Assessing Market Response U ndoubtedly there will be a market response if the proposed consolidation is to follow through. Other cooperatives will begin to enter into merger talks in order to get bigger and compete with the new cooperative for both producers and customers. Many competing cooperatives will fear that the new mega cooperative will create a cash flow that can be used to steal their members away. Proprietary processors will also respond by encouraging area farmers to form their own cooperative. They will do this in order to reduce membership in the new mega cooperative and thereby lower their cost of acquiring milk.
T here are inherent dangers in the proposed consolidation as there are in all business deals.
Farmers need to be made aware of the risks. T here are many unforeseen costs that can arise in a consolidation of this size that may offset the savings. But staying put and watching others expand may also be a form of risk. After all, cooperatives are designed to serve farmers. The answer will really depend on the objective of the consolidation.