Dairylea Members to Vote on DFA Merger

10/26/2013 7:00 AM
By Joyce Bupp Central Pa. Correspondent

SYRACUSE, N.Y. — A proposal to merge the Dairylea Cooperative with Dairy Farmers of America was put before co-op members on Oct. 16 during Dairylea’s annual meeting at the Liverpool Holiday Inn in Syracuse.

“The time was right. We believe this is absolutely the right thing to do,” Bill Beeman, Dairylea’s chairman, said in his annual report to an audience of more than 600 members and industry guests.

Beeman’s address to the 106th annual meeting of Dairylea outlined a recent, unanimous vote by the cooperative’s board of directors to propose the merger of the Syracuse-based cooperative with Dairy Farmers of America, headquartered in Kansas City, Mo. The board of DFA has also voted to endorse the merger.

A “merger with DFA would deliver more value now and in the future for our members,” said Beeman, a Kingsley, Pa., dairyman.

The proposed merger will require approval by Dairylea’s members, with a vote scheduled at a meeting planned for February 2014. If approved, the merger would become effective April 1.

Change, in various forms, was the key factor Beeman cited as the moving force behind the board’s merger proposal.

Changes in membership dynamics, changes in technology, in member needs and in the kinds of value they seek from the cooperative all contributed to spur the board’s proposal.

The merger proposal surfaced from a three-year study by the Dairylea board, with input and guidance from its “2020 Group,” a committee formed in 2010 to gather ideas and study alternatives on how to generate greater value for members beyond the cooperative’s current structure.

“Ultimately, the board determined that 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 CEO.

“Why DFA?” Wickham said in his meeting presentation. “We share the same goals of farmers being first and commercial investments second. The proposed merger meets the criteria for change desired by the board.”

Other merger considerations cited by Wickham included membership investment in plants and brands, marketplace leadership, expanded reach of the farm services business, and unlocking the value of Dairylea and assigning it to members.

Dairylea, the largest milk marketing cooperative in the Northeast, has been a member cooperative of DFA since 2002. Its 1,250 member farms market more than 5 billion pounds of milk annually.

The proposed merger will provide Dairylea members the opportunity to grow with DFA’s expanding international marketing efforts and commercial investments, as well as eligibility for ongoing patronage dividends and tax benefits derived from the business.

In addition to its own member-owners, Dairylea has several member cooperatives whose milk it markets, including Lancaster County-based Mount Joy Cooperative.

Those member cooperatives will be able to continue having their milk marketed as in the past, through agreements with DFA or Dairy Marketing Services, the joint marketing venture formed in 1999 between DFA, Dairylea and St. Albans Cooperative Creamery of St. Albans, Vt.

A series of Dairylea member meetings is planned for November and December, prior to the February special meeting.

Pending merger approval, six seats will be added to DFA’s board of directors to represent the expanded membership in the Northeast region.

DFA’s Northeast Council will continue to maintain local governance and a grass-roots membership structure similar to that of Dairylea.

Along with providing a larger domestic and global footprint for Dairylea members, the merger will provide DFA with an expanded customer base in the Northeast markets, enhance the farm business divisions it had already operated in partnership with with Dairylea and provide expanded access to capital for future strategic growth.

“In many ways, a merger is simply a continuation of the working relationship that Dairylea has forged with DFA during the past 12 years,” said Rick Smith, DFA president and CEO.

The merger of Dairylea and DFA will result in a cooperative with nearly 10,000 member farms and 33 plants processing fluid milk, a variety of dairy foods and ingredients, and multiple commercial brands.

Editor’s note: Correspondent Joyce Bupp is a member of DFA’s board of directors.


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