A b s t r a c t A total of 49,675 member-producers of the Nation's 155 dairy cooperatives marketed

152.5 billion pounds of milk, or 82.6 percent of all milk marketed, in 2007. Forty-five

cooperatives operated 176 dairy processing and manufacturing plants, 12 handled

milk through receiving stations only, and 98 had no milk handling facilities.

Cooperatives marketed 71 percent of the Nation's butter, 96 percent of nonfat and

skim milk powders, 26 percent of natural cheese, 7 percent of packaged fluid milk

products, 4 percent of ice cream, 13 percent of ice cream mix, 11 percent of yogurt, 42

percent of dry whey products, 14 percent of sour cream, and 20 percent of condensed

buttermilk. Cooperatives in the 1-billion-to-2-billion-pounds of milk group showed the

most significant increase in the share of total cooperative milk volume, while the milk

share of the larger sized groups, as a whole, was slightly lower. A total of 86 dairy

cooperatives reported having 21,475 full-time and 2,944 part-time employees.

Complete financial data submitted by 94 dairy cooperatives showed that total assets

for the fiscal year were $8.41 per hundredweight (cwt); total liabilities, $6.09 per cwt;

members' equity, $2.32 per cwt; and net margin before taxes, 28 cents per cwt, which

represented a return on equity of 12.2 percent.

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

MARKETING OPERATIONS OF DAIRY COOPERATIVES, 2007

K. Charles Ling

Agricultural Economist

USDA Rural Development

Research Report 218

July 2009

On the Cover: Top two photos by Mark Johnson, courtesy of Tennessee Farmers

Cooperative. Bottom left: photo by Sheryl Meshke, courtesy of Associated Milk

Producers Inc. Bottom right: USDA archival photo.
P r e f a c e Information for this report came primarily from the responses to a once-every-5-year

USDA survey of all U.S. dairy cooperatives. The dairy-specific data were collected in

conjunction with the annual survey of all cooperatives by the Cooperative Programs'

Statistical Services staff of USDA Rural Development. 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 2007. These fiscal years vary within the calendar

year, so the data reflect some differences in time periods.

This report also updates and revises Rural Business-Cooperative Service (RBS)

Research Report 201, which was based on cooperative operations for the fiscal year

ending in calendar 2002. Revisions were made for consistency in interpreting data

between the two surveys.

Unless otherwise specified, when calculating cooperative marketing shares of various

products, information for U.S. total volumes was from the statistics reported by USDA

National Agricultural Statistics Service: Milk Disposition and Income, Final Estimates

1998-2002, May 2004; Milk Disposition and Income, Final Estimates 2003-2007, May

2009; Dairy Products, 2003 Summary, April 2004; and Dairy Products, 2008 Summary,

May 2009.

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

necessary data for this report is gratefully acknowledged.

The historical summaries of the results of this and previous surveys may be accessed

at http://www.rurdev.usda.gov/rbs/coops/dairy.htm.

i
C o n t e n t s Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iv

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

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

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

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

Dairy Products Marketed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Cooperative Sizes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Concentration Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Financial Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

List of Tables

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

2002 and 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Table 2—Cooperative marketing selected dairy products, 2002 and 2007 . . . . .3

Table 3—Cooperative share of milk marketed by producers, 2002 and 2007 . .4

Table 4—Utilization of cooperatively marketed milk, 2002 and 2007 . . . . . . . . .4

Table 5—Cooperative member milk by region, number of producers, and milk 

per producer, 2002 and 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

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

performing various marketing functions, by plant location, 2002 

and 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Table 7—Selected dairy products marketed by cooperatives, 2002 

and 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Table 8—Selected dairy products marketed by cooperative and shares of U.S. 

production, 2002 and 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Table 9—Size of dairy cooperatives in terms of milk marketed by members, 

2002 and 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Table 10—Share of milk marketed by members of dairy cooperatives, 2002 

and 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Table 11—Number of employees of 86 dairy cooperatives, 2007 . . . . . . . . . . .11

ii
Table 12—Aggregated balance sheet of 94 dairy cooperatives, 2007 . . . . . . .12

Table 13—Aggregated income statement of 94 dairy cooperatives, 2007 . . . .12

List of Figures

Figure 1—Number of Cooperatives Operating in Each Region, MemberProducers, Member Milk, and Milk per Producer, 2007 . . . . . . . . . . .2

iii
H i g h l i g h t s Member-producers of dairy cooperatives marketed 152.5 billion pounds of milk in

2007, a 9.6 percent increase from 2002. This volume represented 82.6 percent of the

milk marketed by farmers nationally, a slight increase from 82.4 percent 5 years earlier.

The number of dairy cooperatives during this period decreased from 194 to 155. There

were 45 cooperatives that processed and manufactured dairy products, the same

number as in 2002, while 12 cooperatives operated receiving stations only and 98 had

no milk-handling facilities.

Sixty-three percent of total cooperative volume was sold as raw milk in 2007 versus 61

percent in 2002. The other 37 percent was manufactured at plants owned and operated by cooperatives.

