Mail Box Tells More

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Above are "mailbox" prices courtesy of Dairy Market News. The "mailbox" is essentially the net check after charges.

Notice New York which has a high class one utilization and therefore should have a high mailbox price. What can explain the low price other than DFA/DMS?

No Competition

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The Vermont Attorney General has several items from the so-called Northeast case on its website.

One document is particularly interesting and is at the above link. The pages above are from that link.

Obviously, where there is no competition, prices to dairy farmers are depressed. this is what is known as a "horizontal agreement" and is illegal. Additionally, DFA/DMS is party to a long standing consent decree and this type of "deal" is a violation of that agreement with the U.S. Department of Justice.

This case results from government, particularly, the U.S. government not following their own laws:

The Code of Federal Regulations states:

608c(7)

(7) Terms common to all orders
In the case of the agricultural commodities and the products thereof specified in subsection (2) of this section orders shall contain one or more of the following terms and conditions:
(A) Prohibiting unfair methods of competition and unfair trade practices in the handling thereof.

Where is USDA? Where is DOJ? That's right, according to the so-called man on the street. the people want less government. Nobody wants an intrusive, oppressive government but, as the ancient Greeks said, "Who will guard us from the guards."

http://www.atg.state.vt.us/assets/files/DFOA%20Plaintiffs%20Reply%20Memo.pdfhttp://www.blogger.com/img/blank.gif

Northeast Milk Supply/Dean Settlement

To hear the DFA conditioned farmers tell it, there is so, so much milk in the Northeast that if they cannot get it into the Dean plants involved in the NE settlement, they will get less money.

Here are a couple stories:

http://www.uticaod.com/news/x1798429123/Chenango-Co-s-Chobani-yogurt-hopes-to-be-No-1-yogurt-soon



http://www.uticaod.com/news/x1274023574/Yogurt-plants-boost-state-s-dairy-industry

But Chobani has expanded so rapidly that dairy farmers haven’t been able to grow the size of their herds as fast as the company needs, Ulukaya said.

“The demand is so high that it comes from every corner of the state,” Ulukaya said, of the milk. “Yet, we need more.”

The need for milk is a major reason why Ulukaya doesn’t know whether he will expand in this state or another, he said. The Chenango County plant will stay in place either way, but he has been in discussion with state farmers about whether they can handle further expansion by Chobani, he said.

According to sources, DFA/DMS has a full supply agreement with Chobani. Obviously, they cannot supply the Chobani plant.

However, DFA's ploy really has nothing to do with supply, but rather, with trying to disrupt class certification in the class action lawsuit. Without class certification there is no suit.

DFA's Opposition to Dean Food Settlement

DFA's press releases on the proposed settlement of the NE case are everywhere (to coin a phrase - none dare call it journalism).

Career board member of DFA/DMS Ed Shoen states in a court document:

When Dean uses this provision to say that the “competitive market price” for
the milk it buys under Section 9.2 is lower than what DMS had been charging, then I’m sure Dean will then want DMS to cut the price on the rest of the milk DMS is selling to Dean so that it too is sold at that lower “competitive market price” that Dean has announced. We’ll end up getting less for all of our milk sales to Dean, and we’ll be selling them less volume, but we’ll still
have the responsibility and cost of balancing their needs at the plants we serve. Under our current arrangements with Dean, one of the services we provide is “balancing” the plants’ needs no matter how supply and demand conditions change over the course of the year. It could be plus or minus 20-30 loads per plant from one day to another. That’s a valuable service and one that costs money to provide, whether it’s disposing of surplus milk or paying for additional milk when milk is short. When we lose this volume, I expect we’ll face the same balancing costs for Dean, but we’ll have less milk to recover those costs. The other possibility is for Dean to do its
own balancing which adds cost on their end for the “independent milk” they have just incurred. It might well have been less harmful to us if the Proposed Settlement gave away all of the volume at one plant, and at least saved us the balancing costs there.

There is no doubt that DFA rules the roost in FMMO I and Dean Foods is the major Class I user. So, if you go to:

http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5081678

"Announced Cooperative Class I Price for Selected Cities"

You will find the price for FMMO I is 59% of the average and less than half of nearby orders.

Con games always sound so logical.