Last week, Dean Foods filed for Chapter 11 bankruptcy. The company is one of the largest dairy companies in the United States. With the filing, many farmers wonder who will be controlling where they send their milk. This announcement comes amid low dairy prices for producers, despite slow growth in the numbers.
In the November 12th statement, Dean Foods said that it was in talks with Dairy Farmers of America (DFA) about a “possible acquisition.” DFA is currently the largest dairy cooperative in the country, controlling approximately thirty percent of the milk production in the U.S. Acquiring a company the size of Dean Foods would expand that control even further.
This has drawn the attention of Peter Carsten, a University of Wisconsin Law School professor and antitrust expert. Carsten says he is concerned with a lack of competition for DFA if the deal were to go through. Carsten also talks about the fact the DFA, as a dairy cooperative, negotiates the best prices possible for their producers. Normally, this would be done with a company like Dean Foods. However, if DFA were to control the bankrupted company, they may try to shortchange their 13,000 farmer members to increase their profits as a producer. Carsten says this raises a conflict of interest with some big question marks. In the past, farmers have accused DFA of suppressing milk prices to maximize profits.
Any acquisition of Dean Foods by DFA would have to be approved by the courts, the U.S. Department of Justice, and the Federal Trade Commission.