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Organic Consumers Association

Sen. Bernie Sanders Cries "Monopoly" in a Collapsing Milk Market

Earlier this year, the Obama administration's top antitrust enforcer, Christine Varney, announced a new effort to crack down on monopolist practices in industry. Some of us were particularly interested to observe that Varney's first speech specifically mentioned agribusiness as a top target. This is understandable since, from fertilizer to meatpacking to seeds, four companies or fewer control up to 80% of each of these markets.

But right now nowhere are the oligolopolists doing more damage than in the dairy industry, where prices have fallen faster and deeper than any time since the Great Depression. And now, joining ranks with tens of thousands of desperately struggling dairy farmers, Sen. Bernie Sanders of Vermont has had enough - he has called on the Justice Department to investigate the dairy giant Dean Foods as a monopolist.

It's about time someone in government used that word to describe Dean Foods. They control 40% of the fluid milk supply nationwide and, to Sen. Sanders great dismay, almost 70% of fluid milk in New England. But surely, with milk prices scraping the bottom, they must be suffering as well. Nope.

 At the end of 2008, Dean Foods reported adjusted quarterly operating income of $184m, the highest in its history.

 ...While Dean Foods continues to increase its profits, milk prices have taken a tumble. At a press conference in his offices, Sanders said: "Farmers have seen the price for their milk drop from $19.50 per hundred pounds a year ago to less than $11 in June. Meanwhile, Dean Foods' profits climbed from $30m in the first quarter of 2008 to $76.2m for the first quarter of 2009."


Dean Foods, of course, denies the accusations of monopoly and points out that milk prices are regulated by the government. This is true. What Dean Foods doesn't mention is that a relatively recent reform allowed the "government-set" milk price to be determined by the price of milk on the Chicago Mercantile Exchange. So really, the government punted to the commodities market-and it's been a fun ride, hasn't it?


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