Antitrust investigator hears concerns from upstate dairy farmers

Department of Justice head of antitrust investigations heard concerns of upstate New York dairy farmers regarding lack of competition and disparities in low prices paid to farmers versus high consumer prices on Monday.

Christine A. Varney, Assistant Attorney General in charge of the Department of Justice's (DOJ) Antitrust Division, came to Batavia, New York to meet with upstate New York dairy farmers and consumers to explore potential anticompetitive practices in the dairy industry. Varney is the nation’s top antitrust investigator and she is coming to New York following a request by Schumer. The specific areas of focus include excessive market concentration, marketplace transparency and vertical integration in the dairy industry. Schumer joined Varney at the meeting on Monday, March 29th at the Genesee Community College in Batavia.

“For too long farmers have been receiving rock-bottom prices for their product, while prices have not dropped commensurately for consumers at the stores,” Schumer said in a press release. “It just doesn’t add up and we need DOJ’s help to peel this onion and identify some of the problems plaguing our family dairy farmers and milk consumers."

Nationwide, dairy prices hit historic lows last year, threatening the viability of countless dairy farms. At the same time, the amount of revenue dairy farmers receive per dollar consumers spend on milk has precipitously declined. Although the price that dairy farmers are paid remains lower than in nearly four decades, less than $1 for a gallon of milk in past summers, the cost that consumers pay for milk in stores remains relatively high. As a result of these plunging prices, family dairy farms across the country have gone out of business or are in severe danger of doing so. This is a disaster not only for the thousands of rural communities that rely on economic activity generated by the dairy industry but also for the many consumers who want fresh and locally produced food. Further, a reduction in the diversity of wholesale milk suppliers could lead to further concentration in the dairy industry, concentrating market share – and pricing power – in the hands of a very few operations, an outcome that would weaken the interests of both dairy farmers and consumers.

Schumer added, “Dairy is among New York’s most important industries and we simply can’t afford to lose dairy farms or the products they supply. We must work to ensure a fair and competitive dairy market.”

According to one report, "Dean Foods manages large portions of the market for fluid milk in a number of regions of the United States controlling approximately 90% in Michigan, about 80% in Massachusetts, 80 to 90% in Tennessee, 70% in New England, over 80% in Northern Alabama, and over 70% in northern New Jersey. Schumer said that without such concentrated market conditions, farmers would have greater options as to where they sell their product and would see higher prices on the farm, while consumers would see more competitive prices in the store."