An Overview of Dairy Marketing Cooperatives Operating in New York State

Agricultural cooperatives have historically played an important role in marketing farm products produced in New York State dating back to the 1800’s. Some of the first dairy marketing cooperatives organized in the U.S. were formed in New York. Many early dairy cooperatives were created to bargain for prices and terms of trade on behalf of farmer members with dairy processors. The number of dairy processing plants and firms in the U.S. and New York State have decreased significantly over the past fifty years. However, the number of New York dairy cooperatives, especially bargaining cooperatives, did not decrease at the same rate as the rest of the U.S. over the same period. There is a wide range of types of cooperatives operating in New York performing various functions throughout the dairy value chain. Some dairy cooperatives operate at the first handler-level of the value chain as bargaining associations, while others operate further up the value chain by adding value to member milk in a number of ways. New York dairy cooperatives utilize a variety of organizational structures including: centralized, federated, marketing agency in common, strategic alliances and joint ventures both with cooperatives or other types of firms. Cooperatives can qualify for special status within the Federal Market Order system obtaining some privileges or voting rights not available to proprietary handlers. New York State reported the highest number (65) of dairy cooperatives of any state. The average gross volume per New York dairy cooperative as well as the average gross business volume per member was relatively low compared to other major dairy states. There are a relatively larger number of small scale bargaining cooperatives headquartered in New York State. Proximity to market; a large number of smaller volume processing plants; the previous ability of smaller bargaining cooperatives to secure beneficial terms for their members; the lack of a strong, pre-eminent dairy cooperative in the region; past Federal Market Order provisions in New York, and major cooperative financial failures were all factors that provided a climate for small bargaining cooperatives to operate in. Ten of the top 50 dairy cooperatives in the U.S. operate in New York. Four New York cooperatives with processing operations are among the top 100 U.S. dairy processors. A number of national, international cooperatives or associations of cooperatives include or support New York cooperatives such as the National Milk Producers Federation, Cooperatives Working Together, Dairy America, and the National Council of Farmer Cooperatives. Dairy cooperatives operating in New York State are adjusting to significant changes in the regional, national, and global markets for milk and dairy products. Since the data were collected for this report in 2003, a number of major changes have occurred in the number and scope of New York dairy cooperatives. Those developments will be reviewed in a future report.