Economic and Marketing Information
FOR INDIANA  FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana
April 30, 1971
DURING THE 1960'S DAIRY cooperatives in
Indiana and throughout the Central United States
undertook a new experiment in bargaining. This
experiment evolved in two stages as milk producers
sought new methods of improving their economic
position. First, was the rise of large-scale federations of dairy cooperatives during the early to mid-
1960's. Second, was a sequence of consolidations,
mergers, and acquisitions resulting in the organization of multi-market regional cooperatives. Historically the price of milk had been determined to a
large extent by the federal milk marketing order
and price support programs. The negotiation of premiums over federal order prices was limited by surplus milk production, increased intermarket milk
movements, and competition among cooperatives for
premium fluid-use milk outlets.
Federations
Two large federated cooperatives—Great Lakes-
Southern Milk Marketing Federation and Associated
Dairymen—were formed during the early 1960's.
Both federations grew to the extent that their operational areas as of 1970 stretched from the Canadian
border to the Gulf of Mexico.
In 1970, Great Lakes-Southern member cooperative handled 13.2 billion pounds of milk produced
by 34,000 member-producers. Cooperatives belonging to Great Lakes-Southern with producers located
in Indiana include: Milk Incorporated, Wayne
Co-op, Cincinnati Milk Sales, Miami Valley Milk
Producers, Michigan Milk Producers, Dairymen,
Inc., Cooperative Pure Milk Association, and Con-
stantine Cooperative Creamery. Associated Dairymen cooperatives handled 20 billion pounds of milk
produced by 50,000 member-producers. Associated
Milk Producers, Inc. (AMPI) which includes both
the former Pure Milk Association serving the Chicago market and Central Indiana Dairymen serving
the Indianapolis market is the largest cooperative in
Associated Dairymen. Associated Dairymen and
Great Lakes-Southern cooperatives handled nearly
30 per cent of the total U.S. milk production and
over 70 per cent of the Grade A milk produced in
their respective areas. The main function of these
federations has been to coordinate the activities of
their member cooperatives so that the members
could obain higher levels of milk prices and a more
stable milk market.
Mergers
Discussion among cooperative managers and producers of common problems and experience in federations led to the realization that many of the milk
marketing and pricing problems facing dairy farmers could not be solved in a loose-knit federation.
Thus the federation movement led to an extensive
merger movement in the latter half of the 1960's.
The magnitude of the merger movement is indicated by the fact that from 1967 to 1970, more than
170 local cooperatives handling 26 billion pounds of
milk for 70,000 producers, were combined into four
large multi-market cooperatives located in the Central United States. The largest cooperative, Associated Milk Producers Incorporated (AMPI), serves
27 federal milk marketing orders and covers a 10-
state area including all or parts of Texas, New
Mexico, Oklahoma, Kansas, Arkansas, Indiana, Illinois, Wisconsin, Minnesota, and Iowa. AMPI
handled nearly 11 billion pounds of milk for 31,000
producers. Central Indiana Dairymen and Pure
Milk Association were two cooperatives with producers located in Indiana which were consolidated
into AMPI. Mid-America Dairymen, Inc. in the
Iowa, Missouri, Kansas, Nebraska, and Minnesota
area handles 7.5 billion pounds of milk for 23.000
producers. Dairymen, Inc., in the Southeast 10-state
area, handles 5 billion pounds of milk for 10,000
producers in 12 federal order markets. Kyana Milk
Producers which served suppliers in Southern In-
*Ronald D. Knutson is an associate professor and Larry
Jones is a graduate research assistant in the Department of
Agricultural  Economics  at  Purdue  University.