Bankrupt milk factory in US falls into cooperative hands

Dairy Farmers of America, the largest dairy cooperative in the United States, has taken over bankrupt Dean Foods. As a result, the largest milk factory comes into the hands of the largest cooperative milk processor. The deal still needs to be approved by authorities.

Under the agreement, Dairy Farmers of America would pay $425 million to acquire Dean Foods' 44 facilities. The bankruptcy court, which oversees Dean Foods and the regulators that have been investigating the possible merger for months, still have to approve the deal. The research so far has focused on developing the role of Dairy Farmers of America in the US dairy industry.

Dairy Farmers of America's interest in Dean Foods became apparent soon after the bankruptcy in November† The farmers who belong to the cooperative are hesitant. They think that a merger will reduce competition, which could subsequently push down the milk price. However, the cooperative says that the deal will actually help the farmers. This is because it guarantees that there are buyers for the milk at a time when milk consumption is declining nationally.

Conflict of Interest
Dairy Farmers of America was founded 2 decades ago to help smallholder farmers market their milk. There are now more than 14.000 members. The cooperative has invested a lot in processing. According to some dairy farmers, these investments have created a conflict of interest.

This is because the processors benefit from lower prices, while the dairy farmers have to contend with higher prices. The plan to acquire much of Dean Foods' assets would significantly expand Dairy Farmers of America's processing business. Critics of the merger say it will increase the conflict of interest.

Chanti Oussoren

Editor at Boerenbusiness who studies the dairy, pig (meat) and feed markets.

c.oussoren@boerenbusiness. Nl

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