LEADERS of Northeast dairy cooperative Dairylea plan to merge the 105-year-old organization with Dairy Farmers of America (DFA).
Dairylea members were presented with the merger proposal during the co-op's annual meeting in Syracuse, N.Y., Oct. 16 and will vote on the issue at a special meeting in February.
"Today's dairy industry is undergoing unprecedented change," Dairylea chief executive officer Greg Wickham said. "From consolidation in the marketplace and changing farm demographics to a movement toward a global dairy industry, this change presents both challenges and opportunities."
The merger proposal follows three years of study by the Dairylea board on the best way to position the cooperative for the future. A committee formed in 2010 considered various options to generate value "beyond the traditional cooperative structure," including ways to create additional market opportunities in the processing sector.
Enter DFA, the largest dairy company in the U.S. and the sixth largest in the world, according to a recent analysis by Rabobank's Food & Agribusiness Research & Advisory group.
"Ultimately, the board determined that merging with DFA, already a longtime partner in dairy marketing services, would best complement Dairylea's capabilities and resources while securing flexibility and increasing value for our members," Wickham said.
Dairylea has been affiliated with Kansas City, Mo.-based DFA since 2002.
According to the Rabobank analysis, DFA's dairy sales in 2012 topped $12.1 billion, 37% more than the next largest U.S. dairy giant, Dean Foods.
DFA owns 21 manufacturing plants and operates numerous fluid milk joint ventures, in addition to having shared ownership in milk bottling plants. More than 8,000 farms in 48 states are members of DFA, and the company markets more than 63 billion lb. of milk annually.
Dairylea, founded in 1907, is owned by more than 2,000 member farmers and markets more than 6 billion lb. of milk per year. The proposed merger will provide Dairylea members with access to growing national and international milk markets, ongoing patronage dividends, tax benefits and other opportunities.
Additionally, Dairylea members will become owners of — and enjoy the value-added returns from — the products, plants and partners that comprise DFA's commercial division. Six seats will be added to DFA's board of directors to represent expanded membership in the Northeast, and DFA's Northeast Area Council will maintain a local governance and grassroots structure that is familiar to Dairylea members.