The authors are economists with USDA's Rural Business Cooperative Service. This article is based on the 25-page report "Member Satisfaction with Their Cooperatives: Insights from Dairy Farmers."
Satisfaction with dairy co-ops was at the heart of the survey completed by 1,736 co-op members. Six areas served as study linchpins: Cooperative services, operations, principles and governance, along with sense of connection to the co-op and handling of milk pricing.
One way for a cooperative to find out what its members think and feel about their cooperative is to ask them for direct input. Several major dairy cooperatives have done that in recent years via a mailed survey to their members.
USDA Cooperative Programs played a role in these surveys, resulting in the collection of 1,736 cooperative member opinions on 43 questions that were common to each survey. The surveys were conducted independently from January through March from 1993 to 2012. About 40 percent of the members in these cooperatives provided input on all of the questions that the surveys had in common.
Marketing and price matter
Dairy farmers' livelihood depends on their milk being efficiently marketed and receiving the highest possible price for it. Many studies show that dairy farmers greatly value an assured market and high milk price. So, it is natural that their satisfaction with their cooperative is tied closely to whether the cooperative does a good job of marketing their milk at a reasonable cost, then returns a competitive milk price to members.
Corporate-level issues that concern how well the cooperative is run (board and management efficiency and/or competency) and items that affect members' pocketbooks (pay prices and cooperative operational costs) are most strongly associated with overall member satisfaction. Member's overall satisfaction with their cooperative is very strongly correlated with member satisfaction of management and pricing policies. Similarly, member satisfaction is strongly related to their perception of how well the co-op is managing operating and marketing costs.
Overall satisfaction is also strongly linked to feelings toward the board of directors. Members hold management and the board of directors responsible for cooperative activities and functions that affect their farms' financial bottom line.
Communication contributes
Three communication (member relations) issues are strongly correlated with members' satisfaction with their co-ops. Agreement that their cooperative keeps them well-informed about its operations was strongly linked to overall feelings about the cooperative.
Similarly, members' feelings that they can influence the cooperative and have an impact on how it is run are strongly related to overall satisfaction. It may be that feeling well-informed about their co-op contributes to members' being satisfied with the corporate-level issues mentioned above. It then seems possible that less satisfied members would show greater satisfaction with the co-op if they were more aware of how the cooperative operates and/or felt like they had more of a role in how it is run.
Feelings of "being connected" to the co-op influence member satisfaction. Member satisfaction was linked to a view that "the cooperative is not more concerned about its operations than about members." Likewise, agreement that the cooperative "is not just another place to do business" is related to overall satisfaction.
Cooperative services
The surveys also asked about five different co-op services. The level of satisfaction with the cooperative's provision of market information, with its milk hauling policies, with the cooperative's field representative, and with its laboratory services were each moderately correlated with member overall satisfaction. However, satisfaction with milk hauling services (operating or arranging routes) was only weakly linked to satisfaction with the cooperative.
The relatively weaker correlations between member satisfaction with their cooperative and satisfaction with the various services provided by, or through, the cooperative may be because of the individualistic nature of the relationships between service provider and member. Members may hold service providers - such as field representatives and milk haulers whom they have direct contact with - accountable for the quality of the services provided, rather than the cooperative itself.
Members' satisfaction may be more heavily influenced by how the cooperative guides the provision of these services. For example, members' rating of the cooperatives' milk hauling policy is more strongly correlated to satisfaction with the cooperative overall than is members' rating of the milk hauling service itself.
Cooperative practices
Finally, agreement that the cooperative does not try to cover too big a geographic area is moderately linked to the level of overall satisfaction with the cooperative. In other words, members who were satisfied with their cooperative usually did not agree that it tried to cover too big an area.
The level of agreement with the statements that the cooperative's earnings were a return on the member's investment and that the cooperative paid patronage in proportion to the member's patronage are both moderately associated with overall satisfaction. Likewise, agreement that their cooperative works appropriately with other agricultural cooperatives and that it supports cooperative education for members and the public are also moderately correlated with the level of overall satisfaction.
Cultivating member satisfaction
The first priority for cultivating improved member satisfaction appears to be having a competent board of directors and a capable management team in place. To achieve this, members should elect a board that is knowledgeable in setting policies and in recruiting and supervising a capable management team. Members look to management to do the best possible job of marketing member milk, minimizing operating costs and setting satisfactory milk pricing policies.
A second key area for member satisfaction is sound communication that keeps members well-informed about cooperative operations and provides feedback from members regarding their wishes and concerns. Third, the cooperative should have an educational program to augment members' understanding of the milk market and the nature of the cooperative business model.
