THE DECISION TO MERGE: CASE STUDIES OF NEW YORK DAIRY COOPERATIVES

• Sponsoring Institution: National Institute of Food and Agriculture
• Project Status: COMPLETE
• Funding Source: HATCH
• Reporting Frequency: Annual
• Accession No.: 0198751
• Project Start Date: Oct 1, 2003
• Project End Date: Sep 30, 2006
• Program Code: [(N/A)]- (N/A)

Recipient Organization
CORNELL UNIVERSITY
(N/A)
ITHACA,NY 14853

Performing Department
APPLIED ECONOMICS & MANAGEMENT

Non Technical Summary
New York State has the highest number of dairy cooperatives of any state in the U.S. accounting for 67 out of 225 dairy cooperative operating in the United States. Ongoing structural change in the dairy processing and marketing system will demand a better coordinated or consolidated cooperative structure to compete. The purpose of the project is to increase the understanding of how and why directors and managers of dairy cooperatives determine the need to merge and successfully merge.

Animal Health Component

100%

Research Effort Categories

Basic

(N/A)

Applied

100%

Developmental

(N/A)

Classification

Knowledge Area (KA)	Subject of Investigation (SOI)	Field of Science (FOS)	Percent
604	6210	3010	50%
604	6210	3100	50%

Knowledge Area
604 - Marketing and Distribution Practices;

Subject Of Investigation
6210 - Farmer cooperatives;

Field Of Science
3010 - Economics; 3100 - Management;

Keywords

dairy cooperatives

decision making

case study

dairy farms

cooperatives

mergers

agricultural economics

marketing

business management

economic impact

finance

surveys

interviews

consolidation

Goals / Objectives
The overall purpose of the project is to improve the understanding of how dairy cooperative decision-makers consider, evaluate, and make the decision to consolidate operations with other cooperatives. Specific objectives include to: identify the motivation in considering consolidation for cooperatives that have recently merged; review the criteria used to make the decision by their boards of directors; ascertain what barriers to mergers are unique to cooperative businesses, and how those barriers were overcome; examine how selected financial ratios may measure the economic impact of the merger at the cooperative level; identify what criteria were used to analyze whether the proposed objectives of the merger were achieved; and determine how members view the impact of the merger at the farm level.

Project Methods
A case study approach will be used to analyze dairy cooperatives with New York members which merged since 1990. Economic and management data for the case studies will be collected through comprehensive, structured interviews with the board chairs, advisors, and managers directly involved in making the merger decision. Financial statements reporting performance, pre and post merger, will be reviewed. Financial ratio analysis will be utilized to measure the economic impact of the merger at the cooperative level. Member surveys will be conducted to measure the impact of the mergers at the member farm level. Data will also be collected through interviews with cooperatives who entered into merger negotiations but were not able to successfully merge operations.

Progress 10/01/03 to 09/30/06

Outputs
The research project proposed under this project was completed during the reporting period. Data on dairy cooperative location, leadership contact information, and scope of operations were collected. A data base was developed including all of the 69 Dairy Cooperatives licensed to handle milk in New York State. Sources of data included the Dairy Division of the New York Department of Ag. and Markets; USDA, RBS-Cooperative Services; the office of the Market Administrator of the NE Federal Market Order 1; and industry trade publications. Ranking of U.S. dairy cooperatives were compared to those operating in New York State by milk volume handled and the number of members. An analysis of the average dollar revenues and milk marketed per member was developed comparing New York State to other states in the U.S. Data on value-added processing and types of products marketed were collected for those cooperatives engaged in such activities.

Impacts
Results of the case study research will create a knowledge base for cooperative managers, directors, and members to make more informed decisions about strategically positioning their cooperatives in current and future markets. The ultimate impact would be to improve economic returns to New York dairy farmer-members.

Publications

• Henehan, B.M. 2007. An Overview of Dairy Cooperatives Operating in New York. Dept. of Applied Economics and Management, College of Ag. and Life Sciences, Cornell University. Forthcoming.

Progress 01/01/05 to 12/31/05

Outputs
Progress was made during the reporting period in a number of areas. Data on dairy cooperative location, leadership contact information, and scope of operations were collected. A data base was developed including all of the 69 Dairy Cooperatives licensed to handle milk in New York State. Sources of data included the Dairy Division of the New York Department of Ag. and Markets; USDA, RBS-Cooperative Services; the office of the Market Administrator of the NE Federal Market Order 1; and industry trade publications. Ranking of U.S. dairy cooperatives were compared to those operating in New York State by milk volume handled and the number of members. An analysis of the average dollar revenues and milk marketed per member was developed comparing New York State to other states in the U.S. Data on value-added processing and types of products marketed were collected for those cooperatives engaged in such activities. A seminar was presented to the Department of Applied Economics and Management on the first phase of the project titled: Analyzing the Marketing Strategies of Dairy Cooperatives Operating in New York State. Feedback from faculty and graduate students attending the seminar proved valuable information for further efforts in completing the project. The first draft of a publication titled - An Overview of Dairy Cooperatives Operating in New York State has been written and is being reviewed by faculty and outside reviewers.

Impacts
Results of the case study research will create a knowledge base for cooperative managers, directors, and members to make more informed decisions about strategically positioning their cooperatives in current and future markets. The ultimate impact would be to improve economic returns to New York dairy farmer-members.

Publications

• Henehan, B.M. 2006. An Overview of Dairy Cooperatives Operating in New York. Dept. of Applied Economics and Management, College of Ag. and Life Sciences, Cornell University. Forthcoming.

Progress 01/01/04 to 12/31/04

Outputs
Project activities for the reporting period have included the creation of a data base on all dairy marketing cooperatives operating in New York State. The data base includes contact information for each cooperative, data on the type of operations, and affiliation with other cooperatives. Several Chief Executive Officers and Farmer-Directors of cooperatives have been contacted to schedule interviews. A questionnaire has been developed to use in the structured interviews with cooperative leaders to collect data for the case studies.

Impacts
Results of the case study research will create a knowledge base for cooperative managers, directors, and members to make more informed decisions about strategically positioning their cooperatives in current and future markets. The ultimate impact would be to improve economic returns to New York dairy farmer-members.

Publications

• No publications reported this period