University of Wisconsin Center for Cooperatives
This paper is part of a series entitled "Dairy Markets and Policy -- Issues and Options", a project of Cornell University's Program on Dairy Markets and Policy. No. M-9, August 1995

Role of Dairy Cooperatives in U.S.

DAIRY COOPERATIVES AND THEIR ROLE
IN THE UNITED STATES

Robert Jacobson, Emeritus Professor in the Department of Agricultural Economics and Rural Sociology at the Ohio State University and
Robert Cropp, and Professor and Extension Dairy Marketing and Policy Specialist at the University of Wisconsin-Madison.

Dairy cooperatives, or more specifically milk marketing cooperatives, are a major institution in the milk industry in the United States. In 1992, 264 dairy cooperatives marketed producer milk in the U.S., and an estimated 82 percent of all producer milk was marketed through a cooperative in which the dairy farmer was a member-owner.1 The other 18 percent of producer milk was marketed by "independent" or "non-member" dairy farmers. In terms of dairy farm numbers, approximately 106,000 dairy farms of the 130,000 dairy farms defined as commercial dairy farms in the U.S. have a milk marketing cooperative affiliation.

Structure of Dairy Cooperatives

Dairy cooperatives, like other farmer cooperatives, are for profit corporations which operate at cost by allocating net margins back to their producer members on a patronage basis. Dairy cooperatives are chartered by state statute in the state in which they are headquartered. In cooperatively marketing their products, farmers and their cooperatives enjoy a significant anti-trust exemption under the Capper-Volstead Act of 1922.

The structure of dairy cooperatives has reflected the same trends that have described dairy farms and processing plants in recent decades, i.e., fewer and larger. Table I reports these trends.

Even while 87 percent of the dairy cooperatives have disappeared during the 1950 through 1991 period, the share of producer milk marketed by cooperatives has increased markedly to the 82 percent level. While the 82 percent market share looks to be strong in the aggregate, there are some milk markets in the United States in which the cooperative movement is limited and the proportion of non-member producers is substantial.

Table 1. Number of Dairy Cooperatives and Farm Level Share of Milk Marketed by Dairy Cooperatives, U.S., 1950-1991.
Year Number of Dairy
Cooperatives
Farm Level Share of
Cooperative Marketing
1950-51 2,072 53%
1960-61 1,609 61%
1969-70 971 73%
1974-75 631 75%
1985-86 394 78%
1990-91 264 82%
Source: Agricultural Cooperative Service, USDA.

Almost all of the reduction in the number of dairy cooperatives is explained by merger-consolidation activities. A rapid transition to the present regional cooperative structure occurred mostly in the 1965-1975 period. A cooperative such as Associated Milk Producers Inc., for example, has scores of smaller predecessor cooperatives in its genealogy. At the present time, the top 25 dairy cooperatives in the United States which are only 9 percent of the total number, market more than 60 percent of all producer milk (see Table 2).

In some instances, cooperatives have federated to pursue some common marketing-pricing objectives. A federation is a cooperative whose membership includes individual cooperatives that maintain independent corporate status. Associated Dairymen, Inc. and Great Lakes-Southem Milk, Inc. were early versions of federated activity. Presently, most federated activity is reflected in organizations such as Central Milk Producers Cooperative in Chicago, which are primarily mechanisms for operating over-order price pools.

Table 2. Top 50 Dairy Cooperatives, 1992.

