The dairy co-op landscape will have a new look if members of Dairylea, the nation’s sixth largest co-op, approve a proposed merger with Dairy Farmers of America (DFA), the country’s largest cooperative.
For the past three years, the Dairylea board of directors conducted a comprehensive examination on how to best position the Northeast’s largest dairy cooperative. “Ultimately, the board determined merging with DFA, already a long-time partner in Dairy Marketing Services (DMS), would best complement Dairylea’s capabilities and resources, while securing flexibility and increasing value for our members,” said Greg Wickham who serves as Dairylea’s chief executive officer.
According to the Hoard’s Dairyman Top 50 Dairy Co-op List published in the October 10, 2013, edition on page 639, Dairylea ranked sixth among all U.S. dairy co-ops with 2,050 members and marketed 6.4 billion pounds of milk last year. (This includes some 850 members of the Cortland Bulk Milk Producers, Mt. Joy Farmers Co-op and Oneida-Madison Cooperative that market milk via partnerships with Dairylea.) Meanwhile, DFA ranked first marketing 39.4 billion pounds of milk from 8,252 member farms.
The Dairylea and DFA board of directors have already endorsed the merger plan. If the Dairylea merger gets approved by its members in a special February 2014 meeting, the combined co-op would market 45.8 billion pounds of milk which would represent nearly 23 percent of our country’s 200 billion pounds of milk production. Likewise, the cooperative would represent nearly 10,000 dairy farms, roughly 20 percent of the nation’s 49,000 dairy operations, as reported in the March 10, 2013, edition of Hoard’s Dairyman on pages 151 and 155.
Dairylea and Dairy Farmers of America have been partners for over a decade. In 1999, the two cooperatives formed Dairy Marketing Services (DMS). Since then, St. Albans Cooperative Creamery has joined the DMS partnership. The current DMS partnership manages the sale and distribution of raw milk for both organizations, a number of independent dairy producers and other dairy cooperatives. According to Dairylea’s website, DMS includes more than 9,500 farms producing 16 billion pounds of milk annually. If the merger goes through, it is anticipated that DFA and St. Albans would continue to work together in DMS.
Dairylea and DFA also share another strong bond. Current DFA president and chief executive officer Rick Smith got his start in the dairy industry back in 1982 when he joined Dairylea after serving as an attorney for Bond, Schoeneck & King in Syracuse, N.Y. From 1982 to 1988, Smith was employed as Dairylea’s vice-president and general counsel. From 1988 to 2005, he served as chief executive officer of the Syracuse-based co-op. Since 2006, Smith has held a similar position for DFA as its leader.
“(This merger) is a natural progression to the partnership that DFA and Dairylea have had in the Northeast for the past 14 years,” explained DFA CEO Rick Smith in an October 16 late afternoon conference call regarding the merger.
Dairylea got its start in 1907. At that time, its members knew it as the Dairymen’s League Cooperative Association. The cooperative introduced the brand name Dairylea in 1923 and later shortened its co-op name to Dairylea in 1969.
Dairy Farmers of America was formed in 1998 when Associated Milk Producers, Inc. (AMPI southern division); Mid-America Dairymen, Inc.; Milk Marketing, Inc.; and Western Dairymen Cooperative, Inc., merged to form the nation’s largest co-op. Since then, four more cooperatives merged into DFA — Independent Cooperative Milk Producers Association, Valley of Virginia Milk Producers Association, Black Hills Milk Producers and California Cooperative Creamery (Cal-Gold). If Dairylea members approve the merger plan, it would be the ninth cooperative to join DFA.
As part of the governance structure, DFA’s board of directors would expand by six seats to represent the expanded membership in the Northeast. Currently, Dairylea board president William Beeman of Kingsley, Pa., and board treasurer David Chamberlain of Wyoming, N.Y., serve as two members on the DFA board due to interaction between Dairylea and DFA. If the merger goes through, Dairylea would select four more representatives from their board to serve on the corporate DFA board of directors. From that point forward, board members would be selected from the DFA’s Northeast Area Council. Before these plans get put in place, there will be a series of information sessions held to provide Dairylea members with a comprehensive overview of the proposed merger.
Source: Hoards