Cooperatives are the heart of a competitive dairy industry
ROGERSVILLE, Mo. -- The farm economy slowly is recovering from the disaster it faced in 2009, but the nation's dairy farmers still are struggling to regain their footing. As dairy farmers redefine their future, farmer-owned and farmer-run coopera...
ROGERSVILLE, Mo. -- The farm economy slowly is recovering from the disaster it faced in 2009, but the nation's dairy farmers still are struggling to regain their footing. As dairy farmers redefine their future, farmer-owned and farmer-run cooperatives are providing a vehicle and a voice to those who want a say in reshaping their livelihoods.
This is not the first time cooperatives have served a crucial role at a pivotal moment in the history of dairy farming.
Back in the 1800s, dairy farmers first formed cooperatives to gain protection from predatory milk buyers and to establish a secure market for their product. When these efforts to improve farmer income were challenged on antitrust grounds, Congress responded in 1922 with the Capper-Volstead Act, which allowed farmers to band together through cooperatives without
violating antitrust laws.
Ninety years later, Capper-Volstead and the cooperatives it fosters remain vital tools for the agriculture community. Without Capper-Volstead protections, farmers lack the bargaining power to compete in a marketplace that is more concentrated now than ever.
Cooperatives allow farmers to continue operating independently while taking advantage of the benefits that come from being part of a larger pool. Perhaps cooperatives' most valuable role is that of a reliable milk buyer and marketer. Processors typically buy only enough milk to meet their immediate needs. Milk supplies often exceed that amount.
Without help from a cooperative, farmers would be left to sell their excess milk themselves, at whatever price the market will bear.
Cooperatives solve the problem by agreeing to buy all their members' milk, even if the co-ops don't have an immediate need for it. Sometimes they find a use for the milk with a customer in another area. Or they use it to make a storable product, like cheese or nonfat dry milk.
Either way, a co-op's ability to buy all its members' milk frees dairy farmers to do what they do best -- produce milk.
Many cooperatives also provide services such as insurance, price risk management tools and national buying programs to help farmers increase profits. These services often are too expensive or difficult for farmers to purchase or access on their own. Through a cooperative, farmers get them at an affordable price.
Through their cooperatives, farmers also advocate for laws and regulations to improve their industry. This is particularly important now, with various industry groups working on plans to modernize federal dairy policy.
Strength in numbers
Despite the important role of cooperatives in advancing farmers' interests, some critics question whether cooperatives still need Capper-Volstead protection. These critics are using the Obama administration's review of competition and concentration in agriculture as the latest vehicle for their attack. The administration's review was the subject of a June 25 U.S. Department of Agriculture/Department of Justice joint workshop in Madison, Wis., focusing on dairy issues.
Whether they milk 50, 500 or 5,000 cows, dairy farmers need cooperatives. They provide marketplace certainty, as well as the valuable services and strength in numbers that allow farmers to compete in tough economic times. And they allow dairy farmers to speak with a common voice in defending a unique way of life.
Editor's Note: Mooney is a dairy producer from Missouri and chairman of the board of directors for Dairy Farmers of America Inc., a milk marketing cooperative.