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U.S. reportedly
investigating KC dairy co-op
By ANDREW
MARTIN Chicago
Tribune
WASHINGTON — The nation's largest dairy cooperative is under
investigation by the Antitrust Division of the Department of
Justice, according to several dairy farmers.
Farmers interviewed as part of the inquiry said the Kansas
City-based Dairy Farmers of America is being investigated for trying
to corner the raw milk market in several regions of the country.
The cooperative markets milk for one-third of the nation's dairy
farmers. Critics have long complained that the cooperative has grown
by using predatory practices that violate federal antitrust
laws.
Justice Department officials declined to comment.
David Geisler, the co-op's legal counsel, said the department has
not contacted the cooperative about its investigation. But he said
that in the six years since the Dairy Farmers of America was formed,
the department has frequently reviewed the cooperative's
acquisitions and mergers.
“In many ways, the government is fairly active in a number of
businesses, and the milk business is one they have been involved
with historically,” Geisler said. “It's a sensational,
attention-grabbing headline. I think it's viewed by us as part of
our normal business operations.
“If we are contacted, we plan on cooperating.”
He denied that the cooperative is trying to monopolize the raw
milk market. He noted that the government has repeatedly reviewed
the cooperative's actions and not charged it with any
violations.
Several dairy farmers in Louisiana said two federal prosecutors
and a Justice Department economist met with about 15 dairy farmers
and their wives on Aug. 5. Representatives of the attorneys general
in Florida and Louisiana also participated, the farmers said.
Officials from those offices in Florida and Louisiana did not
return messages seeking comment.
The prosecutors asked the dairy farmers about their experiences
with the cooperative, which markets raw milk for an estimated 90
percent of the dairy farmers in eastern Louisiana, said Jerome
Walker, a dairy farmer at the meeting.
A company partially owned by the cooperative is trying to buy a
milk plant in Hattiesburg, La., that is one of the few remaining
plants that buys milk from independent dairy farmers, including
Walker and the other meeting participants. The sale is awaiting
approval from the Justice Department.
Among the complaints against the cooperative is that it acquires
exclusive rights to supply milk to processors — and then allegedly
prohibits other cooperatives and independent farmers from selling
milk to those processors unless they affiliate with the Dairy
Farmers of America, several farmers said.
Joseph Wright, president of Southeast Milk in Florida, said his
cooperative has been asking federal authorities to investigate the
Dairy Farmers of America for 18 months and only recently was told a
formal investigation is under way.
Wright said his cooperative had to start paying the Dairy Farmers
of America $3.5 million a year last year to continue selling milk at
two bottling plants where the Dairy Farmers of America acquired
exclusive supply agreements.
Peter Hardin, editor of The Milkweed, a dairy industry
publication, said the Dairy Farmers of America has gotten so large
that dairy farmers no longer control it or benefit from its rapid
growth. Much of the money that the cooperative generates is plowed
into expansion rather than back to its members, he said.
“Money that was the farmers' originally goes to buy these
businesses, but then they don't share in the profits,” said Hardin,
whose publication is a frequent critic of the cooperative.
The Dairy Farmers of America was created in 1998 by the merger of
four large dairy cooperatives. It has 13,445 member farms and
markets 57 billion pounds of milk a year, one-third of the nation's
milk production.
First glance
• Several dairy farmers say the
Kansas City-based Dairy Farmers of America is under investigation
for trying to corner the raw milk market in parts of the
country. |