500

400

300

200

100

0

Number/billion pounds

1964 73 80 87 92 97

Manufacturing-processing

Bargaining-only

Milk handled by co-ops
merged and eventually became part of six new cooperatives. Ten combined with an ongoing cooperative.

Combinations occurred for various reasons--to take

advantage of economies of scale; to better configure

and use a system of manufacturing plants; to reduce

operating overhead; to foster marketing clout; and to

secure milk supplies. Overlapping milk pickup routes

were often eliminated. Cooperative mergers reflected

the pace of consolidation in the retail sector. The

merged cooperatives were better able to supply their

customers’ larger volume and product requirements.

Eight of the exiting cooperatives were acquired

by investor-owned dairy firms (IOF). Four cooperatives moved the focus of their operations away fro m

the dairy business to other farm business such as feed

or supplies to the point where dairy sales accounted

for less than 50 percent of their total income.

New groups of producers created 26 of the 32

new cooperatives organized between 1992 and 2000

(table 3). (Six new cooperatives were formed by consolidation of existing dairy cooperatives.) Some of

these 26 new cooperatives were started to add value to

their members’ milk by making products for market

niches. Others may have been formed when dissatisfied members split from existing cooperatives. Some of

3

Table 1—Change in cooperative numbers since 1992.

Percent of

1992 Exits Entries Net change 1992 2000

——— ——— ——— ————— ————— ———

(No.) (No.) (No.) (No.) (%) (No.)

Cooperatives 265 84 32 -52 -19.6 213

Exits Entries Net change 

(N0.) (N0.) (N0.)

Year of exit or entry:

1992 8 3 -5

1993 13 2 -11

1994 11 1 -10

1995 17 2 -15

1996 7 2 -5

1997 3 8 5

1998 12 7 -5

1999 11 3 -8

2000 2 4 2 __ __ __

84 32 -52

Table 3—Origin of dairy cooperatives formed between

1992 and 2000.

Number Percent

Source:

Merger of existing cooperatives 6 18.7

New group of producers 26 81.3 __ ____

Total, all new dairy cooperatives 32 100.0

Table 2—What happened to the 84 cooperatives

exiting between 1992 and 2000?

Number Percent 1

Action:

Merged into another dairy cooperative 36 42.9

Acquired by an investor-owned dairy firm 8 9.5

Reduced dairy’s role to minor share of

operations 4 4.8

Dissolved or out of operation 36 42.9 __ ____

Total, all dairy cooperative exits 84 100.0

1 Total may not add due to rounding.
this dissatisfaction was disagreement with a vote to

merge. A few were successors to cooperatives that had

gone out of business for a time.

Location of Headquarters

By region — Looking at 9 years of changes, the

number of cooperatives headquartered in each region

declined (see map and table 4). The distribution of

cooperative headquarters among the regions did not

change substantially.

The East North Central and West North Central

regions had the largest net declines in dairy cooperatives (14 and 18, respectively), while the South Central

had a net loss of just 1. The South Atlantic region’s loss

of six dairy cooperatives represented a decline of 50

percent from 1992, the largest percentage decrease of

any region. Conversely, although the North Atlantic

was fairly active compared with other regions, its net

loss of seven cooperatives was far below the other

regions on a percentage basis (7.4 percent). As a result,

the region increased its share of the Nation’s dairy

cooperatives by nearly 6 percentage points, the only

region to show an increase.

By State— In 1992, 34 States had one or more

dairy cooperatives headquartered within their boundaries (appendix table 3). By 2000, 28 States had lost one

or more dairy cooperatives while 12 others gained new

dairy cooperatives, leaving 29 States with dairy cooperative headquarters.

New Mexico was the only state to gain new dairy

cooperatives (3) where none had previously existed.

Texas was the only other State to show an increase.

Conversely, six States no longer held any dairy cooperative headquarters (Colorado, Indiana, Louisiana,

Mississippi, Utah, and West Virginia).

Overall, there was no change in the rankings of

the top six States in terms of number of dairy cooperative headquarters--New York, Minnesota, Wisconsin,

Pennsylvania, California, and Iowa (in that order) had

the most dairy cooperative headquarters both in 1992

and in 2000.

Characteristics of Dairy Cooperatives

Dairy cooperatives can be broadly grouped into

two categories— manufacturing-processing and bargaining. Manufacturing-processing cooperatives

attempt to enhance their bargaining position and to

add value to their members’ milk by processing or

manufacturing a portion of their raw milk into a variety of dairy products. Manufacturing-processing cooperatives handle the bulk of the milk (75.9 percent of

total milk handled by cooperatives in 1997) and

account for 93.9 percent of the assets used by dairy

cooperatives (appendix table 4).

Bargaining cooperatives negotiate prices and

terms of trade for members’ raw milk but do not operate plants (although some may operate receiving stations). They use just 6.1 percent of all dairy cooperative assets to market members’ milk. Bargaining

cooperatives are the most numerous of U.S. dairy

cooperatives.

Adjustment by type— In addition to the 48 exits

and 21 entries of bargaining cooperatives, 5 cooperatives ceased to operate manufacturing plants and

focused solely on bargaining and member services

(table 5). Thus, there was a net decline of 22 bargaining

cooperatives between 1992 and 2000.

Manufacturing/processing cooperative

numbers shrunk by a net of 30 cooperatives, but this

was more than twice the rate of bargaining

cooperatives. As a result, bargaining cooperatives

grew from 67.5 percent of U.S. dairy cooperative

numbers in 1992 to 73.7 percent in 2000.

Adjustment by size— Dairy cooperatives were

grouped according to the net volume of milk they handled annually (table 6). In addition to entries and exits,

some ongoing cooperatives, by increasing or decreasing the volume of milk they handled, changed size categories during the 9-year period. Small dairy cooperatives (handled less than 50 million pounds of milk per

year) had the largest number of entries and exits

among the three size groups and shrunk by 26 cooperatives. Medium cooperatives (handled 50 to 999 million pounds of milk annually) lost a net of 20 cooperatives, and large cooperatives (1 billion pounds of milk

or more) had a net loss of only 7 cooperatives. Yet, onehalf of the large dairy cooperatives in 1992 had exited

by 2000.