Last, but not least, the cooperative should ensure that service providers who are in direct personal contact with members are well-trained, with the technical expertise members expect and who are committed to delivering a high level of customer service.
This article appears on page 663 of the October 25, 2014 issue of Hoard's Dairyman.
One way for a cooperative to find out what its members think and feel about their cooperative is to ask them for direct input. Several major dairy cooperatives have done that in recent years via a mailed survey to their members.
USDA Cooperative Programs played a role in these surveys, resulting in the collection of 1,736 cooperative member opinions on 43 questions that were common to each survey. The surveys were conducted independently from January through March from 1993 to 2012. About 40 percent of the members in these cooperatives provided input on all of the questions that the surveys had in common.
Marketing and price matter
Dairy farmers' livelihood depends on their milk being efficiently marketed and receiving the highest possible price for it. Many studies show that dairy farmers greatly value an assured market and high milk price. So, it is natural that their satisfaction with their cooperative is tied closely to whether the cooperative does a good job of marketing their milk at a reasonable cost, then returns a competitive milk price to members.
Corporate-level issues that concern how well the cooperative is run (board and management efficiency and/or competency) and items that affect members' pocketbooks (pay prices and cooperative operational costs) are most strongly associated with overall member satisfaction. Member's overall satisfaction with their cooperative is very strongly correlated with member satisfaction of management and pricing policies. Similarly, member satisfaction is strongly related to their perception of how well the co-op is managing operating and marketing costs.
Overall satisfaction is also strongly linked to feelings toward the board of directors. Members hold management and the board of directors responsible for cooperative activities and functions that affect their farms' financial bottom line.
Communication contributes
Three communication (member relations) issues are strongly correlated with members' satisfaction with their co-ops. Agreement that their cooperative keeps them well-informed about its operations was strongly linked to overall feelings about the cooperative.
Similarly, members' feelings that they can influence the cooperative and have an impact on how it is run are strongly related to overall satisfaction. It may be that feeling well-informed about their co-op contributes to members' being satisfied with the corporate-level issues mentioned above. It then seems possible that less satisfied members would show greater satisfaction with the co-op if they were more aware of how the cooperative operates and/or felt like they had more of a role in how it is run.
Feelings of "being connected" to the co-op influence member satisfaction. Member satisfaction was linked to a view that "the cooperative is not more concerned about its operations than about members." Likewise, agreement that the cooperative "is not just another place to do business" is related to overall satisfaction.
Cooperative services
The surveys also asked about five different co-op services. The level of satisfaction with the cooperative's provision of market information, with its milk hauling policies, with the cooperative's field representative, and with its laboratory services were each moderately correlated with member overall satisfaction. However, satisfaction with milk hauling services (operating or arranging routes) was only weakly linked to satisfaction with the cooperative.
The relatively weaker correlations between member satisfaction with their cooperative and satisfaction with the various services provided by, or through, the cooperative may be because of the individualistic nature of the relationships between service provider and member. Members may hold service providers - such as field representatives and milk haulers whom they have direct contact with - accountable for the quality of the services provided, rather than the cooperative itself.
Members' satisfaction may be more heavily influenced by how the cooperative guides the provision of these services. For example, members' rating of the cooperatives' milk hauling policy is more strongly correlated to satisfaction with the cooperative overall than is members' rating of the milk hauling service itself.
Cooperative practices
Finally, agreement that the cooperative does not try to cover too big a geographic area is moderately linked to the level of overall satisfaction with the cooperative. In other words, members who were satisfied with their cooperative usually did not agree that it tried to cover too big an area.
The level of agreement with the statements that the cooperative's earnings were a return on the member's investment and that the cooperative paid patronage in proportion to the member's patronage are both moderately associated with overall satisfaction. Likewise, agreement that their cooperative works appropriately with other agricultural cooperatives and that it supports cooperative education for members and the public are also moderately correlated with the level of overall satisfaction.
Cultivating member satisfaction
The first priority for cultivating improved member satisfaction appears to be having a competent board of directors and a capable management team in place. To achieve this, members should elect a board that is knowledgeable in setting policies and in recruiting and supervising a capable management team. Members look to management to do the best possible job of marketing member milk, minimizing operating costs and setting satisfactory milk pricing policies.
A second key area for member satisfaction is sound communication that keeps members well-informed about cooperative operations and provides feedback from members regarding their wishes and concerns. Third, the cooperative should have an educational program to augment members' understanding of the milk market and the nature of the cooperative business model.
Last, but not least, the cooperative should ensure that service providers who are in direct personal contact with members are well-trained, with the technical expertise members expect and who are committed to delivering a high level of customer service.