Rank Dairy Cooperative Member milk volume Number of members
1 Associated Milk Producers, Inc.
San Antonio, Texas
16.50 14,729
2 Mid-America Dairymen, Inc.
Springfield, Missouri
8.61 13,108
3 California Milk Producers Assn.
Artesia, California
5.76 393
4 Farmers Union Milk Marketing Coop.
Madison, Wisconsin
5.64 10,751
5 Darigold Farms
Seattle, Washington
4.92 1,350
6 Land O'Lakes, Inc.
Minneapolis, Minnesota
4.20 5,580
7 Milk Marketing, Inc.
Strongsville, Ohio
3.81 5,855
8 Dairymen, Inc.
Louisville, Kentucky
3.62 3,362
9 Atlantic Dairy Cooperative
Southampton, Pennsylvania
3.53 3,580
10 Dairvmen's Cooperative Creamery Assn.
Tulare, Califomia
3.50 287
11 California Cooperative Greamery
Petaluma, California
3.21 505
12 Manitowoc Milk Producers Coop
Manitowoc, Wisconsin
3.06 3,462
13 Michigan Milk Producers Assn.
Novi, Michigan
2.95 2,750
14 Western Dairymen Coop., Inc.
Thorton, Colorado
2.85 1,075
15 Wisconsin Dairies Coop.
Baraboo, Wisconsin
2.77 4,65t)
16* Agri-Mark, Inc.
Lawrence, Massachusetts
2.49 2,044
16* Dairylea Cooperative, Inc.
East Syracuse, New York
2.49 2,300
18 Maryland & Virginia Milk Producers Assn.
Reston, Virginia
2.25 1,359
19 Florida Dairy Farmers Assn.
Fort Lauderdale, Florida
1.95 192
20 Milwaukee Cooperative Milk Producers
Brookfield, Wisconsin
1.88 2,021
21 San Joaquin Valley Dairymen
Los Banos, Cali'omia
1.80 228
22 Southern Milk Sales, Inc.
San Antonio, Texas
1.66 1,246
23* Eastern Milk Producers Coop. Assn.
Syracuse, New York
1.55 2,200
23* United Dairymen of Arizona
Tempe, Arizona
1.55 105
25 Swiss Valley Farms Company
Davenport, Iowa
1.41 2,205
26 Allied Federated Coop.
Canton, New York
1.39 1,397
27 Danish Creamery Assn.
Fresno, California
1.34 125
28 Alto Dairy Cooperative
Waupun, Wisconsin
1.26 1,275
29 Carolina-Virginia Milk Prod. Assn., Inc
Charlotte, North Carolina
.99 445
30 Independent Co-op Milk Prod. Assn., Inc.
Grand Rapids, Michigan
.95 782
31 Upstate Milk Cooperative, Inc.
LeRoy, New York
.90 570
32 First District Association
Litchfield, Minnesota
.89 1,200
33 Golden Guernsey Dairy Coop.
Wauwatosa, Wisconsin
.87 962
34 Tampa Independent Dairy Farmers' Association, Inc.
Tampa, Florida
.82 129
35 Bongard's Creameries
Bongard, Minnesota
.80 1,290
36 Prairie Farms Dairy, Inc.
Carlinville, Illinois
.78 747
37 St. Albans Cooperative Creamery, Inc.
St. Albans, Vermont
.73 573
38 Magic Valley Quality Milk Producers, Inc.
Jerome, Idaho
.71 87
39 Gulf Dairy Association, Inc.
Kentwood, Louisiana
.61 582
40* Tilmook County Creamery Assn.
Tilmook, Oregon
.48 197
40* Cass-Clay Creamery, Inc.
Fargo, North Dakota
.48 879
42 Valley of Virginia Coop. Milk Prod. Assn.
Mt. Crawford, Virginia
.45 293
43 Central Pennsylvania Milk Marketing Co-op
Reedsville, Pennsylvania
.40 235
44 Farmers Cooperative Creamery
McMinnville, Oregon
.38 114
45 Cal-West Dairymen, Inc.
Walnut Creek, California
.31 35
46* Huntington Interstate Milk Producers
Hungington, West Virginia
.30 500
46* Tri-State Milk Cooperative
West Salem, Wisconsin
.30 640
48 Plainview Milk Products Cooperative
Kellogg, Minnesota
.27 286
49 Humboldt Cooperative Creamery Assn.
Fortuna, California
.24 130
50 Ellsworth Cooperative Creamery
Ellsworth, Wisconsin
.22 400
TOTAL 110.82 99,210
* Tie
Source: Hoard's Dairyman, October 10, 1993.

The Agricultural Cooperative Service of the USDA estimates that dairy cooperatives in the United States hold $4.4 billion in assets. Member equity or net worth totals $1.7 billion. Much of the $2.7 billion liability represents loans from the Farm Credit System bank for cooperatives-- Cobank.

Activities of Dairy Cooperatives

The 264 dairy cooperatives in the United States vary widely in size, marketing functions pursued, and impact in the market served2. Several of the dairy cooperatives have fewer than 50 members, while a large regional cooperative like Associated Milk Producers, Inc. has over 16,000 producer members. Some cooperatives are essentially bargaining associations that maintain an office and may offer members field services. Others have extensive facilities for handling and manufacturing reserve milk through processing and marketing operations. Similarly, some dairy coopera- tives do not have enough control over the supply of milk in their market to have any bargaining power. Others have substantial market power and are able to implement effective and coordinated marketing-bargaining programs.

