Milk Industry Mega-Merger In The Works

The largest milk cooperative in the United States has reached an agreement to purchase “a substantial portion” of the struggling milk company Dean Foods, the two parties announced on Monday, February 17.

According to the New York Times, under the agreement, the co-op, Dairy Farmers of America, would pay US$425 million to acquire 44 of Dean Food’s facilities, as well as the real estate, inventory, and equipment necessary to operate them. But the deal must be approved by the bankruptcy court overseeing Dean Foods as well as government antitrust regulators.

Dairy Farmers of America was founded to help small farmers market their raw milk to dairy processing companies like Dean Foods, which prepare milk for distribution to retailers.

Over the years, the co-op has also invested heavily in processing, meaning it buys some of the raw milk that its marketing branch sells. Those investments have created a conflict, some dairy farmers argue, because processors benefit from lower milk prices, while farmers benefit from higher ones. A deal to acquire Dean Foods would significantly expand the co-op’s processing operations, heightening that conflict of interest, critics of the potential merger say.

Full Content: New York Times

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