Saturday, January 22, 2011

More on DFA's Opposition

DFA in documents file in Vermont Federal District Court on January 18, 2011 objected to the settlement with Dean Foods.

In a court document, Greg Wickham, general manager of DMS states:

“DMS is an LLC is also a common marketing agency that today markets milk for almost 8000 dairy farmers in the northeastern United States. DMS is owned by three cooperatives: Dairylea, DFA and St. Alban’s. Although DMS to is not directly have any farmer members, it is indirectly owned by the farmers who belonged to and own Dairylea, DFA and St. Albans and DMS's operations are overseen by a Board of Directors made up of dairy farmers from each of its owner coops. These three coops have all designated DMS as their exclusive marketing agent for raw milk in the northeastern United States. As of August 2010 they were about 1,441 Dairylea producers marketing milk through DMS in the Northeast, about 1,463 DFA producers and about 446 dairy farmers were members of St. Albans.”

DMS is not an "common marketing agency," in any usual sense of the term. It operates actually as a market allocating agency. There is quite a difference.

Wickham also states,"In addition, DMS and 2010 markets milk of hundreds of independent dairy farmers were not members of any cooperative," and fails to mention that many quite possibly most, are not voluntarily participating in the DMS system.

"In September 2010, for example, DMS marketed total of 1.272 billion pounds of raw milk, 1.166 billion pounds of which was marketed to plants in Order I” according to the court document. That volume represents 60% of Order I milk.

With all of that market share, Wickham complains:

"For example, there is one Dean planted which we primarily provide milk for class I purposes, and also ship about 10,000,000 pounds a month of milk that is used for class II purposes. With respect to that Class II milk, we have told Dean's repeatedly that we felt the milk was underpriced by over $1.00/cwt, but for years they were unwilling to give ground in the negotiations. Even with the recent price increase to that plant, it is in my view still underpriced by $40 - .50/cwt."

What he is saying, is that Dean Foods has more market power than an organization,DMS, which by their own reckoning has 60% of the milk in Order I.

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