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Dairy Industry Making a Killing, by Killing Cows?

Lawsuit alleges massive price-fixing scheme

Opinion

If you think you’re paying too much for a gallon of milk these days, it could be the result of an elaborate price-fixing scheme, according to a recent class action that charges the dairy industry with federal antitrust violations, among other claims.

The case was instigated by the animal advocacy organization Compassion Over Killing whose research revealed that, between 2003 and 2010, more than 500,000 young cows were slaughtered under a “dairy herd retirement” program, in an effort to reduce the supply of milk and inflate prices. The group also alleges that the program “bought out smaller farmers and instructed them to kill their entire dairy herds, unfairly increasing the profits of agribusiness giants.”

Cooperatives Working Together aka Big Dairy Front Group

Front groups tend to give themselves a warm and fuzzy name and claim to represent the little guy, but in reality are doing the bidding of big business. Enter Cooperative Working Together, the main defendant in the price-fixing lawsuit.

According to its website, CWT “is a program designed exclusively by America’s dairy farmers for the benefit of America’s dairy farmers.” Nice job, getting the word farmer in there twice. However, its leaders are anything but.

The program was started by the National Milk Producers Federation, a powerful trade group whose mission you gotta love: “Connecting Cows, Cooperatives, Capitol Hill, and Consumers.” This lobbying association represents 32,000 dairy producers in 31 cooperatives. (The dairy industry is a complex web of interlocking cooperatives, trade groups, and mega-corporations.)

CWT’s “herd retirement” program, aka, sending cows to slaughter, was funded by its members, who represent 70 percent of the dairy industry. According to the complaint, each member agreed to pay assessments to CWT, which would then in turn pay some members to prematurely retire their herds, to “strengthen and stabilize” raw farm milk prices for all members of CWT. And of course, CWT got a nice cut of the action too. In 2009, for example, CWT membership generated $219 million for CWT, while the group spent $217 million on herd reductions.

According to the complaint, the cow-killing scheme was a huge success in reducing the supply of milk and increasing prices paid by consumers:

CWT financed ten rounds of herd retirements from 2003 to 2010, during which CWT was responsible for removing over 500,000 cows from production, reducing the nation’s milk supply by approximately 10 billion pounds…. By the end of the program in 2010, it was responsible for a cumulative increase in milk price revenue of $9.55 billion.

Furthermore, even though the program ended last year, economic research demonstrates its impacts into the future, such that “dairy farmers are still significantly profiting from previous herd retirements.”

The complaint concludes that “by manipulating the supply of raw farm milk through herd retirement, price competition has been suppressed and prices have been supported at artificially high levels throughout the United States.”

USDA Manipulating Dairy Prices for Decades, Also by Killing Cows

Wondering where the dairy industry got the crazy idea to kill cows to raise prices? It may have come from Uncle Sam himself. The federal government has a long and sordid history of dairy price supports, most of which is so complex you need a PhD in economics to even begin to understand it.

But in a nutshell, the dairy industry (like most of agribusiness) does not base its production decisions on normal supply and demand principles. This is largely thanks to the U.S. Department of Agriculture making a habit of purchasing surplus dairy products when supply gets too high. Guess where all that excess cheese, butter, and milk goes? Yup, it gets dumped on the poor through USDA’s food assistance programs such as school lunches.

According to a 1989 General Accounting Office report on dairy pricing:

In 1988, USDA spent approximately $1.16 billion to purchase 9.7 billion pounds of surplus dairy products. In 1987 and 1988, over half of the surplus dairy stocks were distributed through domestic and foreign food assistance programs.

But it seems this program got too expensive, so in 1985, Congress authorized the “Dairy Termination Program” – a more honest description than “herd retirement.” It removed a staggering 12 billion pounds of milk over an 18-month period, and the USDA took “bids” from farmers on how much they were willing to be paid to slaughter their cows. To help pay for the program, producers were assessed a fee, much like how the CWT program operated. One big difference being the feds lost money on the operation. And, of course, federal government programs are not subject to anti-trust laws, while private entities are.

By the end of the program, some 1.6 million dairy cattle were either slaughtered or exported, more than three times the number alleged in the current class action. The GAO report concluded that the Dairy Termination Program resulted in both lowered milk production and lower dairy surplus purchases by the federal government. (Remember, the main concern was how USDA was spending too much money buying up excess milk.) However, these positive economic effects appeared to be temporary and GAO predicted that Congress would once again have to come up with new ways to curb overproduction by the dairy industry.

Fast forward to today and that’s exactly what Congress is still doing. On the table right now are several proposals to manipulate dairy prices. For example, “The Dairy Security Act of 2011″ (H.R. 3062) would replace the current dairy price supports called the Milk Income Loss Contract (or MILC – how cute) with a new program called the Dairy Market Stabilization Program.

But wait, there’s more. The Dairy Producer Income Protection Act of 2011 (S. 1714) is not to be confused with The Dairy Advancement Act of 2011 (S. 1682) or The Federal Milk Marketing Improvement Act of 2011 (S. 1640).

The current state of federal dairy policy is so complex it took a convoluted diagram in this Congressional Research Service report to explain it, and even then … Suffice to say, the government is deeply involved in dairy pricing and that’s not going to change anytime soon given the high stakes and powerful lobbying.

