Dairy collectives must face farmers' milk price-fixing lawsuit, US judge rules
Dairy collectives lost their bid to dismiss class action
13 March 2024
2 minute read
By: The two largest dairy farm collectives in the southwestern United States have lost their bid to dismiss a proposed class action in New Mexico accusing them of conspiring to fix prices in the region's multibillion-dollar milk industry, reported Reuters.
Dairy farmers in New Mexico, most of Texas and parts of Arizona, Oklahoma and Kansas can move ahead with antitrust claims for now against Dairy Farmers of America and Select Milk, US District Judge Margaret Strickland ruled on Monday, opens new tab.
Strickland said the plaintiffs, including farms and individual farmers, plausibly alleged an ongoing conspiracy since 2015 in which Dairy Farmers of America and other defendants unlawfully coordinated price decisions.
The farmers’ 2022 lawsuit said they were artificially underpaid in violation of US antitrust law for the production of raw fluid Grade A milk. Dairy Farmers of America and attorneys for Select Milk did not immediately respond to requests for comment on Tuesday.
Attorneys for the plaintiffs, including Othart Dairy Farms and Pareo Farm in New Mexico, did not immediately respond to similar requests.
Texas and New Mexico are among the country’s largest milk-producing states. Annual dairy production in the southwestern United States is valued at more than $3.5 billion, according to the lawsuit.
Cooperatives play a central role in the marketing of milk and other dairy products in the United States.
The lawsuit, opens new tab accused the cooperatives of decreasing payments to farmers for raw milk while keeping volume high. The cooperatives could use cheaper raw milk to make more profit on items such as cheese, yogurt and milk powder, the plaintiffs alleged.
The dairy cooperatives in seeking to dismiss the lawsuit said they had no motive to reduce payments to farmer-members who own and govern their organisations.
The defendants also said federal law allows some coordination on collective marketing and processing decisions.
Strickland said US law does not permit collective actions “such as conspiring to depress payments to members.”
Dairy Farmers of America in 2015 agreed to pay $50 million to resolve a class action from farmers in northeastern United States accusing the cooperative of conspiring to suppress milk prices. The cooperative in 2013 settled a similar case for $140 million involving farmers in the southeastern United States. The case is Othart Dairy Farms LLC et al v. Dairy Farmers of America Inc et al, US District Court for the District of New Mexico, No. 2:22-cv-00251-MIS-DLM.