The distribution of dairy cooperatives according

to size in 2000 was similar to the 1992 pattern.

However, small cooperatives with the lowest rate of

decline (-16.8 percent) of the three size groups

increased their representation of total cooperative

numbers to 60.6 percent.

Characteristics of exiting cooperatives— Most of the

cooperatives that dissolved were small (86.1 percent)

in contrast with those that merged into another dairy

cooperative, where just 22.2 percent were small (table

7). All of the large cooperatives that exited between

1992 and 2000 did so by merging. Six of the eight cooperatives acquired by an IOF were small and all 4 of the

cooperatives that exited by refocusing operations were

small.

4
5

M A P--Number of Dairy Cooperatives Between 1992 and 2000 by Headquarters Region, 1997

Table 4—Distribution of entering and exiting dairy cooperatives’ headquarters.

Region 1992 Exits Entries Net Change 2000

% of

No. % No. No. No. ‘92 No. %

North Atlantic 95 35.8 17 10 -7 -7.4 88 41.3

East North Central 53 20.0 20 6 -14 -26.4 39 18.3

West North Central 72 27.2 23 5 -18 -25.0 55 25.8

South Atlantic 12 4.5 8 2 -6 -50.0 6 2.8

South Central 7 2.6 4 3 -1 -14.3 5 2.3

Western 26 9.8 12 6 -6 -23.1 20 9.4 ___ ____ __ __ __ ____ ___ ____

Total 265 100.0 84 32 -52 -19.6 213 100.0

Note: Associated Milk Producers, Inc. (AMPI) split, with the Southern region merging to form Dairy Farmers of America (DFA) while the North

Central region of AMPI remained in business as AMPI. AMPI’s headquarters are now located in the West North Central region rather

than the South Central as they were in 1992.

West North Central

-18 (-25.0 %)

East North Central

-14 (-26.4 %)

Western

South Central

-1 (-14.3%)

South Atlantic

-6 (-50.0%)

North

Atlantic

-7 (-7.4%)

Includes

Alaska and

Hawaii

-6 (-23.1%)
6

Table 5—Distribution of dairy cooperatives, exits and entries 1992-2000, by type.

Type

Type of cooperative 1992 Exits Entries change1 Net change 2000

% of ‘92

No. % No. No. No. No. by type No.1 %

Bargaining 179 67.5 48 21 +5 -22 -12.3 157 73.7

Manufacturing-processing 86 32.5 36 11 -5 -30 -34.9 56 26.3 ___ ____ __ __ __ ___ ____ ___ ____

Totals 265 100.0 84 32 0 -52 -19.6 213 100.0

1 Between 1992 and 2000, five cooperatives remained in operation but changed from manufacturing to bargaining cooperatives, and are not

Table 6—Distribution of dairy cooperatives, exits and entries 1992-2000, by size.

Size

changes

Size of cooperative 1992 Exits Entries (net)1 Net change 2000

% of ‘92

No. % No. No. No. No. by size No. %

Small2 155 58.5 49 16 + 7 -26 -16.8 129 60.6

Medium3 80 30.2 20 10 -10 -20 -25.0 60 28.2

Large4 30 11.3 15 5 + 3 -7 -23.3 23 10.8 ___ _____ __ __ ___ ___ ____ ___ _____

Total5 265 100.0 84 32 0 -52 -19.6 213 100.0

1 20 cooperatives operating in both 1992 and 2000 changed size category—12 handled smaller and 8 handled larger milk volumes. Those that

shrunk tended to be bargaining cooperatives and those that grew tended to be manufacturing/processing.

2 Handled less than 50 million pounds of milk per year.

3 Handled 50 to 999 million pounds of milk per year.

4 Handled 1 billion or more pounds of milk per year.

5 Could not confirm the volume handled by one of the new cooperatives; totals may not add.

N O T E: Size category for the exiting cooperatives was determined by either their 1992 or 1997 milk volume, depending upon when they exited.

Size category for entering cooperatives was determined by either their 1997 milk volume, or if formed after 1997, by volume reported

in industry news. Year 2000 size category was determined by 1997 milk volume, except for cooperatives formed after 1997.

Table 7—Comparison of dairy cooperatives that exited between 1992 and 2000, by size of exiting cooperative.

Dairy cooperatives that:

Reduced dairy’s

Merged into Were acquired by role to minor

another dairy dairy IOF share of

Dissolved cooperative operations

Number Percent Number Percent Number Percent Number Percent

Size:

Small1 31 86.1 8 22.2 6 75.0 4 100.0

Medium2 5 13.9 13 36.1 2 25.0 0 0.0

Large3 0 0.0 15 41.7 0 0.0 0 0.0

__ ____ __ ____ _ ____ _ ____

Total 36 100.0 36 100.0 8 100.0 4 100.0

1 Handled less than 50 million pounds of milk per year.

2 Handled 50 to 999 million pounds of milk per year.

3 Handled 1 billion or more pounds of milk per year.
Those that dissolved were often bargaining cooperatives (77.8 percent). Likewise, three of the four

cooperatives no longer classified as dairy cooperatives

had been bargaining cooperatives (table 7A). In contrast, 58.3 percent of those that merged were manufacturing-processing cooperatives. Similarly, the cooperatives acquired by dairy IOFs were mostly

manufacturing-processing cooperatives.

Many of the cooperatives that dissolved (86.1

percent) had gone out of business by the end of 1996.

Seven of the eight acquisitions by IOFs were completed by then as well. One-half of the cooperative mergers took place during the last 3 years of the 9-year period (table 7B). Those reducing dairy to a minor shareof

their operations did so throughout the period.

Headquarters of the cooperatives that dissolved

were clustered in the North Atlantic, and East North

Central and West North Central regions (table 7C).

Cooperatives that exited through merger with another

dairy cooperative were headquartered in each region.

