Cooperatives in the dairy agribusiness: organizational and strategic changes in response to globalization

Abstract

Amongst the greatest milk producers all over the world, Brazil stands out due to the low participation of dairy cooperatives in milk handling and commercialization. Several factors may be identified to explain cross-country differences regarding to dairy cooperative market share. This paper discusses aspects related to the organizational structure and strategic behavior of dairy cooperatives in response to the globalization process. Based on research projects, case studies, and interviews with industry leaders, the study analyzes common features of dairy cooperatives in the United States, Western Europe and Oceania, which grew and prospered under intense competitive pressures from multinational companies. Some necessary conditions for the strengthening the Brazilian dairy cooperative system are discussed, including: consolidation by means of mergers and acquisitions, strategic alliance and network formation, adoption of professional and representative governance systems, centralized structure (replacing the singular central model), efforts to enhance membership commitment, new capitalization models, and competitive strategy aligned with the cooperative structure.