Sept. 10, 2010

California Class 1 price announcement delayed

Due to a state employee furlough, California’s Class 1 milk prices will be announced on Monday, Sept. 13.

Crop Production report

Corn production is forecast at a record 13.2 billion bushels, down 2% from the August forecast, but up from the previous record of 13.1 billion bushels set in 2009. Based on conditions as of Sept. 1, yields are expected to average 162.5 bushels per acre, down 2.5 bushels from the previous month and 2.2 bushels below last year’s record of 164.7 bushels.

Soybean production is forecast at a record high 3.48 billion bushels, up 1% from August and 4% above last year. Based on Sept. 1 conditions, yields are expected to average a record high 44.7 bushels per acre, up 0.7 bushel from both last month and last year.

World Ag Supply & Demand Estimates report

The WASDE report raises estimated U.S. milk marketings for both 2010 and 2011 – again citing higher-than-expected cow numbers and more milk per cow. The report now estimates 2010 milk marketings at 191.7 billion lbs., up 700 million lbs. from the August forecast, and up more than 4 billion lbs. since January’s outlook. Despite the boost in production, domestic and global demand should raise milk prices, but gains could be offset by higher feed prices.

MARKETS:

Cheese up again

Closing on Friday, Sept. 10:

Cheddar barrels – up 1.0¢, to $1.7050/lb.

Cheddar blocks – up 0.5¢, to $1.7350/lb.

Butter – unchanged, at $2.2225/lb.

Extra Grade nonfat dry milk – unchanged, at $1.2250/lb.

Grade A nonfat dry milk – unchanged, at $1.23/lb.

Class III milk futures – mostly steady to slightly higher through November 2011.

The week in review

The CME cash 40-pound block cheddar cheese price closed the Labor Day holiday-shortened week at $1.7350/lb., up 1.5¢ on the week and 46.5¢ more than the corresponding week a year ago, according to DairyLine Radio’s Lee Meilke. CME cheddar barrels closed at $1.7050/lb., up 2¢ on the week and 45.5¢ more than a year ago. Three cars of blocks traded hands on the week; five of barrels.

Butter slipped 0.25¢ on Thursday, the first loss since May 25, and closed Friday at $2.225/lb., down 0.25¢ on the week, but $1.0425 more than the corresponding week a year ago. Four cars were sold.

Cash powder was unchanged all week, with Grade A holding at $1.23/lb., and Extra Grade at $1.2250/lb.

Who’s driving corn markets?

The Renewable Fuels Association (RFA), which takes heat from livestock producers for driving feed prices higher, says market speculators are back at volumes last seen in 2008. RFA vice president of research Geoff Cooper charges speculators control almost as much corn today as the entire ethanol industry consumed in all of 2009. Speculators are betting the U.S. corn won’t be as high as USDA previously predicted. The Friday before Labor Day was the busiest corn trading day since corn trading began in 1877.

WESTERN DAIRYBUSINESS

Climate change: Don’t blame the cows

DAIRYLINE RADIO:

Monday: DMI Update

A partnership between the checkoff-funded National Dairy Council and Newsweek has led to the distribution of more than 1 million copies of the “How to Build a Healthy Kid” back-to-school guidebook, according to Dairy Management Inc.’s Joe Bavido. The guidebook, developed and produced by Newsweek, will be included in information being distributed to more than 60,000 schools participating in NDC’s Fuel Up to Play 60 program this fall.

To read Bavido’s comments, visit www.dairyline.com under “Today’s Dairy News.” Or, listen to the conversation with DairyLine’s Lee Mielke by clicking on “DairyLine Daily Broadcast.”

Check for daily DPW news updates at www.dairybusiness.com.

For a sample copy of Dairy Profit Weekly, or subscription information, visit www.dairyprofit.com or phone: 800-334-1904, ext. 244.

Dave Natzke, Editor

1) Dairy outlook: The good news: Milk prices are forecast higher. The question: How much will higher feed costs eat into producers’ bottom lines? Two USDA reports – the World Ag Supply & Demand Estimates (WASDE) and Crop Production reports – issued Friday, Sept. 10, provide some direction.

