The agricultural sector plays a very important role in any economy. It is important to note that no country has ever developed without first strengthening its agricultural sector. However, agricultural products are not easy to market and they usually attract low prices compared to other goods.
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On the same note, value addition for agricultural products requires heavy capital investments which are out of reach for most individual farmers. However, collectively farmers can have influence over prices and also be able to bargain for increased market share (Janus, 2011, p. 135). Consequently, farmers in many parts of the world have organized themselves into cooperative unions.
These cooperatives have been very influential in the fight for better prices as well as technically supporting farmers. It is important to note that Wisconsin farmers have not been left behind as far as cooperatives are concerned.
A cooperative is defined as a group of people with similar interests who have pulled resources together for their common benefit. It is important to note that cooperatives are non profit making organizations and their main aim is to advance members’ welfare. Historically, cooperatives have been depicted to be autonomous groups of people who aim at mutual social, economic and cultural benefits.
In this regard, cooperatives are supposed to act as collection centers of products from farmers. Cooperatives also help in streamlining the supply chain system to ensure efficiency. On the same note, cooperative societies organize marketing of the products of farmers at good prices (Monaghan, 2008, p. 93).
Additionally, cooperatives help farmers by giving them inputs of production. It is important to note that while small scale farmers find it difficult to individually produce commodities for commercial purposes, cooperatives easily achieve this because several producers bring their products together.
In this regard, people join cooperatives because of various reasons. Producers want to have a steady market for their products and joining cooperatives is one way of achieving this. On the same note, people seek better representation in legislative and regulatory boards, a function which cooperatives achieve effectively.
More importantly, producers will always go for the best terms of trade. Consequently, they will be willing to join cooperatives since by joining hands with others they are able to bargain for better terms of trade.
The history of cooperatives in Wisconsin dates back to 1800’s when people decided to work together. However, the specific date when cooperatives started is a subject of debate. In the early 19th century, there were several groups of milk farmers who acted collectively in various aspects. The first group that was recognized as a cooperative for production of cheese in United States was started around 1841 in Jefferson County, Wisconsin.
Due to the success of the cheese cooperative, there was formation of many other cooperatives in the years that followed. In the beginning, people came together strictly for cooperative purposes (Hubbell, 2007, p. 49). However, private enterprises invaded the field and changed the spirit of communal activities.
Initially, every factory sold its products on its own, either to individual people or to a group of people. These people, either from the local area or from other counties, came to the factories where prices were bargained and agreements reached. This system led to many problems including price variability. Consequently, cheese boards were developed to assist in negotiation of prices between buyers and sellers. Through this system, a base price was set which was used to pay farmers for their products.
As a result, there was uniformity across the industry. Unfortunately, large cheese dealers and packers used their influence to manipulate the industry and fixed low selling prices which negatively impacted the producers (Monaghan, 2008, p. 87). This was achieved through the board of Plymouth, Wisconsin. Farmers then decided to form another group that would work for their benefit.
This led to formation of the Sheboygan County Cheese Producer’s federation by forty three cheese factories under the leadership of Henry Krumrey. The main agenda of this formation was to sell cheese of member factories. The federation was started in 1914 and has tremendously grown with its members increasing from 43 to over 400. The federation suffered a set back when it was prevented from selling on the Plymouth board while at the same time penalties were imposed on its members.
Moreover, the federation faced opposition from dealers, packers as well as cheese makers. Despite all these, the federation has evolved to become very influential. It also changed its name to Wisconsin Cheese Producers Federation and later to National Cheese Producers’ Federation (Torgerson, 2006, p. 153). The federation strives to ensure that consumers and producers of cheese trade fairly. In this regard, the federation ensures enhancement of quality and efficiency in supply chain.
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On the other hand, butter producers have also been organizing themselves into cooperatives. While butter production started mainly as a small scale affair, increase in demand led to the need to increase production. Consequently, factories were built to help in large scale production of butter (Janus, 2011, p. 141). This led to rapid increase of butter production in Wisconsin State.
Due to the increase in production and the emergence of the factory system, it became necessary to combine forces. This led to the emergence of cooperative creameries that aimed at enhancing efficiency in production and distribution. The Wisconsin Cooperative Creamery Federation is one of the cooperatives that were formed. The cooperative’s main aim was to inform people on the importance of pulling forces together to improve quality and reduce expenses by cutting some costs (Torgerson, 2006, p. 314).
