The dairy market environment in the United States of America and in Europe is changing partially due to a change in policies supporting free markets. The effect of the change in the dairy market environment in the United States and Germany on cooperative organization, competition, and price risk management is elaborated in this thesis by means of a literature survey including governmental documents, industry documents, and published scientific articles. The thesis provides a closer look to the interaction between two players within the dairy market chain, i.e. the farmers and the processors. Both players are confronted with increasing accessibility of the markets which increases the importance of trade and increases the volatility of the price. Dairy cooperatives transform their organizational structure in order to adapt strategies to cope with the increasing international competition. However, the consolidation present on the procurers‟ side of the market puts dairy farmers in a weak bargaining position. Policy makers are aware of these malfunctions within the market and are suggesting alternative policies that are conform to the World Trade Organization negotiations. The stimulation of producer organizations, interbranch organizations and the use of futures markets and contracting to reduce price risk are advised by the European Commission and the United States Department of Agriculture. The market changes and policy changes create opportunities for farmers and processors in both countries to diversify and to increase production. Processors have the opportunity to become world players