Big Dairy on the Defense

The antitrust class action complaint was filed against several huge players in the dairy industry, including the National Milk Producers Federation aka Cooperatives Working Together. Also named are the Dairy Farmers of America (another massive trade group) and three huge cooperatives: Dairylea Cooperative, which calls itself the “largest milk-marketing organization in the Northeast,” selling more than six billion pounds of milk annually; Land O’Lakes, the second largest cooperative in America, producing 12 billion pounds of milk annually with $11 billion in sales in 2010; and Agri-Mark, representing 1,300 dairy producers in New England and New York State.

Cooperatives Working Together has denied any allegations of price fixing. The formal response from CWT contains three predictable parts:

Part 1, claim to represent family farmers: “Cooperatives Working Together was created in 2003 as a self-help initiative to assist family dairy farmers and members of dairy cooperatives who were losing money producing milk.”

Part 2, denial: “The program was designed and has always been operated in a manner fully consistent with the anti-trust laws of the United States.”

Part 3, shoot the messenger while seeking to marginalize: “The lawsuit filed yesterday in California at the instigation of a west coast animal rights group is without merit.”

CWT can’t even get its facts straight. Compassion over Killing is in fact based in Washington D.C., with an office in Los Angeles. But “west coast animal rights group” sounds so much more nefarious. It’s common for Big Agribusiness to attempt to marginalize groups that expose animal harm; name-calling is so much easier than responding to the merits of the allegations.

Cheryl Leahy, Compassion Over Killing’s general counsel, makes no secret of her organization’s concern for animals: “The dairy industry has consistently shown its lack of regard for animal welfare and the environment,” she said. “Now it’s milking its own consumers by unlawfully jacking up prices. The dairy industry must be held accountable for these illegal profits.”

Let’s hope so.

The Seattle-based law firm that filed the case, Hagens Berman, is interested in hearing from consumers who purchased milk or milk products from 2004 to the present. You can contact them here. Also Compassion Over Killing has posted additional information about the case here.

——————-

Michele Simon is a public health lawyer specializing in industry marketing and lobbying tactics. She is the author of “Appetite for Profit: How the Food Industry Undermines Our Health and How to Fight Back” and president of Eat Drink Politics, a consulting firm. Her website is Appetite for Profit.

© Food Safety News
  • http://www.foodsafetynews.com/2011/11/dairy-industry-making-a-killing-by-killing-cows/ Albert Chambers

    It was hard to find the “food safety” slant in this story. Animal welfare maybe, and vegan for certain, but not food safety!
    afc

  • Lucas

    Wow, didn’t think FSN would be printing this garbage. Your credibility just went down in my book. As the other commenter said, this has nothing to do with food safety.
    It has everything to do with animal rights, which if that’s what you want you might as well kiss your website goodbye because these people (HSUS affiliates) want to put the people who make food safe out of business. Really disappointed that you’re allowing non-food safety O&CA from Ms. Simon and HSUS.
    Stick to the food safety, these whacks don’t need another outlet for their rhetoric. Let the New York Times report on that crap.

  • Michael Bulger

    From an animal welfare standpoint, keeping milk prices high has some positive effects. If the profit margin on milk drops, farmers are forced to increase production or cut corners to earn a living. This could be seen as encouraging mega-dairies, less individual monitoring of cows, potentially less space for cows, possible increase in infection opportunities, etc.
    So, if farmgate prices for raw milk are an issue, care needs to be taken to ensure that the price a dairy gets for its milk doesn’t force it to lower the quality of its operation. This could have negative effects on environment, animal welfare, and public health.
    Also, as I understand it, farmers are granted antitrust exemptions in some situations. Processors, who are fewer in number and can potentially exert more market power in between farmers and consumers, are the usual suspects under the Sherman Act. Agricultural cooperatives are supposedly exempt from antitrust laws in order for farmers to join together to obtain more bargaining power in the face of consolidated buyers. Similar to a labor union.

  • Richard Ross

    The only way for a monopoly to exist is if the government allows it to exist either by law or it’s own actions. Who says what the price of milk is? The government, the dairy farmer? Wake up,,, this is the governments doing and another action that is not in the best interest of the consumer.
    As for price fixing, if something is priced too high, the consumer will not buy. And with the participation of the government in price supports, as spoken about in the article, we see the government interfering with the market. If we want the price of something to go down, there must be more supply than demand. Pretty simple.

  • Judy Montez

    I also am disappointed that Food Safety News would feature this poor excuse for an article as worthy information pertinent to food safety or to news. I have noticed other articles by Michele Simon and none have been worthy of publishing. Simon cannot seem to elevate her intellect above cheap spin. Hateful, bitchy spin at that. I will no longer peruse Food Dafety News. Too bad because I enjoyed and respected this blog until Simon ruined it with her perpetual PMS crankiness.

  • Leon

    This is a classic manipulative hit piece that would have gone unanswered in the days before the internet when a small left wing group controlled the media. Now the silent majority can speak out in forums like this.
    How bizarre is it that these people think that big government dairy price fixing is good (wealth transfer from poor consumers to both government and rich farmers) but the same prices caused by producers reducing supply is bad.
    How bizarre is it that large scale farming is terrible for animal welfare – except when producers want to reduce the number of cows subjected to these conditions in order to raise profits.
    Sheer Lunacy. The real agenda is not animal welfare but a pathologically compulsive need to have the government “do something” at every turn. This, unfortunately, lies in the heart every human being but some of us control it.
    We have seen the enemy and he is us.