One-half of those acquired by other dairy firms were

headquartered in the North Atlantic. Three of the four

that reduced dairy to a minor share of their operations

were headquartered in the West North Central region.

7

Table 7A—Comparison of dairy cooperatives that exited between 1992 and 2000, by type of exiting

cooperative.

Dairy cooperatives that:

Reduced dairy’s

Merged into role to minor

another dairy Were acquired by share of

Dissolved cooperative dairy IOF operations

Number Percent Number Percent Number Percent Number Percent

Type:

Bargaining 28 77.8 15 41.7 2 25.0 3 75.0

Manufacturing/

processing 8 22.2 21 58.3 6 75.0 1 25.0 __ ____ __ ____ _ ____ _ ____

Total 36 100.0 36 100.0 8 100.0 4 100.0

Table 7B—Comparison of dairy cooperatives that exited between 1992 and 2000, by year of exit.

Dairy cooperatives that:

Reduced dairy’s

Merged into another Were acquired by role to minor share

Dissolved dairy cooperative dairy IOF operations

Cumulative Cumulative Cumulative Cumulative

Number Percent Number Percent Number Percent Number Percent

Year:

1992 4 11.1 1 2.8 2 25.0 1 25.0

1993 10 38.9 2 8.3 1 37.5 0 25.0

1994 2 44.4 6 25.0 2 62.5 1 50.0

1995 10 72.2 6 41.7 1 75.0 0 50.0

1996 5 86.1 1 44.4 1 87.5 0 50.0

1997 0 86.1 2 50.0 0 87.5 1 75.0

1998 4 97.2 7 69.4 0 87.5 1 100.0

1999 1 100.0 9 94.4 1 100.0 0 100.0

2000 0 100.0 2 100.0 0 100.0 0 100.0 __ __ _ _

Total 36 100.0 36 100.0 8 100.0 4 100.0
Information on the cooperatives’ financial status

was found for about 44 percent of the cooperatives

that exited between 1992 and 2000. While the data is

incomplete, it is interesting to note that a higher percentage of cooperatives that dissolved (67 percent)

showed signs of poor financial health compared with

cooperatives that merged (50 percent, table 7D). And,

financial statements of five (31 percent) merging cooperatives showed them to be healthy compared with

just two (11 percent) of those that dissolved.

Characteristics of new cooperatives— None of the

six new cooperatives formed by merger were small

(table 8). These new cooperatives represented equally

the two operating types (table 8A). Four were formed

in 1998 and 1999 (table 8B). One-half were headquartered in the West North Central region (table 8C). The

location of a cooperative’s headquarters loses some of

its significance given nationwide memberships.

Sixteen of the 26 cooperatives formed by new

groups of producers were small and 18 offered only

bargaining services. Twenty of this group were formed

8

Table 7C—Comparison of dairy cooperatives that exited between 1992 and 2000, by location of exiting

cooperatives’ headquarters.

Dairy cooperatives that:

Reduced

Merged into dairy’s role to

another dairy Were acquired by minor share of

Dissolved cooperative dairy IOF operations

Number Percent Number Percent Number Percent Number Percent

Region:

North Atlantic 10 27.8 3 8.3 4 50.0 0 0.0

East North Central 10 27.8 8 22.2 2 25.0 0 0.0

West North Central 11 30.6 8 22.2 1 12.5 3 75.0

South Atlantic 1 2.8 6 16.7 1 12.5 0 0.0

South Central 0 0.0 4 11.1 0 0.0 0 0.0

Western 4 11.1 7 19.4 0 0.0 1 25.0 ___ ____ __ ____ _ ____ _ ____

Total 36 100.0 36 100.0 8 100.0 4 100.0

Table 7D--Comparison of dairy cooperatives that exited between 1992 and 2000, by "financial status" of exiting

cooperative.

Dairy cooperatives that:

Reduced dairy’s

Merged into role to minor

another dairy Were acquired by share of

Dissolved cooperative dairy IOF operations

Number Percent Number Percent Number Percent Number Percent

“Financial status”:

Neutral1 4 22 3 19 0 0 0 0

Poor/declining2 12 67 8 50 1 50 0 0

Positive 2 11 5 31 1 50 1 100 __ ___ __ ___ _ ___ _ ___

Total 18 100 16 100 2 100 1 100

1 Nothing notable in one year’s data.

2 One or more of the following in the last year(s) of operation: negative net margins, declining assets and/or net worth, negative net worth.
9

after 1996. Many were formed by new groups of producers in the North Atlantic region (38.5 percent). This

reflects a common practice among small groups of producers to form bargaining cooperatives that areflexible in finding market niches.

Cooperative Operations and Change

The nature of change within the dairy cooperative sector can be more fully captured by grouping

them further according to the functions they perform

in the market. Manufacturing-processing cooperatives

can be further subdivided according to their degree of

integration into the marketplace, from least to most

fully vertically integrated--bargaining-balancing cooperatives, hard product manufacturing cooperatives,

branded-cheese cooperatives, fluid processing cooperatives, and diversified cooperatives (see page 15). The

changes seen between 1992 and 2000 show dairy cooperatives heading in divergent directions. Some cooperTable 8—Comparison of dairy cooperatives formed

between 1992-2000, by size of new cooperative.

Cooperatives formed by...

Merger of existing

New producer groups cooperatives

Number1 Percent Number Percent

Size:

Small2 16 61.5 0 0.0

Medium3 8 30.8 2 33.3

Large4 1 3.8 4 66.7

__ ____ _ ____

Total 26 100.0 6 100.0

1 Could not confirm the volume handled by one of the new

cooperatives.

2 Handled less than 50 million pounds of milk per year.

3 Handled 50 to 999 million pounds of milk per year.

4 Handled 1 billion or more pounds of milk per year.

Table 8A—Comparison of dairy cooperatives formed

between 1992-2000, by type of new cooperative.

Cooperatives formed by...

Merger of existing

New producer groups cooperatives

Number1 Percent Number Percent

Type:

Bargaining 18 69.2 3 50.0

Manufacturing/

processing 8 30.8 3 50.0 __ ____ _ ____

Total 26 100.0 6 100.0

Table 8B—Comparison of dairy cooperatives formed

between 1992-2000, by year of formation.

