The members of Dairy Farmers of America (DFA) are partners in cream. DFA is one of the world's largest dairy cooperatives, with some 15,000 member/farmers in 48 states. About 1.7 million cows belonging to member/farmers produce 63 billion pounds of milk a year (roughly 30% of milk production in the US), which DFA markets. Along with fresh and shelf-stable fluid milk, the co-op produces cheese, butter, dried milk powder, and other dairy products for industrial, wholesale, and retail customers. It also offers contract manufacturing services. The co-op owns 20-plus manufacturing plants nationwide. DFA, whose profits are shared based on member contribution, is a major supplier to dairy king Dean Foods.
The DFA owns about 30 manufacturing plants nationwide to produce its products. The facilities are focused on several functions and product categories, such as consumers cheese and butter, consumer fluid, ingredient cheese and protein, and contract manufacturing.
The organization returned $49 million in cash to its members in 2011. This consisted of $41 million in equity retirements and $8 million in allocated patronage dividends. DFA's commercial operations generated $3.4 billion in 2011 sales vs. $2.4 billion in 2010; the 42% increase can be attributed to higher average commodity prices due to higher-priced products and increased volume from acquisitions. The group's affiliates also made cash distributions totaling $27 million.
Although DFA's primary business is to market its members' milk, the cooperative has invested heavily in facilities and joint ventures to process its fluid milk into value-added products and high-end dairy-based ingredients. Among its offerings, it makes and markets cheese, butter, nonfat milk powders, and other dairy ingredients under household name brands, including Borden, Breakstone's, and Keller's, as well as private label products through contract manufacture.
The co-op expects to continue to benefit from its diverse activities coupled with higher average commodity prices for dairy products. The marketing of raw milk accounted for approximately 74% of sales. Sales have been bolstered by the acquisition of Berkshire Dairy and Food Products, a producer of dairy ingredients, and DFA's investment in Castro Cheese Company, which makes and markets aqueso fresco, panea, and queso quesadilla under the La Vaquita brand. Control of the brand launched DFA into the increasingly popular Hispanic cheese market. DFA's efforts to shore up earnings and mitigate a volatile commodity market have included trimming certain investments. In 2009 the co-op sold off its 87% stake in Dallas-based National Dairy Holdings to one of Mexico's giant dairy producers, Grupo Lala. As part of the reported $435 million deal, Lala gained control of 18 Borden milk processing facilities in the US and a number of major brands; DFA retained the Borden-branded cheese products. Proceeds from the sale enabled DFA to add to its lineup of value-added products by acquiring milk and ice cream producer Kemps from HP Hood. Kemps makes and sells milk, ice cream, and other dairy products under the Kemps, Hood, Hagen, Green's, and Arrowhead brands. DFA picked up some properties, taking ownership of two milk processing plants, an ice cream and milk facility, and a plant that makes yogurt, sour cream, and cottage cheese. In 2011 DFA formed a new Fluid Milk and Ice Cream Division by exchanging its affiliate ownership interest in HP Hood LLC for 100% ownership in Kemps. The move made Kemps a wholly-owned business of DFA. – less