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The Bargaining Strength of a Milk Marketing Cooperative

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  • Prasertsri, Peerapon
  • Kilmer, Richard L.

Abstract

As a result of economies of size, food processors are generally large and few in number. These characteristics put processors at a bargaining advantage over independent farmers. Marketing cooperatives were established to counter the uneven bargaining position of individual farmers. This article investigates the relative bargaining strength of one milk marketing cooperative and several fluid milk processors. The Nash bargaining model can be used to analyze the negotiated price in the Florida fluid milk market which acts like a bilateral monopoly. The milk marketing cooperatives have bargained well with the milk marketing processors; The monthly bargaining strength of the Southeast Dairy Cooperative, Inc. (SDC), exceeds the monthly bargaining strength of the processors in all twelve months, ranging from a low of 0.6664 in January to a high of 0.7831 in September. The monthly average bargaining strength across all months for SDC is 0.7326.

Suggested Citation

  • Prasertsri, Peerapon & Kilmer, Richard L., 2008. "The Bargaining Strength of a Milk Marketing Cooperative," Agricultural and Resource Economics Review, Cambridge University Press, vol. 37(2), pages 204-210, October.
    • Handle: RePEc:cup:agrerw:v:37:y:2008:i:02:p:204-210_00
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    Cited by:

    1. Xiaowei Cai & Kyle W. Stiegert, 2013. "Economic analysis of the US fluid milk industry," Applied Economics Letters, Taylor & Francis Journals, vol. 20(10), pages 971-977, July.
    2. Hayashida, K., 2018. "Bargaining Power between Food Processors and Retailers: Evidence from Japanese Milk Transactions," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277730, International Association of Agricultural Economists.
    3. Maximilian Koppenberg, 2023. "Markups, organic agriculture and downstream concentration at the example of European dairy farmers," Agricultural Economics, International Association of Agricultural Economists, vol. 54(2), pages 161-178, March.

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