Cooperatives formed by...

Merger of existing

New producer groups cooperatives

Cumulative Cumulative

Number1 Percent Number Percent

Year:

1992 2 7.7 1 16.7

1993 2 15.4 0 16.7

1994 1 19.2 0 16.7

1995 1 23.1 1 33.3

1996 2 30.8 0 33.3

1997 8 61.5 0 33.3

1998 4 76.9 3 83.3

1999 2 84.6 1 100.0

2000 4 100.0 0 100.0 __ _

Total 26 100.0 6 100.0

Table 8C—Comparison of dairy cooperatives formed

between 1992-2000, by location of new

cooperatives’ headquarters.

Cooperatives formed by...

Merger of existing

New producer groups cooperatives

Number1 Percent Number Percent

Region:

North Atlantic 10 38.5 0 0.0

East North Central 5 19.2 1 16.7

West North Central 2 7.7 3 50.0

South Atlantic 1 3.8 1 16.7

South Central 3 11.5 0 0.0

Western 5 19.2 1 16.7 __ ____ _ ____

Total 26 100.0 6 100.0
10

atives became more vertically integrated (engaging in

further manufacturing and processing, differentiating

their products and strengthening ties in the marketing

chain). In contrast, others focused their operations on

bargaining only.

First Level Coordination

More bargaining dairy cooperatives were formed

and exited than any other type (table 9). The minimal

financial commitment required to form a bargaining

cooperative contributes to their ease of forming and

dissolving. A majority (58.3 percent) of these cooperatives that exited had dissolved, the highest proportion

among the 6 types of cooperatives. One-half of those

exiting were small and dissolved (table 10). The few

large ones that exited merged with other dairy cooperatives.

Bargaining cooperatives continue to play an

important role in providing producers a voice in the

marketplace—negotiating milk price and terms of

trade, ensuring the accuracy of weights and tests in

computing producer milk checks, and providing representation in government policy matters. Their challenge is to maintain a large enough membership so

they can be heard in the marketplace and limit service

costs.

Increasing Market Coordination

Use of plants solely for balancing purposes is

declining, as evidenced by the 53.3 percent reduction

in the number of bargaining-balancing cooperatives

between 1992 and 2000. In addition, two bargainingbalancing cooperatives shut down or sold their plants

to continue as bargaining cooperatives. No new cooperatives were formed that operated plants just for balancing purposes. Thus, 18 out of the 30 bargaining-balancing cooperatives (60 percent) operating in 1992

were not operating as such in 2000 (appendix table 6).

Maintaining small, old balancing plants is costly,

but building new,large-scale plants is expensive, particularly for the small bargaining-balancing cooperatives. The six of those that dissolved or were acquired

by an IOF were small. Alternatively, most of the 10

bargaining-balancing cooperatives that merged with

diversified dairy cooperatives were medium or large.

Hard-product manufacturing cooperatives aim to

operate their plants at full capacity to achieve low perunit manufacturing costs. These cooperatives faced

greater financial risk because most of their member

milk was committed to making low-margin commodity products. Their limited flexibility left them more

vulnerable to inventory losses arising from the volatile

milk prices of the 1990s than perhaps a more diversified product line would have been. These cooperatives

appear to be under market pressure as they enter the

21st century. The number of hard-product manufacturing cooperative numbers shrunk by 40 percent and no

new ones formed between 1992 and 2000. All of those

exiting werelarge and merged with diversified cooperatives.

The merger of both bargaining-balancing and

hard-product manufacturing cooperatives into diversified cooperatives reflects the trend of increased integration by dairy cooperatives. The plants formerly

operated by bargaining-balancing or hard product

manufacturing cooperatives were then incorporated

into a larger system. Those that could not be operated

efficiently were often shut down or sold.

Branded-cheese dairy cooperatives had the smallest percentage change between 1992 and 2000 (-12.0

percent) compared with the other types (appendix

table 6). All of the seven new branded-cheese cooperatives were small, as were most of those exiting. Three

small cooperatives continued to operate but sold their

manufacturing operations to become bargaining cooperatives. A majority of those exiting dissolved. One

merged with a diversified dairy cooperative and two

were acquired by an IOF.

All of the exiting branded-cheese cooperatives for

which information could be obtained showed poor

financial status. These artisan cooperatives must compete with other cheesemakers on the basis of the quality and uniqueness of their product. They lack the size

and scale to compete on price with the large commodity cheesemakers. (Almost by definition, there were no

large branded-cheese cooperatives in 1992 or 2000.)

These smaller cooperatives must find and develop a

niche for their specialty product. For those unable to

do so, the market is unforgiving. However, with the

increasing consumer interest in "organic" and "farmbased" or local production, along with the continued

consumer interest in specialty cheeses, a number of

new cooperatives are entering this type of business.

Fluid processing cooperatives lost 42.9 percent of

their 1992 numbers, but gained one small cooperative

that formed in hope of capitalizing on a niche market

for their locally produced milk (table 9). All of the

fluid processing cooperatives either merged into

another fluid or diversified cooperative or were

acquired by an IOF. None went out of business. The

mature, highly competitive fluid processing sector has

seen the most consolidation by IOFs. One fluid pro-
11

Table 9—Characteristics of dairy cooperatives exiting or entering between 1992 and 2000, by type.

