Since it is illegal for farm owners to unionize, The Capper-Volstead Act of 1922 allowed farmers to form cooperative associations to increase their power in the marketplace. It was assumed that these farmer-owned cooperatives would not only market milk but also be proactive in negotiating fair prices for their members. Many cooperatives have, instead, been reactive, caving to market pressures.
Capper-Volstead Act of 1922
7 USC Sec. 291
TITLE 7 - AGRICULTURE CHAPTER 12 - ASSOCIATIONS OF AGRICULTURAL PRODUCTS PRODUCERS
-HEAD- Sec. 291. Authorization of associations; powers
-STATUTE- Persons engaged in the production of agricultural products as farmers, planters, ranchmen, dairymen, nut or fruit growers may act together in associations, corporate or otherwise, with or without capital stock, in collectively processing, preparing for market, handling, and marketing in interstate and foreign commerce, such products of persons so engaged. Such associations may have marketing agencies in common; and such associations and their members may make the necessary contracts and agreements to effect such purposes: Provided, however, That such associations are operated for the mutual benefit of the members thereof, as such producers, and conform to one or both of the following requirements: First. That no member of the association is allowed more than one vote because of the amount of stock or membership capital he may own therein, or, Second. That the association does not pay dividends on stock or membership capital in excess of 8 per centum per annum. And in any case to the following: Third. That the association shall not deal in the products of nonmembers to an amount greater in value than such as are handled by it for members.
-SOURCE- (Feb. 18, 1922, ch. 57, Sec. 1, 42 Stat. 388.)