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Dairy farmers frustrated with ever-eroding
profit margins and possible antitrust violations in the industry
will get a chance Friday to voice their concerns to federal
regulators in "America's Dairyland."


      U.S. Agriculture Secretary Tom Vilsack and Assistant Attorney
General Christine Varney, the department's chief antitrust
investigator, were scheduled to host the roundtable discussion in
Madison, Wis., a state where dairy is a $26 billion a year
industry.


      Regulators in the Obama administration have promised to be more
aggressive in enforcing antitrust laws at a time when large
agricultural companies have purchased smaller competitors and
consolidated market share. Dairy farmers complain that while
customers pay more than ever for milk and cheese in the store, the
money producers receive is flat.


      "The pricing system and the marketing system are simply not
getting that money back to the farmer, where it is direly needed,"
said dairy analyst Pete Hardin, who publishes industry newsletter
The Milkweed. "The consumer is paying very liberally at the store
for dairy products. At the farm, the farmer is getting milk prices
that were akin to what he was getting 30 years ago."


      Milk prices have fluctuated wildly. A chart that Hardin intends
to present based on USDA data shows prices farmers are getting for
milk are roughly the same that they got in 1979.


      "They want to know who's making all the money," said U.S. Sen.
Russ Feingold, D-Wis., who plans to attend the hearing.


      Dairy farmers, other elected officials, experts in the field,
lobbyists and others were scheduled to participate in the hearing
that could help determine how the Obama administration redraws its
antitrust policy.


      The hearing is the third of five planned by the departments of
Justice and Agriculture. Previous ones focused on crops, hogs and
poultry.


      The DOJ antitrust division has done virtually nothing in the
past 15 years to stop market consolidation in the dairy industry,
Hardin said.


      During that time large companies like the nation's largest dairy
Dean Foods, a Fortune 500 company with brands including Horizon
Organic and Land O'Lakes milk, have expanded their market share to
about 40 percent nationwide, Hardin said.


      Adding to the consolidation is the growth of the Dairy Farmers
of America, a co-op that has 17,000 members, Hardin said. Farmers
are pressured to join the co-op or not be in a position to market
their product, he said.


      The DFA has contractual ownership relationships with Dean and
the nation's other two largest milk processors - National Dairy
Holdings and HP Hood - resulting in a restricted market for dairy
farmers, said Peter Carstensen, a University of Wisconsin-Madison
law professor and expert in antitrust law and competition policy.


      That arrangement has led to antitrust lawsuits against Dean and
DFA, including one filed in January by DOJ.


      U.S. Attorney General Eric Holder and Vilsack have said at
previous hearings that they're looking at developing broad policies
to ensure big companies don't have too much sway over prices they
pay farmers and charge consumers.


      Four DFA representatives were scheduled to participate in
Friday's hearing. The group's vice president, John Wilson, issued a
statement saying it was natural at a time when dairy prices are
down to question the system.


      "A very small but vocal minority distorts the reality and value
that today's cooperative structure brings to dairy farmers,"
Wilson said.


      In April, the DFA was sued in federal court in Illinois by a
dairy producer, cheese distributor and cheese manufacturer alleging
that the co-op engaged in a conspiracy to manipulate the cheddar
markets at the Chicago Mercantile Exchange.


      In October, Northeast dairy farmers filed a federal class-action
lawsuit against Dean Foods, HP Hood, the DFA and its marketing
co-op, alleging that they monopolized the milk market in their area
and forced producers to join the co-op or its marketing affiliate
to survive. Dean and DFA were also sued in 2007 in a class action
lawsuit alleging that they engaged in price fixing to lower prices
paid to farmers in the Southeast.


      DFA and Dean have denied they engage in price fixing and called
the lawsuits baseless.


      In January, the Department of Justice office, along with
attorneys general from Illinois, Michigan and Wisconsin, filed an
antitrust lawsuit against Dean Foods, alleging it purchased a
smaller dairy company in Wisconsin, Foremost Farms, to quash
competition.


      Dean Foods, which according to the lawsuit has acquired more
than 100 smaller companies since 1996, has called the complaint
unsound. Dean gained 57 percent market share in parts of Michigan,
Illinois and Wisconsin through the deal.
      

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Dairy farmers frustrated with ever-eroding
profit margins and possible antitrust violations in the industry will get a chance Friday to voice their concerns to federal regulators in "America's Dairyland."

US regulators examine dairy industry competition

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