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Milk is a quintessentially American kitchen staple and plays a fundamental role in our national diet. Dairy farming has long been a staple of our agricultural economy, with small dairies occupying a sentimental place in the American imagination. But over the past century, dairy farming has changed dramatically, from a market comprised of small producers to an increasingly consolidated, corporate industry.

 

In the first part of the twentieth century, milk production took place in a competitive, open market. Across much of rural America, dairy farms were commonplace. In 1940, the USDA counted about 4.6 million farms with milk cows (versus 105,000 in 2000). Milk processors, meanwhile, were small, local enterprises that competed strongly with one another, allowing farmers to sell their products to whoever offered the best price. Further, dairy farmers were able to freely organize themselves into cooperatives that enabled them to counterbalance the power of any bottler they thought didn’t treat them well: in the early 1940s, there were about 2,300 dairy cooperatives in America (versus 155 in 2007).

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But today, two companies dominate the dairy business in America and in many parts of the country have the power to dictate terms. These two giants, Dairy Farmers of America and Dean Foods, control as much as 80 or 90% of the dairy supply in some states, like Michigan, Massachusetts, or Tennessee. Consequently, they have oversize impact on the dairy market and farmers’ livelihoods.

Dean is the largest milk processor in the country. It boasts a 36% share of the U.S. milk market as a whole, and controls at least 31 brands sold across the country, including Land O’Lakes, Garelick Farms, Fieldcrest, and Swiss Dairy. (In May 2015, Dean announced that it would unite its many brands under the same name, DairyPure, for consistency in different regions.) Between 1987 and 1998, Dean bought fourteen milk companies and merged with Suiza Foods, the second largest milk processor, solidifying its powerful place in the market. Dean had $9.5 billion in sales in 2014. Dairy Farmers of America, meanwhile, controls about a third of the U.S. raw milk supply. While technically a “cooperative,” DFA acts more like a traditional corporation, and is involved in the processing, delivery, and marketing of dairy products.

Worse, DFA and Dean in many respects are not true competitors. In many parts of the country, DFA serves as Dean Foods’ exclusive supplier to funnel milk into that company’s brands. In recent years farmers have repeatedly alleged that the two routinely collude on pricing and force farmers to market their milk through those companies’ services.

Since DFA was created in 1998 in a merger of four large cooperatives, dairy farmers have increasingly pushed back against DFA’s growing market power. Although both the Bush and Obama administrations have largely ignored this problem, farmers have managed to bring two private antitrust suits against Dean Foods and DFA. In 2012, farmers in the Southeast received a $140 million settlement after a class-action lawsuit alleged that the two companies’ collusion lowered prices for dairy farmers. And in 2014, DFA paid $50 million to around 10,000 dairy farmers to settle a class-action lawsuit that alleged that DFA and its marketing arm, Dairy Marketing Services LLC, had conspired to monopolize the raw milk market in the Northeast.

In 2010, the Justice Department sued Dean Foods over its acquisition of Wisconsin-based processor Foremost Farms, alleging that the acquisition dramatically reduced competition in sales of milk to school districts, grocery stores, and supermarkets, and in some areas constituted a regional monopoly. But the divestment that settled that lawsuit did little to reel in Dean’s power over the long term.

Despite the efforts of small farmers, extreme consolidation has had a dramatic effect on the dairy industry. Since 1970, the number of dairy farms has dropped from 640,000 to around 60,000. For the past two decades, about 4,600 dairy farms have closed each year. And the remaining farmers are making less for their product; between 1998 and 2007, dairy farmers saw profits fall by 25% while retail prices rose by 40%. That windfall ended up in the hands of the largest corporate processors. While farmers’ profits have risen somewhat from their low in 2009, dairy farmers are still struggling.

The size of dairy farms is also changing. In Wisconsin, farms with under 100 head of cattle comprised 56% of that state’s milk production in 2000, compared to 45% in 2006. And farms with over 500 head of cattle grew from 9% to 19% over the same six-year span. Nationally, the average number of cows per herd rose from 74 to 179 between 1992 and 2011. 

Today, the average dairy farm looks more industrial than ever. In the late 1990s, the majority of milk was produced on small farms. But now, more than a quarter of milk comes from large-scale dairies. Cows on industrial dairies are given little access to the outdoors, and are pushed to produce milk at unprecedented rates. In 1940, the average dairy cow produced about 5,000 pounds of milk in its lifetime. By 2000, that number reached nearly 18,000 pounds. This jump is partially due to breeding for productivity, and partially due to the use of hormones like recombinant bovine growth hormone (rGBH) that can increase a cow’s milk production by up to 12%.

In key dairy states, farms are growing in size and shrinking in number. As the power players in the dairy industry continue to grow, small farms are shuttering at a rapid pace.

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Photo by Wilson Ring/Associated Press.