While dairy farmers faced the worst crisis since the Great Depression, Dean Foods Co. reported a 31 percent profit increase for the quarter that ended June 30, and earned $64.1 million on sales of $2.7 billion that quarter. Dean Foods is the largest milk processor and distributor in the U.S., which a 2001 merger with Suiza Foods helped it become. Dairy Farmers of America, a dairy cooperative, controls about 30 percent of milk supply and sells milk to Dean Foods.
Farmers receive about $1 from every gallon of milk sold, and the rest covers processing and handling costs and profits to the processors and store owners profits. “No matter what you do, even if you give 110% every day on your farm from sun up to sun down, at the end of that day you will not have earned enough to pay your bills. It doesn’t get any more demoralizing than that,” said Joel Greeno, a Wisconsin farmer.
Senator Russ Feingold (D-WI) wrote a letter to the Department of Justice’s antitrust division about the dairy industry. “Based on our research and conversations with agricultural economists, we believe that one reason for Dean Foods’ recent profits may be its ability to exercise monopoly pricing power in many parts of the country,” Feingold said in the letter.”
During a September Senate hearing in St. Albans, Vermont about antitrust concerns in the dairy industry, Feingold mentioned the joint hearings scheduled in 2010 by the USDA and Department of Justice to “examine competition in the dairy industry.”
Feingold called the hearings a “good start,” but stated that they should “consider the entire dairy system and also bring in the Federal Trade Commission to consider concentration at the retail level, and the Commodity Futures Trading Commission to consider steps to ensure that cash markets for dairy markets are not manipulated.”
In 2003, then Vermont state representative, Tom Pelham wrote in an op-ed that change needs to occur in the dairy industry. “If we don’t seek a different course, the road we now head down inevitably leads to huge corporate farms, supplying huge corporate dairy processors, supplying huge corporate food retailers.”
Last month Pelham said, “Something is out of balance here. If you have an entity that controls that much of the marketplace, you need to break them up.”
“Parts of the dairy industry have experienced extensive consolidation in recent years,” said Assistant Attorney General Christine Varney. As a result, “the potential for an exercise of buyer power has increased.”
At the hearing, Varney said, “There is no doubt that we will prosecute that kind of activity should we find it.”