There were 49,675 member producers marketing milk in 2007, 19 percent (11,715)

fewer than 5 years earlier. Three regions - East North Central, North Atlantic, and West

North Central - together accounted for 85 percent of all member producers and 51 percent of cooperative milk volume. The Western region was the top source of cooperative milk. At 58.1 billion pounds, it represented 38 percent of all cooperative milk.

Dairy cooperatives owned and operated 193 plants, 17 for receiving and shipping milk

only, 34 for manufacturing American cheese, 17 for making Italian cheese, 49 for packaging fluid milk products, 24 for churning butter, 39 plants for drying milk products, and

24 for whey products. Other plants made various other dairy products. (A plant may

perform more than one function.)

Volumes of butter and nonfat and skim milk powders increased from 2002 to 2007.

Cooperatives' share of butter, at 1,087 million pounds, remained at 71 percent of U.S.

production, and their share of nonfat and skim milk powders, at 1,444 million pounds,

was an overwhelming 96 percent. However, cheese made by cooperatives had a substantial drop, decreasing by 15 percent from 5 years earlier to 2,513 million pounds

and accounting for 26 percent (versus 34 percent in 2002) of U.S. production.

Cooperatives' share of dry whey products also declined, from 52 percent to 42 percent

in 2007.

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

market share. The 4,035 million pounds marketed was 7.4 percent of the Nation's production, up from 7 percent in 2002. Share of ice cream increased from 3 percent to 4

percent, while share of ice cream mix increased from 6 percent to 13 percent. In 2007,

cooperatives marketed 11 percent of the Nation's yogurt, 14 percent of the sour cream,

and 20 percent of the condensed buttermilk.

As in 2002, there were four cooperatives that each handled more than 6 billion pounds

of member milk in 2007. The four accounted for 49.2 percent of cooperative milk volume in 2007, the same share as reported for 2002. Together, the 17 cooperatives in

the more-than-2-billion-pounds-size groups had a very slight decrease in the share of

cooperative milk, 0.3 percentage point, from 80.6 percent in 2002 to 80.3 percent in

2007.

Both the cooperative number and the milk volume of the 1-billion-to-2-billion-pounds

group more than doubled over the 5-year period. This is the size group to show the

most significant increase in the share of total cooperative milk volume (from 5.1 percent in 2002 to 10.1 percent), mostly at the expense of the groups of cooperatives with

smaller milk volumes.

iv
The four largest cooperatives had only a slightly higher share of the Nation's milk,

moving from 40.5 percent in 2002 to 40.7 percent in 2007. Broadening the focus to the

largest 8 dairy cooperatives and the largest 20, their shares of cooperative milk or total

U.S. milk changed little or not at all. In terms of milk volume, the relative position of

dairy cooperatives to the rest of the industry has been remarkably stable.

Sixty-five dairy cooperatives reported having a total of 21,475 full-time and 2,938 parttime employees in 2007. Six other cooperatives each had only one part-time employee. Another 15 cooperatives reportedly had no employees. These 86 cooperatives

marketed 86 percent of cooperative milk.

Complete financial data submitted by 94 dairy cooperatives showed that total assets

for the fiscal year ending in 2007 were $12 billion ($8.41 per cwt), total liabilities were

$8.7 billion ($6.09 per cwt), and members' equity was $3.3 billion ($2.32 per cwt).

Eighty-two percent of the equity was allocated to members. Net margin before taxes

was $404 million (28 cents per cwt), a return on equity of 12.2 percent. Together these

cooperatives marketed 94 percent of total cooperative milk volume.

v
MARKETING OPERATIONS OF DAIRY

C O O P E R ATIVES, 2007

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 re m a i ning are handling larger volumes. In addition, many

cooperatives own and operate plants to process, manuf a c t u re, and market various dairy pro d u c t s .

This report, ninth in a series of periodic

appraisals of the scope and performance of dairy cooperatives, describes their continuing evolution in an

e v e r-changing market enviro n m e n t .

Cooperative Industry Profil e

Between 2002 and 2007, the number of dairy

cooperatives decreased by 39 (20 percent), from 194 to

155. The pace was faster than the reduction of 32 cooperatives (14 percent) re c o rded from 1997 to 2002. In

2007, 129 (83 percent of all dairy cooperatives) were

h e a d q u a r t e red in the North Atlantic, East North

Central, and West North Central regions; the North

Atlantic region had the most with 55 dairy cooperatives (table 1). These three regions also showed a dro p

of dairy cooperative numbers from 2002. The steepest

reduction was 30 in the North Atlantic region. The

South Atlantic region had an increase of two cooperatives. The number of dairy cooperatives in the South

Central and Western regions remained unchanged.

In 2007, 45 cooperatives (29 percent of all dairy

cooperatives) processed and manufactured dairy pro ducts, the same number as in 2002. The number of cooperatives with plant operations increased by one both in

the South Atlantic and South Central regions, and it

d e c reased by one each in the North Atlantic and We s t

North Central regions. The East North Central re g i o n

still had the most cooperatives (20) with plant operat i o n s .