2) USDA’s Crop Production report: On the feed side, USDA’s September Crop Production report reduced the expected corn crop by 2% from August projections. Soybean production was projected up 1% from August and 4% from a year ago, to a record 3.48 billion bushels.

3) MILC payment ‘start’ dates (an update and clarification): Dairy farmers who produce milk above the 2.985 million lb. annual cap and had October 2009 as their payment “start” month in fiscal year 2010 should designate a new “start” month for fiscal year 2011 – by Sept. 14.

4) DPW Trends: U.S. 2009 per capita dairy consumption topped the 600-lb. mark milk equivalent (milkfat basis) for the fourth straight year. More U.S. corn is being exported in forms other than grain. According to the Renewable Fuels Association, the U.S. exported 22.4 million gallons of denatured ethanol and  886,300 metric tons of distillers dried grains with solubles in July.

5) DPW Washington: Most claims in an antitrust lawsuit brought by former and current southeastern U.S. dairy producers will continue with “class action” status, under a ruling issued this week in a U.S. district court.

Check for daily Dairy Profit Weekly news updates at www.dairybusiness.com.

Dave Natzke, Editor

For a sample copy of Dairy Profit Weekly, or subscription information, visit www.dairyprofit.com or phone: 800-334-1904, ext. 244.

Sept. 9, 2010

Dairy antitrust

Most claims in an antitrust lawsuit brought by former and current southeastern U.S. dairy producers will continue with “class action” status, under a ruling issued this week in a U.S. district court. The “Memorandum Opinion and Order” was issued Sept. 7, by Judge J. Ronnie Greer, of the U.S. District Court for the Eastern District of Tennessee, and Magistrate Judge Dennis H. Inman. The case (Sweetwater Valley Farm, Inc., et al v. Dean Foods Co., et al, No. 2:07-CV 208) is being heard in the Greeneville Division, Eastern District of Tennessee, U.S. District Court. For more information, see this week’s Dairy Profit Weekly.

WESTERN DAIRYBUSINESS

Southwest Pulse

• Environment: New Mexico dairy industry battles for economic life

• 9^th annual AZ Dairy Production Conference, Oct. 21

MARKETS:

Cheese up; butter dips

Closing on Thursday, Sept. 9:

Cheddar barrels – up 1.0¢, to $1.6950/lb.

Cheddar blocks – up 1.0¢, to $1.73/lb.

Butter – down 0.25¢, to $2.2225/lb.

Extra Grade nonfat dry milk – unchanged, at $1.2250/lb.

Grade A nonfat dry milk – unchanged, at $1.23/lb.

Class III milk futures –  mixed in a narrow range through December 2011.

DAIRYLINE RADIO:

Friday: Dairy Profit Weekly

2009 was a hard year financially for dairy farmers, but lower prices helped push U.S. per capita dairy product consumption up a little. Dairy Profit Weekly editor Dave Natzke summarizes USDA’s Economic Research Service annual report, noting “cheese has been a favorite of dairy consumers in the past, and last year was no different. And, with our love for pizza, Italian cheese consumption topped other cheese categories for the seventh straight year. Total dairy production consumption, on a milk equivalent basis, was 611 lbs., up 3 lbs. from 2008.

To read Natzke’s comments, visit www.dairyline.com under “Today’s Dairy News.” Or, listen to the conversation with DairyLine’s Lee Mielke by clicking on “DairyLine Daily Broadcast.”

Check for daily DPW news updates at www.dairybusiness.com.

For a sample copy of Dairy Profit Weekly, or subscription information, visit www.dairyprofit.com or phone: 800-334-1904, ext. 244.

Dave Natzke, Editor

Sept. 8, 2010

MILC payment: An update and a clarification

Last week’s Dairy Profit Weekly article apparently caused some confusion regarding changing Milk Income Loss Contract (MILC) program payment “start” months. NMPF’s Roger Cryan helps set the record straight, and provides an updated outlook. Producers can change their start date as often as they’d like, as long as they do so by the 14th of a month that is before both the start month on file and the start month they want to change to. Of most immediate concern, if a farmer’s current start date on file is October, he has until Sept. 14 to change it.

