LEARNING FROM THE DUTCH MILK COOP MODEL

LEARNING FROM THE DUTCH MILK COOP MODEL

My dear countrymen, in my opinion, the business of an agricultural cooperative has four main components, namely production, processing, packaging and marketing. Usually, the production component is done by the individual members on their own, sometimes with the help of their family members. However, the other three components, namely processing, packaging and marketing are usually done collectively by the cooperative itself. That is basically the Dutch milk cooperative model that is so successful, it has been adopted all over the world.

Here are the key features of the Dutch coop model, according to ChatGPT:

1.   Farmer-Owned Cooperatives:

o   Farmers are both suppliers and shareholders of the cooperative.

o   Members share profits based on their milk contributions and cooperative performance.

2.   Centralized Milk Collection and Processing:

o   Cooperatives establish centralized facilities to collect raw milk from member farms.

o   The milk is processed into various dairy products such as cheese, butter, yogurt, and milk powder.

3.   High-Quality Standards:

o   Strict quality controls are implemented at every stage, from production to processing.

o   Farmers receive training and support to maintain consistent quality.

4.   Market-Oriented Operations:

o   Cooperatives focus on market trends, consumer demands, and global trade opportunities.

o   Products are branded and marketed internationally to maximize reach and profitability.

5.   Sustainable Practices:

o   Emphasis on environmentally friendly and sustainable farming methods.

o   Initiatives to reduce greenhouse gas emissions and manage waste efficiently.

6.   Vertical Integration:

o   Cooperatives control the entire supply chain, from milk production to product distribution.

o   This ensures cost efficiency and quality consistency.

I noticed in their definition that the members are both suppliers and shareholders and in one instance, they are also called “contributors”. Although ChatGPT is not very specific about it, it seems implied that once the raw milk harvests are delivered to the processing plant, these are considered “sold” and the “sales” goes to the account of the member. What that means is that the member does have to worry about selling his milk harvests anymore, because his market is guaranteed. On the other hand, the cooperative, being the buyer, does not have to worry about their raw materials anymore, because it is also guaranteed.

Obviously, the dairy farmers who only own a few dairy cows do not have the economies of scale to put up their own processing and packaging plants. They also could not afford to invest in the logistics needed to market their finished products, especially those needing refrigeration and cold storage. That is where the cooperative approach becomes practical. Also, according to Chat GPT, one of the world's largest dairy cooperatives, Friesland Campina, follows the Dutch model. It represents thousands of dairy farmers and exports products globally. The cooperative reinvests in innovation and farmer development, ensuring long-term growth.

Based on my own research, there is sufficient legal basis for both NGAs and LGUs to support all cooperatives in general and all dairy cooperatives in particular, with inputs for production, processing, packaging and marketing. These could be in the form of financing or equipment. And although some cooperatives might prefer to go into dairy cows, they could also add dairy goats and dairy carabaos. Your friend, IKE SENERES/01-03-25/visit my blog senseneres.blogspot.com