Chong H. Lee

Document Type

Thesis - Open Access

Award Date


Degree Name

Master of Science (MS)

Department / School



Like all levels of the dairy industry, the market structure and the competitive conditions in the processing and distribution of fluid milk in South Dakota have undergone substantial changes in the past two decades. The major structural changes have been the decline in the number of fluid milk processing plants and the expansion of the remaining plants. These changes in structure have resulted in a changed pattern of distribution for fluid milk. In the past years, fluid milk was distributed only in areas in close proximity to the plants, and a high percentage of the milk was delivered directly to consumers. As the processing of fluid milk has become centralized, milk processors' sales areas have increased. Some have radii of several hundred miles from the fluid milk packaging plants. Many of them have shifted their emphasis from home delivery to the stores. Currently less than one third of the total fluid milk sold in the United States is home delivered. Large processors whose major outlets have become large buyers also have grown and expanded their plant operations in order to hold their competitive positions. In order to meet the demands for a larger volume of milk by the large buyers and at the same time retain their competitive positions in the fluid milk markets, milk processors have increasingly employed competitive devices other than price. Most common among the practices employed have been non-price concessions in the form of advertising allowances and free or below cost equipment display services. This growing intensity in the competition for the accounts of large buyers coupled with the introduction of private label brands in recent years have undercut substantially milk processors' bargaining power. The result of these developments is that the fluid milk industry has become a dynamic industry in which the competitive conditions as well as the relations between fluid milk processors and large buyers have changed considerably. The above mentioned conditions characterizing the fluid milk industry in South Dakota have been evolving over the last several decades. Milk processors in South Dakota have been confronted with problems brought about by the interaction of these conditions. As the number of plants continues to decline adjustments to these conditions will involve more crucial decisions by management. This study focused on (a) the conduct of milk processing firms and their competitors, and (b) the reactions of milk processing firms to specific changes in the structural characteristics of the fluid milk industry in South Dakota.

Library of Congress Subject Headings

Milk supply -- South Dakota

Milk plants -- South Dakota


South Dakota State University Theses



Number of Pages



South Dakota State University