Wheat, corn get attention, but soybean prices remain strong, too

Much of the attention in the crop markets in recent weeks has been focused on wheat and corn, notes Darrel Good, University of Illinois ag economist. Over the next month, three USDA reports will add more clarity to the supply side of the soybean market.

WESTERN DAIRYBUSINESS

Opinions & sacred cows: Time to fish or cut bait

The dairy industry has been wrestling with supply management issues for much too long, says Western DairyBusiness editor Ron Goble. There is legislation currently under consideration in Congress. However, where is the rest of the industry? The Midwest, Southwest, and Southeastern legislators are missing in action.

MARKETS:

Another ‘steady’ day

Closing on Wednesday, Sept. 8:

Cheddar barrels – unchanged, at $1.6850/lb.

Cheddar blocks – unchanged, at $1.72/lb.

Butter – unchanged, at $2.2250/lb.

Extra Grade nonfat dry milk – unchanged, at $1.2250/lb.

Grade A nonfat dry milk – unchanged, at $1.23/lb.

Class III milk futures –  mostly slightly lower through June 2011; steady to slightly higher through December 2011.

EASTERN DAIRYBUSINESS

Northeast Pulse: Sept. 8, 2010

• Penn State Dairy Alliance webinars set

• Dairy Skills Training: Calf Management

• Pennsylvania Dairy Stakeholders seek “Pacesetter” nominations

• Vermont Grazing & Livestock Conference scheduled

• Pennsylvania Dairy Profitability Forum set

• Young Farmers’ Discussion Group forms In New York’s Mohawk Valley

Midwest Pulse: Sept. 8, 2010

• Good Farm Neighbor Award winner focuses on cow comfort

• National Conference for Agribusiness to take place at Purdue

• Central Plains Dairy Women’s Conference scheduled

DAIRYLINE RADIO:

Thursday: NMPF

Dairy farmers can take a proactive approach to growing consumer concerns regarding animal care and food production by participating in the National Milk Producers Federation’s NMPF’s Farms Assuring Responsible Management (FARM) program. NMPF’s Chris Galen said dairy farmers can now enroll independently or through their cooperative.

To read Galen’s comments, visit www.dairyline.com under “Today’s Dairy News.” Or, listen to the conversation with DairyLine’s Lee Mielke by clicking on “DairyLine Daily Broadcast.”

Check for daily DPW news updates at www.dairybusiness.com.

For a sample copy of Dairy Profit Weekly, or subscription information, visit www.dairyprofit.com or phone: 800-334-1904, ext. 244.

Dave Natzke, Editor

Rising feed futures and falling dairy futures are leading to higher projected Milk Income Loss Contract (MILC) payment rates, according to National Milk Producers Federation’s Roger Cryan. Based on conditions as of Sept. 7, MILC payments would begin in February 2011, and average 30¢/cwt. over an 8-month period ending November 2011.

Fiscal year (FY) 2010 ends Sept. 30.  MILC payments are limited to 2.985 million lbs. of milk per operation per fiscal year.  For producers large enough to worry about this limit, their deadline to choose their start month for FY 2011 (October 2010–September 2011) is coming up.

The highest payments for FY 2010 were in October, and most capped producers chose October 2009 as their start date last year.  Any farmer who wants to change that for FY 2011 will have to file a new start date with the Farm Service Agency by Sept. 14, 2010.  Months with no payment rate don’t count against the cap, but if October is your start month, payments will begin with the first month for which there is a payment rate.

Producers can change their start date as often as they’d like, as long as they do so by the 14th of a month that is before both the start month on file and the start month they want to change to.

(For example, current projections suggest the highest payments will be next summer.  A farmer can go to the FSA office by Sept. 14, and choose May 2011 as his start month for FY 2011.  Then, if the markets shift, and it looks like he can get larger payments by starting with March 2011, he can change to March, as long as he does so by Feb. 14 – the month before his new start month.  If he wants to change to July, he must do so by April 14 – the month before his old start month.)

