Dairy Farmers of America in class action lawsuit over 'monopsony'

By Teodora Lyubomirova contact

- Last updated on GMT

GettyImages/174197278
GettyImages/174197278

Related tags: Lawsuit, Dairy farming, Milk

Northeastern dairy farmers have filed a federal class action lawsuit against Dairy Farmers of America (DFA), accusing the largest US dairy cooperative of violating federal antitrust rules.

The lawsuit alleges that DFA constrained the ability of Northeast dairy farmers to get raw Grade A milk to market other than through DFA. It argues that when DFA expanded into dairy processing, it favored its processor holdings’ interest in buying raw milk at the lowest prices rather than its members’ interest in getting them the highest price for their milk, thus creating a monopsony.

The lawsuit also states that DFA used its market power to create a price environment that pushed other dairy cooperatives ‘to the brink of insolvency’, leaving those cooperatives ‘with no choice’ but to join DFA through mergers.

DFA’s Northeast region comprises Vermont, New York, Connecticut, Rhode Island, Massachusetts, New Hampshire, Maine, New Jersey, Maryland, Delaware, and the majority of Pennsylvania, except for its westernmost portion

The complaint was filed in the United States District Court for the District of Vermont by the law firms of Lockridge Grindal Nauen P.L.L.P., Hagens Berman, and Scott+Scott Attorneys at Law LLP in July.

'Blatantly inaccurate' 

Responding to the allegations, Kristen Coady, senior vice-president of corporate affairs at DFA, commented: "The allegations brought fourth in the lawsuit filed in Vermont are baseless and completely without merit.

"DFA is a cooperative that was formed by, and is owned by, and is governed by dairy farmers. Any claim that a farmer-owned, farmer-governed cooperative is motivated to self-inflict damage on its member-owners is preposterous, irrational and blatantly inaccurate.

"Since DFA's formation, our farmer-owners have worked to build a cooperative that is strategically invested in assets to ensure milk markets and provide additional returns on their investment in their cooperative.

"We will, as we always have, continue to make decisions and take actions that are in the best interest of our farmer-owners - now and for generations to come."

Last updated on 3 August 09:29 BST to include Dairy Farmers of America's response.

Related topics: Manufacturers, Fresh Milk

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