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Dairy farmers alarmed over growing concentration

(Friday, April 16, 2004 -- CropChoice news) -- William Kates, Associated Press via The Agribusiness Examiner :
The increasing concentration of the dairy industry is leading to the demise of small family owned dairy farms and the domestic dairy industry, said dairy farmers from around the nation who met [April 1 in Syracuse, New York] with New York Attorney General Eliot Spitzer.

"If competition is so good, why don't we have some," said John Bunting, a dairy farmer from Delhi, N.Y., who was among more than 150 dairy farmers who gathered for Thursday's session held by the National Family Farm Coalition.

Like the rest of the nation, New York has experienced tremendous concentration at all levels of the dairy industry --- cooperatives, processors and retailers --- all of which have worked to reduce competition to the detriment of dairy farmers, he said.

"And there has been no gain for the consumer because of that concentration," Bunting said.

The dairy farmers, who came from throughout the Northeast and as far away as Wisconsin and California, called on Spitzer to take the national lead and begin investigating industry consolidation in New York for possible antitrust violations.

"We are deeply concerned about these issues," Spitzer said, pledging to look into New York's situation. "Markets do not work ... unless the rules of competition are maintained."

Spitzer said it was clear that "small farms have an inadequate voice" in a dairy industry that is increasingly becoming dominated by corporations and giant cooperatives, such as Dairy Farmers of America, which controls about one-third of the nation's milk supply within its membership.

Joaquin Contente, a dairy farmer from Hanford, Calif., said in his state --- which is the nation's top dairy state producing about one-fifth of the country's milk --- there are fewer than 2,000 dairy farms.

The demise of the small dairy farm in California has been propelled by the state's pricing system, which guarantees the cost of production for processors but not for dairy farmers, Contente said.

Contente said the California dairy industry is dominated by three companies: Luprino Foods, the world's largest manufacturer of mozzarella; Dean Foods, the nation's largest fluid milk processor, which controls about 35% of all the fluid milk sold in the United States; and retail giant, Kraft Foods.

"Those three entities end up marketing all the product ... and they don't even compete against each other because one is in food service, one in retail and the other in fluid products. The thing about capitalism, if it's going to succeed, you have to have a balance of buyers and sellers," Contente said.

He added that from 2001 through 2003, the price America's dairy farmers received was 20% to 30% below the cost of production.

While most of the public is unconcerned with the economics of the dairy industry, it is a "flesh and blood issue" for the nation's dairy farmers, who are in "an unspeakable phase of suffering," said Brenda Cochran of Westfield, Pennsylvania., whose family milks 160 cows.

"We are in the final phase of the destruction of our domestic dairy industry. If government doesn't take our problems seriously, we won't have a domestic dairy supply in the near future," she said.