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Dairy cows at Greenwood Dairy, in Canton, NY. Photo: Nora Flaherty
Dairy cows at Greenwood Dairy, in Canton, NY. Photo: Nora Flaherty

Report says consolidation hurting farms and communities

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It's a strange time for the North Country's dairy farmers.
On one hand, Congress' failure to pass a new farm bill has meant the loss of a safety net if milk prices drop or feed costs rise. On the other hand, the soaring popularity of Greek yogurt is offering what New York's dairy leaders call a "once in a generation" opportunity to shore up an industry that's been eroding for decades.

New York has lost about two-thirds of its dairy farms since the 1980s. The ones that remain have gotten bigger.

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Many farmers, like Derek Conway in Lewis County, say that's the natural result of seeking efficiencies in a business with tight margins. "I mean we have to," says Conway. "My friend that's milking 50 cows is in an older tie-stall barn. He's putting the same inputs in and feed costs as we are per cow, and we're probably averaging 10 to 15 more pounds [of milk]."

But a national environmental group argues there's something else at play. The organization Food and Water Watch has issued a report that says corporate consolidation across the food and agriculture industries is bad for farmers. The report, called "The Economic Cost of Food Monopolies", includes a section on the consolidation of milk processors and milk cooperatives in New York State, with a focus on St. Lawrence County.

Food and Water Watch assistant director Patty Lovera says the decline in the number of farms and area cheese plants has been bad for the economy. "Having more players involved means more money saved locally," she says.

Lovera told David Sommerstein consolidation at both ends of the dairy industry is squeezing family farms.

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Farmers turned out from all over the country [to say] these markets aren't competitive, we don't have enough options, and we pay the price for that, and we've not seen action.
So you have somebody picking up the milk from the farm, and then you have some amount of processing, even bottling it, or turning it into cheese or ice cream or whatever it is. And so there’s different players that are doing those steps, they’re not necessarily the farmers themselves.

So for a long time you know Farmer Cooperatives were the ones were buying the milk, and sometimes they processed it and sometimes they would sell it to a processor. And there’s been increasing concern among family farmers, and now there's even some legal challenges that are happening that some of the biggest players in both those staffs, both the cooperative, picking up the milk, and the processors.

Farmers have few options, because there’s been consolidation of both of those steps, but there’s fewer players, and that those two staffs are coordinating together more. 

What do you mean coordinating between, you know the biggest processor, Dean Foods, for example, and the biggest coop, Dairy Farmers of America (DFA)?

So there’s a cooperative in New York called Dairylea, and they formed a joint venture to market milk with DFA that was called Dairy Market Services (DMS). So now you’ve got this entity, the two coops got together and formed this joint venture called Dairy Marketing Services. And they’re going to deliver the milk for a huge area, from New England all the way down in to the mid-Atlantic like Maryland.

And so then you Dean, which controls a huge amount, some people say up to 70 percent of the milk bottling in the northeastern part of the country, say they will only deal with the DFA or DMS. So if you're in that pretty big geographic area as a dairy farmer, odds are that’s where your going to sell your milk, because their reach is so broad it turns you into somebody who doesn’t have a lot of options, and your going to take the price that they are offering.

What would this report like to see next in terms of should farmers do different things? Should there be new policy? You know what does this report recommend?

So we recommend, you know were thinking about the federal government who does a lot of our foreign policy when we wrote this report, and also the Department of Justice. To really take a look at whether what some of these players, whether it’s in the dairy industry or in the meat packing industry or vegetable production, which are all examples we wrote about, to really take a look at whether there’s been enough enforcement of antitrust rules, whether these markets are actually competitive.

So in 2010, the USDA and the Department of Justice did these hearings around the country to ask that question. And they got an earful. And farmers turned out from all over the country and all different topics, including dairy, to tell them these markets aren’t competitive, we don’t have enough options, and we pay the price for that, and we’ve not seen action.

And I think on the consumer side of things, I think people are often like well there’s different brands in the store. So just because have a company like Dean Foods that might be, you know in any given region, might have from 40 percent to up to 70 percent of the market that they control, you probably don’t see Dean Foods on the label, you might see a label that’s older, but they acquired it and they kept that brand. So it’s hard for consumers to know this.

We’ve talked about how this would affect farmers, would this affect consumers and what they would pay for milk or yogurt or cheese?

Well that’s a great question, we weren’t really able to delve into that in this particular report, but we’re really interested in that question, 'cause common sense would tell you, if you have a market that’s not competitive cause it’s controlled by just a couple of players, and you know we’ve shown and farmers will testify that they don’t get paid as much because of that, what incentive do those companies have to pass saving on the us.

Early in the recession, in one summer the price that was paid to dairy farmers was cut in half nationally. So they just took a 50 percent pay cut from like June to August. We didn’t get a 50 percent savings at the store in what we paid for milk or cheese or whatever, so that indicates that things are not always being passed along. So if you know dairy processors are getting a pretty big reduction in their raw material, they didn’t feel the need that summer to pass that price drop on to us.

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