Dairylea Votes to Merge with Dairy Farmers Of America

Northeast's two largest dairy cooperatives move a step closer to merger; Dairylea membership still has to approve it.

Published on: Oct 18, 2013

This week, Dairylea Cooperative directors voted to merge with Dairy Farmers of America. DFA's Board of Directors had already has endorsed the merger, which still requires approval by Dairylea's members. That'll be voted on during a special meeting next February.

"Today's dairy industry is undergoing unprecedented change," says Greg Wickham, Dairylea's chief executive officer. "From consolidation in the marketplace and changing farm demographics to a movement toward a global dairy industry, this change presents both challenges and opportunities."

It was not a quick decision. Dairylea's board of directors spent three years examining how to best position Dairylea's members for the future. Its "2020 Group," a committee formed in 2010, gathered ideas on how to generate value beyond the traditional cooperative structure. Among many topics, the group explored how to create market opportunities for members comparable to that peer cooperatives were attaining in via processing.

Dairylea Proposed Merger With Dairy Farmers Of America
Dairylea Proposed Merger With Dairy Farmers Of America

The co-ops were not new to working together. They've been long-time partners in Dairy Marketing Services.

Since 2002, Dairylea has been a member cooperative of DFA, a national cooperative with a global footprint and expanding commercial investments in processing. The proposed merger would provide Dairylea members access to growing national and international milk markets, ongoing patronage dividends, tax benefits and other opportunities. And, says Wickham, Dairylea members will become owners of — and enjoy the value-added returns from — the products, plants and partners that comprise DFA's commercial division.

"In many ways, a merger with DFA is simply a continuation of the working relationship that Dairylea has forged with DFA during the past 12 years," responds Rick Smith, DFA president and chief executive officer.

They work together in milk assembly, transportation and marketing, as well as joint management of Farm Services and membership operations in the Northeast. These cost-efficiencies are expected to continue.

As proposed, six seats would be added to DFA's Board of Directors to represent expanded membership in the Northeast. DFA's Northeast Area Council will maintain local governance and a grassroots structure familiar to Dairylea members.