US Senator Bernie Sanders has called for a Justice Department investigation into Dean Foods for potential antitrust violations, accusing the dairy company of profiting as dairy farmers suffer.
Dean Foods is one of the largest dairy processing firms in the US, and according to Sanders, the Justice Department should investigate whether the company has a monopoly grip on the market.
Request for “a very serious look”
Last week Sanders spoke with Assistant Attorney General Christine Varney, the antitrust division chief, to request “a very serious look” at Dean Foods.
The Vermont senator said Dean Foods buys about 70 per cent of the fluid milk in New England and has been recording massive profits as dairy farmers struggle to stay afloat.
At the end of 2008, Dean Foods reported adjusted quarterly operating income of $184m, the highest in its history.
The company has also been busy expanding its sizable frame, buying Alpro, the European soy-based beverage and food arm of Vandemoortele, for about €325m.
While Dean Foods continues to increase its profits, milk prices have taken a tumble. At a press conference in his offices, Sanders said: “Farmers have seen the price for their milk drop from $19.50 per hundred pounds a year ago to less than $11 in June. Meanwhile, Dean Foods’ profits climbed from $30m in the first quarter of 2008 to $76.2m for the first quarter of 2009.”
However, Dean Foods denies any wrong doing. Associated Press quoted a company spokesperson saying the US Department of Agriculture largely sets the price of milk and that supply and demand is contributing to the low price.
Pressure on governments to offer support
The US government is under pressure to take action to intervene in order to bolster prices. Sanders has spoken with U.S. Agriculture Secretary Tom Vilsack about increasing price supports paid to dairy farmers.
The EU is also under pressure to halt the decline in milk prices. Thousands of dairy farmers took to the streets of Strasbourg this week to call on the new President of the EU Parliament to take action against low prices and deregulation.
The farmers were calling for the milk quota to be increased by 5 per cent to help push prices up. Brussels has already introduced a range of measures to sure up the European dairy market, including the reinstatement of export subsidies.
These have been greeted with anger from governments in the US, Australia, and New Zealand who have written to Brussels in protest. They say the measures go against the spirit of the G20 agreement to avoid protectionism in the face of the financial crisis.