Milk price fixing settlement angers farmers


Trouble is running through the dairy industry. Photo by NRDC, courtesy USDA. Some rights reserved.

As NPR reported this morning, the Dairy Farmers of America settled a lawsuit claiming it conspired with megaprocessor Dean Foods to keep milk prices down for its own farmer-members in the Southeast.  DFA is one of the country's largest milk cooperatives, with hundreds of farms in New York.  The settlement was for a whopping $158.6 million.

But the farmers were disappointed.  They wanted to get their day in court.  Veterinarian Sam Galphin of Raleigh, NC, told NPR the DFA-Dean allegiance is a "cartel":

When I started in North Carolina, there were 1,200 dairies. Today there are less than 300. In South Carolina, there were 800 dairies. Today there are less than 100.  That's not just consolidation.

DFA did not admit any wrongdoing.  CEO Rick Smith said the settlement was a good business decision because "inherently there's risk when you go to trial."

Dean Foods reached a $140 million settlement in response to related milk price fixing charges in the Southeast two years ago.  They settled an antitrust lawsuit in the Northeast again for $30 million in 2010.

There's growing unrest inside and outside the dairy industry as dairy farms disappear, small and large farms struggle to survive, and the big players consolidate into bigger players.  A New York Times article last year exposed Dean Foods and DFA executives making salaries in the tens or hundreds of millions of dollars.

In response to an interview I did recently about the perils of consolidation in the dairy industry, one spokesman for big time processors called the interview biased and distorted.  "Any claims brought stating processors and manufacturers are not paying a fair share, enough or too little are baseless," he wrote via email.

I shared this view with a lifelong dairy farmer, very mainstream, who's very well connected in the North Country dairy industry.  His reaction was simple.  "Bullshit," he said.

To read more (and there's a lot more) about the DFA-Dean Foods case in the Southeast, read this excellent blog post by Peggy Lowe over at our friends at Harvest Public Media.  She did the NPR story mentioned above.



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One Comment

  1. This settlement will likely be paid out of stockholders pockets, leaving those fellows with the really big paychecks untouched. Two years from now they'll be involved in some other racket, when they should be marking off the days on the wall of a cell.