Business

Farmers allege milk-price conspiracy

Scott Williams checked equipment at his old dairy farm in  Taylorsville. The third-generation dairy farmer gave up the  milking operation last fall and took a full-time municipal job.
Scott Williams checked equipment at his old dairy farm in Taylorsville. The third-generation dairy farmer gave up the milking operation last fall and took a full-time municipal job. AP

LOUISVILLE — Dairy farmers across the Southeast have sued Dean Foods and others in hope of proving what they claim is a conspiracy to drive down the price they're paid for milk.

The lawsuit is scheduled to be tried in June in U.S. District Court in Greeneville, Tenn.

Dairy farmer John Kalmey told The Courier-Journal of Louisville that there is no competition for milk in the Southeast. Kalmey said many farmers are barely breaking even. The farmers contend that Dean and cooperatives that are major buyers worked together to keep prices artificially low, in part by buying bottling plants and thereby limiting competition.

Dean spokesman Jamaison Schuler said that farmers have many outlets for raw milk at competitive prices and that competition flourishes in the dairy industry.

"We have every incentive to ensure that independent dairy farmers are economically viable," Schuler said.

Dean Foods offered to pay $30 million in December to settle a similar case with dairy farmers in the Northeast, but a Dean official said recently that the company views the case in the Southeast as separate.

In the lawsuit, the farmers claim Dean Foods and the other defendants tried to reduce competition and lower prices by working together by buying and closing milk processing plants.

The options for Kentucky farmers mainly consist of Dean or plants that buy through a farmers' cooperative called Dairy Farmers of America and its partners, said Maury Cox, executive director of the Kentucky Dairy Development Council.

Dean is the nation's largest milk processor, and Dairy Farmers of America is the largest milk cooperative.

The lawsuit also contends the defendants conspired by having Dean accept milk only from dairy farmers who joined the marketing associations that the plaintiffs say are controlled by Dairy Farmers of America.

Scott Williams of Taylorsville, a third-generation dairy farmer, had enough last fall and took a full-time job with the city water department.

"Milk just wasn't paying the bills and, as much as I hate to, I had to get out of it," Williams said.

Consumers might not notice the effect of the lawsuit, whatever the outcome, because milk prices in grocery stores have been far less volatile.

"Whatever changes at the farm level is going to be watered down at the retail level," said Brian Gould, a professor at the University of Wisconsin's dairy research center.

The farmers sued Dean four years ago in federal court, seeking to represent about 7,500 producers who sold milk in the Southeast since 2001. The region, defined by a federal marketing program that aims to set a floor price for milk, includes almost all of Kentucky.

The defendants include Texas-based Dean; Kansas City-based DFA; and marketing agencies affiliated with Dairy Farmers, including Louisville-based Southern Marketing Agency.

The case is one of several claims being made across the country against Dean. The U.S. Justice Department and the attorneys general of Wisconsin, Michigan and Illinois also have filed a federal lawsuit claiming that Dean's purchase of regional milk plants violated antitrust laws.

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