| Cattlemen's Association has developed a project to assist small dairy farmers in Cayambe, Ecuador to market milk collectively and receive higher benefits. This research investigates potential extensions of this real project by assessing scenarios that reflect horizontal integration and gradual vertical integration for the viability to start a dairy cooperative among small, medium and large farms in the region.; Strategic analysis and planning was used to identify key success factors as well as the action strategies that should be implemented to enable the cooperative to be successful in the future. The core strategy elements differentiate between a bargaining cooperative, which includes three scenarios, and a processing cooperative that evolves from the third scenario of the bargaining cooperative.; Financial analysis was used to assess the viability of the four scenarios, which showed that farmers would receive increasing benefits if they engage in horizontal and gradual vertical integration while enhancing quality of milk and dairy products. The estimated cooperative sales price, which was obtained by regression analysis, would cover operational costs and return higher prices to members across the scenarios. The highest potential benefits for farmers result from starting a dairy processing cooperative and offering quality milk to processors in the bargaining scenarios. |
