The Bargaining Strength of a Milk Marketing Cooperative

Abstract

As a result of economies of size, food processors are generally large and few in number. These characteristics put processors at a bargaining advantage over independent farmers. Marketing cooperatives were established to counter the uneven bargaining position of individual farmers. This article investigates the relative bargaining strength of one milk marketing cooperative and several fluid milk processors. The Nash bargaining model can be used to analyze the negotiated price in the Florida fluid milk market which acts like a bilateral monopoly. The milk marketing cooperatives have bargained well with the milk marketing processors. The monthly bargaining strength of the Southeast Dairy Cooperative, Inc. (SDC), exceeds the monthly bargaining strength of the processors in all twelve months, ranging from a low of 0.6664 in January to a high of 0.7831 in September. The monthly average bargaining strength across all months for SDC is 0.7326.

Agricultural Co-operatives in the western world: A bibliometric analysis

“…The nodes of a network can be divided into 'clusters' or 'modules' where connections (density of edges) are stronger between nodes of the same cluster than between those of different clusters (Clauset, Newman et al 2004, Radicchi, Castellano et al 2004, Leydesdorff and Bornmann 2011.…”

Investigating Bargaining Power of Farmers and Processors in Iran's Dairy Market

“…However, our study is different from the former ones in two main aspects. First, the type of the data in this study differs from Bonnet and Bouamra-Mechemache (2015) and Prasertsri and Kilmer (2008). We use annual longitudinal data at the national level because cross-section data at the retailer level are not available and monthly or quarterly data on milk production are not reported in Iran.…”

“…Prasertsri and Kilmer (2008) examine the relative bargaining power of one marketing cooperative and several processors in the U.S. dairy industry using regional data. They use a Nash bargaining model to analyze the negotiated price in the Florida raw milk market.…”

“…They use a Nash bargaining model to analyze the negotiated price in the Florida raw milk market. Both Bonnet and Bouamra-Mechemache (2015) and Prasertsri and Kilmer (2008) employ single-equation regression models to relate observed prices to a series of exogenous factors that are thought to influence bargaining power.…”

“…There are a considerable number of studies on the application of bargaining theory in the literature 5 . However, fewer studies (Bonnet and Bouamra-Mechemache, 2015; Folwell, Mittelhammer, and Wang, 1998; Noton and Elberg, 2014; Oczkowski, 1991; Prasertsri and Kilmer, 2008) report application of this theory to the agro-food industry. Bonnet and Bouamra-Mechemache (2015) investigate the distribution of profit between producers and retailers in the supply chain of organic milk.…”