BATAVIA, N.Y. (AP) — The nation's top federal antitrust investigator on Monday assured desperate dairy farmers that the government also wants to know why they are being paid so little for milk when the price shoppers pay in stores is holding steady.
At the invitation of U.S. Sen. Charles Schumer, Assistant Attorney General Christine Varney met with milk producers from around the state, who blame a lack of competition among milk processors on years of industry consolidation.
A report released by Schumer's office in November found that the price paid to dairy farmers fell by almost half since January 2009. At the same time, the retail price of milk fell just 15 percent.
"It just doesn't add up," the New York Democrat said at the forum Monday in western New York, which drew about 200 people.
Regulators in Washington have promised to hold hearings on an agricultural sector dominated by big corporations that have consolidated market share over the last two decades and to take aggressive action if necessary.
Varney's office in January filed an antitrust lawsuit against the nation's largest dairy company, Dallas-based Dean Foods Co., alleging it purchased a smaller dairy company in Wisconsin to quash competition. Dean Foods, which according to the lawsuit has acquired more than 100 smaller companies since 1996, has called the complaint unsound.
Varney said Monday she would not discuss ongoing investigations, but she indicated the department was well aware of the dairy farmers' concerns.
"We know prices on the farm are dropping. We know prices at the retail level are rising, or at least not dropping," said Varney, head of the Justice Department's antitrust division. "That means there's a margin squeeze and we've really got to examine what are the factors of the margin squeeze and what are potentially the cures."
Madison County dairy farmer Gretchen Maine said the price she received for milk bottomed out last year at $13.65 per hundredweight, the equivalent of about 12 gallons. The drop from $19.81 a year earlier came at the same time feed and fertilizer costs jumped by hundreds of dollars per ton.
After 43 years of dairy farming with her husband, the third-generation farmer called 2009 "the worst year of our lives."
"All of the sudden there's not even grocery money," she said.
About 40 percent of what consumers pay for milk goes back to the farm where it was produced, said Jonathan Taylor of the New York Farm Bureau.
"Many in the dairy industry view this low farmer share in the retail price of milk as proof of anticompetitive behavior by dairy processors and manufacturers, which have undergone phenomenal consolidation over the past two decades," he said. "Like David and Goliath, a family farm is at a distinct disadvantage in dealing with such businesses."