Assessing the Value of Cooperative Membership : A Case of Dairy Marketing in the United States

The existence of cooperative organizations in today’s business environment, particularly in agriculture, signals their continued ability to provide value to their member owners. However, due largely to data limitations, we know very little about the monetary value of cooperative ownership held by members and how that value may change across members of differing characteristics. Through a discrete choice experiment with more than 200 dairy farmers in the United States we examine this issue explicitly for dairy marketing cooperatives that purchase their members’ milk and process it into finished dairy products. Results suggest that dairy farmers, on aggregate, are willing to accept lower per hundredweight compensation, 2.3% of the average milk price, to be cooperative members relative to selling to independent handlers. Estimated partworth utilities also suggest dairy farmers actively consider the industry wide impacts within pricing offers on preferences for other milk pricing attributes. Finally, the inclusion of demographic covariates in our modeling highlights trends important to understanding heterogeneous member interests across U.S. dairy farmers and informing improved cooperative governance strategies and decision making to address them