The strength of community

One thing that not many peo-ple know is that members of the cooperative are the ones who make all the important decisions in the company. Self-help, self-administration and self-responsibility: these basic cooperative principles apply to one of the largest food producers in Germany and Europe, and are a crucial foundation for DMK. Organizations that are cooperatives offer greater understanding, more stability and more mutual support. And all that makes for more equal opportunities.

On the ground, what that means is large and small dairy farms alike can find a home at DMK, where members stand up for each other. That is the only way it is possible to provide a significant level of support to smaller farms in particular. It makes no difference if they are located far away from major roads, they will still be served by milk tankers, just as reliably as any other farm. Such support makes all the difference when it comes to protecting jobs, purchasing power and diversity in remote and rural areas. That’s the advantage of the cooperative model, which applies equally to all members, compared to individual contracts as called for in connection with plans to implement Article 148 of the Common Market Organization (CMO). Smaller farms are often family-run, handed down from one generation to the next – and would likely struggle to find dairies to buy their milk under such contracts, making it hard for them to remain viable.

The members of a cooperative deter-mine the rules of cooperation themselves through democratic processes. Such structures need many committed people who hold voluntary positions on DMK’s committees alongside their farming work. They form an important bridge between the company and the farmers. Of the approximately 4,700 members, more than 300 elected representatives are active in a wide range of committees, from the Representatives’ Meeting to the Advisory Board, the Executive Board and the Supervisory Board. Their goal is always to make sure people are fairly treated, increase economic stability, and ensure agricultural businesses have a solid future ahead.

Increasing digitalization is a key driver for the cooperative model. Together with its members, DMK is continuously developing programs and services that guarantee sustainable value creation through out the supply chain. The tools also ensure information is shared transparently and enable people to participate in all company developments and broader market activity, no matter where they are. Not least, they ensure the cooperative will be viable in the future, too. DMK farmers use the myMilk.de digital communication platform to access all the services they need to work together with the dairy. DMK has implemented a slew of measures in this area together with the cooperative to give farmers the best possible assessment of the market. That way, dairy farmers have the entrepreneurial freedom to adjust their own supply behavior after weighing up the available forecasts as to how the milk price is likely to develop.

To minimize the impact of sometimes extreme market fluctuations and the liquidity risk that means for farmers, DMK introduced the Fixed Price model with its cooperative bodies. It is an important way of further developing the relationship with members and here, too, the focus is on the cooperative idea of mutual support. The DMK Group calculates a guaranteed fixed price for the coming 12 months based on the market value of milk. The farmer decides whether and how much he or she wants to hedge. The next step is that DMK hedges the fixed price offer in the context of commodity future sales. The farmer supplies their milk and receives the fixed price for the volume confirmed with the milk bill. Fixed prices are an important way to secure the liquidity of dairy farms, particularly when prices are low. To help with planning, monthly milk price statements are supplemented by market forecasts from the IG-Milchbarometer and market data and payment forecasts in the Fixed Price model. All that means DMK provides an estimate about milk prices in the medium term, helping farmers assess how the market may develop.

Flexibility is another core feature of cooperatives like DMK, and this is especially important when it comes to supply relationships. In 2017, members of Deutsches Milchkontor eG passed a resolution agreeing to make supply relationships more flexible, expanding members’ scope for action after an internal cooperative decisionmaking process. When terminating their membership, they can apply to shorten the delivery obligation from two years to one. All these measures show cooperatives like DMK are important drivers amid the largest transformation of agriculture since the industrial revolution, while also protecting their members. What defines them is their focus on fairness not destructive competition, competence not ideology, experience rather than knowing better, participation not monopoly, and ultimately, us instead of me. The formula is proving crucial for everyone’s success and while it may be 150 years old, it is now more relevant than ever.