FOCUSON...
Southern Marketing Agency Inc.
hat is the
Southern
Marketing Agency
(SMA)?
SMA is a marketing-agency-in common,
the primary purpose of which is
to seek efficiencies in supplying the
fluid milk needs of the southeastern
United States. SMA began operations
on April 1, 2002, as a Kentucky agricultural
cooperative organized under
provisions of the Capper Volstead Act.
Current members are: Arkansas Dairy
Cooperative Association (Damascus,
Ark.); Dairy Farmers of America Inc.
(Kansas City, Mo.); Dairymen’s
Marketing Cooperative Inc. (Mountain
Grove, Mo.); Lone Star Milk
Producers Inc. (Windthorst, Texas);
and Maryland & Virginia Milk
Producers Cooperative Association Inc.
(Reston, Va.).
Initial goals:
- Promote member cooperation
and communication;
- Seek cost savings in the purchase
of supplemental milk;
- Preserve over-order prices in the
Southeast;
- Seek cost savings in farm-to-market
hauling;
- Seek cost savings in seasonal surplus
balancing.
Results to date
- “Member cooperation and communication
simply could not be better,”
says Jeff Sims, as administrator
and assistant secretary of the
agency. “The goals of the agency
are clearly defined and all the
members are dedicated to working
together to reach the goals.”
- Supplemental milk purchase costs
have declined, and supplemental
milk agreements have been
restructured, Simms notes. The
new supplemental milk agreements
have allowed Class I utilization
percentages in the Appalachian and
Southeast Federal Milk Marketing
Orders to increase over comparable
months last year
- Prices over federal-order minimums
in the Southeast were not
only preserved, but they increased
in 2003, Simms reports.
- Agency members have saved more
than $10.6 million in hauling costs
since April 2002, adding more than
12 cents per hundredweight to the
SMA-weighted average pool value.
Savings are also increasing month to
month.
- A study of current and future needs
for seasonal milk surplus balancing
capacity is underway to help determine
short and long-term needs
for balancing capacity and optimum
plant locations.
Key management members:
Day-to-day operations of the
agency are handled through the
Operations Committee, made up of
senior management members of the
member cooperatives. Committee
members are: Floyd Wiedower, from
Arkansas Dairy Cooperative
Association; John Collins from DFA;
Don Allen from Dairymen’s Marketing
Cooperative Inc.; Jim Baird from Lone
Star Milk Producers Inc.; Jay Bryant
from Maryland & Virginia Milk
Producers. Other members of senior
management of each cooperative may,
and regularly do, participate.
How is SMA governed?
The Operations Committee reports
directly to the SMA board of directors,
made up of 10 dairy farmers, all of
whom are producer-members of the
five member cooperatives. Board seats
are apportioned by member patronage,
with each member entitled to at least
one board seat, without regard to any
minimum patronage level.
Biggest obstacle overcome
“The change in mindset of cooperation
vs. competition is not always an
easy transition to make. The group
has now fully completed that transformation
and cooperation is at an
extremely high level,” Simms says.
Future plans?
The agency continues to seek efficiencies
in milk hauling, which is a
major cost in serving a milk-deficit
market. “Agency members feel the
cost-savings achieved thus far in milk
hauling may have only scratched the
surface. The recommendations from
the study of balancing plant needs will
offer opportunities for savings there
too,” Simms says. “As production continues
to decline in the Southeast and
fluid milk sales continue to grow,
focusing on the efficient and cost
effective procurement of supplemental
milk to fill the growing deficit will be
an ongoing process.”
