Nuffield Travels

These blog entries detail my travels across the United States as I complete my Nuffield Farming Scholarship on Leadership and Capital Structures of Dairy Co-operatives.

Tuesday 4th August 2009

Met up with Tom Lyons at the Wisconsin Department of Agriculture.

He was formerly General Manager of an AI & milk recording co-operative, which has grown steadily as mergers where conducted with neighbouring co-operatives. He presently works as a consultant for the Wisconsin Department of Agriculture.

In the US the dairy co-operatives handle 75% of the milk. Dairy Farmers of America (DFA) on their own account for 34% of the milk.

The Provisions on the Capper-Volstead Act which was passed in 1922 protect co-operatives from the provisions of US Anti-Trust legislation. However DFA have been accused of breaching Anti-Trust regulations by manipulating the Chicago Futures & Derivatives markets. A new management is now in place at DFA and is cleaning up its Act.

50% of milk produces in the United States goes into the liquid market. While private companies (such as Deans and Kraft) are involved a wide range of dairy products, the involvement of private companies (including PLC’s) is greatest in the liquid sector.

Dairy co-operatives tend to struggle to secure finance compared to the PLC’s as dairy farmers (and in some cases the farmer Directors) are always pressing for the highest possible milk payout in the short term. (Long term strategy looses out to short sightedness and political expediency).

During the Great Depression of the 1930’s. Franklin D. Roosevelt set up two principle co-operative organisations.

Rural Electric Co-operatives. These provided electricity to rural areas, they are still in existence today.

The Farmer Co-operative Bank. This evolved into the Farm Credit system. Part of this also provides finances for Co-operatives.

Co-operatives need to balance the needs of their members with the needs of their staff. Co-ops unlike plc’s are not able to offer stock options.

The area that Co-operatives need to improve most urgently is Strategic Planning. He suggest an annual strategic planning session separate from the main board meeting this should then feed into the budget and plan of work for the year.

The long term view should always be taken and wherever possible decisions put up for discussion at this months Board meeting should not be taken until the following month. Decision by email should be avoided unless absolutely necessary