But the bottom line is that if a farmer’s current start date is October, he has until Sept. 14 to change it.  If he doesn’t change it, it will kick in as soon as there is a payment.

For more information, see the materials on USDA’s MILC page.

USDA/FSA MILC page: http://www.fsa.usda.gov/FSA/webapp?area=home&subject=prsu&topic=mpp-mi

MILC fact sheet: http://www.fsa.usda.gov/Internet/FSA_File/milc2008.pdf.

Much of the attention in the crop markets in recent weeks has been focused on wheat and corn. The wheat market has been dominated by the shortfall in production in Russia and the potential for a drawdown in world wheat stocks. The corn market has been driven by strong domestic and world demand and by recent concerns about the size of the U.S. harvest.

Soybean prices have traded in a wide range over the past two months, but fundamental developments have been less dramatic than in the wheat and corn markets. Over the next month, three USDA reports will add more clarity to the supply side of the soybean market.  The first of those is the Sept. 10 Crop Production report which will provide a new forecast of the size of the 2010 U.S. harvest. A change in the forecast of harvested acreage is not expected, so the focus will be on the yield forecast.  USDA’s August Crop Production report forecast the U.S. average yield at 44 bushels, equal to last year’s record and about 1.2 bushels above the calculated trend yield for 2010. Above-average temperatures in many areas during August may have reduced yield potential, particularly in areas that also experienced below average precipitation during the month. For the most part, expectations are that the U.S. average yield potential has not been reduced enough to alter the prospects for a record large harvest.

The second report is the Sept. 30 Grain Stocks report which will reveal the level of old crop soybean stocks on September 1, the beginning of the 2010-11 marketing year. Based on available data, it appears that soybean exports during the 2009-10 marketing year that ended on Aug. 31 exceeded USDA projection of 1.47 billion bushels. Cumulative export inspections through August 31 were reported at 1.46 billion bushels. From September 2009 through June 2010, cumulative exports as estimated by the Census Bureau exceeded inspections by 44 million bushels. If that margin continued through August, marketing year exports would have totaled 1.504 billion bushels.

In contrast, the 2009-10 marketing year domestic crush may fall just short of the USDA projection of 1.75 billion bushels.  The crush during August needed to be 7 million bushels larger than during August 2009 to reach that projection. Monthly crush was below year ago levels from April through June and exceeded the year ago crush in July by only 300,000 bushels. On the surface, it appears that the inventory of soybeans on Sept. 1, 2010 may have been smaller than the projection of 160 million bushels.  However, the September stocks report has a reputation for containing some surprises and on occasion has resulted in a revision in the estimated size of the previous harvest.

The third report to provide supply information will be the USDA’s Oct. 8 Crop Production report. In addition to providing a new forecast of yields, that report will also reflect administrative acreage information, primarily certified planted acreage data from the Farm Service Agency.

Prospects for export demand for the 2010 U.S. crop will depend heavily on the strength of Chinese demand and the size of the 2011 South American crop.  Currently, USDA projects China will import 1.91 billion bushels from all sources during the 2010-11 marketing year, up from 1.82 billion during the year just ended.  While the 2011 South American crop is expected to be smaller than the huge 2010 crop, large inventories of the 2010 crop will keep supplies large and perhaps allow South America to capture more of the Chinese market. However, U.S. export sales for the 2010-11 marketing year have started very strong. As of Aug. 26, USDA reported sales for delivery during the current marketing year at 562.7 million bushels. New crop sales a year ago totaled 516.1 million bushels. Nearly 60% of current outstanding sales are to China. Progress of the South American crop will become very important over the next few months as the developing LaNina weather pattern becomes important for the Southern Hemisphere.

Soybean futures prices remain above $10.00/bushel, resulting in cash prices at or above the upper end of USDA’s projected range for the marketing year average price. Relatively high prices and a small carry in the futures market make harvest sales attractive for a portion of the crop.