  • A. Markham

    I agree. A new journalistic low for FSN. This goes far beyond any editorial reach for balanced reporting. Blatant propaganda, this. Now we must suspect the intention and accuracy of every other article appearing on this blog. It is not worth the effort by the reader. Isn’t that what editors are for?

  • http://www,marlerblog.com bill marler

    I have to admit, I never really realized how few people like to be challenged with articles or opinions that do not fit their preconceived notions of how things should be. Although I agree that this OPINION piece does not directly impact food safety in the way I generally think about it, it was worth raising the issue AND getting comments.

  • CT

    I really want to question the editor’s decision to include this article. I do not think this article has anything to do with food safety, which is the whole purpose of this site. This is not the first such article that Simon has written which has not had food safety as a focus, and yet has been included on this site (and currently is the “main” story on the homepage of FSN).
    I would respectfully request the editors justify their decision to publish this article and, given the themes of her recent pieces, justify their decision to keep Simon as a contributor to the site.

  • http://www.eating-made-easy.com Amelia

    In response to the comments complaining that this article is irrelevant:
    The inner-workings of the food industry are almost always relevant to food safety, even if indirectly. As Ms Simon describes, when there is excess supply that the government decides to purchase and “dump” on either food assistance programs or foreign nations, the price of that commodity goes down in the theoretical market, and thus consumers will learn to expect cheaper product. Demand for cheaper product inherently leads to poorer quality, and poorer quality food is less safe because it’s impossible to regulate appropriately without incurring higher costs.

  • VW

    I’m surprised at the outrage at this article. How dare the author write a story that doesn’t seem to be about food safety! /s
    I can’t see how people can disagree with the lawsuit mentioned in the article. From what I gather, this is about a private group of milk companies getting together, deciding to buy smaller producers and kill their cows. This reduces supply, and raises the price of milk. Sounds pretty awful on many fronts and if they are indeed guilty of it, the companies ought to pay for what they’ve done. This sounds very bad on many fronts. Thanks for this article.

  • Lorraine Lewandrowski

    The plaintiffs in this matter are “angry” that a group of cooperatives arranged for sale of some 62,500 dairy cattle annually. Why are a group of vegans concerned that milk prices are “too high”?
    We are losing 5 dairy farmers per day in the US, and indeed my own state, NY, is hemmoraging dairy farmers, losing 1 every 3 days. If you ask about the success of the CWT program in some dairy farmer circles, they will tell you that the program was not effective in raising prices to dairy farmers. Effective or not, the fact is that American dairy farmers face a daunting set of circumstances. Yes, federal marketing orders were developed to lend stability and fairness to a situation where milk is highly perishable and must be shipped daily with the farmer finding out the price some 60 days later. And, yes, the federal orders are complex with few people understanding how they function.
    As of November, 2011, the US dairy herd stands at 8,480,000 cows…up some 111,000 from October of 2011. Testimony of the Food Marketing Policy Center out of the University of Conn. at the Department of Justice hearings revealed that the share of the retail dollar that finds its way back to the dairy farmer has dropped from 42% in 2002 to 27% in 2009 and is headed down.
    Here in my state, NYC politicians have fought tooth and nail for the cheapest of milk from the farmers of its milkshed. Google “Have a cow” and “Northeast Dairy Compact” to read the details on how NYC politicians excoriated NY’s dairy farmers when the farmers attempted collective bargaining as a countervailing force to the global dairy processors.
    No, the CWT program has not caused consumers to pay more, to pay outrageously for a gallon of milk. How much cheaper do consumers want milk wrung out of the land, the farmers and the animals???? Here in NY, it has come to the point that some 3 million acres of working grasslands now stand idled or not used, some abandoned, some subdivided. [see Cornell Report: "Green Grass, Green Jobs"]. We see a rural NY, a NY dairy land, wide open for FRACKING as farmers struggle to pay their real property taxes, perhaps even health insurance or dental care for their children. Audubon NY has sounded the alarm as grassland bird species are in trouble as the dairy farms are driven from the land. [see "Plan for Conserving Grassland Bird Species in NY" for specifics].
    The story of dairy and the average farmers of America is far more complex than the spin presented. We are all in this together, if NYC residents believe in the beauty of their working countryside, I would urge you to go out and talk with the dairy farmers of your state.

  • http://farmbillalmanac.wordpress.com Stephen S. Wade

    There’s also a safety component in terms of who has ownership over the milk supply — enough studies have been done to indicate that the blending of raw milk, even when pastuerized, represents the ability to disseminate unsafe dairy products. And when over 70% of the dairy supply is consolidated, there is a significant health risk in terms of firm behavior, and history of how those firms have function. There is a need for an independent dairy industry, one that does not need to resort to these sorts of practices to essentially control supply and diversity of supply.

  • CS

    While I agree this article has animal rights undertones it absolutely addresses an important concept of food safety; who is controlling it? If there is a dairy coalition that has the government in it’s back pocket, they can pretty much do whatever they want. They could defecate in your milk and sell it at $10.00 a carton. Inspections have come up with all kinds of disgusting garbage found in milk, everything from pus to blood, yet farms don’t close. Why? Because of things like CWT. You want safe food, you have to speak up and that’s what this article addresses.
    Why anyone would defend dairy farming (aside from personal reasons is beyond me) Dairy is completely unnecessary in our diet and actually detrimental to our health.

