MONTPELIER, Vt. (AP) — A group of dairy farmers is suing four milk marketing firms, saying they've engaged in monopolizing the market into which farmers have had to sell milk, fixed prices and created an economic crisis in the Northeast dairy industry.
The Washington-based law firm Cohen Milstein says it expects many farmers will join a class action suit against Kansas City-based Dairy Farmers of America and Dallas-based Dean Foods Co.
The suit alleges DFA and Dean have seized effective control of the region's dairy industry and are forcing farmers to join DFA or its marketing affiliate Dairy Marketing Services to survive. DMS and HP Hood also were named as defendants.
Hood spokeswoman Lynne Bohan said the company had not seen the lawsuit and could not comment. DFA issued a statement calling the allegations "without basis."
"We are continuously looking for additional ways to increase dairy farmer pay price and net returns, not suppress them, and have been successful in doing so," DFA said.
A message left at Dean Foods was not immediately returned.
Benjamin Brown, a lawyer for Cohen Milstein, said the suit had been filed as a class action, meaning that those who could collect from a jury verdict could include not just the two dairy farm families named as plaintiffs, but thousands more "similarly situated."
Brown said he did not know how many dairy farmers would be affected. DFA's Web site says it has 1,563 member farmers in the Northeast.
Brown said DFA, the nation's largest dairy cooperative, and Dean, the largest processor in the United States, had worked together to lower prices paid to farmers for their milk "by making DFA and its affiliates the exclusive suppliers of milk to Dean and HP Hood."
Dean and Hood bottle about 90 percent of the fluid milk sold in the Northeast, Brown said.
"Monopolization and price-fixing have contributed to the milk-pricing crisis dairy farmers, especially small, family-owned dairies in the Northeast, face today," Brown said.
"Many dairy farmers have been forced to choose between joining DFA or DMS or going out of business," Brown said. "If they join, they have to pay a fee to continue to market to their own customers at prices fixed by DFA, DMS and other cooperatives. Meanwhile major milk processors Dean and HP Hood, which is part-owned by DFA, enjoy the economic benefits."
The suit follows a summer of suffering for dairy farmers in Vermont and elsewhere in the Northeast.
In Vermont, milk prices paid to farmers dropped to about $11 per 100 pounds in June from $19 a year earlier. Meanwhile, production costs remain about $17 per 100 pounds.
The price plunge has put the state's $2 billion-a-year dairy industry on the brink of collapse. Vermont has lost more than 250 dairy farms in the past five years, and they're going under this year at a rate of about six a month, state officials said.
Copyright 2009 The Associated Press.