The evolution of the federated relationship between local and regional cooperatives is examined from the perspective of local cooperatives’ need for commodity-based farm supplies and regional cooperatives’ identity as food companies. Because locals want many competing bids for the supplies they purchase, they resist a strong and close affiliation with regional cooperatives, which then find themselves with excess capacity. Regionals have responded by instituting tighter bonds with selected local cooperatives operating as "internal supply networks," in exchange for certain benefits. This adaptation reduces the impact of divergent goals among regionals and locals within the federated system.