Cooperatives that operated only milk re c e i v i n g

stations decreased from 19 to 12 by 2007. The We s t

North Central region dropped five cooperatives, while

the East North Central and South Central dropped two

each. There was a gain of two cooperatives that operated only milk-receiving stations in the Western re g i o n .

Cooperatives that did not have plants or milkreceiving facilities decreased from 130 to 98. Almost

half of these were in the North Atlantic re g i o n .

H o w e v e r, the 48 such cooperatives in that region re presented a decrease of 29 from 2002, the steepest

decline among the 3 regions that showed a decline.

The South Atlantic, West North Central, and South

Central regions each gained one such cooperative.

Most cooperatives (88 percent of all dairy cooperatives) sold at least some bulk raw milk (table 2). The

number of cooperatives that marketed butter, Italian

cheese, sour cream and yogurt remained unchanged

f rom 2002. There was a gain of four cooperatives that

made specialty cheeses and a gain of one each that

made dry whole milk and condensed milk. On the

other hand, six fewer cooperatives than in 2002 made

American cheese. Cooperatives that handled other

selected dairy products all declined in number.

Milk Volume and Utilization

In 2007, cooperative member- p roducers marketed

152.5 billion pounds of milk, or 82.6 percent of milk

marketed by all U.S. producers (table 3). The cooperative share of milk was an increase of 0.2 perc e n t a g e

point from 2002, when it was 82.4 percent. Over the 5-

year period, milk marketed by cooperative members

i n c reased 9.6 percent, while the increase was 9.2 percent by all U.S. pro d u c e r s .

Milk received from nonmembers and non-cooperative firms decreased by almost 2 billion pounds (37

p e rcent) when compared with 2002. In total, coopera1
2
3

Table 1—Dairy cooperatives by type of operation and by headquarters region, 2002 and 2007

Not operating

Processing and Operating milk milk plants or

manufacturing receiving receiving

Region1 dairy products facilities only facilities Total

2002 2007 2002 2007 2002 2007 2002 2007

---------------------------------------------------------------Number----------------------------------------------------------------

North Atlantic 7 6 1 1 77 48 85 55

South Atlantic 1 2 0 0 2 3 3 5

East North Central 20 20 5 3 16 12 41 35

West North Central 10 9 10 5 24 25 44 39

South Central 0 1 2 0 1 2 3 3

West 7 7 1 3 10 8 18 18 _________________________________________________________________________

All regions 45 45 19 12 130 98 194 155

------------------------------------------------------------Percent-------------------------------------------------------------------

Share of total cooperatives 23 29 10 8 67 63 100 100

1Figure 1 shows States by region.

Table 2—Cooperatives marketing selected dairy products, 2002 and 20071

Item 2002 2007 5-year change

----Number of cooperatives----

Bulk raw milk 168 136 -32

Butter 19 19 0

Nonfat dry milk 17 14 -3

Dry whole milk 4 5 +1

Dry buttermilk 11 10 -1

Natural cheese other than cottage cheese 32 31 -1

American cheese 24 18 -6

Italian cheese 6 6 0

Swiss cheese 5 4 -1

Other (specialty) cheeses 11 15 +4

Cottage cheese 9 6 -3

Sour cream 8 8 0

Packaged fluid milk products 16 13 -3

Ice cream 7 6 -1

Ice cream mix 8 6 -2

Yogurt 6 6 0

Condensed milk 14 15 +1

Condensed whey 10 7 -3

Condensed buttermilk 6 4 -2

Dry whey products 13 11 -2

Whey protein concentrates & isolates2 6

Lactose2 4

1 A cooperative may market several products.

2 Separately counted for 2007
4

tives received or bargained for 155.8 billion pounds of

milk, or 84.4 percent of total volume marketed by all

U.S. producers. Cooperatives' share was 1 perc e n t a g e

point lower than in 2002. Cooperatives sold 63 perc e n t

of this volume as raw milk, up 2 percentage points

f rom 2002 (table 4). In other words, cooperatives

p rocessed or manufactured 37 percent of the milk in

the plants they directly operated.

Market strategy changes and industry re s t ru c t u ring 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.

To some extent, declining cooperative plant numbers

and decreases in market shares of some products were

the results of this market evolution.

Member Supply and Location

T h e re were 49,675 cooperative member- p ro d u cers marketing milk in 2007. Most (20,255 pro d u c e r s )

w e re in the East North Central region, followed by the

North Atlantic region (12,078 producers) and the We s t

North Central region (10,135 producers). To g e t h e r,

these regions had 85 percent of total member pro d u cers, but only 51 percent of member milk (table 5).

Following the national trend of decreasing dairy

farm numbers, dairy cooperatives reported a 19-percent decline in the number of member- p roducers in 5

years — from 61,390 to 49,675. The greatest declines

w e re in the two North Central regions, each of which

had 4,000 fewer member- p ro d u c e r s .

