The Changing Role of Dairy Trade Groups and Co-ops
By Jerry Kozak,
Chief Executive Officer
National Milk Producers Federation
Years before the Capper-Volstead Act allowed cooperatives to collectively
bargain on behalf of their members' economic interests, U.S. dairy leaders
established the National Milk Producers Federation to create a single, national
presence for dairy associations. NMPF was formed back in 1916, making it one of
the first national, commodity-oriented organizations to promote the economic and
political interests of farmers and their collectively owned creameries and
marketing organizations.
But
- as the cliche goes - times have changed. While milk itself is still
essentially the same as it was 85 years ago, the dairy industry is structurally
very different than before. And with a new century sure to pose new challenges,
it's important to examine how a membership association like NMPF must evolve to
better represent the needs of its member cooperatives. Let's start by looking at
how the industry has changed.
A historical perspective
At the end of World War II, there were roughly 3.5 million dairy farms in the
United States. Today, 50 years later, there are 100,000. There were more than
1,000 dairy cooperatives half a century ago. Today, while there are still more
than 200 dairy co-ops, just 20 of those market half of all the milk produced in
the United States (roughly 160 billion pounds annually). The top three
cooperatives alone (Dairy Farmers of America, Land O'Lakes and newly merged
California Dairies) market approximately 50 billion pounds of milk annually.
It's
also worth noting that, 30 years ago, only 65 percent of the nation's dairy
farmers marketed their production through a cooperative. That figure has grown
to 83 percent today. So, while the number of farms and cooperatives has
declined, the marketing presence of farmer-owned dairy co-ops has actually
expanded during the past generation.
One
of the primary missions of our organization, like countless others based in
Washington, D.C., is to provide representation in Congress and with the federal
agencies that regulate our industry. That's a key reason why NMPF was formed,
and it's still at the forefront of what our members look to us to do. As long as
the government has a presence in the production and distribution of dairy
products, it will be important to have a Washington-based presence for dairy
farm organizations.
In
fact, there was a time not long ago when the dairy cooperatives that belong to
NMPF asked whether they still needed a national presence. And after looking at
their needs and the realities of the dairy industry, the answer they arrived at
was a resounding "yes" - they need to have a recognized and consistent
voice on Capitol Hill and with the USDA, Federal Drug Administration,
Environmental Protection Agency and other agencies whose activities have a daily
impact on the operation of dairy farms.
Dairy co-op issues changing
So, National Milk continues to fill a unique and important role for its members.
But the assortment of issues in which we're involved is changing, and thus our
role is evolving in relation to where we've been in the past. For example, take
the issue of international dairy standards.
Ten
years ago, the manner by which European nations determined the composition of
their cheese was of little or no concern to U.S. cheese manufacturers. We didn't
import or export enough of the product for us to bother comparing notes with
other cheese-producing countries. But as the U.S. government and other nations
work through the World Trade Organization to increase global trade in products
such as cheese, ice cream and butter, it is critical for the U.S. dairy industry
to involve itself in that process. And it's the role of NMPF to give American
farmer-owned dairy cooperatives a seat at the table when international dairy
standards are constructed.
Environmental concerns
Environmental regulation is another area where NMPF has evolved to better
reflect the needs of its members. As most farmers are aware, the USDA and EPA
are developing a new regulatory approach to managing the environmental impact of
animal waste. The regulations that result from this process could have as
significant an economic influence on dairy farmers as the Federal Milk Marketing
Order program or dairy price supports. So, it's important to have a national
organization such as NMPF to bring dairy producers' concerns to federal
regulators as they design the new animal waste guidelines.
Our
evolving mission also reflects an increasing concern with consumers' attitudes
towards our members' products. The leading concern of dairy consumers, according
to most attitudinal surveys, is not price, variety or taste, but food safety.
Dairy has an admirable record of providing safe, high-quality products, but in
this information-intensive age, one isolated pathogenic outbreak can have
national - even international - consequences. NMPF must serve as an educational
voice for the media and consumers during times when
a national presence is required to keep consumer-oriented issues in their proper
context. No individual cooperative, or regional organization, has the same
capability.
Sorting through information
Another factor that will determine how NMPF changes in the future is the
transformational influence of information technology. At the core of our mission
is the exchange of information not so much data, such as a financial services or
marketing organization would manage - but ideas, news and perspective. For
decades, NMPF served as a conduit for opinions and ideas both from Washington to
our members, and vice versa. That exchange often took weeks or months, and was
reliant on paper correspondence. Today, thanks to the ubiquity of computers, we
have the capability of moving that information much more thoroughly and rapidly.
The use of email and the Internet enables NMPF to more rapidly and effectively
communicate both to our members and the rest of the world.
Truth
be told, thanks to information technology, the same news that we provide to our
members sometimes can be obtained by them directly from the source (Congress,
USDA, WTO, etc.). Where NMPF's role becomes more crucial is the addition of
context to that information. Our interpretation of events, and our assessment of
the impact of those events on the dairy industry - these are where NMPF adds
value to the daily flow of information within the industry. And as we all become
increasingly bombarded with the facts, figures and conjecture of the Information
Age, the role of a trade association increasingly will be screening this flow of
information so that it is useful and instructive to our members, and not just
confusing.
Ultimately,
the role and scope of NMPF is a mirror image of its own membership.
NMPF
reflects both the hopes and fears of dairy producers and their cooperatives. As
the number of farms declines and those remaining get larger - and the same
pattern applies to cooperatives themselves - NMPF will continue to evolve to
best reflect the needs of its changing membership base. 
RECs on track for Y2K
Status
reports on electric power supply and delivery into 2000 indicate that the
nation's cooperative electric utilities are on track with the rest of the
industry in preparing to keep the lights on when the calendar changes.
Eighty-six percent of the electric cooperatives participating in a survey of the
electric utility industry reported they had achieved Year 2000 readiness by the
June 30 goal set by the U.S. Department of Energy. Another 13 percent said
they would be ready before the end of the year.
Data from 96 percent of 858 electric
cooperative distribution systems were compiled as part of a comprehensive
assessment of electric distribution readiness contained in "Preparing the
Electric Power Systems of North America for Transition to the Year
2000: a Status Report and Work Plan," delivered to DOE by
the North American Electric Reliability Council (NERC). As requested by
DOE, NERC is the official coordinator of Year 2000 readiness, risk assessment
and contingency planning for the electric utility industry.
The survey of electric co-ops, fourth
in the series begun last year, was conducted by the National Rural Electric
Cooperative Association, Arlington, Va., the trade association representing
private, consumer-owned cooperative utilities. The nation's nearly 1,000
private, consumer-owned cooperative electric utilities serve more than 32
million people in 46 states. Electric cooperatives serve 13 million
businesses, homes, schools, churches, farms, irrigation systems, and other
establishments in 2,600 of 3,128 counties in the United States.
For information on how USDA can
assist your cooperative with Y2K readiness, visit our website at www.ocio.usda.gov/y2k/index.htm,
or make a toll-free call to the President's Council on Year 2000 Conversion at
1-888-872-4925.
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