Bargaining- Hard product Branded Fluid

Bargaining balancing manufacturing cheese processing Diversified

No. % No. % No. % No. % No. % No. %

Action of exiting cooperatives:

Merged with B cooperative 6 12.5 1 6.3 0 0.0 0 0.0 0 0.0 0 0.0

Merged with B-B cooperative 0 0.0 1(3) 6.3 0 0.0 0 0.0 0 0.0 0 0.0

Merged with HPM cooperative 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0

Merged with B-C cooperative 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0

Merged with FP cooperative 0 0.0 0 0.0 0 0.0 0 0.0 1 33.3 0 0.0

Merged with D cooperative 9 18.8 8 50.0 2 100.0 1 14.3 1 33.3 6 75.0

Acquired by IOF 2 4.2 2 12.5 0 0.0 2 28.6 1 33.3 1 12.5

Reduced dairy’s role to minor

share of operations 3 6.3 0 0.0 0 0.0 0 0.0 0 0.0 1 12.5

Dissolved 28 58.3 4 25.0 0 0.0 4 57.1 0 0.0 0 0.0 __ ____ __ ____ _ ____ _ ____ _ ____ _ ___

Total 48 100.0 16 100.0 2 100.0 7 100.0 3 100.0 8 100.0

Number exiting as a percent of

cooperatives in 1992, by type: 26.8 53.3 40.0 28.0 42.9 42.1

No. % No. % No. % No. % No. %

"Financial status" of exiting

cooperatives:

Neutral1 6 28 1 12 0 0 0 0 0 0

Poor/declining2 10 48 4 50 5 100 1 100 1 50

Positive 5 24 3 38 0 0 0 0 1 50 __ ___ _ ___ _ ___ _ ___ _ ___

Total 21 100 8 100 5 100 1 100 2 100

No. % No. % No. % No. %

"Source" group of entering

cooperatives:

Merger of existing cooperatives 3 14.3 0 0.0 0 0.0 3 100.0

New producer groups 18 85.7 7 100.0 1 100.0 0 0.0 __ ____ _ ____ _ ____ _ ____

Total 21 100.0 7 100.0 1 100.0 3 100.0

Number entering as a

percent of cooperatives in

2000, by type: 13.4 0.0 0.0 31.8 20.0 21.4

1 Nothing notable in one year’s data. No further information obtained.

2 One or more of the following in the last year(s) of operation: negative net margins, declining assets and/or net worth, negative net worth. 3 Subsequently, the successor cooperative merged with a diversified cooperative.

NOTE: B: Bargaining; B-B: Bargaining-balancing; HPM: Hard product manufacturing; B-C: Branded-cheese; FP: Fluid processing; D:

Diversified; IOF: Independently-owned firm.
12

Table 10—Dairy cooperative exits by size and action, 1992-2000.

Size

Small Medium Large Total

Percent

Bargaining cooperatives that...

dissolved 50.0 8.3 0.0 58.3

merged into another dairy cooperative 10.4 14.6 6.3 31.3

were acquired by an IOF 4.2 0.0 0.0 4.2

reduced dairy’s role to minor share of

operations 6.3 0.0 0.0 6.3 ___ ___ __ ____

Total, bargaining cooperatives 70.8 22.9 6.3 100.0

Bargaining-balancing cooperatives that...

dissolved 25.0 0.0 0.0 25.0

merged into another dairy cooperative 12.5 18.8 31.3 62.5

were acquired by an IOF 12.5 0.0 0.0 12.5

___ ___ ___ ____

Total, bargaining-balancing cooperatives 50.0 18.8 31.3 100.0

Hard product mfg. cooperatives that...

merged into another dairy cooperative 0.0 0.0 100.0 100.0 ___ ___ ____ ____

Total, hard product mfg. cooperatives 0.0 0.0 100.0 100.0

Branded-cheese cooperatives that...

dissolved 42.9 14.3 0.0 57.1

merged into another dairy cooperative 14.3 0.0 0.0 14.3

were acquired by an IOF 28.6 0.0 0.0 28.6

___ ___ __ ____

Total, branded-cheese cooperatives 85.7 14.3 0.0 100.0

Fluid processing cooperatives that...

merged into another dairy cooperative 0.0 66.7 0.0 66.7

were acquired by an IOF 0.0 33.3 0.0 33.3 __ ____ ___ ____

Total, fluid processing cooperatives 0.0 100.0 0.0 100.0

Diversified cooperatives that...

merged into another dairy cooperative 0.0 12.5 62.5 75.0

were acquired by an IOF 0.0 12.5 0.0 12.5

reduced dairy’s role to minor share of

operations 12.5 0.0 0.0 12.5 ___ ____ ___ ____

Total, diversified cooperatives 12.5 25.0 62.5 100.0
13

cessing cooperative, however, has been quite successful in meeting the challenge and grew between 1992

and 2000 (from the medium to large size category).

Diversified dairy cooperatives handle a majority

of the milk volume of cooperatives. Most of those exiting merged with other diversified cooperatives, but

none dissolved. The diversified cooperatives formed

between 1992 and 2000 werealllarge,resulting fro m

mergers between existing cooperatives. Some of the

largest diversified cooperatives have national reach,

representing horizontal and vertical integration. None

of the diversified cooperatives operating in 2000 were

small.

Summary and Conclusions

Merger and consolidation have typified the dairy

cooperative sector in the 1990s. Much of the merger

impetus was created by consolidation among food

retailers looking to gain greater procurement efficiencies (Kaufman). The producer sector sought to hold its

place at the bargaining table, meet customer needs,

supply larger volume requirements, and meet product

standards through mergers of their marketing cooperatives (Hanman, Cheese Market News). Most of the

milk handled by cooperatives exiting and entering

between 1992 and 2000 was accounted for by the merging cooperatives.

Also contributing to the merger activity was the

increased ability to transport milk long distances due

to improvements in trucking, milk quality, and milk

handling and packaging technology. The increased

merger activity in the last 3 years of the century may

have, in part, resulted from dairy cooperatives anticipating and reacting to the consolidated market orders,

which went into effect Jan.1, 2000. Other factors

included rapid advances in information technology

(web sites, e-mail, computerized production, sales and

inventory systems) which have greatly enhanced the

reach of a cooperative’s headquarters. The mergers

expanded the geographical reach and countervailing

market power of the surviving organizations. By 2000,

some dairy cooperatives’ memberships spanned multiple regions or even reached nationwide status.

