An Old and New Cooperative Alternative: Integration by Farmers Into Fluid Processing to Develop Local Brands to Capture Some of the Channel Margin

The branded integration strategy is not new. Recall that Agrimark owned Hood in a joint venture with Agway for many years. It did not work for many reasons, including the fact that Agrimark was prohibited by the U.S. Justice Department from direct representation on the Hood board of directors. Justice feared vertical foreclosure, i.e. if Hood was controlled by Agrimark then other non Agrimark farmers and cooperatives might not be able to sell milk to Hood. On this point let us hope that Justice exercises similar concern on the current Hood, National Dairy Holdings merger where vertical foreclosure will, if the merger is allowed as proposed by the companies, cut Agrimark producers off from Hood.