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Dairy Farmers Cheated by Processors

05 October 2009

US - Dairy farmers are losing out to large processors.

Whilst large food companies are making hefty profits, producers are going broke. Dairy farmers are pressing federal antitrust regulators to investigate this, reports The Journal Sentinel.

The average dairy farm in the Wisconsin lost about $100 per cow per month this summer, according to the Wisconsin Farm Bureau Federation. With more than 1.25 million cows in the state, it means the industry is losing roughly $4 million a day.

Farmers have seen milk prices halve in 2009. Some farmers have cashed out their farm equity and savings just to buy cattle feed and pay their utility bills. Entire herds have been slaughtered as part of a national programme meant to reduce milk supplies and increase the amount that farmers receive in their milk checks.

Dean Foods Co., one of the industry's largest players, reported a 31 per cent increase in profit for its quarter that ended 30 June 2009. The company earned $64.1 million on sales of $2.7 billion in the quarter and said it was on track to deliver very strong results for the full year.

Farm groups such as the National Family Farm Coalition have urged Senator Russ Feingold to investigate large food companies and dairy cooperatives that sell to the companies. Mr Feingold told The Journal Sentinel, "Based on our research and conversations with agricultural economists, we believe that one reason for Dean Foods' recent profits may be its ability to exercise monopoly pricing power in many parts of the country."

However, at the end of the day retail stores, not processors set the final price that consumers pay.

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