Dairy Farmers of America, Inc. (DFA) is a nonprofit organization that supposedly benefits its members, the dairy farmers who produce raw Grade A milk in the Northeast. But the complaint for this class action argues that it is instead a monopsony that works toward its own benefit and leaves its members operating on very thin margins.
The class for this action is all dairy farmers, both individuals and entities, who produced raw Grade A milk within the Northeastern US, as defined by DFA’s Northeast Area region, which consists of all of Vermont, New Hampshire, Maine, Massachusetts, Connecticut, Rhode Island, New York, New Jersey, Maryland, and Delaware, and most of Pennsylvania (except for the western portion), and who sold Grade A milk within the Northeastern US at any time between May 10, 2016 and the present.
A monopoly is a situation in which there is only one maker or producer of a product. A monopsony is a situation in which there is only one buyer for a product.
DFA is supposed to be a dairy farmers’ cooperative. The complaint alleges, “Its core function is to facilitate members’ collective bargaining with the dairy processors that purchase their raw Grade A milk … for a competitive price.” Instead, the complaint alleges, DFA has gone into dairy processing for itself, which creates a conflict of interest between what’s good for DFA and what’s good for its member farmers.
The complaint alleges that DFA could have worked this position to its members’ interest, running its processing operations to just break even. “Instead,” the complaint alleges, “DFA structured its business to thrive in a low-price, high-supply raw milk environment” that benefits the processors at the expense of its members’ profits.
According to the complaint, DFA’s “empire building” or acquisition of processing companies and facilities to build its monopsony power: “Over time, DFA has taken predatory and exclusionary actions to position itself as the sole conduit for Northeastern dairy farmers to get their raw milk to market, and to control Northeast raw milk processing capacity, the only market into which Northeast dairy farmers can sell their perishable product.”
The complaint alleges that, among other things, it has pushed other cooperatives out of the market, has bought up milk hauling entities that served non-DFA farmers, and has tried to manipulate Federal Milk Marketing Orders pooling rules. With these anticompetitive actions, the complaint asserts, DFA has stopped Northeast dairy farmers from getting their milk to market unless they become members of DFA, and in the meantime has kept members’ prices for milk low.
DFA has thus extended its monopsony power, the complaint claims, from roughly 40%-55% of the volume in the Northeast milk market to 50%-60%. DFA has been helped in establishing its monopsony by need to milk cows twice a day, the perishability of milk, and dairy farmers’ need to sell their milk nearly every day.
Article Type: LawsuitTopic: Antitrust
Most Recent Case Event
Dairy Farmers of America Milk Monopsony Complaint
July 29, 2022
Dairy Farmers of America, Inc. (DFA) is a nonprofit organization that supposedly benefits its members, the dairy farmers who produce raw Grade A milk in the Northeast. But the complaint for this class action argues that it is instead a monopsony that works toward its own benefit and leaves its members operating on very thin margins.
Dairy Farmers of America Milk Monopsony ComplaintCase Event History
Dairy Farmers of America Milk Monopsony Complaint
July 29, 2022
Dairy Farmers of America, Inc. (DFA) is a nonprofit organization that supposedly benefits its members, the dairy farmers who produce raw Grade A milk in the Northeast. But the complaint for this class action argues that it is instead a monopsony that works toward its own benefit and leaves its members operating on very thin margins.
Dairy Farmers of America Milk Monopsony Complaint