LOUISVILLE, Ky. (AP) — Dairy farmers across the Southeast hope to prove what they claim is a conspiracy to drive down the price they're paid for milk.
The lawsuit against Dean Foods and others is scheduled to be tried in June in U.S. District Court in Greeneville, Tenn.
Dairy farmer John Kalmey told The Courier-Journal of Louisville that there is no competition for milk in the Southeast. Kalmey said production prices keep climbing, and many farmers are barely breaking even. The farmers contend that Dean and cooperatives that are major buyers worked together to keep prices artificially low, in part by buying bottling plants and thereby limiting competition.
Dean spokesman Jamaison Schuler said that farmers have many outlets for raw milk at competitive prices and that competition flourishes in the dairy industry.
"We have every incentive to ensure that independent dairy farmers are economically viable," Dean spokesman Schuler said.
Dean Foods offered to pay $30 million in December to settle a similar case with Northeastern dairy farmers, but a Dean official said recently that the company views the Southeastern case as separate.
In the lawsuit, the farmers claim Dean Foods and the other defendants tried to reduce competition and lower prices by working together by buying and closing milk processing plants. It also claims the defendants conspired by having Dean accept milk only from dairy farmers who joined the marketing associations that the plaintiffs say are controlled by Dairy Farmers of America.
The options for Kentucky farmers mainly consist of Dean or plants that buy through a farmers' cooperative called Dairy Farmers of America and its partners, said Maury Cox, executive director of the Kentucky Dairy Development Council.
Dean is the nation's largest milk processor, and Dairy Farmers of America is the largest milk cooperative.
Scott Williams of Taylorsville, a third-generation dairy farmer, had enough last fall and took a full-time job with the city water department.
"Milk just wasn't paying the bills and, as much as I hate to, I had to get out of it," Williams said.
Consumers may not notice the impact of the lawsuit, whatever the outcome, because milk prices in grocery stores have been far less volatile.
"Whatever changes at the farm level is going to be watered down at the retail level," said Brian Gould, a professor at the University of Wisconsin's dairy research center.
The farmers sued Dean four years ago in federal court, seeking to represent about 7,500 producers who sold milk in the Southeast since 2001. The region, defined by a federal marketing program that aims to set a floor price for milk, includes almost all of Kentucky.
The defendants include Texas-based Dean; Kansas City-based DFA; and marketing agencies affiliated with Dairy Farmers, including Louisville-based Southern Marketing Agency.
Dairy Farmers of America spokeswoman Kristi Dale said the cooperative has complied with a 1922 federal law that provides limited antitrust protection to agricultural producers, including dairy farmers.
Officials at Southern Marketing, a marketing agent for several cooperatives, including Dairy Farmers of America, didn't return a call for comment.
The case is one of several claims being made across the country against Dean. The U.S. Justice Department and the attorneys general of Wisconsin, Michigan and Illinois also have filed a federal lawsuit claiming that Dean's purchase of regional milk plants violated antitrust laws.