Dairy Farmers of America acquires two processing facilities to expand investment in dairy space

US – Dairy Farmers of America (DFA), a national milk marketing cooperative in the US, has acquired two extended shelf-life (ESL) processing facilities from dairy manufacturer SmithFoods.

The processing plants, which are located in Richmond, Indiana, and Pacific, Missouri, produce a variety of ESL dairy and non-dairy beverages, as well as ice cream and shake mixes, for both retail and foodservice customers.

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Although financial terms were not disclosed, the facilities will officially assume the names Richmond Beverage Solutions and Pacific Dairy Solutions, respectively.

According to DFA, the existing management team will continue to oversee the plant’s day-to-day operations to avoid disruption during the shifting of ownership.

Pat Panko, executive vice president of DFA, said: “There is increasing consumer interest in extended shelf-life dairy products and this acquisition aligns with our strategy to increase commercial investments and expand our ownership in this space”.

Panko added that DFA has an opportunity to grow its customer base and create synergies between other extended shelf-life and aseptic facilities, using this acquisition.

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DFA sued by Northeastern dairy farmers

Meanwhile, Northeastern dairy farmers have filed a federal class action lawsuit against Dairy Farmers of America, accusing the cooperative of violating federal antitrust rules.

It is alleged that DFA constrained the ability of Northeast dairy farmers to get raw Grade A milk to market other than through DFA.

The farmers argue that when DFA expanded into dairy processing, it favored its processor holdings’ interest in buying raw milk at the lowest prices rather than its members’ interest in getting them the highest price for their milk, thus creating a monopsony.

Furthermore, DFA is accused of using its market power to create a price environment that pushed other dairy cooperatives ‘to the brink of insolvency, leaving those cooperatives with no choice but to join DFA through mergers.

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Responding to the allegations, Kristen Coady, senior vice-president of corporate affairs at DFA, commented that the allegations brought forth in the lawsuit filed in Vermont are baseless and completely without merit.

He added: “DFA is a cooperative that was formed by, and is owned by, and is governed by dairy farmers.”

Any claim that a farmer-owned, farmer-governed cooperative is motivated to self-inflict damage on its member-owners is preposterous, irrational, and blatantly inaccurate.”

According to Coady, since DFA’s formation, its farmer-owners have worked to build a cooperative that is strategically invested in assets to ensure milk markets and provide additional returns on their investment in their cooperative.

He noted that the company will, as it has always had, continue to make decisions and take actions that are in the best interest of our farmer-owners – now and for generations to come.

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