The lower support price and continued volatility

of milk and commodity dairy prices contributed to the

exodus of cooperatives operating just balancing plants

or just hard product manufacturing plants. Typically,

these cooperatives consolidated with or into diversified cooperatives, where they gained flexibility in

product mix and efficiency from a more rationalized

system of plants. Some plants were closed when they

could not be used efficiently within the new system of

plants. The closures alarmed some producers who had

formerly shipped their milk to these local plants, even

though their milk still had a marketing outlet with the

cooperative.

Despite the headline-making consolidation taking place during the 1990s, other trends were afoot,

such as the creation of new small- and medium-sized

dairy cooperatives by producers seeking a new marketing avenue for their milk. Some may have formed

when dairy farmers became uncomfortable, for various reasons, with their large organizations and sought

alternatives to the "mega-cooperatives" for their marketing needs. Other producers made new efforts to

capture marketing margins by focusing on a niche,

perceived or real, such as "rBST-free," "organic," or

"high quality." Most commonly, the product was specialty cheese, although a couple sought to process

branded fluid milk.

While dairy cooperative numbers are declining,

their milk volume has increased. Despite this overall

trend, the number of small cooperatives as a group is

maintaining, if not increasing, its share of dairy cooperative numbers as a whole, rising from 58.5 to 60.6

percent. Bargaining cooperatives are still the most

common form of dairy cooperative in the United States

although they handle less than one-quarter of the

cooperative milk volume (based on 1997 volume).

These were also the most common type formed

between 1992 and 2000.

Thus, whether through consolidation or the formation of new dairy cooperatives, on large or small

scale, dairy cooperatives appear to have taken two

paths in marketing member milk. One path was vertical integration up the marketing chain in order to capture margins for their members. The other path was to

less vertical integration focusing by and large on bargaining functions, sparing members the risk and

expense of engaging in manufacturing and processing

operations.

This report has documented the dynamics of the

dairy cooperative sector at the end of the century.Joint

venture activity between dairy cooperatives and

between dairy cooperatives and IOFs has also been

significant. For example, two of the Nation’s largest

cooperatives-- DFA and Land O’Lakes, formed a joint

venture to own and operate a Minnesota cheese plant.

In 2000, DFA had a 33 percent stake in Suiza’s fluid

operations in the United States through a joint venture

(however, this arrangement was dissolved with the

proposed merger of Suiza and Dean in 2001 and conse-
quently DFA acquired six Suiza plants and put them in

a new joint venture with other partners). The implications for dairy cooperatives of these types of joint ventures need further examination.

References

Cheese Market News. "5th Annual Roundtable Perspective:

Part II: Panelists Weigh in on Consolidation,

Pasteurization," No. 47, Vol. 20, Dec. 29, 2000.

Dairy Foods Online. "Consolidations Peak," Top 100 U.S./

Canadian Companies, www.dairyfoods.com,

February, 2001.

Kaufman, Phil R. "Grocery Retailers Demonstrate Urge

To Merge," Food Review, USDA/Economic

Research Service, Vol. 23, Issue 2, May-August

2000.

Kaufman, Phil R. "Consolidation in Food Retailing:

Prospects for Consumers and Grocery Suppliers,"

Agricultural Outlook, USDA/Economic Research

Service, August 2000.

Ling, Charles, K. and Carolyn Liebrand. "Vertical

Integration Patterns of Dairy Co-ops Reflect

Changing Market," Farmer Cooperatives, USDA,

September 1995.

Liebrand, Carolyn. Financial Profile of Dairy

Cooperatives, 1997, Rural Business-Cooperative

Service, Research Report 176, December 1999.

Suiza Foods Corporation. 1999 Annual Report,

Ammended. SEC Form 10-K filed April 4, 2000.

14
15

Box 1—Types of Dairy Cooperatives By Degree of Vertical

Coordination

Bargaining cooperatives are the first step in vertical integration—producers gain a say

in the market at the first handler level as they seek to secure the most profitable outlets

for their members’ milk. They own no plants, leaving further processing and sales of

dairy products to others.

Bargaining-balancing cooperatives sell raw milk and provide related services to other

handlers. They operate similarly to bargaining cooperatives, but have plant facilities to

accomodate handlers’ needs and/or to balance milk supplies. Their manufacturing

operations are generally used for manufacturing commodity dairy products (butter,

powder, and cheese) for last-resort balancing of surplus milk volume. They are only

slightly more integrated up the marketing chain than bargaining cooperatives.

Hard-product manufacturing cooperatives use most of their members’ milk in their

own manufacturing plants to make undifferentiated, commodity dairy products. These

cooperatives have opportunity to capture processor margins by operating well-run,

large-scale modern plants and represent the next step (beyond operating plants to

enhance their bargaining position) in vertical coordination.

Branded-cheese cooperatives typically process all of their members’ milk in the cooperative’s plants to manufacture and market specialty or branded cheese and other dairy

products for particlar markets. They may capture some marketing margins in addition

to processor margins, thus taking their operations closer to the consumer.

Fluid processing cooperatives typically process their members’ milk in bottling plants.

Like branded-cheese cooperatives, they may capture some marketing margins in addition to processor margins, reflecting a similar degree of vertical integration. However,

the fluid processing sector is extremely competitive and requires ample financial

resources and top-notch management.

Diversified dairy cooperatives perform all or most of the functions that the other types

of dairy cooperatives (described above) perform. They direct a steady volume of milk to

their own processing or manufacturing plants to make a variety of products—both differentiated and commodity, while at the same time selling much of their milk supply to

other handlers. Some are sophisticated marketers of consumer products. They are the

most well-positioned to capture processor and marketing margins throughout the marketing chain.
16

Afolkey Cooperative Cheese Company

Albany-Greene Bulk Milk Producers Assoc.

Alburg-Isle Lamotte Vermont

Allen Dairy Products Inc.

Aloha Dairy Cooperative

Annandale Cooperative Creamery Association

Atlantic Dairy Cooperative

Atlantic Processing Inc.

Atwater Creamery Company

Bremer Cooperative Creamery Company

Brunkow Cheese Company

Buckman Farmers Cooperative Creamery

California Cooperative Creamery

California Milk Producers

Carolina-Virginia Milk Producers Association

Champlain Milk Producers Cooperative Inc.

