University of Wisconsin Center for Wisconsin
Rural Cooperatives, July/August 1999, p. 28.
Published by the Rural Business and Cooperative Development Service 

Co-ops Remain Major Players in Dairy Industry

By K. Charles Ling

Agricultural Economist
USDA Rural Development

Dairy cooperatives continue to play a major role in the U.S. milk industry. While dairy products represented 30 percent of the value of all agricultural cooperative marketings during 1997, dairy cooperatives received or bargained for 83 percent of all milk sold by farmers to the Nation's plants and dealers. It is the major finding from a survey of dairy cooperatives' operations for the fiscal year ending in 1997.

The number of dairy cooperatives decreased 15 percent, from 265 to 226, between 1992 and 1997. Similarly, cooperatives that processed and manufactured dairy products dropped from 86 in 1992 to 63 in 1997. Following the same pattern, the number of cooperatives selling raw whole milk fell from 230 in 1992 to 204 in 1997. But cooperatives' share of total milk volume sold by farmers inched up from 82 percent to 83 percent.

Sixty-one percent of total cooperative volume was sold as raw whole milk in 1997 compared to 60 percent in 1992. The other 39 percent was manufactured at plants operated by cooperatives.

There were 87,938 producers delivering milk to 222 dairy cooperatives with direct members. Three regions—East North Central, West North Central, and North Atlantic—together accounted for 83 percent of all member-producers and 55 percent of cooperative milk volume.

In 1997, dairy cooperatives owned 298 plants, 91 of which were shipping and receiving facilities only. The cooperatives operated 62 plants for manufacturing American cheese, 30 for Italian cheese, 54 for packaging fluid milk products, 43 for manufacturing dry milk products, and 35 for churning butter.

While net sales of butter and dry milk products decreased from 1992 to 1997, those of cheese increased. However, cooperatives' shares of these products declined.

Cooperatives' shares of butter decreased from 65 percent to 61 percent during the five-year period. Dry milk products (nonfat dry milk, dry buttermilk, and dry whole milk) also decreased, from 81 percent to 76 percent.

Cheese marketed by cooperatives grew 3 percent, from 2.82 billion pounds to 2.907 billion pounds, while total cheese production increased 13 percent. Cooperatives' shares of the natural cheese market declined from 43 percent to 40 percent by 1997.

Sales of packaged fluid milk products by cooperatives decreased both in volume and in share of market. The 7.73 billion pounds marketed was 14 percent of the Nation's production, down from 16 percent in 1992. Cooperatives' sales of cottage cheese as a percentage of national production, at 10 percent, was also lower than in 1992. Share of ice cream decreased from 10 percent to 6 percent. In 1997, cooperatives marketed 11 percent of the Nation's ice cream mix, 4 percent of yogurt, 65 percent of bulk condensed milk, and 48 percent of dry whey products.

Most dairy cooperatives continue to be relatively small business organizations. However, through consolidations and mergers, an increasing amount of dairy products were sold by larger cooperatives. The 20 largest dairy cooperatives received 77 percent of all producer milk marketed through cooperatives. And 89 percent of cooperative milk processing and manufacturing was conducted by the 20 largest cooperatives with plant operations.

To obtain a copy of the full report, please order RBS Research Report No. 173, "Marketing Operations of Dairy Cooperatives."

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