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

Atlantic was served by 10 cooperatives, while 62 cooperatives had members in the North Atlantic re g i o n .

In 2007, the Western region remained the top

s o u rce of cooperative milk volume. The 2,736 pro d u cers there (5.5 percent of all dairy cooperative members)

marketed 58.1 billion pounds of member milk. This

re p resented 38 percent of member milk marketed by

all cooperatives, up from 35 percent in 2002. The East

North Central region accounted for 25 percent of total

member milk volume, unchanged from 2002. The

North Atlantic and West North Central regions each

supplied 13 percent of the total U.S. cooperative member volume.

Table 3—Cooperative share of milk marketed by producers, 2002 and 2007

Cooperative share 

of U.S. Total

Milk from ________________________

Milk from sources other Total milk Total

member- than handled by United States Member milk

Year producers cooperatives1 cooperatives2 total milk handled

-----------------------------------------------Million pounds------------------------------------------------- --------Percent--------

2002 139,205 5,144 144,349 168,944 82.4 85.4

2007 152,514 3,272 155,786 184,565 82.6 84.4

----------------------------------------------------Percent------------------------------------------------------

5-year change 9.6% -36.7% 7.9% 9.2%

1 Milk from nonmembers and non-cooperative firms. 2 Handled by physical receipt, bargaining or servicing transactions. Excludes inter-cooperative shipment.

Table 4—Utilization of milk marketed by

cooperatives, 2002 and 20071

Year Milk marketed Utilization rate

---Million pounds--- ---Percent---

2002

Sold raw2 88,073 61

Processed or

manufactured 56,276 39 _____________________________

Total 144,349 100

2007

Sold raw2 98,288 63

Processed or

manufactured 57,498 37 _____________________________

Total 155,786 100

1 Excludes inter-cooperative volume and includes milk from

non-member producers and non-cooperative firms.

2 Includes milk shipped to plants which cooperatives invested in.
5

All regions except the South Atlantic incre a s e d

milk volumes from cooperative members. The gre a test increase was in the Western region, up 9 billion

pounds in 5 years.

Milk deliveries per member- p roducer were up in

all regions in the last 5 years. Nationally, it incre a s e d

35 percent from 2.3 million pounds to 3.1 million

pounds. Per member delivery was highest in the

Western region at 21.2 million pounds, a 56-perc e n t

i n c rease from 13.6 million pounds in 2002, and was

m o re than 12 times that of the North Atlantic re g i o n

in 2007.

Plant Operations

Cooperatives owned and operated a total of 193

dairy plants in 2007, 18 fewer than in 2002 (table 6).

M o re than one-third of the plants (66 plants) were in

the East North Central region. The region was also the

most prominent in almost all categories of dairy

plants, except for churning butter, drying milk pro ducts, and making ice cream. The Western region had

the most plants for manufacturing butter and dry

milk pro d u c t s .

T h ree regions had more plants in 2007 than in

2002: the North Atlantic region gained one plant, the

South Atlantic region gained five, and the South

Central region gained two. On the other hand, the 2

North Central regions and the Western region had

fewer plants operated by cooperatives, with the East

North Central region showing 17 fewer plants.

Seventeen plants served only as milk-re c e i v i n g

stations, compared with 35 in 2002. Manufacturing

operations were carried out in 176 plants, unchanged

f rom 2002.

Forty-nine cooperative plants packaged fluid

milk products, up seven from 2002. The East North

Central region had the most, with 14, followed by the

West Central region, with 12. Butter- m a n u f a c t u r i n g

plants declined from 25 to 24. Thirty-nine plants manu f a c t u red dry milk products (other than dry whey

p roducts), down four from 5 years earlier.

Many manufacturing operations were devoted

to cheesemaking — 34 American, 17 Italian, and 18

other cheeses. The East North Central region had the

most cooperative cheese plants in every category.

In 2007, 11 cooperative plants made culture d

p roducts and the same number made ice cream. FiftyTable 5—Cooperative member milk by region, number of producers, and milk per producer, 2002 and 2007

Member- Member Milk per Co-op regional

Year and region1 Cooperatives2 producers milk producer share of milk3

--------Number-------- ---Million pounds--- ---Percent---

2002

North Atlantic 87 12,886 19,826 1.5 69

South Atlantic 8 2,770 8,448 3.0 90

East North Central 53 24,314 34,210 1.4 90

West North Central 53 14,199 17,893 1.3 94

South Central 8 3,617 9,752 2.7 89

Western 24 3,604 49,076 13.6 73 ____________________________________________________________________________________

All4 194 61,390 139,205 2.3 82.4

2007

North Atlantic 62 12,078 20,428 1.7 76

South Atlantic 10 2,118 7,350 3.5 94

East North Central 47 20,255 37,675 1.9 91

West North Central 49 10,135 19,192 1.9 97

South Central 11 2,353 9,788 4.2 83

Western 21 2,736 58,081 21.2 76 ____________________________________________________________________________________

All4 155 49,675 152,514 3.1 82.6

1 Figure 1 shows States by region.

2 Cooperatives having member-producers in the region.

3 Cooperative member milk volume as a percentage of regional volume marketed by producers.

4 Sum of cooperatives not equal to all-region total because many had member-producers in more than one region.
6

six plants produced condensed milk and whey pro ducts. Dry whey products were made in 24 cooperative

plants. Twenty-six plants performed functions that are

not listed in table 6.