Chelsea Cheese Company

Chicagoland Dairy Sales Inc.

Clarks Grove Cooperative Creamery

Coble Dairy Products Cooperative Inc

Cold Spring Cooperative Creamery Assoc.

Conger Cooperative Creamery Company

Cooperative Dairy Farmers of Lewisburg

Dairy Maid Cooperative

Dairyman's Cooperative Creamery Association

Dairymen Inc.

Hebron Cooperative Creamery2

Danish Creamery Association

Eastern Milk Producers Co-op Association Inc.

Edgerton Cooperative Creamery

Elizabeth Creamery Association

Equity Supply Company

Farmers Cooperative Creamery

Farmers Cooperative of Balaton

Florida Dairy Farmers Association

Fort Collins Milk Producers Association

Franklin St. Lawrence Milk Producers Co-op

Fremont Cooperative Creamery Association

Glencoe Butter and Produce Association

Golden Guernsey Dairy Cooperative

Gulf Coast Dairymen’s Association

Gulf Dairy Association Inc.

H P Farmers Cooperative Inc.

H.P. Hood Company

Huntington Interstate Milk Producers Assoc.

Independent Cooperative Milk Producers Assoc.

Independent Milk Producer Cooperative

Inter Lake Cooperative Creamery Association

Lafayette County Cooperative Creamery Assoc.

Lake Mills Cooperative Creamery Company

Lastrup Cooperative Creamery

Little Rock Cooperative Creamery Association

Marketing Association of America Cooperative

Mid-America Dairymen

Middlefield Swiss Cheese Cooperative Assoc.

Milk Marketing Inc.

Millport Milk Prodcers Cooperative Assoc.

Miltona Creamery Association

Mindoro Cooperative Creamery Association

Mountain Milk Producers Association Inc.

North Logan Dairy Cooperative

Oregon Jersey Cooperative Inc.

Palmeto Milk Producers Association

Pleasant View Cooperative Dairy Company

Port Allegany Co-op Milk Producers Assoc.

Quality Milk Producers Association

Rosyln Creamery Company

San Joaquin Valley Dairymen

Sauk Centre Cooperative Creamery Assoc.

Southern Milk Sales Inc.

Star Valley Cooperative Cheese Company

State Dairy Association

Tampa Independent Farmers Association

Tioga Valley Co-op Bulk Milk Producers Assoc.

Tri State Milk Cooperative

United Can Milk Producers Co-op

United Dairy Cooperative Services Inc.

Valley of Virginia Cooperative Milk Producers

Vanguard Milk Produces Cooperative

Western Dairymen Cooperative, Inc.

Westfield Co-op Milk Producers Assoc. Inc.

Winfield Cheese

Wisconsin Dairies Cooperative

Wisconsin Milk Producers Cooperative Inc.

Appendix table 1—Exiting dairy cooperatives, 1992-2000.
17

Best Milk Producers Cooperative

Butternut Farms Organic 

California Dairies

Cal-West Dairymen

Central Minnesota Cooperative

Continental Dairy Products, Inc.

Cooperative Milk Producers Association

Dairy Farmers of America

Dairymen's Marketing Cooperative, Inc.

Elite Milk Producers, L.C.

Farmer's Friendly Cooperative

Foremost Farms USA

Green Belt Cooperative Inc

Jersey Country Inc.

Lanco Dairy Farms Cooperative

Liberty Milk Co-op Association

Lone Star Milk Producers, L.C.

Maverick Milk Producers

Middlefield Original Cheese Cooperative

Mohawk High Protein Cooperative Inc.

Pastureland Cooperative

Pioneer Valley Milk Marketing Cooperative

Premier Milk, Inc.

Quality Dairy Producers

Scenic Valley Protein Milk Producers Cooperative

Association

Select Milk Producers Association

Southeast Milk

Sunrise Ag Cooperative

Superior Shores Agricultural Cooperative

Susquehanna Mini Dairy Cooperative

Valley View Cheese Cooperative Association

ZIA Milk Producers Association

Appendix table 2—Dairy cooperatives formed since 1992.
18

Appendix table 3—Distribution of cooperative headquarters, 1992-2000, by State.

State 1992 Exits Entries Net change 2000

No. No. No. No. % No.

Arizona 1 0 0 0 0.0 1

Arkansas 1 0 0 0 0.0 1

California 10 6 3 -3 -30.0 7

Colorado 1 1 0 -1 -100.0 0

Florida 2 2 1 -1 -50.0 1

Hawaii 3 1 0 -1 -33.3 2

Iowa 10 3 0 -3 -30.0 7

Idaho 1 0 0 0 0.0 1

Illinois 6 2 0-2 -33.3 4

Indiana 1 1 0 -1 -100.0 0

Kentucky 2 1 0 -1 -50.0 1

Louisiana 1 1 0 -1 -100.0 0

Massachusetts 3 1 1 0 0.0 3

Michigan 3 2 0 -2 -66.7 1

Minnesota 52 16 3 -13 -25.0 40

Missouri 2 2 2 0 0.0 2

Mississippi 1 1 0 -1 -100.0 0

Montana 2 1 0 -1 -50.0 1

North Carolina 4 3 0 -3 -75.0 1

North Dakota 5 1 0 -1 -20.0 4

Nebraska 1 0 0 0 0.0 1

New Mexico 0 0 3 3 n/a 3

New York 67 8 6 -2 -3.0 64

Ohio 6 2 2 0 0.0 6

Oregon 4 1 0 -1 -25.0 3

Pennsylvania 22 7 3 -4 -18.2 19

South Carolina 2 1 0 -1 -50.0 1

South Dakota 2 1 0 -1 -50.0 1

Texas 2 1 3 2 0.0 3

Utah 2 2 0 -2 -100.0 0

Virginia 3 1 1 0 0.0 3

Vermont 3 1 0 -1 -33.3 2

Washington 2 0 0 0 0.0 2

West Virginia 1 1 0 -1 -100.0 0

Wisconsin 37 13 4 -9 -24.3 28 ___ __ __ __ ____ ___

Total 265 84 32 -52 -19.6 213

Note: One cooperative’s headquarters were relocated from TX to MN.
19

Appendix table 4—U.S. dairy cooperatives, by type, 1997.