Table 3. Total Dollar Business Volume of Dairy Cooperatives and their Business Volume as a Percentage of all Marketing Cooperatives, 1987- 1991.
Year Dollar business volume
($ billions)
Dairy co-ops as a percent of all
marketing co-op's $ business volume
1987 $16.37 37.2
1988 17.78 36.3
1989 18.34 34.4
1990 20.72 35.8
1991 18.83 33.5
Source: Agricultural Cooperative Service, USDA, Farmer Cooperatives, November 1989, November 1991 and October 1992.

Table 3 shows the business volume of dairy cooperatives and this business volume as a percentage of total business volume for all types of marketing cooperatives for 1987 through 1991. Annual business volume ranged from a low of $16.37 billion for 1987 to a high of $20.72 billion for 1990 before declining to $18.83 billion in 1991. The decline in 1991 was due to lower milk prices rather than a decline in milk volume. Dairy cooperatives account for more than a third of total business volume of all marketing cooperatives.

In most dairy cooperatives, the milk producer signs a one- to three-year membership agreement (contract) which commits the producer to marketing all milk through the cooperative and which commits the cooperative to doing various things for the producer. The basic objectives or reasons for joining a dairy cooperative from a producer standpoint are:

  1. to be guaranteed a market outlet.
  2. to bargain for the best price terms possible in the marketplace, including over-order premiums in federal milk marketing orders3.
  3. to have milk marketed efficiently, i.e., balancing plant needs, diverting of market surpluses, assembling producer milk.
  4. to have the highest quality producer milk possible shipped to the market.
  5. to be effectively represented in legislative, regulatory, and public relations arenas.

Financing of dairy cooperatives is handled somewhat differently by each cooperative. Some dairy cooperatives acquire equity (member) capital by retaining a portion of the net income as allocated or unallocated patronage. Another approach is to utilize an assessment per cwt. from the producer milk check. The assessment, which is usually referred to as a per unit capital retain, often in the range of 1 percent to 2 percent of the gross blend price, may cover operating expenses as well as member investment in the cooperative. The member investment portion (equity capital) of the assessment or allocated patronage is generally revolved back to the member in a specified time period, usually seven to ten years.

The federal dairy price support program has become highly market oriented since the mid-1980s. Most of the time, market forces instead of federal support prices now determine dairy product prices and in turn farm milk prices. As a result, dairy product prices and farm milk prices have become much more variable. Although changes in dairy product prices and farm milk prices are closely related, normally there is a time lag between these price changes. These variable prices and the time lag have made operating margins more variable for those dairy cooperatives manufacturing members' milk into cheese, butter and nonfat dry niilk. Further, variable product prices have adversely affected coop- eratives' inventory values of dairy products when prices take a sudden downturn. The financial conditions of dairy cooperatives have been adversely impacted by product price and inventory value changes. Table 4 reports net incomes of dairy cooperatives during 1987 through 1991. Net income declined more than 40 percent from 1989 to 1990 ($270.0 billion to $161.3 billion) as unexpected sharp declines in cheese prices during mid-summer resulted in substantial inventory losses. Net income only partially improved in 1991.

Table 4. Net Income of Dairy Cooperatives, 1987-1991.

Year Net Income ($ millions)
1987 $201.5
1988 269.9
1989 270.0
1990 161.3
1991 190.3
Source:Agricultural Cooperative Service, USDA, Farmer Cooperatives, November 1989, November 1991 and October 1992.

Market Operations and Market Shares of Dairy Cooperatives

In pursuing both their market guarantee objective and their bargaining objective, the leaders in many dairy cooperatives concluded early on that cooperative owned and controlled milk plant operations would be required. Until 1950, cooperative plants in fluid milk markets engaged primarily in butter-powder processing as a means of balancing supplies in fluid milk markets. Prior to 1950, dairy cooperatives in manufactured dairy product regions such as the Upper Midwest had been very active in plant operations. For example, in 1936, 39 percent of the butter in the United States, 25 percent of the natural cheese, and 17 percent of the dry milk products were manufactured at cooperative plants (but only 5 percent of fluid milk products).

In research reports published in 1984 and 1994, the Agricultural Cooperative Service (ACS) of the USDA reported product manufacturing activity by dairy cooperatives over time. Market shares are reported for 1957 and 1980 with estimates for 1990 in Table 5. The ACS report also indicates that in 1991, cooperatives manufactured other dairy products including (1) bulk condensed milk, with a 27 percent market share, (2) dry whey products, with a 48 percent market share, and (3) yogurt, with a 3 percent market share. Over 20 percent (81) of the total 381 plants owned by cooperatives in 1992 operated only as milk receiving stations.

