Photo: Leo Reynolds (Flickr)
A Long-Fought Battle
Following years of delays, a class-action lawsuit filed by dairy farmers against the Dairy Farmers of America (DFA) cooperative for alleged price-fixing has been settled out of court.
Not wanting to risk trial, DFA agreed to pay $158.6 million to farmers in the southeastern United States but did not admit any wrongdoing.
Conflict Of Interest
In 2007, farmers sued the DFA under antitrust legislation, arguing the organization conspired to fix milk prices in the Southeast. The charges stem from a deal the cooperative made back in 2001 with Dean Foods, the Dallas-based corporation behind many major dairy brands, including TruMoo, Land O’Lakes, Dean’s and Meadow Gold.
Farmers asserted that DFA and Dean Foods sought not only to eliminate competition in the southeast, but also to drastically reduce the prices the latter would have pay for raw milk.
DFA and Dean Foods executives may have also gotten rich out of the deal. According to an NPR report, Gary Hanman, DFA’s former CEO, was paid $31.6 million during the seven years he led the co-op; Dean Foods’ former CEO Gregg Engles pocketed $156 million.
Dean Foods was also named in another class action lawsuit by the dairy farmers, and settled its case in the summer of 2012 for $145 million.
Critics argue that while the settlement will provide farmers with some financial compensation, it does nothing to address the underlying problem that caused them to suffer financially in the first place.
“While it is nice that the farmers get some modest compensation for the harm that they suffered in the past, they remain at risk, as does the entire milk industry, by the failure to use this case to develop better, more open and nondiscriminatory access to markets for milk,” said Peter Carstensen, law professor at the University of Wisconsin Madison, to NPR.
Changes To Follow
Beyond the financial settlement, DFA has also said it will change its business practices in the Southeast, promising to work towards higher raw milk prices, to alter their fee structure with some bottling facilities, and not to enter into any new supply agreements.
The organization has also agreed to be more transparent in its business practices, especially with regards to price-related information.