  • http://appetiteforprofit.com msimon

    I am going to ignore the nasty comments since they don’t deserve a reply. If you cannot engage in a reasonable discussion on the merits of the article, I can’t help you. Instead, I will just respond to the question: What does this have to do with food safety? For me, industry practices are all connected.
    If the dairy industry is overproducing and the government buys up the excess and dumps it on school meals, don’t we care if that food is safe for kids to eat? And if that same industry is engaged in harmful treatment to animals due to pressures to compete, might this impact food safety? While price-fixing per se might not be an obvious food safety matter, I think it’s important to be aware of all the ways industry operates to understand the bigger picture.

  • Lee

    Kudos to the author for this article. It’s important to be educated about this kind of manipulation of the markets. There is a reason we have laws against conspiring to fix prices in this country – it goes against the basic principles of fairness and supply and demand to allow companies to get together to artificially line their own pockets at the expense of consumers — and in this case, at the expense of cows. The fact that the government is on this train as well is pretty abhorrent. It surprises me that the commenters on this article seem to be willfully ignoring this illegality and injustice.

  • Mike

    What’s with the ‘shoot the messenger’ mentality of some of the commenters??? Many of the comments here claim that this article is “spin” or worse, yet almost none of them challenge the merits of the article and the court case that it talks about. For the people who are against the court case it doesn’t look good when you appear so defensive and avoid coming up with anything constructive. I look forward to seeing how the case progresses. Whether it’s the government or powerful corporations, I’m against corrupt activity and good riddance to whoever is guilty of it!

  • Minkpuppy

    The whole thing that’s so bothersome to me about the herd reduction schemes is the fact that the same groups that are promoting the sale of these cows also promote the use of rBST to increase milk production. If the real issue is overproduction of milk and the need to reduce the milk supply to increase prices, then why aren’t they speaking out against rBST also? It seems ridiculous to me to keep culling herds while pumping the remaining cows full of hormones to make up for the loss of milk from the other cows.
    Secondly, this is an OPINION piece folks so let’s not get our undies in a twist that it doesn’t have anything to do with “food safety”. Please play nice. If you don’t like Ms. Simon’s articles, then don’t read them and don’t judge the whole site by one contributor. As one of the previous commentors mentioned, even if it isn’t obvious, this does have a potential effect on food safety due to lower milk quality out of the remaining producers who are cutting corners to boost milk production.

  • Don

    I think the comments characterizing the piece as animal rights propaganda are missing the mark entirely. While it looks like Compassion Over Killing did the initial research for the suit and while animal welfare concerns are no doubt implicated here, you definitely don’t have to be a vegan to be outraged by dairy producers illegally conspiring to artificially jack up the price of milk and pass the costs (more than 9 billion dollars since 2001) on to consumers. Indeed, the people that were actually harmed here, including all of the named plaintiffs on the lawsuit, are dairy consumers, not animal rights activists.
    So let’s be clear – this lawsuit isn’t an attack on poor family dairy farmers by rabid animal rights activists. It’s an attack on a group of massive agribusiness cooperatives that were distorting the free market by illegally fixing prices. Whether you are a dairy consumer or a vegan, a regulation-happy liberal or a free market conservative, you should be happy that shady practices like this are being exposed.

  • Ricky

    The lack of transparency in food production comes to light with investigations from non-profits such as Compassion Over Killing and investigative reporting from concerned people like Michele Simon. I applaud this article as I for one don’t trust anything on the shelves in grocery stores not with the USDA bowing before so-called farmers with lobbyists roaming the halls of D.C. I recommend everyone join Community Supported Agriculture and buy direct from the actual farmers themselves. The real farmers are not represented in D.C. as they are to busy working the fields and selling their produce at local Farmer’s Markets and while they enjoy profit from their labor they are doing it honestly unlike those mentioned in the article.

  • Genevieve Parsons

    I’m happy the reporter brought this story to light. Its absolutely shameful what the dairy industry has done. Oh, and its also illegal. When businesses get together to manipulate prices of their goods, its called price-fixing! I’m not sure why more readers aren’t outraged because we are the ones paying for it. As Don said, this lawsuit isn’t attacking family farmers, its trying to keep huge agribusiness in check!

  • Sequoya

    Food safety is directly connected to farming/business practices. If you’re really concerned about your food safety purchase locally, support farms you can actually visit, where you can shake the farmer’s hand, pet the chickens who lay your eggs, etc. Support farms where their farming/business practices are guided by organic/sustainable values not by what their lobbyists can ‘buy’ them in Washington.

  • Leon

    Bill,
    I can’t speak for the others, but I don’t care if you put these articles up as long as people can comment. I think it’s a “teachable moment” and people reading the comments can learn a lot when an article gets picked apart.
    Some of the supporters obviously didn’t read or understand my comments about the lunacy of complaining about the evil capitalists jacking up prices when the government is deliberately jacking up prices! It’s okay if the government jacks up prices or restrict production – socialists call that a command economy. Smell the hypocrisy.
    As for the allegations of price fixing, let’s look at the sloppy reasoning here. Price fixing is when multiple producers collude to fix prices. Not happening. A cartel is where a small number of producers deliberately control the market – like DeBeers, which kills people who sell too many diamonds. Not happening. There are low barriers to entry to becoming a dairy farmer. I live in the freaking desert and there are dairy farmers all around me. New players will enter the market if it is profitable, and existing players will expand.
    Clearing excess supply out of the market is a normal market function. If they go too far, new supply will come in. That is particularly true of competitive markets like dairy.
    You need to show some interference with these normal market functions if you want to allege market manipulation.
    Socialists ignore these truths because they have a different agenda. Sunshine is the best disinfectant for left wing arguments.

