As a result of economies of size, food processors are generally large and few in number. These characteristics put processors at a bargaining advantage over independent farmers. Marketing cooperatives were established to counter the uneven bargaining position of individual farmers. This article investigates the relative bargaining strength of one milk marketing cooperative and several fluid milk processors. The Nash bargaining model can be used to analyze the negotiated price in the Florida fluid milk market which acts like a bilateral monopoly. The milk marketing cooperatives have bargained well with the milk marketing processors; The monthly bargaining strength of the Southeast Dairy Cooperative, Inc. (SDC), exceeds the monthly bargaining strength of the processors in all twelve months, ranging from a low of 0.6664 in January to a high of 0.7831 in September. The monthly average bargaining strength across all months for SDC is 0.7326.

A structural probit model is estimated to determine the change in the probability of selecting a milk handler. Cooperatives are thought to have lower prices and higher deductions than independent milk handlers and these factors reduce the probability that a farmer will select a cooperative by 0.39 and 0.32. Cooperatives are thought to have better services and an assured market and payment than independent milk handlers and these factors increase the probability that a farmer will select a cooperative by 0.20 and 0.26. This indicates that many cooperative members value monetary characteristics over non-monetary characteristics.