Dairy Farmers of America Inc., the leading U.S. dairy cooperative, faces federal antitrust litigation in New Mexico over its alleged scheme with another top agricultural co-op to drive down compensation for small farmers producing Grade A milk throughout the Southwest.
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A cow grazes in a pasture on Tuesday, July 3, 2018. Daniel Acker/Bloomberg via Getty Images

The lawsuit, filed Monday, accuses DFA of conspiring with Select Milk Producers Inc. “to stabilize and depress” pay for their farmer-members by sharing illegal price data through various joint ventures, skimming excess profits from milk “pooled” from several sources, and “unlawfully coordinating pricing.”

“DFA and Select Milk are exploiting their members for cheap milk to supply the cooperatives’ commercial divisions,” which focus on profitable consumer products like cheese and yogurt, while “failing to pass on the increased commercial revenues to their farmers,” the suit says.

The effect “has been devastating to many dairy farmers,” forcing them “to borrow from generations of equity build up on their land,” according to the complaint filed in the U.S. District Court for the District of New Mexico. “Many Southwestern dairy farmers have been forced to declare bankruptcy.”

DFA didn’t immediately respond to a request for comment Monday. Select Milk couldn’t be reached. A joint venture of theirs that’s named as a defendant, Greater Southwest Agency, also couldn’t be reached.

The proposed class action on behalf of dairy farmers adds a new dimension to an ongoing wave of cartel litigation involving agriculture, livestock, and protein that has already taken aim at the chicken, beef, pork, turkey, tuna, salmon, and eggs industries.

Like the milk case, most of those suits allege unlawful price coordination through exchanges of sensitive commercial information. The poultry and tuna sectors have been hardest hit so far, with several executives facing or serving prison time over the price-fixing allegations.

The new suit against DFA and Select Milk echoes multidistrict litigation over an alleged industrywide scheme to drive down pay for chicken farmers. Top poultry producers have begun settling those claims for tens of millions of dollars.

DFA has faced antitrust woes in the past, including a challenge to its rescue buyout of the top U.S. milk processor, the bankrupt Dean Foods Co., which the co-op resolved with a confidential settlement in February 2021. DFA and Dean previously paid $350 million in 2014 to settle price-fixing claims.

Cause of Action: Section 1 of the Sherman Act.

Relief: Treble damages, an injunction, costs, fees, and interest.

Potential Class Size: Dairy farmers who produced Grade A milk since 2015 in the southwestern U.S., as defined by DFA.

Attorneys: The farmers are represented by Peifer, Hanson, Mullins & Baker PA; Lockridge Grindal Nauen PLLP; and Hagens Berman Sobol Shapiro LLP.

The case is Othart Dairy Farms LLC v. Dairy Farmers of Am. Inc., D.N.M., No. 22-cv-251, complaint filed 4/4/22.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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