AG Kaul announces lawsuit against Dairy Farmers of America

Colleen Kottke
Wisconsin State Farmer
The future of Dean Foods is unknown right now.

Farmers and ag industry stakeholders are hailing the Wisconsin Attorney General for joining a lawsuit against the country's largest dairy cooperative. 

Attorney General Josh Kaul announced that he is joining the U.S. Department of Justice and the Commonwealth of Massachusetts in filing a complaint and proposed judgement in the Northern District of Illinois against Dairy Farmers of America (DFA), which recently acquired the lion's share of Dean Foods' assets during the March 30 bankruptcy sale.

During the court supervised sale, 35 bidders lined up to purchase assets. The winning bidders included: DFA purchased 44 fluid and frozen assets for $433 million; Prairie Farms cast a winning bid of $75 million for eight production facilities and two distribution plants; Mana Saves McArthur purchased the McArthur Dairy Plant and two distribution centers for $16.5 million; Harmoni paid $7.25 million for Uncle Matt’s Organic Inc. and Producers Dairy Foods acquired the Model Dairy processing facility for $2.1 million.

Prior to the sale, stakeholders and advocacy groups reached out to lawmakers and attorney general offices in the dairy producing states to investigate the sale, citing antitrust concerns.

Joel Greeno, president of the farm advocacy group Family Farm Defenders, said the sale to DFA would have a "far-reaching impact on dairy producers".

"DFA says they have every interest in paying farmers better. Like hell. They have no history of doing that ever," Greeno said, adding that the deal could be "upended by the U.S. DOJ or a state's attorney general".

"We feel strongly that this is an antitrust issue that must be looked at," Greeno told the Wisconsin State Farmer following the sale. 

As part of the settlement suit, DFA must sell plants in Harvard, Ill., DePere, Wis, and Franklin, Mass. within 30 days.

According to the Wisconsin Department of Justice, DFA is required to divest the intellectual property associated with the Morning Glory dairy plant in DePere, including the exclusive right to using the Dean's name in Wisconsin, Illinois, Indiana, and the Upper Peninsula of Michigan, and licenses for the TruMoo and DairyPure brand names nationwide.

Josh Kaul

"I am very happy that we've been able to help protect competition in the dairy industry here in Wisconsin," Kaul said. "While strong competition in the market is always important, it's incredibly important now, as we're living through a pandemic. Our supply chain must have robust competition to ensure a continued supply of milk to those who need it, and milk producers--who were facing a crisis in the dairy industry even before the coronavirus pandemic hit--need to be able to sell milk on fair terms."

Wisconsin Farmers Union (WFU) and dairy farmers raised concerns about the sale of Dean Foods to DFA, citing a history of anti-competitive business practices and a tendency to pay farmers less for their milk than other buyers.

"We want to thank the Attorney General's office for taking the time to listen to farmers and consider the impact this merger could have on their livelihoods," said WFU President Darin Von Ruden.

Von Ruden noted the COVID-19 pandemic has brought to light the risks of a highly consolidated food system, particularly in meat processing.

"Wisconsin is one of the few places in the country where we still have robust dairy processing infrastructure and this action on behalf of our State Department of Justice will help preserve that," Von Ruden said. "Though the sale of the majority of Dean Foods' assets to DFA have been approved by the U.S. Dept. of Justice, the state of Wisconsin can claim victory."