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Justice Department probes dairy cooperative

Wednesday, November 17, 2004 - Bangor Daily News

PITTSFIELD - An investigation by the U.S. Department of Justice into allegations of anticompetitive practices by a company that controls a third of the nation's milk supply - and likely 80 percent of New England's - is growing more intensive, according to Maine farmers and dairy experts. The Kansas City, Mo.-based Dairy Farmers of America Inc., formed in late 1997 by the merger of four dairy co-ops, has been accused by farmers across the country of unlawfully trying to monopolize the nation's production and distribution of milk.

In August, the Justice Department hired Yale University to study DFA's Southeast network of dairy plants, milk bottlers and marketing agencies. That investigation recently expanded to include 12 additional states, including those in New England.

In Maine, DFA has milk distribution contracts with Horizon organic milk and Garelick in Bangor and has been active in recruitment in Maine.

Stan Millay, director of the Maine Milk Commission, said Tuesday that Dairy Marketing Services LLC of Syracuse, N.Y., handles all the milk in Maine for DFA and sells that milk to Oakhurst, Grant's and Hood's. In addition, said Millay, there are 20 to 21 actual DFA members in Maine.

Millay said DFA's influence is greatest in the South, where "they have gobbled up everything and can therefore pretty much pay what they want."

Nationally, a federal market administrator sets the minimum price for milk, Millay explained, but DFA can set what it wants for transportation and premiums. "That's where it really affects the farmers," Millay said.

Dairy farms have struggled in recent years as the industry has consolidated and imports have increased. In 1989, there were 203,000 dairy farms nationwide. Today there are 85,000. Maine's dairy farms now number around 390.

L. Hardin, editor and publisher of The Milkweed, an independent newspaper that monitors the country's dairy industry, has been calling for an investigation into DFA for years.

"Dairy competition has eroded on two vital fronts: far fewer buyers of farm milk, and far fewer firms processing and distributing packaged fluid milk," Hardin said Tuesday. "This declined competition is, in part, a deliberate strategy, and dairy farmers, consumers and competing milk marketers and processors all lose. Dairy Farmers of America, the nation's largest raw milk marketer, and Dean Foods, the nation's largest fluid milk processor, have rigged a system that controls the sale of one-third or more of U.S. farm milk."

Hardin said that in areas where DFA has far greater control of all farm milk than New England, such as the Southeast, producers' milk prices suffer dramatic underpayments as "DFA uses its market power as a tool used against farmers."

Hardin said the DFA "monopoly" has two effects - the underpayment of the dairy farmer for his or her milk and unduly high retail prices for consumers.

"In the coming turbulent times of food and energy cost inflation, it's socially inequitable to let money-hungry interests depress farmers' income and inflate consumers' costs," he concluded.

Bangor Publishing Company

www.bangornews.com/

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