  • Lorraine Lewandrowski

    Hi, Genevieve. What do you think about collective bargaining for dairy farmers? Here in the northeast we have about 13,000 dairy farmers (Federal Milk Marketing Order One from northern Maryland to Southern Maine). These 13,000 farms average 100 cows per farm. When we tried collective bargaining, NYC politicians crushed us. This was in 1998. Google “have a cow” “Northeast Dairy Compact” I was at a meeting when urban politicians who normally support labor and teachers unions shouted at us that we were “unAmerican” that we were trying to form a “cartel” that we should be replaced by “efficient corporate farms” or the milk would be imported. Hillary Clinton was the only person who stood up for us at that time. Today it is Senator Gillibrand. Please listen to my radio interview on http://www.HeritageRadioNetwork.Com Go to the “Cutting the Curd” show hosted by Anne Saxelby. Its Episode 78 archived there “Small Cheese Occupies Big Food” Or “what’s dairy farming got to do with Occupy Wall Street.” Thanks so much, we farmers are trying to determine what we can do as the large corporations have us down to less than 27% of the money paid at the store by consumers (from some 42% several years ago). No one has mentioned that.

  • http://beaelliott.blogspot.com/ Bea Elliott

    I may be vegan now – But I wasn’t years ago when this activity was taking place – So I certainly have a valid interest in this “dairy” issue.
    I echo the comments here that although this is not directly a food “safety” issue – It is one that points to overall corruption in our system that must be exposed in any and every forum possible. If “unrelated” infractions and manipulations occur without check – There’s no telling what the next cover-up will be about.
    I commend Ms. Simon for her thorough and well researched piece. I am now a committed reader of FSN and will look for future articles and insights that take the whole picture into objective consideration. Thank you!

  • http://appetiteforprofit.com Michele Simon

    I am going to ignore the nasty comments since they don’t deserve a reply. If you cannot engage in a reasonable discussion on the merits of the article, I can’t help you. Instead, I will just respond to the question: What does this have to do with food safety? For me, industry practices are all connected.
    If the dairy industry is overproducing and the government buys up the excess and dumps it on school meals, don’t we care if that food is safe for kids to eat? And if that same industry is engaged in harmful treatment to animals due to pressures to compete, might this impact food safety? While price-fixing per se might not be an obvious food safety matter, I think it’s important to be aware of all the ways industry operates to understand the bigger picture.

  • Olivia

    Upfront admission: I stopped drinking dairy milk some five years ago, when I recognized that this business enslaves, steals babies and milk from, and ultimately kills its workers.
    The indisputable facts shared in Michele Simons’ well-researched, well-written opinion piece remind me of another string of 5Cs far different from the alliterative “Connecting Cows, Cooperatives, Capitol Hill, and Consumers” cleverly coined by the National Milk Producers Federation.
    The 5Cs I have in mind are complicity, collusion, connivance, conspiracy, corruption.
    It makes sense to me that same people who learned at an early age how to prey upon innocent animals are also capable of preying upon innocent consumers. Put another way, the same people who have been indoctrinated to believe there’s nothing immoral about making a profit at the expense of nonhuman beings are also susceptible to treating fellow humans immorally. This lawsuit is one such instance.
    I know my comments sound absurd to dairy farmers and dairy consumers, all of who are still in a state of deep denial. Upton Sinclair, author of The Jungle, understood such defensiveness so well that he wrote, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”

  • Jerry G.

    Lame title, lame reporting, lame article, lame agenda, lame apologies for why FSN has let Simon and HSUS bend them over like this. Lame, just lame journalism. Not up to your usual standards, at all.

  • http://www.norbackley.com Kathleen Ley

    Thank you Michelle for this brave post and putting up with slings and arrows in this forum. Yes, learning more about the pressures on our evolving food system is vital to understanding how food safety has/is changing. Remember how over 100 years ago Sinclair Lewis, in his book “The Jungle,” laid out bad meat plant practice that led to the establishment of the FDA? We need brave voices now to highlight what is wrong now. Who knows? Maybe we will eventually see a single food agency started with posts like yours…

  • Don

    Leon -
    I’m not sure I see what is so “left-wing” about opposing antitrust violations. Does wanting to see markets operate freely and efficiently make one a socialist?
    The facts are simple here – these cooperatives themselves admit to them. For years, a number of dairy producers and collectives of dairy producers who ordinarily compete with each other agreed to periodically pool money to “buy out” smaller producers. The point was to limit the number of active producers in the market and thereby raise prices by cutting supply. While attempting to raise prices by cutting production would be perfectly legal if one producer was doing it in a vacuum (something that would never happen because it’s economically irrational), when a group of competitors all come to an agreement to limit supply that’s an illegal cartel. It’s not so different from what OPEC does with oil, and if OPEC was a domestic cartel you’d better believe that they’d be brought down under the Sherman Act. If you’re mad about the price of oil going up because of anti-competitive behavior, you should also be mad about the price of milk going up for the exact same reason. There’s nothing “left wing” about that.