Sept. 7, 2010

Per capita dairy consumption up in 2009

U.S. 2009 per capita dairy consumption topped the 600-lb. mark milk equivalent (milkfat basis) for the fourth straight year.  At 611 lbs., consumption was up 3.0 lbs. from 2008, according to preliminary data from USDA’s Economic Research Service (ERS).

Compared to the year before, 2009 per capita consumption included:

• fluid milk/cream: 205 lbs., +1.0 lb.

• butter: 5.1 lbs., +0.1 lb.

• American cheese: 13.5 lbs., +0.4 lbs.

• other cheese: 19.7 lbs., +0.1 lb.

• cottage cheese: 2.4 lbs., unchanged

• evaporated and condensed milk: 7.1 lbs., -0.2 lb.

• ice cream (regular and reduced fat): 20.2 lbs., -0.5 lb.

• nonfat dry milk: 4.0 lbs., + 0.9 lb.

• dry whey: 2.0 lbs., -0.4 lb.

WESTERN DAIRYBUSINESS

Western Pulse

• Darigold announces merger with Country Classic

• Newsmakers: NAIDC board elects three new directors

• Industry: Pfizer, partners support FFA, AABP programs

MARKETS:

All steady

Closing on Tuesday, Sept. 7:

Cheddar barrels – unchanged, at $1.6850/lb.

Cheddar blocks – unchanged, at $1.72/lb.

Butter – unchanged, at $2.2250/lb.

Extra Grade nonfat dry milk – unchanged, at $1.2250/lb.

Grade A nonfat dry milk – unchanged, at $1.23/lb.

Class III milk futures –  steady to mixed through November 2011.

NEW PRODUCTS

• John Deere D450 Self-Propelled Windrower

• Pfizer Animal Genetics introduces CLARIFIDE™ dairy genomics test

• Pfizer Animal Health introduces INFORCE^™ 3 Respiratory Vaccine

• New Kuhn On-Land Plow

• Vermeer Rancher 664 Baler

• Vermeer TM850 Trailed Mower

• New Vermeer Carted Wheel Rake

DAIRYLINE RADIO:

Tuesday: Levitt comments on cheese prices

Cheese price must be close to the top, in the opinion of analyst Alan Levitt, editor of the CME’s Daily Dairy Report. Labor Day is a watershed time of the year, when supplies are generally the tightest, he said.

“Dairy producers have made it through the worst of the summer, the weather is cooling, cows are more comfortable, components and milk volume start to climb, the school milk pipeline is just about filled, so that makes more milk available to the vat and the churn,” he said.

The heavy inventory of cheese could temper some of the buying going into fourth quarter. Exports are questionable, he said, because, with the run up in U.S. cheese prices, the U.S. price advantage on the world market is all but gone.

Wednesday: Beef promotion

Farm tours are all but a thing of the past, with biosecurity and animal activist concerns closing the farmgate, but Genesee, Pa. dairy producer Tricia Adams still believes farm tours are important.

“It’s important because farmers need to stick up for what they do and to let their actions speak for themselves, because, unfortunately, there are a lot of misconceptions out there on how farmers care for their animals and produce their food,” she said.

Tours on Adam’s farm are primarily for children from local schools, ages 5 to 18, but she wants them to see how a modern farm operates.

To read their’s comments, visit www.dairyline.com under “Today’s Dairy News.” Or, listen to the conversation with DairyLine’s Lee Mielke by clicking on “DairyLine Daily Broadcast.”

Check for daily DPW news updates at www.dairybusiness.com.

For a sample copy of Dairy Profit Weekly, or subscription information, visit www.dairyprofit.com or phone: 800-334-1904, ext. 244.

Dave Natzke, Editor

Sept. 3, 2010

August federal order class prices

August’s federal order Class III milk price is $15.18/cwt., up $1.44 from July and $3.98 more than August 2009. The 2010 average now stands at $13.80/cwt., up from $10.29/cwt. for the same period a year ago, but compares to $18.14/cwt. in 2008. The August Class IV price is $15.61/cwt., down 14¢ from July, but $5.23 more than a year ago.

