A dairy cooperative brings together farmers to market their milk and collectively further the economic well-being of the cooperative’s member-owners. They are owned and democratically governed by members who share in the cooperative’s profits and expenses.
Dairy co-ops range widely in size and function. While some exist only to market milk, others have diversified to own and operate processing plants to earn revenue from the sale of dairy products, both locally and globally. Farmer-owned dairy cooperatives collectively handle about 85 percent of U.S. milk and are a major player at all levels of the U.S. dairy industry.
Cooperatives provide dairy farmers with a secure market and significant stability for producers of what can be an economically volatile commodity. Importantly, cooperatives also enable dairy farmers to bargain more effectively with companies that purchase farm products—such as dairy processors and retailers —by increasing their market power.
Cooperative members benefit from the many marketing services that co-ops provide, most of which reach beyond the capabilities of any individual farm. Many co-ops also support their members in other ways, such as providing field services, verifying weights and tests of milk, selling equipment and supplies, and providing health insurance. Cooperative members can also receive more competitive prices from retailers and consumers based on supply control and brand strength.
Cooperative members, through membership in the National Milk Producers Federation, also influence federal policy discussions on issues including dairy pricing, animal health, labor availability, taxation and international trade.
Dairy cooperatives sprang up spontaneously in the years following the American Revolution, formed by groups of small farmers seeking solutions to common problems. These groups drew upon cooperative traditions that immigrant dairy farmers brought with them from their home countries.
The development of railroads during the 1800s allowed for the increased movement of milk to cities. Expanding urbanization made it necessary for families to obtain milk from more distant places. Dairy farmers formed associations to arrange these early shipments.
By the late 1800s, the milk marketing system was steadily moving toward a structure in which hundreds or thousands of dairy farmers sold to only a handful of large fluid milk dealers. Cooperative associations developed around the major cities in the eastern part of the United States and in Chicago to negotiate milk prices with milk dealers and distributors.
In the early 20th century, unfavorable economic conditions, chaotic pricing of fluid milk, and dealers who balanced fluctuating supply needs by refusing to accept some producers’ milk spurred the successful formation of large-scale cooperative bargaining organizations for raw milk.
Enactment of the Capper-Volstead Act of 1922 granted cooperatives limited exemption from Federal antitrust acts. Government action helped give producer cooperatives a foothold strong enough to ensure their lasting establishment. Dairy cooperatives were thus positioned to provide an effective solution for dairy farmers’ marketing problems. Since then, while the number of dairy cooperatives has declined, their reach and diversity have only increased, from smaller, regional marketing cooperatives to globally competitive Fortune 500 businesses. The National Milk Producers Federation fights for the interests of this wide range of cooperatives at the federal level, making NMPF the voice of dairy in Washington. Learn more here.