  • http://www.twitter.com/H_O_G_ Joan

    Too many cows, too much milk is an awful irony:
    My cousin, and his wife, took over the family farm in Northeast,Ohio back in the early 90′s. They had a milking cow business. The Dairy Industry insisted that the cows were injected with hormones and antibiotics,claiming it would provide a healthier, fuller milk production.It was before hormones in dairy was popular knowledge. Prices were already rising on dairy products, yet my cousin & his wife saw none of the increase of money. They were unable to afford the costly injections and as a result the Dairy Industry stopped purchasing their cows milk. No other distributor would pick up their milk. Eventually, they sold their cows and farm equipment at a tremendous loss.My cousin’s wife died of a heart attack at 38yrs old. Stress was an obvious factor. It’s a sad and all-too-common story about the plight of the American Farmer vs Big Agriculture aka Big Pharmacy.

  • Jaya Bhumitra

    This is a terrific, thorough article. I especially appreciated the history of these abuses. It’s unbelievable how far back this type of consumer and animal exploitation goes, but it explains why the industry is so entrenched in the government today. Thanks for raising awareness of this important animal and consumer rights issue.

  • http://www.healthyfoodcoalition.org hhamil

    Thanks, Ms. Lewandrowski, for providing us with important facts about the actual situation facing dairy farmers that Michele Simon chose to ignore in her amicus brief for the plaintiffs.
    As most people interested in local, healthy food know well, small dairies are closing at a stunning rate because those dairies which sell into the mainstream dairy products system are losing money on most every gallon they produce. Thus, there has been a lot of activity in Congress this year trying to redress the problems before even more consolidation occurs.
    As I wondered who you are, I spent about 10 minutes doing web research. I learned that you are a 4th generation dairy farmer in central NY who is also a practicing attorney in private practice and long-time advocate for dairy farmers. You also studied at Harvard Business School (agribusiness) and Tufts’ Fletcher School of Law and Diplomacy (international studies). Did I get that right?
    I find it very interesting that not one of the 18 comments since your initial comment (including Michele Simon and Bill Marler) has taken issue with even a single item of the information you’ve provided.
    I’m not surprised because in the 2+ years that I’ve been working in the food safety arena, I’ve found that to be the pattern. Those who want to tell those of us who grow the crops and raise the animals that become their food are seldom willing to actually face an informed, reasonable farmer/rancher like you. Rather they pick on those of us and our supporters who are less informed and able to deal with their rhetorical tricks.
    So, it will be interesting to see if Michele Simon or Bill Marler is willing to actually address the issues that you raised, Ms. Lewandrowski.
    As always, I will happily discuss everything I have written if written to at healthyfoodcoalition@gmail.com. Send me a phone number and I’ll happily call you on my nickel so we speak directly.

  • Leon

    Don,
    They don’t “admit” to “anti-trust violations” – other people characterize it that way. There’s nothing wrong with bringing an unprofitable market back into equilibrium. OPEC is less than a dozen producers that truly control the market (unless we decide to blow them out and overproduce oil until they come to their knees). There is no single collective out there controlling the market. Therefore, there is no trust/cartel/oligopoly. It’s really that simple and you need look no further.
    Actions by producers that increase or decrease supply to bring the market back into a zone of reasonable profit happen in all the time in competitive markets like dairy. As I understand it, dairy is actually a very tight, competitive market. Oil sheiks drive Rolls Royces. Show me the rich dairy farmers.
    People mischaracterize and distort the truth for political ends all the time. Don’t fall for the straw man arguments. You are being manipulated.
    It’s the same with these Occupy Wall Street dopes who think they are going to change something by taxing away the profits of corporations whose net profit is usually less than 10% of sales. 10% isn’t going to change anything and you can do better by waiting for a 25% off sale at the store. People just don’t think things through, and that’s how they get manipulated.

  • http://www.healthyfoodcoalition.org Harry Hamil

    Thanks, Ms. Lewandrowski, for providing us with important facts about the actual situation facing dairy farmers that Michele Simon chose to ignore in her amicus brief for the plaintiffs.
    As most people interested in local, healthy food know well, small dairies are closing at a stunning rate because those dairies which sell into the mainstream dairy products system are losing money on most every gallon they produce. Thus, there has been a lot of activity in Congress this year trying to redress the problems before even more consolidation occurs.
    As I wondered who you are, I spent about 10 minutes doing web research. I learned that you are a 4th generation dairy farmer in central NY who is also a practicing attorney in private practice and long-time advocate for dairy farmers. You also studied at Harvard Business School (agribusiness) and Tufts’ Fletcher School of Law and Diplomacy (international studies). Did I get that right?
    I find it very interesting that not one of the 18 comments since your initial comment (including Michele Simon and Bill Marler) has taken issue with even a single item of the information you’ve provided.
    I’m not surprised because in the 2+ years that I’ve been working in the food safety arena, I’ve found that to be the pattern. Those who want to tell those of us who grow the crops and raise the animals that become their food are seldom willing to actually face an informed, reasonable farmer/rancher like you. Rather they pick on those of us and our supporters who are less informed and able to deal with their rhetorical tricks.
    So, it will be interesting to see if Michele Simon or Bill Marler is willing to actually address the issues that you raised, Ms. Lewandrowski.
    As always, I will happily discuss everything I have written if written to at healthyfoodcoalition@gmail.com. Send me a phone number and I’ll happily call you on my nickel so we speak directly.

  • jim

    Mr. Marler must be joking, right? I thought he was credible until now. Maybe he is attached to the lawsuit somehow.

