Three of the state's best-known dairy cooperative announced Friday (Nov. 2) that they plan to merge, if their members approve of the plan in December meetings.
Milwaukee Cooperative Milk Producers, Manitowoc Milk Producers Cooperative and Family Dairies USA have "carefully studied" the planned merger and if members approve the Board members for the three co-ops have voted unanimously to recommend the merger to their members. FarmFirst Dairy Cooperative was chosen as the name for the new merged group.
David Cooper, general manager of Family Dairies USA, said that as leaders of the three co-ops discussed the possible merger over the last year and a half, "it was apparent that all have their own rich history and found it difficult to give up a piece of their identity." However, all of them wanted to focus on farmers and the new name recognizes that.
"This new name doesn't identify any farm size or scope - all our members are dairy farmers," said Cooper. "Our ultimate goal is to put members first and the name FarmFirst seemed to resonate."
If approved, the merger would make this the largest Midwest dairy cooperative - in terms of milk volume and membership - and would give it a "powerful voice in policy discussions," said the three cooperative general managers in a press conference Nov. 2, when the merger announcement was officially made.
The new cooperative entity would represent 5,100-5,200 dairy farms.
Cooper said the financial strength of each of the cooperatives is great but the merger would provide enhanced opportunities for members while giving them the same cooperative advantage they have now.
Dennis Donohue, general manager of Manitowoc Milk Producers Cooperative, said that as time went on it was clear to all three cooperatives that they had similar goals, belonged to similar organizations and had similar points of view.
Combining the three into one larger cooperative will offer members some economies of scale and generate savings, he added.
In addition, all three of the co-ops have been competing for the same dairy farms, Donohue said.
Jim Bird, general manager of Milwaukee Cooperative Milk Producers, said that there is a lot of duplication among the three co-ops and they are looking at a shrinking market.
"That seems to be the way it will continue to go," Bird said, adding that combining their farmers into one cooperative will give them all a "more powerful voice in policy discussions."
Cooper emphasized that all three cooperatives are in great financial shape but they could gain even more efficiencies and find more enhanced opportunities for members if they were all in one cooperative, as well as having more clout in policy discussions.
There are three offices for the three entities now but the Brookfield office, home to Milwaukee Milk Producers, is already being sold. The Madison office, which is now home to Family Dairies, would become the home office of this new entity the men said.
"Our cooperatives have shared common goals and even collaborated in business together over the years," said Bird. "It is a natural progression. Now, we can combine efforts that will allow us to put more resources into critical member areas that will continue to build upon the 200-plus years of combined history we have."
TWO SEPARATE PROGRAMS CONTINUE
Family Dairies USA's Milk Program and the Fox Valley Quality Control Laboratory will continue to operate as separate entities that will be subsidiaries of the new cooperative.
Cooper explained that Family Dairies has supplied milk through its milk procurement program to a number of buyers in eastern Wisconsin from Milwaukee up through Michigan and in west-central Wisconsin who purchase milk for various uses from Class I through Class IV.
The program, he said, supplies milk to various specialty cheese companies, to Kemps and the Galloway Company as well as balancing milk for other plants.
Bird said his co-op's dairy testing in Brookfield would be combined with the Neenah lab it co-owns with Manitowoc Milk Producers and would still serve 30 different dairy plants.
According to business records from their annual meetings in late 2011, Manitowoc Milk had assets of $1,919,000 and Milwaukee Milk's total assets were over $1.33 million.
Family Dairies USA Milk Program and the Fox Valley Quality Control Laboratory which will continue to operate as subsidiaries of the new co-op, will have managed profit and loss statements that "roll up into the balance sheet and performance of the overall cooperative."
"The timing of coming together could not be better," adds Donohue. "The current, individual financial status of all three cooperatives is outstanding. This allows the new organization to start out on very strong footing, so that we can immediately focus on growing and improving member benefits."
Informational meetings will be held by each cooperative's membership over the next six weeks and the proposal to merge will be voted on by each membership in mid-December.
Under the new cooperative, the combined member representation will be divided into a total of nine districts, based on membership within each district.
The current directors from each of the three cooperatives will transition into the new organization, helping ensure consistency in leadership and membership voice.
"We are extremely excited about the future this effort will offer our members," said Cooper.
He added, "The combined size and strength of the new cooperative will provide all of our members with a deeper and broader voice in policy-making decisions, both locally and nationally. And, by combining the resources of three independent organizations, we will be able to improve efficiencies and effectiveness."
The proposed delegate representation will be based on a combined total of nine districts, based on membership within the districts.
Each current director will maintain a position for one year following the consolidation. A transition plan has been established in provisional bylaws to handle representation after that. Current directors will serve a one-year term and follow a three-year transition.
A management transition plan for the new organization has been defined, the men said.
Members of all three co-ops will receive a packet of information related to the merger around the second week of November and all the information shared with members will also be made publicly available for reference and review at www.mycoopportunity.com.
In mid-December each cooperative member will need to vote with a mail-in ballot on their organization's opportunity to merge into FarmFirst Dairy Cooperative. Each cooperative must approve the merger through their members votes, based on the bylaws of their organizations.
On Dec. 18 each co-op will hold a special meeting for the purpose of counting ballots. If the merger is supported by the voting members, the new organization will be on its way to beginning business on Jan. 1.