More than 7,000 Northeast dairy farmers could get an average of around $4,000 in a proposed settlement with the cooperative Dairy Farmers of America over an alleged effort to drive down prices paid to farmers.
A final federal court hearing was held last week in Vermont on the $50 million proposal to resolve antitrust allegations.
The 2009 class-action lawsuit charged the cooperative, its marketing arm Dairy Marketing Services and Dallas-based Dean Foods with working together to monopolize the market for raw milk in the Northeast.
The lawsuit claimed the cooperative created an agreement with Dean Foods to source all of its milk from the cooperative's farms.
"If you were a small dairy farmer who had a separate agreement with Dean, you would have to join DFA/DMS in order to continue supplying milk. So basically they were using these full supply agreements in order to consolidate their power and sweep up a bunch of other dairy farmers," Vermont Assistant Attorney General Ryan Kriger told the state Senate Agriculture Committee on Wednesday.
Dean Foods agreed to a separate $30 million settlement in 2011.
A judge is expected to decide in the coming months whether to approve the cooperative's settlement, and farmers now have until the end of May to submit a claim. The settlement covers farmers in Delaware, Connecticut, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont and Virginia. About $20 million of the settlement could cover legal expenses.
As part of the deal, the cooperative, which has not admitted any wrongdoing, may not enter into any new full supply agreements in the region for 30 months.
"Although this settlement offer by Defendants DFA/DMS is not perfect in either the structural relief needed or the monetary compensation to farmers, it is a major step in the right direction," former dairy farmer Alice Allen, of East Ryegate, wrote in a letter to the court.
Parts of the settlement increase the transparency of the cooperative to farmers but it's up to the farmers to pay attention, Kriger said.
The settlement proposes that the cooperative be audited by a nationally recognized accounting firm and provide the names and compensation of its board of directors. It also would be required to post annual financial disclosures on its member website.
"With this case having done what it could to help, now it must be up to the farmers to use those tools and work together to improve their dairy businesses and futures in the dairy industry," Allen wrote.