Dairy Products Marketed

This section and the accompanying tables (tables

7 and 8) describe the net volumes of selected dairy

p roducts marketed by cooperatives. Comparisons are

made between the volumes marketed by cooperatives

and total U.S. pro d u c t i o n .

Butter — Cooperatives churned 1,087 million

pounds of butter in 2007, up 14 percent from 2002.

Cooperatives' share of U.S. production remained at 71

p e rc e n t .

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

functions, by plant location, 2002 and 20071

Region2

________________________________________________________________________________________

East West

North South North North South

Marketing function Atlantic Atlantic Central Central Central Western Total

-------------------------------------------------------------Number---------------------------------------------------------------------

2002

Receive and ship milk3 11 1 43 41 7 22 125

Churn butter 5 2 6 4 1 7 25

Make dry products 6 2 8 7 3 17 43

Make American cheese 3 0 23 11 0 11 48

Make Italian cheese 2 0 13 4 0 2 21

Make other cheeses 0 0 15 3 0 0 18

Package fluid milk 4 1 14 13 4 6 42

Make cultured products 2 1 5 4 2 1 15

Make ice cream 0 1 9 5 1 4 20

Make condensed products4 4 2 26 14 4 16 66

Make dry whey products 2 0 12 10 0 4 28

Other dairy-related activities 6 0 4 6 1 1 18

___________________________________________________________________________

Total5 18 3 83 57 13 37 2113

2007

Receive and ship milk3 9 0 42 35 11 26 23

Churn butter 3 2 5 5 1 8 24

Make dry products 6 2 7 6 2 16 39

Make American cheese 4 0 15 9 0 6 34

Make Italian cheese 1 0 11 3 0 2 17

Make other cheeses 1 0 13 4 0 0 18

Package fluid milk 3 5 14 12 9 6 49

Make cultured products 2 0 4 4 0 1 11

Make ice cream 0 0 3 4 1 3 11

Make condensed products4 5 3 20 12 2 14 56

Make dry whey products 2 0 10 8 0 4 24

Other dairy-related activities 8 0 3 9 1 5 26

___________________________________________________________________________

Total5 19 8 66 50 15 35 1933

1 All dairy plants, including joint-venture plants operated by co-ops.

2 Figure 1 shows States by region.

3 Of plants performing milk receiving and shipping function, 35 were receiving stations only in 2002 and 17 in 2007. Thus, 176 plants in both

years were dairy products manufacturing plants.

4 Includes condensed whey and concentrated milk products.

5 Sum of plants not equal to totals because some perform more than one function.
7

Dry milk products — A total of 1,444

million pounds of nonfat and skim milk powders

(nonfat dry milk, skim milk powders, and dry skim

milk for animal) were marketed in 2007 by

cooperatives. They had a 96-percent share of U.S.

p roduction of these dry milk products. (Skim milk

powder is a new category of dry product being

reported since 2005. It includes protein standard i z e d

and blends.)

Cooperatives marketed 51 percent of the Nation's

dry whole milk, up from 47 percent in 2002. Their

s h a re of dry buttermilk was 65 percent in 2007.

Cheese — In 2007, cooperatives marketed

2,513 million pounds of natural cheese, excluding

cottage cheese, a decline of 15 percent from 2002. As a

result, cooperatives' share of U.S. natural cheese

p roduction was reduced by 8 percentage points, fro m

34 percent to 26 perc e n t .

Among the natural cheese produced by cooperatives, over two-thirds (1,698 million pounds or 68 percent) was American cheese, followed by Italian cheese

(743 million pounds or 30 perc e n t ) .

Table 7—Selected dairy products marketed by cooperatives, 2002 and 2007

Item 2002 2007 5-year change

---------------------------Thousand pounds------------------------ -PercentButter 956,211 1,087,012 130,801 14

