NEW ORLEANS - The nation's biggest dairy cooperative is under investigation by federal antitrust officials reportedly in connection with its expansion in the South with the purchase of an Alabama company.

Last week, the U.S. Justice Department told Dairy Farmers of America Inc., that it was under investigation for "alleged anticompetitive conduct in the raw milk market," said DFA spokeswoman Agnes Schafer. Schafer said the Justice Department did not say what prompted the probe. Justice Department officials declined to comment.

Independent farmers said the probe was connected to the purchase of the Dairy Fresh Corp., a company based in Greensboro, Ala., with milk processing plants in Mississippi, Louisiana and Alabama.

Schafer said that in November 2003, Dallas-based milk processor National Dairy Holdings - of which DFA owns half - bought Dairy Fresh.

Farmers across the country charge that DFA, which controls about a third of the nation's supply of milk, is in the business of creating a monopoly and forcing independent processors and farmers to earn less.

On Aug. 5, Louisiana and Florida farmers said they met with antitrust investigators in Franklinton to discuss the purchase of the Dairy Fresh plant in Hattiesburg, Miss. The Justice Department has declined to comment on the case.

"We have one cooperative that controls 90 percent of the milk in the Southeast. Any time you have one entity controlling 90 to 95 percent of the milk in one area, you look at it and tell me: Is that good or is that bad?" said Jerome Walker, a Franklinton farmer actively opposing DFA's expansion. He has been sending his milk to the Hattiesburg, Miss., plant.

Schafer said the purchase of Dairy Fresh has been approved by federal officials. But Walker disagreed, saying that the Justice Department still is looking into.

This is not the first time DFA has been accused of trying to corner the market.

In September, the cooperative is expected to go to court in Kentucky to defend itself against charges that it has a monopoly on milk sales in dozens of school districts in Kentucky and Tennessee.

The Justice Department also has looked into the merger of milk processors H.P. Hood of Chelsea, Mass., and National Dairy Holdings.

And Southeast Milk Inc., a cooperative of farmers in Florida and Georgia, is in a dispute with DFA over how much farmers get paid for their milk at two Florida plants that DFA has an interest in.

Calvin Covington, chief executive officer of Southeast Milk, said DFA forced Southeast Milk farmers to take less money for their milk at the two plants.

"There are only so many plants to go to, and when we have a surplus, we have to use the plants," Covington said. "We don't mind competition, we just think competition should be on a level playing field."

Schafer said the Justice Department has repeatedly reviewed DFA's actions and not charged the cooperative with any violation.

"The DOJ has, historically, been interested in the milk business. This is the reality of doing business in today's dairy industry. So, DFA views this as business as usual," Schafer said.

Walker said the 70 independent dairy farmers in southeast Louisiana who sent their milk to the Hattiesburg plant stand to lose a lot of money because operations where DFA is involved allegedly pay farmers less.

DFA denies that and said the cooperative, which is made up of about 20,000 farmers, looks out for farmers' interests.

"We have been in existence for a long time and by far - by far - the majority of the members are pleased with the cooperative," said Don Schriver, DFA's executive vice president.

Dairy farms have struggled in recent years as the industry has consolidated and imports have increased. Ten years ago in Louisiana there were about 1,000 dairy farms. Now there are about 340.

It's the same story nationwide: In 1989, there were about 203,000 dairy farmers. Today, that number has dropped to about 85,000.

Schafer said farmers in four major cooperatives got together six years ago and formed DFA to resolve their problems.

"We are a cooperative marketing milk for farmers trying to find innovative ways so they can find ways to survive in the changing marketplace," she said. "Farmers know they have to market their milk efficiently, and they have to do that through a cooperative."

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Diary Farmers of America Inc.: http://www.dfamilk.com/