University of Wisconsin Center for Cooperatives

New Dairy Co-ops are Repeating History

By Jody Padgham,
UWCC Outreach Specialist

Country Today
June 25, 2001

Ten dairy farm husbands and wives sit around a dining room table on a sunny spring afternoon, talking and laughing, discussing newly seeded hay fields and the last of the spring calves. Their conversation is a prelude to the business at hand, discussion on the possibilities of working together to form a new dairy marketing cooperative. The dairy farmers are unhappy about wholesale prices, and want to see if they can gain more value for their product by joining together in a marketing organization. Is this circa 1921, or 2001? It could be either. In the early part of this last century, modern day giants such as Alto and Land O Lakes were getting their start in just this way. In the last few years, lower dairy prices have inspired a new surge in dairy co-op development in the US. Producers continue to come together, realizing that there is much to be gained in working together.

A recent USDA grant funded project has uncovered three new dairy cooperative initiatives in the state. The "Initiative for Value-Added Development" will give a small amount of assistance to each of these young groups in organizational and market development. Scenic Valley Protein Cooperative, in Darlington, WI, incorporated for two years, has 10 members who produce milk from grass-based Jersey herds in the SW part of the state. Wisconsin Dairy Graziers Cooperative is in the process of incorporating, and has 5 farm members located on the eastern edge of the state in the Lake Michigan watershed. The Green Ribbon Creamery involves about 8 families who are focusing their efforts on a marketing cooperative located out of the old Tilden Creamery in the NW part of the state.

As in the days 80 to 100 years ago, these modern farmers believe that by joining together, they can pool product and find markets and/or prices that would not otherwise be available to them. The difference in these new cooperatives, however, is that many of them are already marketing milk through large marketing cooperatives. Their thinking in wanting to start new cooperatives is that they can take advantage of newer, niche markets that might offer a higher premium and eventually increased price per hundredweight back to the farmer members.

All of these groups want to market their products under labels that depict unique characteristics. Locality, breed of animal, grass fed, historical significance- each group is taking a different combination of these elements to distinguish their product from others in the market. Each of our fledgling co-ops have identified that finding the right market for their products is key- and all admit that as commodity dairy producers, marketing has not been their specialty. One of the great benefits in joining together is the ability to pool resources to purchase or acquire skills that might be lacking within the group. Each group has already or is planning to get outside help for their market development.

Grants (often more accessible to organized groups) or pooled co-op member funds can support a consultant to do market research or market development that an individual farm would not be able to afford. Not all co-ops or businesses are able to secure grant funding, and should plan to start up without it, but the extra boost of a grant will obviously really help a start-up situation, by allowing farmer investment dollars to be spread further.

Being new, none of these groups are sure that their ventures will be a success. But, in attending the early meetings of two of these groups, it is obvious to me the advantages they are already gaining by deciding to work together. Though the democratic process takes longer, I am a firm believer that the product of many heads (used in an effective decision making process) is better than one. At meetings of both the Tilden and the Graziers groups, initial assumptions have been challenged and plans have been significantly changed as discussion moves back and forth between individuals. Everyone has unique perspective and experience to bring to the table, and all learn by sharing. Though all the broad decisions about the scope of the organization are made by the whole group, (moving eventually to an elected sub-group, the board of directors) each of the co-ops have broken into work committees as well, to allow those involved to focus on areas of interest or talent. For example, two of the more ‘wordy’ types from the Grazier group are hashing out text for the bylaws, while two others are doing research on possible cheese processors and milk pick- up options. These businesses are being built by the contributions of many individuals, supporting ownership in more than just the financial realm. I am noticing that individuals seem to be more willing to take the risks involved in starting a business, knowing that others are taking the risks along with them.

It will be several years before each of the member farms’ total production will be utilized by these small cooperatives, but the farmer members feel there is value in exploring the potential, as they have faith in their ideas. By investing their time, their thoughts and their money, each of these dairy farmers is betting on a successful future based on the conglomerate vision of their friends and neighbors. In ten or twenty years one or more of these groups may not be around any more, but it is also possible that another strong and far-impacting cooperative is in the process of being birthed. Stay tuned.

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