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Feds Investigating Potential Milk Merger

a farm with a 'got milk?' logo

Milk consumption has decreased by 40 percent in the past four decades, as has the number of milk plants, down by about 600 from 1980 to 2018. (William Garrett/flickr)

They say don’t cry over spilled milk. But what about a massive milk merger?

When the country’s largest milk producer, Dean Foods, filed for bankruptcy late last year, the country’s largest dairy cooperative, Dairy Farmers of America (DFA) stepped in to discuss a merger.

Absorbing Dean’s operations could give DFA more than 60 percent share of fluid-milk sales in markets like Wisconsin, Minnesota and Iowa. 

The move triggered federal antitrust regulators to investigate if a merger could lead to an excessive concentration of milk buyers in parts of the country, and a potential loss of competition in the raw milk market. 

Dairy Farmers of America already buys some of the milk its own marketing arm sells, and some dairy farmers and antitrust experts say the acquisition of Dean would only exacerbate that conflict of interest, and make it impossible for small dairy farmers to survive an industry already in decline for years. 

Milk consumption has decreased by 40 percent in the past four decades, as has the number of milk plants, down by about 600 from 1980 to 2018.

Milk prices have bottomed out, shuttering more and more dairy farms, even in dairy-heavy states like Wisconsin, which lost 500 dairy farms in 2017. 

Simultaneously, major corporations like Walmart Inc. and Kroger Co. have introduced cheaper in-store brands and their own bottling plants, pressuring prices and in some cases reducing business for processors like Dean.

DFA and a group of bondholders are expected to bid on Dean’s assets next month.
 
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