In the recent years, there appears to have been some retreat from fluid milk processing by cooperatives. The sale by Michigan Milk Producers Association of their McDonald plants to a cooperative grocery chain (Country Fresh), and the attempt by Dairymen, Inc. to go joint venture on several fluid processing plants that were owned are symptoms of the retreat. Joint ventures in manufactured dairy products, particularly cheese, as illustrated by the several Leprino joint venture activities with cooperatives, have become a more significant activity in the milk industry in the past couple of years.

Table 5. Market Shares of Dairy Products Distributed by Cooperatives, 1957, 1980 and 1992, and Number of Cooperative Plants in Operation, 1992
Market Share
Dairy Product 1957 1980 1992 # of Co-op owned
plants, 1992
Butter 58% 64% 65% 48
Dry Milk Products 57% 87% 81% 52
Cheese 18% 47% 43% 80*
Cottage Cheese 14% 22% 16% 75
Ice Cream/Ice Milk 4% 10% 10% 37
Fluid (packaged) (1964) 9% 16% 13% 25
*The Agricultural Cooperative Services reports that 43 dairy cooperatives operated 80 plants making American cheese, 46 plants making Italian cheese, and 10 plants making process cheese in 1992.

Source: Agricultural Cooperative Service, USDA, Report No. 40, July 191 84, and Report 1 33, April 1994.

Dairy Cooperatives and Federal Milk Orders

The federal milk marketing order program interfaces closely with dairy cooperatives. Federal milk orders operate in 40 fluid milk markets and regulate 80 percent of the grade A milk in the United States. During 1990, 83.7 percent of the 100,400 dairy farmers shipping milk in federal order markets belonged to one of about 200 dairy cooperatives qualified in the program.4 Frequently questions arise as to what cooperatives do versus what the order does in federal order markets. Dairy cooperatives must qualify or be certified as legitimate organizations in order to gain some privileges from the order program. These privileges include:

  1. The cooperative is entitled to block vote for its members on most order provisions.
  2. The cooperative is entitled to blend or pool its various proceeds from the sale of member milk. In contrast, an investor-owned dairy company is required to pay dairy producers or its suppliers of grade A milk at least the minimum established class prices and blend prices under the federal order. Although a cooperative must pay competitive prices to retain membership, it is not bound by these established minimum blend prices.
  3. The cooperative may collect proceeds for its members from handlers from the sale of member milk.
  4. Members of cooperatives that perform marketing services for members are exempt from market services charged nonmembers.
  5. Cooperatives may move or direct milk in a manner not permitted proprietary handlers.

The U.S. Secretary of Agriculture has given the Dairy Division of the Agricultural Marketing Service (AMS) responsibility for determining whether a dairy cooperative qualifies to be certified as an organization entitled to these privileges. Qualifying cooperatives need to meet the following five conditions:5

  1. It must be an association of agricultural producers.
  2. It must be engaged in marketing milk.
  3. It must be operated for the mutual benefit of its members.
  4. Its operations must be controlled by its members.
  5. The value of its non-member business must be less than the value of its member business.

Marketing orders are not a substitute for effective cooperatives. As noted in federal order publications contrasting the programs, "An order cannot assure that a market will be found for every producer's milk at all times. It cannot secure the most economical utilization of milk. Nor can it perform many of the other marketing functions such as procurement of supplies, economical transportation of milk, and other services which are among the normal functions of milk producers' associations."6

Table 6 indicates the member-non-member proportions in the Federal order by regions in the United States in December 1990. The North Atlantic region reflected the lowest proportion of dairy fanners belonging to dairy cooperatives, 66.9 percent; and the West North Central region showed the highest at 96.7 percent.

Table 6. Percentage of Federal order producers belonging to cooperative associations by region, December 1990.

Federal order region Cooperative members (%) Cooperative members as a percent
of total milk marketed (%)
North Atlantic 66.9 67.2
South Atlantic 77.9 81.6
East North Central 88.1 88.9
West North Central 96.7 96.8
East South Central 74.3 62.8
West South Central 84.2 84.4
Mountain 89.3 90.6
Pacific 89.8 88.9
All Federal order markets 83.4 83.7
Source: Correspondence with USDA, Agricultural Marketing Service, Washington, D.C., November 1992.

Table 7 indicates that, on average across the federal order program for May 1990, dairy farmers who were members of cooperatives delivered more milk per farm than did dairy farmers who were not members of cooperatives. On average, cooperative members marketed 95,730 pounds of milk, about 7 percent more than non-members. However, in 22 of the 42 states that had both cooperative members and non-members delivering milk, non-member dairy farmers were larger. For some states, non-members were substantially larger.