Other butter producers joined together to form the Land O’Lakes Creameries. This was a relatively larger cooperative with members drawn from Minnesota, Wisconsin, and Iowa. The Creameries aimed at ensuring uniformity in quality of butter sold across the region. Conquering the market through insistent marketing was a vital strategy for the Land O’Lakes Creameries.
It is important to note that other dairy products like condensed milk and market milk have also had their cooperatives. However, these cooperatives have been consolidated in the recent years. Nevertheless, cooperatives continue to reorganize with time due to the changes in the business environment.
Cooperatives are started with the aim of increasing bargaining power in the market. This vision is achieved by ensuring that there is a wide variety of products under the control of cooperatives. In this regard, many cooperatives have grouped together to form mergers. These large scale cooperatives always control supply through membership and contract agreement. On the same note, these cooperatives engage in continuous research to increase market for their products.
They also keep buffer stocks to ensure smooth supply of products throughout the period thus avoiding seasonal interruption in supply (Hubbell, 2007, p. 63). Moreover, cooperatives usually aim at increasing the quality of products that pass through their supply channels so as to enhance demand. Besides increasing the numbers of customers, high quality products are known to attract high prices.
If every single producer is left to sell his or her products, it would be very difficult to get good prices. The small quantity of output that each single farmer gets will not enable them to have any influence in the market. Similarly, delivery of the products to respective customers would be impossible due to the large transportation costs involved.
As a result, cooperatives come in handy to assist producers especially farmers. By collecting products from different farmers, quantity increases thus enabling cooperatives to have high bargaining power.
On the same note, cooperatives ensure that members effectively get information about the markets. Moreover, cooperatives arrange for distribution which is usually efficient. In addition, cooperatives are able to minimize costs by eradicating some unnecessary expenses.
There are various factors that affect performance of cooperative movements and the cooperative spirit. To begin with, cooperatives are known to be involved in aggressive marketing in a move that is meant to increase their market share. This may involve discounts, promotions and offers that are meant to attract customers. All these reduce the income of cooperatives and end up reducing the income of producers.
It should be noted that the overall outcome is against the reason of joining cooperatives, which is to increase returns on products (Hubbell, 2007, p. 49). On the same note, research has shown that prices are usually lower in markets dominated by cooperatives. This is because distribution is efficient and any increase in demand is satisfied without the consumer having to strain.
Similarly, sometimes cooperatives find it difficult to balance between the need for efficiency and democracy. While cooperatives are formed on the principle of democracy, efficiency is their main aim. Unfortunately, both democracy and efficiency cannot always be achieved at the same time.
Moreover, though cooperatives are formed by producers to benefit them, people have to be employed to run their day to day affairs. Additionally, cooperatives work through agents who help in the channels of distribution. This relationship brings about the problem of who should benefit first. In many cases, cooperative members are pushed to the back and are only given what remains after others have been satisfied.
Despite the global shift towards large scale and fewer dairy cooperatives, Wisconsin continues to have smaller but successful dairy cooperatives. However, the farmers are changing their mode of operations as well as their demands.
Consequently, cooperatives will need to undergo structural changes to meet the dynamic needs of members (Monaghan, 2008, p. 112). On the same note, cooperatives will need to advance their services to cater not only for their members, but also the highly selective customers due to technological advancement.
Wisconsin is among the states with the highest number of farmers. Consequently, the state plays a crucial role in the United States of America’s dairy industry. It is also crucial to note that agriculture, and more specifically dairy farming, contributes highly to the economy of Wisconsin.
In this regard, dairy cooperatives play a major role in the economy since they are involved with the collection and marketing of dairy products. As a result, efforts should be made to ensure that the main aim of joining cooperatives is met.
Hubbell, J. W. (2007). Minneapolis: Urban-environmental Change in the Upper Mississippi, 1824-1924. Ann Arbor: Proquest.
Janus, E. (2011). Creating Dairyland: How Caring for Cows Saved Our Soil, Created Our Landscape, Brought Prosperity to Our State, and Still Shapes Our Way of Life in Wisconsin. Madison: Wisconsin Historical Society.
Monaghan, P. (2008). Wineries of Wisconsin and Minnesota. Madison: Minnesota Historical Society.
Torgerson, R. E. (2006). Truman Torgerson: Leadership Straight from the Shoulder. Bloomington: AuthorHouse.