Dry milk products

Dry whole milk 22,425 16,322 -6,103 -27

Dry buttermilk 48,104 53,043 4,939 10

Nonfat and skim milk powders1 1,352,016 1,444,395 92,379 7

Nonfat dry milk, human 1,357,782

Skim milk powders 83,790

Dry skim milk, animal 2,823

Natural cheese other than cottage cheese 2,948,084 2,512,713 -435,371 -15

American cheese 2,112,011 1,698,485 -413,526 -20

Italian cheese 765,426 742,830 -22,596 -3

Swiss cheese 39,509 36,921 -2,588 -7

Other (specialty) cheeses 31,138 34,477 3,339 11

Dry whey products 1,104,000 1,027,144 -76,856 -7

Dry whey (including modified whey)2 739,877

Whey protein concentrates & isolates 171,077

Lactose 116,190

Packaged fluid milk products 3,795,462 4,034,808 239,346 6

Sour cream 132,690 162,827 30,137 23

Cottage cheese 111,424 100,205 -11,219 -10

Condensed whole and skim milk (solids)3 629,684 765,221 135,537 22

Condensed buttermilk (solids) 19,000 11,040 -7,960 -42

Bulk fluid cream (butterfat) 326,516 485,536 159,020 49

Bulk fluid skim 294,604 390,331 95,727 32

---------------------------Thousand gallons------------------------

Ice cream 38,000 49,268 11,268 30

Ice cream mix 47,000 93,411 46,411 99

Yogurt 4,405 8,129 3,724 85

1 The three nonfat and skim milk powders are separately counted for 2007. However, nonfat dry milk (human) may be over-counted and skim

milk powders and dry skim milk (animal) under-counted, because some cooperatives reported the three products as a lump sum number 2 The three dry whey products are separately counted for 2007. Dry whey may include some dry permeate and whey protein concentrates and

isolates. 3 Bulk and canned, including blends and ultrafiltered products.
8
9

American cheese made by cooperatives was

down 20 percent from 2002, while U.S. pro d u c t i o n

i n c reased 5 percent, resulting in a decreased cooperative share of 44 percent, down from 57 percent in 2002.

In the same 5 years, cooperative Italian cheese

marketing decreased by 3 percent, and cooperative

s h a re of U.S. total Italian cheese dipped to 18 perc e n t .

Cooperative Swiss cheese production in 2007 was

37 million pounds, 7 percent lower than in 2002.

Cooperative share of U.S. production was down to 12

p e rc e n t .

Cooperatives also marketed 34 million pounds of

natural cheese other than American, Italian, or Swiss

cheese, an 11 - p e rcent increase from 2002. However, this

accounted for only 2 percent of U.S. production of

other cheeses, unchanged from 2002.

Packaged fluid milk products —

Cooperatives marketed 4,035 million pounds of

packaged fluid milk products in 2007, up 6 perc e n t

f rom 2002. However, cooperatives' share of U.S. total

beverage milk volume increased only slightly, from 7

p e rcent 5 years earlier to 7.4 percent in 2007.

Ice cream and ice cream mix —

Cooperatives' role in the ice cream business is

relatively minor, marketing 49 million gallons in 2007.

Their share of the Nation's production increased from 3

to 4 percent. Ice cream made by cooperatives incre a s e d

30 percent while U.S. production decreased slightly.

Cooperatives reported manufacture of 93 million

gallons of ice cream mix or 13 percent of U.S. pro d u ction in 2007. This market share was more than double

the 6 percent share in 2002. In the 5-year period, U.S.

p roduction decreased slightly while cooperative volume almost doubled.

Yogurt — The volume of yogurt marketed by

cooperatives increased 85 percent since 2002, and

market share occupied by cooperatives increased fro m

6 percent to 11 perc e n t .

Dry whey products — In 2007, cooperatives

marketed 1,027 million pounds of dry whey pro d u c t s ,

down 7 percent from 2002, while U.S. pro d u c t i o n

i n c reased 14 percent in the same period. The

p e rcentage of dry whey products made by

cooperatives decreased from 52 percent to 42 percent of

U.S. production in 5 years.

Sour cream and cottage cheese —

Cooperatives marketed 163 million pounds of sour

c ream in 2007, an increase of 23 percent over the 5-year

period and re p resenting a 14-percent share of U.S.

p roduction. Cottage cheese produced by cooperatives

d e c reased by 10 percent to 100 million pounds.

Condensed milk products — C o n d e n s e d

whole and skim milk, both bulk and canned, and

including blends and ultrafiltered products, totaled 765

million pounds of milk solids. This was a 22-perc e n t

i n c rease over 2002. Cooperatives' share of condensed

buttermilk dropped to 20 percent of U.S. total in 2007,

down from 34 perc e n t .

Cooperative Sizes

T h e re were four cooperatives that each handled

m o re than 6 billion pounds of member milk in 2007,

the same number as in 2002 (table 9). The four accounted for 49.2 percent of cooperative milk in 2007, the

same share as reported for 2002.

The number of cooperatives in the next size

g roup (3 billion to 6 billion pounds of milk) incre a s e d

by one, to eight, by 2007. The milk volume of this

g roup occupied a 22.9-percent share of cooperative

milk, an increase of 2 percentage points from 2002.

The 2-billion-to-3-billion-pounds group saw a

d e c rease of one cooperative from 2002, and the gro u p ' s

s h a re of cooperative milk decreased by 2.3 perc e n t a g e

points, from 10.5 percent to 8.3 perc e n t .

The most significant change was the 1-billion-to2-billion-pounds group. The number of cooperatives in

this group more than doubled from 5 to 11, as did their

milk volume. Their share of cooperative milk almost

doubled, from 5.1 percent to 10.1 percent in 2007.