  • Don

    Leon,
    I think the case for antitrust is much stronger than you give it credit for. I’m not sure if you’ve read their websites or response to this lawsuit, but CWT’s position is that it is exempted from the Sherman Act because of certain protections in the Capper-Volstead Act. That means that they are admitting that what they’re doing, were it occurring in another industry, would violate the Sherman Act, but because of special statutory protections that Congress gave to agriculture in the 1920s they feel they can get away with it. This is where it becomes a technical legal battle that is probably over everyone’s heads here. But my point is that, contrary to the way you characterize it, the dispute in the court here isn’t about whether anti-competetive behavior was happening but rather whether they should be immune to legal action to prevent it.
    And as for the OPEC analogy – the cooperatives involved in these agreements represent more than 75% of producers in the US. So it’s not far off from controlling the entire market. But since this is about supply restrictions it really doesn’t matter if every producer is on board as long as a significant number are, because the effects spill over to the entire industry (i.e. when these producers agree to buy out another producer and slaughter his herd, price goes up for everyone, regardless of who participated in the agreement). The violation consists merely in that (1) an agreement among competitors to limit supply was put in place that (2) caused prices to rise significantly and artificially for consumers across the board.
    You say that this “happens all the time” but I’d like to hear an example of another industry where competitors (not just a single producer acting alone) routinely agree to restrict production in order to raise prices. I think you’ll have a harder time thinking of one than you think, because when this happens in other industries that don’t have the ambiguous protections of the Capper-Volstead Act, people get in trouble.
    And finally, I don’t really see how the profitability of the industry bears on the legality of what they’re doing – is your position that you can violate the Sherman Act all you want as long as you aren’t driving a Rolls Royce while doing it?

  • Glen Groth

    Now, I am no legal scholar, but there are simple reasons why the Compassion Over Killing lawsuit is frivolous. First, it is common knowledge that farmers are granted broad protection from anti-trust laws under the Capper-Volstead act. Second, from and animal welfare standpoint, the cows slaughtered under the CWT herd retirement program didn’t meet a fate any different than any other beef animal. Don’t forget folks, dairy cows have an alternate use as a beef animal too. This is why the beef industry was opposed to CWT as it temporarily flooded the market with beef animals. Any price impact felt by consumers of dairy products was probably offet by a descrease in beef price.
    Other points to consider: CWT was designed to raise the price paid by processors to farmers, not to raise the price paid by consumers to retailers and “big dairy”. Therefore it is upon processors to file suit against the NMPF and CWT if they could find a legal argument for price fixing. Also consider that CWT was counter-cyclical in nature. Herd retirement only occured when it was anticipated that the dairy industry was headed towards an over-supply situation. It was not used to boost profits when milk prices were already at historic highs. The milk price did briefly reach high levels during the duration of CWT, but these high prices were brought about by factors other than CWT and were followed by some dismal lows.
    Let’s not lose sight of the fact that those who were the biggest supporters of CWT were family farmers who saw this as an attempt to be proactive to ensure viability of their farms. I know a number of people who participated in the herd retirement program and exited the dairy industry. For them CWT was a godsend, it gave them an opportunity to exit the business with grace and either retire, or focus on a different farming enterprise. Thats all I have time to write right now, as I am busy trying to get things done in the field before winter hits, but I will gladly field any follow-up questions.

  • msimon

    Thanks, Glen, for proving an actual argument about the issue at hand. Happy to have an actual discussion. You say the program was good for small farmers because it allowed them to exit the industry “with grace.” Do you really think most of them wanted to? It seems to me that overproduction is a problem caused by mega dairies who don’t give a damn about small farmers and this program was a way to buy them out, leaving only the largest one left. How is that good for anyone except Big Dairy? Especially given what we know about some awful production practices of large facilities?

  • Lorraine Lewandrowski

    Yes, there are many proposals on the table for dairy legislation. Each region of the US (and they all vary in the composition and styles of their milksheds) and a variety of organizations have advanced various proposals. The proposals are the results of hundreds of hearings, meetings, conferences where farmers have reviewed ways to eliminate price volatility and preserve farms. In my part of the country, farmers seek a way to help rural Upstate NY. This is a part of the state where jobs are scarce, young people are leaving, and lines at Social Services are growing longer. Chobani and Fage Greek Yogurt companies have been the sole bright spots in our local jobs situation. Natural gas fracking companies are advancing rapidly into a fairly pristine countryside holding fracking money out to farmers who can’t pay their taxes or buy health insurance. Senator Gillibrand likewise has gone out into the countryside, holding hearings, listening and all the while treating farmers with respect and compassion.
    Likewise, the Obama Administration Department of Justice held hearings on milk antitrust issues. In NY, leaders of our dairy cooperatives, including members of NMPF testified that the massive chain stores are exerting tremendous downward pressure on milk prices to the farmers. (similar to testimony of farmers in Wales, Scotland, Ireland, England and Australia, and we hear Latin America as well) at their hearings-the power of chain stores). Urban media, with its lack of ag reporters, did not cover the hearings but twitter friends from NYC drove hours to cover hearings in Batavia, NY. You can their coverage at http://www.GreenStateFair.com We never did hear from the Department of Justice again as to any findings.
    Other factors have caused increased milk price volatility including imports of dairy products, especially milk protein concentrates, from overseas, and the “junkification” of dairy products as products utilize more “fillers” or no dairy at all and still pass as dairy (think fake cheese).
    My own dairy coop is not a member of NMPF. My personal view was that if cows were to be culled, I would rather see the program geared towards cows with high somatic cell counts to improve both milk quality and herd health. This would have removed problem cows from individual herds while allowing smaller farmers to stay in business, rather than being bought out totally. There are many dairy farmers who feel that CWT did not help them at all. That all remains to be seen.
    From the many of the comments, I gather that most commentators on this site would support Congressman Joe Walsh in his push for HR 3372 called the Dairy Deregulation Act. This act would entirely dismantle any protections offered to the dairy farmers by the Federal Milk Marketing Orders. The big corporations have set up a website detailing how it can be done at http://www.OutOfMyMilk.com You can get Congressman Walsh’s number from the Congressional switchboard.

