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While the nation has been anxiously watching grocery prices, a massive antitrust lawsuit filed in New Mexico claims that two major dairy cooperatives colluded to keep payments to farmers lower than they should have been has now resulted in a proposed $34.4 million settlement.
Plaintiffs in the suit claim that two leading co-ops in the region, Dairy Farmers of America and Select Milk Producers, along with the marketing entity Greater Southwest Agency, conspired to keep prices paid to farmers for raw milk artificially low. The lawsuit claims the cooperatives were sharing non-public pricing information to coordinate farmer pay rates between 2014 and 2018.
The complaint also accuses the cooperatives of failing to “pool” milk. Usually, dairy cooperatives will pool member farmers’ milk before selling it so that each farmer gets paid according to the volume they contributed. But according to the suit, the defendants allegedly kept the milk supplies separate so they could keep different agreements with the various farmers and pay some lower than what was due them.
If the accusations are true, the defendants could have been violating the Sherman Act, which prohibits this kind of collusion.
In a statement sent to NM.news, Dairy Farmers of America says that the decision to settle was made to ensure that consumers continue to get their supplies without interruption. “While we remain adamant that our actions were legal, ethical, and grounded in our Cooperative’s values,” a representative wrote, “the unique complexity of the case—combined with escalating costs and ongoing disruption—made resolving this now the prudent path forward.”
But the cooperative still denies any wrongdoing. “Ultimately, the cost to continue was higher than the cost to resolve, making this the most logical business decision for the Cooperative, despite the strength of our case and our conviction that we would have ultimately prevailed,” says the statement.
The lawsuit claims that alleged market manipulation by the cooperatives may have harmed family farmers in New Mexico and neighboring states. Plaintiffs include Othart Dairy Farms, Pareo Farm, Desertland Dairy, Bright Star Dairy and other New Mexico farmers. The deadline to file a claim is fast approaching. Affected farmers have until Oct. 13 to file, with a fairness hearing scheduled for Nov. 12.
The affected period spans Jan. 1, 2015, through June 30, 2025, and covers dairy farmers in New Mexico, most of Texas (excluding the far East), eastern Arizona, the Oklahoma Panhandle and southwestern Kansas. To qualify, producers must have sold raw Grade A milk to Dairy Farmers of America or Select Milk Producers (directly or via an agent) in the Southwest Area during that time.
Under the proposed settlement, Dairy Farmers of America has agreed to pay $24.5 million and Select Milk Producers $9.9 million, for a total of $34.4 million that will be distributed among eligible class members.
The settlement also includes a requirement that Dairy Farmers of America and Select Milk Producers stop sharing non-public pricing information, dissolution of the Greater Southwest Agency and changes to cooperative practices to increase transparency and limit price coordination.
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