Dairy Farmers of America (the country’s largest dairy cooperative) purchased Dean Foods, the largest milk processor in the country, for 433 million dollars. DFA was formed in 1998 by the merger of four regional cooperatives. Over twelve thousand dairy farmers were among the DFA members last year. They sold 56 billion gallons of milk, approximately twenty-five percent of total land. Revenues for the entire organization reached nearly 18 billion dollars. DFA was able to acquire Dean and gain unprecedented power as both a supplier of milk and buyer. Pete Hardin, editor-publisher of The Milkweed, a milk trade magazine, said to me that it was the “flagship of agricultural concentration” – which is what Big Ag has become.
DFA members and nonmembers have complained for years about the cooperative’s increasing market power. A dairy farmer in the Ozarks said, “The only reason that I’m with DFA because there isn’t any other place to go.” “They have an exclusive ten year contract with all bottlers within a likely three hundred miles radius.”DFA is therefore the only buyer of its milk. Monopsony, a business that has only one buyer is usually able to offer lower prices to its milk producers. He also said that when he began farming in 1970, there were more than a dozen local milk sellers to whom he could sell his milk. He said, “They kept getting pushed out.” “I have been working in steel for ten year now.”
At the national level the four largest milk co-operatives hold more than half of the market. This is partly due to the 1922 Act known as the Capper-Volstead Act which gives significant exemptions from antitrust laws to farmer-owned agricultural cooperatives. Allee A. RAMADHAN, an ex-Justice Department antitrust attorney who was involved in an investigation into dairy industry me, said that the agribusiness is unique from other industries because Capper-Volstead permits them to band together for reasons other people would not go to jail for.
Although small farmers have the right to collectively bargain over the sale and processing, many large cooperatives, such as DFA, are becoming more like corporations. DFA is home to a number of joint ventures and subsidiaries, but only 25% of its profits were paid directly by farmers, according the latest financial report. DFA is not required to disclose the salary of its executive, which is a departure from public companies. Kristen Coady is the senior vice president at DFA. She told me that DFA would not reveal any information regarding its employees’ compensation or salary “out of respect” for their privacy. The Times reported several years ago that Gary Hanman, founder of DFA, had access to a private plane and earned thirty-one million dollars over the seven years he served as CEO. This headquarters, worth twenty-five millions, includes a foot-high sculpture made out of milk, bocce and basketball courts, and a fitness centre. “Where’s the money going?” Peter Carstensen is an ex-Justice Department antitrust lawyer and expert on the dairy sector. “There is no transparency at cooperatives like DFA. It’s as opaque as possible. “
In the meantime, the DFA has paid out large sums of money in the form of fines and class actions by its own members. In 2008, Hanman, DFA, and another DFA executive agreed to pay a $ 12 million fine for attempting to manipulate milk prices on the Chicago Mercantile Exchange. Five years later, DFA paid a severance payment of one hundred and forty million dollars for allegedly fixing milk prices in the southeast. In 2016, she paid $ 50 million to a group of members who alleged the cooperative was involved in an illegal conspiracy to restrict competition, fix and suppress prices, and control the buying and selling of raw milk in the northeast; Last year it settled another lawsuit for an undisclosed sum with a separate group of dairy farmers from the northeast. Buying processors like Dean, which benefit from paying farmers lower milk prices, created a conflict of interest, according to DFA critics. One Elhauge, a professor at Harvard Law School, testified that the alleged conspiracy in this case lowered prices for all dairy farmers in the area, not just DFA members, by nearly eighty cents per 100 pounds of milk. (As part of each settlement, DFA denied any wrongdoing.) “DFA was so powerful in the industry no matter where you turned,” said Ramadhan. “Wherever they were there there were complaints.”
The increasing concentration of agriculture is not limited to the dairy industry. Since 1982, the four largest beef packers have gone from controlling about forty percent of the market to more than eighty percent. The four largest seed manufacturers increased their market share from twenty-one percent in 1994 to sixty-six percent in 2018. As a result, farmers pay more for inputs – seeds, fertilizers – and sell their goods at lower prices and less competitive buyers. “It’s like the farmers have become serfs again,” said John Peck, executive director of the nonprofit Family Farm Defenders. “They no longer have independence, no autonomy – they belong to the Lord.”
The pandemic has exposed the fragility of America’s consolidated food supply chain. Last April, when restaurants and schools had to close abruptly, the DFA asked some of their farmers to dump their milk, which resulted in millions of gallons being poured into dung lagoons. The sudden closure of slaughterhouses forced farmers to euthanize hundreds of thousands of pigs. And cruelty wasn’t limited to animals. Last spring, meat packers were responsible for six to eight percent of all COVID-19 infections in the United States, according to the Centers for Disease Control and Prevention; At a Tyson pork processing plant in Waterloo, Iowa, managers bet how many workers would get the disease.
Curt Meine, an environmental historian at the University of Wisconsin, Madison, believes that change has sparked a political backlash. In the last election, Donald Trump won rural America by a bigger margin than it did in 2016, receiving nearly two-thirds of the vote. “Concentration nurtured and fueled the politics of resentment, consolidated the power of companies, depopulated the landscape and weakened the autonomy and capacity to act of farmers, consumers, local governments and communities,” said Meine. Meine said, “I believe this is the heart of the rural-urban divide in politics.”
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