The 0.5-billion-to-1-billion-pounds group had

eight cooperatives in 2007, five fewer than in 2002. The

milk volume accounted for by this group declined the

most (by 3.9 billion pounds, or 43 percent), and

showed the most substantial decrease in the share of

cooperative milk volume, from 6.5 percent to 3.4 perc e n t .

Thirty-two cooperatives were in the group that

marketed between 100 million and 500 million pounds

of milk in 2007, an increase of two cooperatives.

To g e t h e r, this group had a slightly lower milk volume

and had a 4.4-percent share of cooperative milk, down

f rom 4.9 percent in 2002.

T h e re were 87 cooperatives in the smallest sized

g roup, which marketed less than 100 million pounds of

milk in 2007. This was a steep (33 percent) decline fro m

2002, when 129 cooperatives in this group were count-
10

ed. The group's milk volume declined by 34 perc e n t

and held only a 1.8-percent share of cooperative milk,

a marked decline from the 2.9-percent share in 2002.

Relative to others, the 1-billion-to-2-billionpounds-of-milk group of cooperatives grew the most

in terms of market share. While as a group, the 17

l a rgest sized cooperatives (greater than 2 billion

pounds of milk) by and large held steady, decre a s i n g

their share of cooperative milk by only 0.3 perc e n t a g e

point from 80.6 percent in 2002 to 80.3 percent in 2007,

the smaller sized groups lost more ground.

Concentration Ratio

A measure commonly used to gauge the concentration of a sector (or market) is the share occupied by

the four largest firms in the sector.

The share of the largest four dairy cooperatives

remained at 49.2 percent of cooperative milk in 2007,

as it was in 2002 (tables 9 and 10). Because there was a

slight increase in total cooperative milk relative to total

U.S. milk marketed (table 3), the largest four dairy

cooperatives also had a slightly higher share of the

Nation's milk, increasing from 40.5 percent in 2002 to

40.7 percent in 2007.

When the focus was expanded to the largest eight

dairy cooperatives, their milk as a share of cooperative

milk and as a share of total U.S. milk both went down

somewhat from 2002 to 2007.

Meanwhile, the largest 20 dairy cooperatives had

a slight decline in their share of cooperative milk.

H o w e v e r, their share of the Nation's milk was

u n c h a n g e d .

In terms of milk volume, the relative position of

dairy cooperatives to the rest of the industry has been

remarkably stable.

E m p l o y e e s

A total of 65 dairy cooperatives (42 percent of all

dairy cooperatives) reported having 21,475 full-time

Table 9—Size of dairy cooperatives in terms of milk marketed by members, 2002 and 2007

Share of Share of co-op

Milk marketed by members Cooperatives cooperatives Member milk milk

2002 2007 2002 2007 2002 2007 2002 2007

---Number--- ---Percent--- --Million Pounds-- ---Percent---

More than 6 billion pounds 4 4 2.1 2.6 68,499 75,089 49.2 49.2

3 to 6 billon pounds 7 8 3.6 5.2 29,040 34,899 20.9 22.9

2 to 3 billon pounds 6 5 3.1 3.2 14,615 12,504 10.5 8.2

1 to 2 billion pounds 5 11 2.6 7.1 7,120 15,439 5.1 10.1

0.5 to 1 billion pounds 13 8 6.7 5.2 9,101 5,176 6.5 3.4

100 to 500 million pounds 30 32 15.5 20.6 6,761 6,740 4.9 4.4

Less than 100 million pounds 129 87 66.5 56.1 4,063 2,681 2.9 1.8 ———————————————————————————————————————

Total 194 155 100.0 100.0 139,199 152,528 100.0 100.0

Table 10—Share of milk marketed by members of dairy cooperatives, 2002 and 2007

Category 2002 2007

-----Percent-----

Share of cooperative volume

4 largest cooperatives 49.2 49.2

8 largest cooperatives 62.9 62.3

20 largest cooperatives 84.0 83.7

Share of total U.S. volume

4 largest cooperatives 40.5 40.7

8 largest cooperatives 51.8 51.5

20 largest cooperatives 69.2 69.2
11

and 2,938 part-time employees in 2007 (table 11). These

cooperatives marketed 127.4 billion pounds of member

milk, or 84 percent of cooperative milk.

(In addition to the main business of marketing

milk, some cooperatives also handled farm supplies

and/or other commodities. There f o re, not all employees were engaged in the business of handling milk and

dairy pro d u c t s . )

Six other cooperatives had only part-time

employees. These were small bargaining cooperatives,

each employing a part-time employee.

Another 15 cooperatives reportedly had no

employees. Again, most of them were small barg a i n i n g

c o o p e r a t i v e s .

In total, these 86 cooperatives re p resented 55 percent of all dairy cooperatives and marketed 86 perc e n t

of cooperative milk. The remaining 14 percent of the

milk was handled by the 45 percent of dairy cooperatives that did not supply employment information.

