Dairylea announces proposed merger with DFA

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Dairylea Cooperative's board of directors has voted to merge with Dairy Farmers of America (DFA).

The merger proposal, presented to members at Dairylea’s Annual Meeting today, reflects a desire to position Dairylea for the future amid rapidly evolving market dynamics. DFA’s Board of Directors has endorsed the merger, which requires approval by Dairylea’s members, who will be asked to vote during a special meeting in February 2014.

"It's a beneficial transaction for all concerned -- a true win-win," Rick Smith, president and chief executive officer of Dairy Farmers of America, told the news media on Wednesday afternoon. 

“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,” Smith said. 

Working together, Dairylea and DFA have created efficiencies 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 and grow following the merger.

Dairylea’s farmer Board of Directors spent the past three years in a comprehensive examination of how to best position Dairylea’s members for the future. This effort involved soliciting member input and guidance from the “2020 Group,” a committee formed in 2010 to gather ideas on generating value beyond the traditional cooperative structure. Among many topics, the group explored how to create market opportunities for its members that peer cooperatives with investments in processing are attaining.

“Ultimately, the Board determined 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,” said Greg Wickham, Dairylea’s chief executive officer.

Since 2002, Dairylea has been a member cooperative of DFA, a national cooperative with a global footprint and expanding commercial investments in processing built around the same core values as Dairylea. The proposed merger will provide Dairylea members 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.

Conversely, the merger provides DFA members with long-standing customer relationships in the Northeast marketplace, enhanced Farm Services and expanded access to capital to facilitate strategic growth.

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 local governance and a grassroots structure familiar to Dairylea members.

Prior to the vote in February 2014, a series of informational sessions will be held to provide Dairylea members with a comprehensive overview of the proposed merger, a more detailed explanation of the voting process and the chance to have their questions answered.

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NY  |  October, 16, 2013 at 03:47 PM

So much for Dairylea being a strong regional coop

new york  |  October, 16, 2013 at 06:43 PM

Nothing like backstabing the membership. How is this good for members? I hope Bill is up for an earfull I will be calling first thing in the morning. Should have seen this comming when they consolidated the board a few years ago. Getting board members who were in lockstep with management. Not a good day.

October, 17, 2013 at 07:36 AM

This is an exciting and beneficial move for members of both cooperatives. By joining together, Dairylea and DFA are building a stronger cooperative that can give members access to more services and the growing national and global milk markets.

new york  |  October, 17, 2013 at 08:12 AM

Jamie I don't want to be a small member of DFA. If the Dairylea board and management want to be DFA members and emploees they are welcome to leave nobody is forcing them to. On the other hand those of us who would like to remain a regional coop are being forced to follow. How are they going to handle the members who do not wish to join DFA?

new york  |  October, 17, 2013 at 08:50 AM

Kind of a general comment. What services and markets that are not already available thru DMI?

October, 17, 2013 at 09:07 AM

This merger is beneficial for the producers as they will be able to capture the true value of their milk through vertical integration. DFA has a well respected name in international markets and allows producers to ship directly to international markets by marketing directly to other countries without having to rely on third parties thus enhancing returns to producers. DFA does have a regional management structure that focused on doing what is best for the producers within their regions.

new york  |  October, 17, 2013 at 09:58 AM

Bob does the northeast really have that much surplus milk? With the yogourt craze do we really need to be looking to exports? Does DFA have the capacity and willingness to make what the world market wants? You claim that producers can ship directly to international markets, really so thru DFA I could send my milk directly to the export market? I think not, it will still be managed by DMS and DMS will still deternine where my milk goes. Members will have less of a voice, not that we really have one now.

NY  |  October, 17, 2013 at 10:03 AM

Like DFA deal with Forterra a few years ago that cost all US farmers real money,

illinois  |  October, 18, 2013 at 09:51 AM

DFA made 7 cents per cwt for their members. How much did Dairylea make for their members? By the way is Clyde Rutherford still around?

Idaho  |  October, 18, 2013 at 02:12 PM

HAHAHAHAHA to anyone who thinks DFA will make you more money. DFA is vertically integrated but the money sure doesn't come back to its members.... Good luck. I say get out of the co-op and ship direct to the plant.

Buffalo, N.Y.  |  October, 18, 2013 at 06:22 PM

Jamie drinks to much Koolaid, But if your still milking cows and taking the money that the Co-Op's pay you and letting them keep the majority of the profit that you all drink to much Koolaid. You are all fools for working for what little they pay you.

WI  |  October, 18, 2013 at 06:22 PM

This merger will add members to help pay fines and the lawsuits that DFA has accumulated over the years.

October, 18, 2013 at 08:05 PM

I strongly believe that a cooperative that is farmer focused has my best interest at heart. A plant will want my milk until sales get soft or they find a cheaper supply. At least DMS can guerante me a market if preferences change from fluid to yogurt. You think if you sign with a plant that produces fluid milk they will guerantee you a market? No they don't. Unfortunately fluid milk consumption is declining. So what happens to our milk once they have to much? They cut us. DMS would ship my milk to another plant. Also who advocates for us farmers in Washington? Plants? No they don't. Most of them are corporations and are loyal to shareholders who want maximum profits. Cooperatives do and will stand up for us. If we stick together we can achieve our goals and should not allow processors to divide and conquer. Just one mans opinion.

new york  |  October, 19, 2013 at 06:04 AM

Bob, Dairylea already markets my milk thru DMS. I would much rather belong to a coop that had 1200 members than one that has close to 15000. My voice and opinion matter more in a smaller coop that a large one. Both DFA and Dairylea are members of NMPF so I am not sure there is any advantage to joining in washington. NMPF already advocates for policies that I disagree with so how is joining with DFA going to help that? You will have less reprasentation with DFA they would only add 6 board members. I belive one of Dairyleas boards biggest mistakes in the last few years was decreasing the number of board members, now I see why they did it.

new york  |  October, 19, 2013 at 06:54 AM

Bob if you are a Dairylea member and want to be a DFA member what is stopping you? Why should I be forced to be a DFA member when I do not wish it? In my opinion the board should be gutted for creating this division within Dairylea.

Pa  |  October, 19, 2013 at 01:18 PM

Steve,you sound a little bitter, did DFA shut you off ? From your comments, it's either personal, or you have no understanding of milk marketing.

new york  |  October, 19, 2013 at 05:36 PM

Third generation Dairylea. Do you understand milk marketing? Why do you think everyone should be a DFA member? DFA has a long history of not necessarily doing the right thing for farmers. Just look at the lawsuits they have been involved in the last few years. Dairylea currently has nine board members DFA is offering 6. Sooooo will I really be better represented after the merger? I am already involved with national organizations that do not care about their members do I really need one more?

Ny  |  October, 20, 2013 at 09:54 AM

I agree with Steve. And ask conesus members how thier promised representation is after thier merge with dairylea only a couple years ago. Your promised 6 now, see what happens in a year.

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