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The Bargaining Strength of a Milk Marketing Cooperative

Published online by Cambridge University Press:  15 September 2016

Peerapon Prasertsri  and
Richard L. Kilmer
Peerapon Prasertsri
Affiliation:
Food and Resource Economics Department and the Institute of Food and Agricultural Sciences at the University of Florida in Gainesville, Florida
Richard L. Kilmer
Affiliation:
Food and Resource Economics Department and the Institute of Food and Agricultural Sciences at the University of Florida in Gainesville, Florida
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Abstract

As a result of economies of size, food processors are generally large and few in number. These characteristics put processors at a bargaining advantage over independent farmers. Marketing cooperatives were established to counter the uneven bargaining position of individual farmers. This article investigates the relative bargaining strength of one milk marketing cooperative and several fluid milk processors. The Nash bargaining model can be used to analyze the negotiated price in the Florida fluid milk market which acts like a bilateral monopoly. The milk marketing cooperatives have bargained well with the milk marketing processors; The monthly bargaining strength of the Southeast Dairy Cooperative, Inc. (SDC), exceeds the monthly bargaining strength of the processors in all twelve months, ranging from a low of 0.6664 in January to a high of 0.7831 in September. The monthly average bargaining strength across all months for SDC is 0.7326.

Keywords

cooperativebargainingbilateral monopolydairyprocessors
Type
Contributed Papers
Information
Agricultural and Resource Economics Review , Volume 37 , Issue 2 , October 2008 , pp. 204 - 210
Copyright
Copyright © 2008 Northeastern Agricultural and Resource Economics Association 

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