Analysis of Cooperative Over-Order Pricing of Fluid Milk

摘要

Dairy cooperatives apparently do not have unfair price advantages in federally regulated milk markets. Because 80 percent of dairy farmers belong to cooperatives, some analysts feel that these organizations could enhance earnings by charging milk handlers high prices for nonprice-regulated services (over-order premiums). However, the probability of cooperative abuse of market power is limited because milk handlers would likely reject too-high premium prices: the availability of milk from outside the cooperative area would blunt cooperative control; and shortrun gains from high premiums would erode if producers respond to high consumer prices by producing more milk, which would generate surpluses and then reduce prices.