Financial Performance

Complete financial data submitted by 94 dairy

cooperatives showed that their total assets for the fiscal year ending in 2007 were $12 billion (table 12).

C u r rent assets accounted for $7.3 billion, and fixed

assets (net pro p e r t y, plant, and equipment (PP&E) and

other assets) were $4.6 billion.

Total liabilities for the 94 cooperatives were $8.7

billion. They owed $6.3 billion in current liabilities,

and incurred $2.4 billion long-term debt.

Members' equity, the balance of assets and liabilities, was $3.3 billion. Most equity (82 percent or $2.7

billion) was allocated to members.

On a per- h u n d redweight-of-milk basis, total

assets were $8.41, total liabilities were $6.09, and member equity was $2.32.

(Dairy cooperatives typically pay members for

their milk twice a month. A large proportion of the

c u r rent assets and the current liabilities are related to

such periodic cash payments to members. This is a

unique characteristic of the balance sheet of dairy

c o o p e r a t i v e s . )

The 94 cooperatives marketed 142.9 billion

pounds of milk in 2007. They re p resented 61 percent of

all dairy cooperatives and 94 percent of cooperative

milk volume.

Total income reported by the 94 cooperatives was

$44.2 billion (table 13). Of this amount, 87.6 perc e n t

($38.8 billion) was from milk and dairy products sales,

11.6 percent ($5.1 billion) was from supply and other

sales, and less than 1 percent was from other income.

Substracting total costs and expenses from total

income, net margin before taxes was $404 million or 28

cents per hundredweight of milk marketed. This re p resents a before-tax return on equity of 12.2 perc e n t .

Some cooperatives reported the value of the milk

they bargained for as sales in the income statements,

while others did not. For this latter group, an estimated value of the milk that was bargained for was

included in the milk and dairy products sales in ord e r

for the cooperative sales figures to be consistent. The

estimated value is offset by the equal amount of the

cost of goods sold and, there f o re, does not affect the

$404 million net savings reported. Milk and dairy

p roduct sales may also include some inter- c o o p e r a t i v e

transactions; again, this does not affect the re p o r t e d

total net savings of dairy cooperatives as a gro u p .

Table 11—Number of employees of 86 dairy cooperatives, 2007

Cooperatives Full-time Part-time

reporting employees employees Member milk

——————————————————————————————————

-----------------------------------Number----------------------------------- --Million lbs--

Having full-time employees 65 21,475 2,938 127,422

Having only part-time employees 6 - 6 296

Having no employee 15 - - 3,767

——————————————————————————————————

Total reported 86 21,475 2,944 131,485

-------------------------------------------------------Percent--------------------------------------------------

Share of total cooperatives 55% *n.a. n.a. 86%

*- not available.
12

Table 13—Aggregated income statement of 94 dairy

cooperatives, 2007

--Thousand dollars--

Milk & dairy product sales1 38,765,715

Supply and other sales 5,128,272

Service receipts, subsidiary and other income 318,880

Patronage refunds received 8,377

Non-recurring gains 15,733

Total income 44,236,977

Cost of goods sold1 41,221,393

Expenses 2,606,133

Non-recurring losses 5,161

Total costs and expenses 43,832,687

Net margin before taxes 404,290

—————

Number of dairy cooperatives reporting 94

Member milk (million pounds) 142,865

Net margin before taxes per hundredweight $0.28

Before-tax return on members' equity 12.2%

1 Includes the estimated value of milk that was bargained for by

some cooperatives but was not reported in their income

statements. Both items may also include some inter-cooperative

transactions.

Table 12—Aggregated balance sheet of 94 dairy

cooperatives, 2007

--Thousand dollars--

Assets:

Current assets 7,258,423

Net PP&E and other assets 4,609,394

Investments in other co-ops 152,067

Assets not categorized 935

Total assets 12,020,819

—————

Liabilities & equity:

Current liabilities 6,290,839

Long-term & other liabilities 2,409,129

Liabilities not categorized 677

Total liabilities 8,700,645

Members' equity

Common stock 1,857

Preferred stock 232,595

Allocated equity 2,727,249

Un-allocated equity 358,473

Total equity 3,320,174

Total liabilities and equity 12,020,819

—————

Number of dairy cooperatives reporting 94

Member milk (million pounds) 142,865

Total assets per hundredweight $8.41

Total liabilities per hundredweight $6.09

Members' equity per hundredweight $2.32
USDA Rural Development

Rural Business–Cooperative Programs

Stop 3250

Washington, D.C. 20250-3250

USDA Rural Development 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 USDA Rural Development (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. Rural Development 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, age, disability, and where applicable,

sex, marital status, familial status, parental status, religion,

sexual orientation, genetic information, political beliefs,

reprisal, or because all or a part of an individual's income is

derived from any public assistance program. (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 to USDA, Director,

Office of Civil Rights, 1400 Independence Avenue, S.W.,

Washington, D.C. 20250-9410 or call (800) 795-3272 (voice) or

(202) 720-6382 (TDD). USDA is an equal opportunity provider

and employer.