  • Michele Simon

    Thanks, Glen, for proving an actual argument about the issue at hand. Happy to have an actual discussion. You say the program was good for small farmers because it allowed them to exit the industry “with grace.” Do you really think most of them wanted to? It seems to me that overproduction is a problem caused by mega dairies who don’t give a damn about small farmers and this program was a way to buy them out, leaving only the largest one left. How is that good for anyone except Big Dairy? Especially given what we know about some awful production practices of large facilities?

  • Glen Groth

    Yes, the farmers who participated in the herd retirement program wanted out. In fact in order to be able to participate in the program you had to submit a bid to CWT. Not all farmers who submitted bids got accepted. More farmers wanted to participate in the herd retirement program than funds would allow. Would some of these farmers continued in the business under ideal conditions? Some yes, some no.
    Here’s an example from my area (Winona County in SouthEast MN). A young neighbor of mine was dairying with his father, but as he progressed in his farming career it became apparent to him that he enjoyed wrenching on machinery more than he liked milking cows. The dairy portion of the farm started to get neglected as he focused on other aspects of the farm, but the dairy herd was maintained as a matter of family tradition and a source of income. When CWT’s last herd buyout occured he had an opportunity to cash in on the program and use the money to expand his cash crop enterprise. He now grows grain, works on other farmer’s equipment and custom harvests grain for me. He told me just the other day that he doesn’t miss dairy farming one bit. This guy’s story is not unique. Others participated in the herd buyout because of old age, worn out facilities, health conditions or to pursue other business opportunities.
    Michele, I soundly reject the idea that CWT was a ploy to push small operators out of business. The program was open to all, and in fact more cows were sent to slaughter in the west where large herds are the rule, not the exception. The data is right here: http://www.cwt.coop/sites/default/files/pdf/past-herd-retirements-110810.pdf. The benefits of any higher milk price was realized by herds of all sizes.
    When it comes to overproduction the dairy industry is unique. A farmer can’t “shut a cow off” nor can he delay selling milk, as it is perishable. The only way to bring production back in line with demand is to cull cows or sell more milk. CWT was designed to do both. In an oversupply situation grain growers can store their crop indefinitly or (in some cases)grow a different crop. Meat livestock producers can delay or move up sales of slaughter animals according to market signals. Swine finishing barns, poultry barns and cattle feedlots are also less costly per head to maintain and build than dairy barns.
    As a final thought: The “mega-dairies” (Michelle, if you could define that term please) you refer to produce milk the exact same way as I do on my small dairy farm. i have been employed on large dairies, have close friends that own and or operate large dairies, I have studied large dairies intensively and I have concluded that on a per-cow and per-gallon of milk basis, they match or exceed the animal welfare, food safety, and evnvironmental standards set by small farms. I have no incentive to say this other than honesty

  • jay scee

    This has a lot of significance for Food Safety. Not only that information in important in every aspect of maintaining the safety of food in the industry. It is obvious that some people reading this article want to enjoy the slant on what they read as well, or benefit in some way with the information the article is putting out.

  • http://www.twitter.com/H_O_G_ Joan

    The mass slaughter of cows for price controlling is what initiated the lawsuit and is in direct line with safety. Dairy policies are too numerous,leading gaps in laws causing many to “interpret” and behave in their best interest. Not-safe! To gain control of higher prices,they are slaughtering cows to claim there is a possible shortage.
    Perhaps, some have not read all the comments.Read mine, above, because, it’s not based on hear-say.Dairy distributors would not buy milk from cows that did not have hormone injections. There was an abundance of milk then and there still is now.
    The whole point of reading a blog and the comments, to me, is to gain knowledge. Clearly, folks need to open their minds and realize that the dairy industry is driven by money. Cash is king… and food safety will always take a back seat to the almighty dollar.

  • bob stein

    CWT shills are flooding the comments. I commend this article for tackling an important issue and bringing it to my attention. Please keep these types of articles oming!

  • Farmerella

    So, Bob…call Congressman Joe Walsh-R and get on his bandwagon for Cheaper Milk. I’m sure Kraft will love you for it.

  • Farmerella

    To Bob Stein: Could you please identify who specifically among the commenters are “shills”?

  • h. t

    thank you FSN for bringing another perverse aspect of our food industry to light.

  • Rick

    Excellent piece, Ms. Simon. Ownership and control over any food industry are obviously relevant to food safety. Agribusiness has shown itself to be a menace to food safety as well as to the food production environment and ecology. I notice your detractors do NOT deal with your argument, but rather attempt to marginalize the topic altogether, preferring, apparently, a very narrow focus at the expense of the “big picture.” Please don’t let their narrow perspectives discourage you from writing on these topics because they are indeed germane and interesting.