Table 7. For Dairy Farmers Marketing Milk Under Federal Orders, Average Milk Delivery per Producer for all Producers, Producers who are Members of Dairy Cooperatives, and Non-Member Producers, by State, May 1990.
Average delivery per producer1
State All producers Cooperative Members2 Non-members
Alabama3 145,666 116,029 172,202
Arizona 1,265,336 1,202,746 2,629,804
Arkansas 76,735 78,149 61,114
California 1,367,452 870,837 2,277,911
Colorado 254,499 246,040 963,353
Connecticut 128,022 129,055 125,244
Delaware 100,539 98,068 118,795
Florida 683,774 708,908 150,933
Georgia3 185,689 195,033 145,114
Idaho3 312,790 313,700 307,021
Illinois 83,723 84,249 55,740
Indiana 72,536 74,607 67,181
Iowa 74,852 74,960 72,625
Kansas 87,406 86,639 101,923
Kentucky3 61,165 60,873 61,689
Louisiana3 108,455 108,408 111,037
Maine 60,752 71,470 54,060
Maryland 106,275 109,669 50,831
Massachusetts 93,254 90,919 109,939
Michigan 88,369 89,287 81,180
Minnesota 72,838 72,962 69,823
Mississippi3 99,889 98,537 118,147
Missouri 74,969 76,482 68,990
Montana 61,693 -- 61,693
Nebraska 87,684 87,318 90,604
Nevada 856,889 856,889 --
New Hampshire 104,796 83,880 132,274
New Jersey 92,500 96,715 85,133
New Mexico3 1,286,288 1,286,288 --
New York 83,559 80,254 87,162
North Carolina 113,794 113,794 --4
North Dakota 71,826 71,826 --
Ohio 74,892 73,476 77,863
Oklahoma 108,201 100,643 164,854
Oregon 219,188 221,631 207,306
Pennsylvania 69,217 69,595 68,505
Rhode Island 73,772 69,357 89,470
South Carolina 172,472 180,379 130,783
South Dakota3 78,032 78,067 73,630
Tennessee3 95,658 89,842 102,481
Texas 218,431 217,642 223,397
Utah 190,025 188,435 199,236
Vermont 88,967 87,125 115,563
Virginia 107,097 108,028 99,067
Washington 298,469 296,331 311,999
West Virginia3 76,783 79,336 65,247
Wisconsin 77,616 77,623 76,240
Wyoming3 86,705 86,705 --
All States Combined3 94,405 95,730 89,661

1 Producer deliveries divided by the number of producers. Dashes indicate that there were no producers of that type marketing milk under Federal orders.
2 These figures for some states may be understated to the extent that the milk of a cooperative member is more likely to be marketed under more than one federal order than is the milk of a non-member.
3 The figures for these states have been adjusted for producers marketing milk under more than one federal milk order during the month.
4 Restricted, pertains to the marketings of fewer than three producers. Data are included with cooperative members.

Source: USDA, AMS, 'Federal Milk Order Market Statistics for April 1992," FMDS-383, p.49.

For example, in Arizona non-members shipped more than twice the amount of milk as did cooperative members. In Califomia, non-members shipped more than two and one-half times more milk than did cooperative members.

Non-Excludable Benefits

Dairy cooperatives, as voluntary membership organizations, face the continuing problem of non-excludable benefits. Non-excludable benefits are programs or benefits established by a cooperative for its members and at a cost to the cooperative, but these benefits cannot be excluded from producers who are not in,the cooperative. Two examples illustrate how this occurs.

Historically, dairy cooperatives were very supportive of the generic advertising and promotion programs financed by dairy farmers. In many cases, cooperatives made promotion assessments mandatory for their membership. In the 1940s, 1950s, and 1960s, the American Dairy Association and the National Dairy Council drew their fundamental producer support from dairy cooperatives. By 1970, dairy cooperatives were instrumental in creating the United Dairy Industry Association, which brought regional promotion and education association into one federation so as to make program production and delivery more efficient. The stronger demand for milk and dairy products and higher price levels that presumably were stimulated by the various promotion-research programs benefitted all dairy farmers, not just those supporting the programs. One outgrowth of this fact, and one which effectively resolved the non-excludable benefits problem in the promotion area, was the creation of the National Dairy Promotion and Research Board through passage of the Dairy Production Stabilization Act of 1983, which mandated a 15-cent per cwt. promotion assessment on all milk producers.

