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US dairy coops to face ‘herd retirement’ price fixing lawsuit

By Mark Astley , 07-Nov-2012

US dairy coops to face ‘herd retirement’ price fixing lawsuit

A US lawsuit alleging that the practice of killing cows to increase the price of milk – known as ‘herd retirement’ – violates anti-trust laws will go to court after a motion to dismiss the case was rejected.

Cooperatives Working Together (CWT) and the National Milk Producers Federation (NMPF) will now face allegations that they have manipulated the supply of raw milk through the practice of ‘herd retirement’ since 2003.

According to the lawsuit, which was filed in September 2011 by plaintiffs Matthew Edwards and Georgina Browne, this practice has led to inflated milk prices in the US.

NMPF and CWT, which counts US dairy co-operatives including Land O’Lakes and Dairy Farmers of America as members, petitioned the court to dismiss the case on two fronts - on the grounds that the court lacked the jurisdiction to adjudicate the matter, and because the plaintiffs failed to state a claim.

The US District Court for the Northern District of California, however, declined to dismiss the case, but did note that the plaintiffs had not “plead facts in support” of their claims.

The court ordered that an amended complaint be filed by 15 November 2012.

“Disappointed” by decision

CWT is a voluntary farmer-funded national programme formed by the National Milk Producers Federation (NMPF) in 2003 to help preserve dairy family farmer businesses.

In a statement sent to DairyReporter.com, CWT voiced its frustration at the court’s decision, but has vowed to defend itself against the lawsuit’s “baseless” claims.

“Cooperatives Working Together (CWT) is disappointed with the Court’s decision not to dismiss the lawsuit at this early stage,” said the CWT statement.

“CWT now intends to defend itself vigorously and to defeat the baseless claim at trial. The real victims are the thousands of dairy farm families across the US whose independence and business decisions have been called into question."

“Dairy farmers remain committed to responsible animal husbandry and care deeply about the treatment and health of dairy cows. Cow comfort is not only important, but it is also imperative for milk production,” CWT added.

Dairy cows “removed”

The lawsuit alleges that CWT and its members have co-ordinated since 2003 to “limit the production of raw farm milk through premature ‘herd retirement’ in order to increase the price of raw farm milk.”

“The purpose and effect of the herd retirement program was to reduce the supply of raw farm milk in order to increase its price, which in turn increased the price paid by consumers for milk and other fresh milk products,” said the filed document.

It added that CWT financed ten rounds of herd retirement between 2003 and 2010, during which time it was responsible for the removal of more than half a million cows from production - reducing the US milk supply by 10bn pounds.

“By manipulating the supply of raw farm milk through herd management, price competition has been suppressed and prices have been supported at artificially high levels throughout the United States,” the September 2011 lawsuit added.

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