However, it should be noted that potential problems
associated with maintaining unity of action among
members normally decline as the number of
autonomous participants is reduced.
Regional co-ops such as AMPI have rather unique
advantages in bargaining to either directly or
indirectly influence product prices or other terms of
sale through use of market power. These
opportunities include, but are not limited to, the
following:
1. Substantial influence of supplies of farm
products within and among markets.
2. Greater efficiency in farm product assembly.
3. Increased producer unity and coordination
of production and marketing activities.
4. Increased potential for effecting total
product output (possibly would require an
assist from government).
5. Improved ability to capitalize on elasticity
differences among markets and end uses of
product; and among time periods.
6. Greater effectiveness in political and
government relations (price support
program, school milk, military contracts,
import-export activity, etc.).
The goal of producer bargaining is to favorably
influence product prices and other terms of trade
through use of market power. However, the effect of
producer bargaining on farm prices and income is
hard to measure because of the complexities of the
market process. Also, one never knows what the
result would have been from alternatives that were
not pursued. However, Knutson [10], while
acknowledging, the difficulty of measurement,
attributed the following gains to dairy cooperative
bargaining efforts during the last half of the 1960’s:
1. Premiums over federal order prices (13
midwest fluid milk market):
A. Prior to 1965 = $.05 to $.15/cwt.
B. After 1965 = $.34 to $.51/cwt.
2. Changes in federal order prices and
provisions:
A. Increase of $.23 to $.24/cwt. for most
markets in the Central United States
during 1967.
B. $.27 to $.29/cwt. for most midwestern
markets during 1968-69.
3. Support price increases for the nine-year
period 1959-1960 to 1968-69 = $.50 to
$.75/cwt. or slightly more than double the
increase expected under competitive
conditions.
4. Producer prices and income-(for producers
in the 13 midwestern markets) increased
almost 32 percent between 1960-68.
While indicators relating to the effect of
higher prices on producer incomes are crude
and inadequate, available evidence suggests
that milk price increases have substantially
enhanced producer incomes.
USDA studies indicate that returns to labor,
management, and capital on a representative
eastern Wisconsin dairy farm approximately
doubled between 1960-68.
Hourly returns to operator and family labor
on these eastern Wisconsin farms increased
from 57 cents in 1960 to $2.47 in 1968.
Cost of operating the network of regional and
federated cooperative is at least twice as great as was
involved in operating individual market cooperatives
prior to the federated and regional cooperative
bargaining efforts. However, these higher costs were
associated with expanded programs by these
cooperatives for improvement of the bargaining and
marketing process. Included in these programs were
such items as financial support for standby pool,
writing off obsolete plant capacity, expenditures for
public policy programs to benefit milk producers,
expanded promotion and research, etc.
PRESENT STATUS OF PRODUCER BARGAINING
A general assessment of the present status of
producer bargaining quite logically reveals a diversity
of situations. This is to be expected due to the
heterogeneous nature of agricultural production and
marketing and differences in the form and stage of
development of organizations employed in various
bargaining efforts. When one considers the nature of
agricultural products and production within the
context of the requirements for effective bargaining,
it should be evident that the degree of success will
likely differ among products-and for a given product
over time. However, it may be somewhat less evident
that success in the development and maintenance of
effective bargaining schemes vary for an individual
product at a given point in time. This diversity of
results may arise due to inherent differences in the
success potential of alternative forms of bargaining
organizations, but also because of the differences in
the individual qualities Ofbargainers, e.g., ingenuity,
toughness and dedication. While the importance of
this latter factor (differences in bargainers) is often
neglected in such discussions, it is likely the single
most important variable in explaining differences in
bargaining results. This is especially true in an
industry, such as farming, which is in its infancy in
terms of development and use Ofbargaining power. In
fact, the farm sector is still viewed with considerable
disbelief and/or disdain in its bargaining role by many
opponents and observers. The ultimate outcome of
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