The second example concems marketwide services. Marketwide services include activities such as transporting milk and balancing market supplies by a handler, usually a cooperative, in ways that benefit the total market but the costs of which are bome by the organization providing the service. Marketwide services therefore have historically been a part of the nonexcludable benefits area. As a result of some authorizing language in the Food Secunty Act of 1985, cooperatives as well as other handlers can petition to have federal market orders amended to have costs of such services at least partially covered out of the monthly pool. As a result, all producers who benefit pay a share of the cost. Such provisions were enacted into the Chicago Regional Order in November, 1987.

Schrader, Babb, Boynton and Lang did extensive research comparing the performance of cooperatives and proprietary, agribusinesses.8 Grade A and grade B dairy farmer perceptions of milk buyers' performance were obtained.. Proprietary handlers were judged superior to cooperatives for the level of prices paid to farmers. However, in general, dairy cooperatives handling grade A milk were thought to perform better than proprietary Handlers in guarantee of market and payment, cost.,eductions and voice in decisions of the firm that affect farmers. Fewer statistically significant dif- ferences in perceived performance of cooperatives and proprietary milk buyers were found among grade B producers.

ln "measured" rather than perceived performance, Schrader et al. found few significant differences between the prices offered by cooperatives and proprietary firms. Cooperative cheese plants were foutid to be more efficient and had lower operating costs than their proprietary counterparts. Retums on total assets were high for cooperative cheese plants. Cooperative cheese plants and cooperative fluid milk plants performed more services for farmers than proprietary plants.

Influencing Public Opinion

Aproximately 40 of the larger dairy cooperatives are affiliated in a nonprofit corporation known as the National Milk Producers Federation, with offices in Arlington, Virginia. The main purpose of NMPF is to advance the interests of dairy farmers and their cooperatives in the United States. Primary areas of attention have included:

Dairy cooperatives individually also attempt to provide input and influence national legislation through their own political action committees. Funds for these comn-tittees are obtained by voluntary contributions from me,-nber dairy producers. Exam. ples of pol;.t;.cal action committees includes the Land O'Lakes PAC of Land O'Lakes, Inc.; TAPE of Associated Milk Producers, Inc.; ADEPT of Mid-Amefica Dairyman, Inc.; and SPACE of Dairymen, Inc. NMPF does not operate a political action committee. At the state level many states have trade associations that are supported by and represent the interests of cooperatives, including dairy cooperatives, on state issues.

Conclusions

The dairy cooperative movement is healthy and dairy cooperatives are in a relatively strong market position. Among major farm commodities, milk ranks first in total dollar value of products marketed by farmers through cooperatives-$18.8 billion in 1991. The $18.8 billion value of milk marketed is approximately 34 percent of the $56 billion worth of all farm commodities sold annually through one of the 2,519 agricultural marketing cooperatives in the United States. The major challenges confronting dairy cooperatives continue to be those of operating efficiently and resolving membership problems. The trends toward fewer and larger dairy farms is forcing dairy cooperatives to find new ways of treating their members equitably as compared to treating them equally. The development of a more market-oriented dairy sector gives all the more reason for effective cooperative marketing.



1 Agricultural Cooperative Service, USDA, Farmer Cooperatives, October 1992, p. 19.

2 This paragraph is adopted from "Who Will Market Your Milk?" by Robert Jacobson, et al., Texas Agricultural Extension Service, D-1058, March, 1978, p. 15.

3 For example, during November 1992 the average premium obtained by dairy cooperatives on class 1 (beverage) milk was $1.09 per hundredweight for all federal milk marketing orders. These premiums ranged from no premium for Phoenix, Arizona to $3.07 for Chicago, Illinois (Dairy Market News, Vol. 59, Report 46).

4 USDA, AMS, Federal Milk Order Market Statistics, April 1992, FMOS-383, p. 38 and correspondence with the Agricultural Marketing Service.

5 Agricultural Marketing Service, USDA, The Federal Milk Marketing Order Program, Marketing Bulletin No. 27, Jan. 1989, p. 31.

6 Questions and Answers on Federal Milk Marketing Orders, AMS-559, AMS-USDA, March 1975, p. 12.

8 Lee F. Schrader, E. M. Babb, R. D. Boynton, and M. G. Lang, Cooperative and Proprietary Agribusinesses; Comparison of Performance, Research Bulletin 982, Purdue University, Agricultural Experiment Station, April 1985.


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