Primary function Total assets Share

Million dollars Percent

Bargaining 374.0 6.1

Bargaining-balancing 428.4 7.0

Hard-product manufacturing 303.2 4.9

Branded cheese 140.6 2.3

Diversified1 4,900.9 79.7

______ ____

Total 6,147.0 100.0

Primary function Net milk volume handled Share

Million pounds Percent

Bargaining 60,657 24.1

Bargaining-balancing 17,892 14.0

Hard-product manufacturing 5,434 4.3

Branded cheese 1,562 1.2

Diversified1 71,874 56.4 ______ ____

127,419 100.0

Primary function Number Share

Percent

Bargaining 163 72.1

Bargaining-balancing 16 7.1

Hard-product manufacturing 5 2.2

Branded cheese 19 8.4

Diversified1 23 10.2

___ ____

Total 226 100.0

Source: (Liebrand)

1 Includes the fluid processing cooperatives also.
20

Appendix table 5—Region of exiting and entering dairy cooperatives headquarters, by type.

Bargaining Bargaining- Hard product

balancing manufacturing

Number Percent Number Percent Number Percent

Cooperatives exiting 1992-2000:

North Atlantic 11 22.9 4 25.0 0 0.0

East North Central 7 14.6 6 37.5 0 0.0

West North Central 17 35.4 3 18.8 0 0.0

South Atlantic 6 12.5 0 0.0 0 0.0

South Central 2 4.2 1 6.3 0 0.0

Western 5 10.4 2 12.5 2 100.0 __ ____ __ ____ _ ____

48 100.0 16 100.0 2 100.0

Number Percent

Cooperatives entering ‘92-‘00:

North Atlantic 6 28.6

East North Central 2 9.5

West North Central 3 14.3

South Atlantic 2 9.5

South Central 3 14.3

Western 5 23.8 __ ____

21 100.0

Branded-cheese Fluid processing Diversified

Number Percent Number Percent Number Percent

Cooperatives exiting ‘92-’00:

North Atlantic 1 14.3 0 0.0 1 12.5

East North Central 5 71.4 1 33.3 1 12.5

West North Central 1 14.3 0 0.0 2 25.0

South Atlantic 0 0.0 2 66.7 0 0.0

South Central 0 0.0 0 0.0 1 12.5

Western 0 0.0 0 0.0 3 37.5 _ ____ _ ____ _

7 100.0 3 100.0 8 100.0

Number Percent Number Percent Number Percent

Cooperatives entering ‘92-‘00:

North Atlantic 3 42.9 1 100.0 0 0.0

East North Central 3 42.9 0 0.0 1 33.3

West North Central 1 14.3 0 0.0 1 33.3

South Atlantic 0 0.0 0 0.0 0 0.0

South Central 0 0.0 0 0.0 0 0.0

Western 0 0.0 0 0.0 1 33.3 _ ____ _ ____ _ ____

Total 7 100.0 1 100.0 3 100.0
21

Appendix table 6—Distribution of dairy cooperatives, exits and entries 1992-2000, by type and size.

Net

size or

type

Type of cooperative 1992 Exits Entries change1 Net change 2000

No. % No. No. No. No. % of ‘92 No. %

Bargaining

Small2 119 67.6 34 8 13 -13 -10.9 106 67.5

Medium3 51 27.9 11 10 -8 -9 -17.6 42 26.8

Large4 9 4.5 3 2 0 -1 -11.1 8 5.1 ___ ____ __ __ __ __ ____ ___ ___

Total5 179 100.0 48 21 5 -22 -12.3 157 100.0

Bargaining-balancing

Small 14 46.7 8 0 -1 -9 -64.3 5 41.7

Medium 9 30.0 3 0 -2 -5 -55.6 4 33.3

Large 7 23.3 5 0 1 -4 -57.1 3 25.0 __ ____ __ _ __ __ ____ __ ____

Total 30 100.0 16 0 -2 -18 -60.0 12 100.0

Hard product mfg.

Small 1 20.0 0 0 -1 0 0.0 0 0.0.

Medium 2 40.0 0 0 1 0 0.0 3 100.0

Large 2 40.0 2 0 0 -2 -100.0 0 0.0 _ ____ _ _ __ __ _____ _ ____

Total 5 100.0 2 0 0 -2 -40.0 3 100.0

Branded-cheese

Small 19 76.0 6 7 -4 -3 -21.1 16 68.2

Medium 6 24.0 1 0 1 0 -16.7 6 31.8

Large3 0 0.0 0 0 0 0 n/a 0 0.0

__ ____ _ _ __ __ ____ __ ____

Total 25 100.0 7 7 -3 -3 -12.0 22 100.0

Fluid processing

Small 1 14.3 0 1 0 1 100.0 2 40.0

Medium 6 85.7 3 0 -1 -4 -66.7 2 40.0

Large 0 0.0 0 0 1 1 n/a 1 20.0 _ ____ _ _ __ __ ____ _ ____

Total 7 100.0 3 1 0 -2 -28.6 5 100.0

Diversified

Small 1 5.3 1 0 0 -1 -100.0 0 0.0

Medium 6 31.6 2 0 -1 -3 -50.0 3 21.4

Large 12 63.2 5 3 1 -1 -8.3 11 78.6 __ ____ _ _ __ __ _____ __ ____

Total 19 100.0 8 3 0 -5 -26.3 14 100.0

1 Some cooperatives operating in both 1992 and 2000 changed size category and/or operating type.

2 Handled less than 50 million pounds of milk per year.

3 Handled 50 to 999 million pounds of milk per year.

4 Handled 1 billion or more pounds of milk per year.

5 Unknown size for one of the new bargaining cooperatives; totals may not add.
U.S. Department of Agriculture

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