Thursday, October 03, 2019

Farmers' case against huge dairy co-op to go to trial

"A collection of dairy farmers who allege anti-competitive conduct by the nation’s largest dairy cooperative will take their case to a jury trial. A U.S. district court judge late last week denied a motion for summary judgment — which would have wrapped the case up without trial — from defendant Dairy Farmers of America," Leah Douglas reports for Successful Farming. DFA is the largest dairy co-op in the nation, representing about 30 percent of the fluid milk market in the U.S.

More than 115 Northeastern farmers sued DFA, alleging that the company and its marketing arm, Dairy Marketing Services, illegally conspired to corner the fluid milk market and that their growing business as a milk processor has created a conflict of interest in how they generate income, Douglas reports.

"Specifically, farmers allege that DFA and other cooperatives upheld an agreement not to poach one another’s farmer-members; shared information about how much they were paying farmers for raw milk in order to discourage competition, resulting in lower prices; and ensured that those low prices were maintained across the market by entering into supply agreements with top dairy processors, including Dean Foods, H.P Hood, Kraft, and others," Douglas reports.

A favorable verdict for the farmers could have big implications for dairy and other ag co-ops. Such co-ops are exempted from some anti-trust scrutiny under the Capper-Volstead Act, but a ruling in favor of the farmers would mean DFA's actions violate their end of the deal that allows them that immunity. "Dairy cooperatives have increasingly been under scrutiny from farmers who say that they operate more like profit-seeking corporations than entities intended to insure farmers’ livelihoods," Douglas reports. "DFA reported net income of over $108 million in 2018, even as more than 2,700 dairy farms went out of business across the country. Cooperative executives’ salaries can reach into the millions."

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