Now is the difficult time to be a dairy farmer in America: The nationwide decline in milk consumption and the spread of trade war with China have put thousands of farms out of business.
Now the industry is close to one step in a major consolidation that some struggling farmers fear may make them more crippled.
Dairy Farmers, the country’s largest milk cooperative, is expected to receive scrutiny from American antitrust regulators on Monday that the bankruptcy milk company reached an agreement to buy “substantial portions” of Dean Foods.
Dairy envoys have argued that a combination will reduce competition and suppress raw milk prices. But the co-op says the deal will help farmers guarantee that there will be a buyer for milk at a time when nationwide milk consumption is declining.
Under the deal, American Dairy Farmers, a farmer-owned co-op, will pay $ 425 million to acquire Dean Food’s 44 facilities, as well as real estate, inventory and equipment to manage them. To proceed, the agreement must be approved by the bankruptcy court, in addition to supervising Dean Foods, who has been investigating potential affiliations for months.
Until now, much of the antitrust investigation has focused on the co-op’s evolving role in the American milk business. American Dairy Farmers was founded two decades ago to help small farmers market their raw milk to dairy processing companies like Dean Foods, which prepares milk for retailers to distribute.
But over the years, Co-Opt, which now has more than 5,8 members, has also invested heavily in processing, which means it buys some raw milk that sells its own marketing branch. These investments have created conflicts of interest, some dairy yeasts argue, because processors benefit from lower milk prices, and farmers benefit from higher ones.
Dean Foods, the largest milk processor in the United States with less than 60 manufacturing facilities and a portfolio of well-known brands such as the Trumau and Lehigh Valley, Filing for bankruptcy protection in November, plagued by consumer habits and a growing market for milk alternatives.
Dean Farmers ‘plans to acquire a larger share of Dean Foods’ wealth in the United States will significantly expand its processing activities, further aggravating the conflict of interest, Merger’s critics say.
However, not all dairy farmers are opposed. And the executives who negotiated the deal argued that the merger of the two milk giants would keep the market stable.
“It is important for our members to ensure continued safe markets for dairy and the minimum disruption to the dairy industry in the United States,” said Rick Smith, chief executive of American Dairy Foods, in a statement on Monday.
Dean Foods’ chief executive, Eric Berings, said in a statement that American dairy envoys “will continue to serve our customers with the same commitment to the quality and service they expect.”
Shortly before the civil filing, the Co-op has been discussing the possible acquisition of Dean Foods. At the same time, incredible judicial officials have investigated possible attachments and are talking to farmers and their representative lawyers about how a deal will impact milk pricing and competition.
In January, a lawyer for the department sent an email to farmers who sold raw milk to Dean Foods and asked to discuss the phone’s connection.
According to a copy reviewed in The New York Times, “We are investigating dairy farmers regarding the possible acquisition of Dane Pharma in America and the potential loss of competition for raw milk sales.”
The Texas Bankruptcy Court, which oversees the Dean Foods case, is scheduled for a March 12 hearing to review possible acquittals.
The potential Dean Foods Deal is not the only source of mistrust in the face of American dairy environments. Judiciary officials are talking to lawyers behind a lawsuit in Vermont that accused them of engaging in various forms of antitrust treatment, including agreements with other co-ops to prevent American dairy farmers from smuggling each other’s members.
Co-op denied the allegations. But in September, a judge allowed the case to proceed to trial and wrote in its decision that the plaintiffs presented evidence from which a “rational jury could conclude that DFA management was conducting its commercial activities and based on the interests of the farmer-members. Favoring the formation of an empire. “