These companies are willing to look to dairy cooperatives to supply these ingredients, provided they have the size and economies of scale to deliver on. A nother reason for consolidation is to cut down on marketing and administrative costs. Trucking milk is a large expense that is borne by the dairy farmers. In some cases as many as two or three trucks may pass one dairy farm in certain parts of the country. It makes sense for cooperatives to consolidate to lower these costs to their members.
Administrative costs are another area of concern.
The proposed mega merger will likely result in a consolidation of administrative procedures that will result in lower marketing costs by reducing duplication of services. Marketing and administrative costs for the new organization can be reduced significantly, but it is difficult to estimate what that number will be. They will review data and statistics to determine if the proposed consolidation will result in a monopoly or some other impediment to free trade. Note that they are not concerned with whether a consolidation of cooperatives will result in less competition for farmer's milk, only whether there is less competition for supplying milk and dairy products to consumers. T he next major obstacle is whether governance rules for the new members can be ironed out.