CDI, DFA Form Marketing Agency in Common
California Dairies, Inc. (CDI) and Dairy Farmers of America (DFA) announced today they are forming a marketing agency in common (MAIC) that will focus on the sales, marketing and transport of raw milk.
The MAIC also will allow both cooperatives to create market stability, milk balancing and enhanced customer service as part of short- and long-term strategies, say the co-ops.
“Given the significant marketing and regulatory challenges that we’ve seen in California over the last few years, there was a mutual desire to reduce supply chain costs and create additional value and stability for our customers,” said Andrei Mikhalevsky, CDI President and CEO. “We would also like to help preserve the existing processing asset base in the State.”
“Our organizations have worked closely over the past decade as the dairy industry in California, the U.S. and the world has become increasingly dynamic,” said Dennis Rodenbaugh, executive vice president of DFA and president of Council Operations. “We have similar goals and see tremendous opportunities with our two cooperatives working together in an increasingly close partnership.”
CDI markets 16 billion pounds of California milk, about 40% of the state’s milk supply, from 400 producer members. DFA is a national dairy co-op, but it, too, has a significant footprint in California.
A major benefit of the MAIC will allow the co-ops to bargain with buyers for transportation subsidies, adds Geoff Vanden Heuvel, director of Regulatory and Economic Affairs for the California Milk Producer Council.
The new Federal Milk Marketing Order in California does provide a 50 cent/cwt differential for Los Angeles, but this is not enough to cover transport costs from the the state's major milk producing areas in the Central Valley, he says. "The only way to get those costs covered is through negotiation with the buyers, hence the necessity of the MAIC," he explains. "The MAIC also allows these cooperatives to fully integrate their milk supply to obtain real efficiencies that will save money in the long term.