Dairy is a quirky commodity. It’s a highly perishable product “harvested” every day. It’s in all 50 states. And more than for most other commodities, dairy farmers are organized into cooperatives, putting the cooperative principle of working together at the heart of the industry.
Cooperatives are everywhere in the U.S., serving members in everything from child care and credit unions to health insurance and rural broadband. Nearly one in three Americans are co-op members. (And happy Co-op Month to all of them!) Thanks to the Capper-Volstead Act of 1922, farmers can form cooperatives to collectively own and manage resources, cut costs and gain a measure of market power traditionally dominated by banks and agribusiness.
Most U.S. farmers use cooperatives at some level – to pool supplies and capital, finance exports, improve their bargaining position with processors, or even become processors themselves. Over time, cooperatives became the dairy industry standard, as farmers far from cities needed ways to sell and ship highly perishable products without relying on middlemen who could use time and distance to push prices down. Cooperatives have empowered dairy farmers and enabled them to build multimillion-dollar processing plants in local communities, share financial resources, and coordinate their own transportation. It’s simply the best way, and sometimes the only way, for a dairy farmer to get products to market and earn a decent return from doing so. And while dairy co-ops don’t have the ability to set market prices – supply and demand still rules – they do help balance the market power equation between individual farmers and corporate buyers.
Today, farmer-owned cooperatives dominate dairy. According to a twice-a-decade USDA survey, cooperatives handled 85 percent of U.S. milk in 2017, a number that’s held steady for 25 years.
Click here to see more...