Court rules on suit’s dismissal requests

A federal district judge pared back parts of a major dairy antitrust lawsuit, but allowed the bulk of complaints to proceed. The class action lawsuit was filed by four Vermont and New York dairy farmers against Dairy Farmers of America, Inc. (DFA), Dairy Marketing Services LLC (DMS), Dean Foods and HP Hood LLC. DFA, DMS, Deans and HP Hood sought dismissal of the charges on several grounds. Federal district judge Christina Reiss, U.S. District Court for the District of Vermont, dismissed all claims against HP Hood, and dismissed claims alleging a price-fixing conspiracy between DFA and DMS. However, she ruled against a DFA request for dismissal of price-fixing claims on the basis of Capper-Volstead immunity, and denied all requests for dismissal by Dean Foods.

Enroll in National Dairy FARM Program

The National Dairy FARM Program: Farmers Assuring Responsible Management is now accepting enrollment in the Animal Care Program. This officially launches the second phase of the implementation process, which includes the start of on-farm evaluations for participating producers. Participation information can be found at www.nationaldairyfarm.com.

MARKETS:

Barrels bump up

Closing on Friday, Sept. 3:

Cheddar barrels – up 1.5¢, to $1.6850/lb.

Cheddar blocks – unchanged, at $1.72/lb.

Butter – unchanged, at $2.2250/lb.

Extra Grade nonfat dry milk – unchanged, at $1.2250/lb.

Grade A nonfat dry milk – unchanged, at $1.23/lb.

Class III milk futures –  mostly slightly lower through December 2011.

Markets will be closed Monday due to Labor Day holiday.

The week in review

CME cash cheddar blocks closed the Friday before Labor Day at $1.72/lb., up 2.5¢ on the week and 45¢ more than the corresponding week a year ago, according to DairyLine Radio’s Lee Meilke. Cheddar barrels closed at $1.6850/lb., up 2¢ on the week and 43.75¢ more than a year ago. One car of blocks traded hands on the week; five of barrels.

CME cash butter moved higher for the fourteenth week in a row, closing Friday at $2.2250/lb., up 4.5¢ on the week and $1.0550 more than the corresponding week a year ago. Two cars were sold.

Cash Grade A nonfat dry milk closed Friday at $1.23/lb., up 3¢ on the week; Extra Grade held all week at $1.2250/lb.

DAIRYLINE RADIO:

Monday: DMI Update

General Mills Foodservice has committed $100,000 to help schools build their breakfast programs through National Dairy Council’s Child Nutrition and Fitness Initiative Breakfast Grant program, according to Dairy Management Inc.’s Joe Bavido, reporting in Monday’s “DMI Update.” Schools participating in the Fuel Up to Play 60 program that are looking to expand their breakfast programs can apply to receive up to $3,000 in funding.

About 10 million children eat breakfast on any given day in U.S. schools, according to Bavido, or about one-third of the 30 million students who eat school lunch regularly. School foodservice administrators understand a breakfast program provides significant benefits regarding healthy diets and increased learning capabilities, he said.

To read Bavido’s comments, visit www.dairyline.com under “Today’s Dairy News.” Or, listen to the conversation with DairyLine’s Lee Mielke by clicking on “DairyLine Daily Broadcast.”

Check for daily DPW news updates at www.dairybusiness.com.

For a sample copy of Dairy Profit Weekly, or subscription information, visit www.dairyprofit.com or phone: 800-334-1904, ext. 244.

Dave Natzke, Editor

A participation fee is a shared responsibility for all participants of the National Dairy FARM Animal Care Program to fund the enrollment of on-farm data in a private database, as well as to pay for third-party verification of the program.  While support for the development of educational training materials has been available from the national dairy check-off, such funding sources cannot be drawn upon for third-party verification.

“Producers can participate independently or through their cooperative or processor. Producers who are affiliated with a cooperative or proprietary processor should contact their representative to see if their milk marketing organization is participating in the program; or to encourage them to join in,” said Betsy Flores, NMPF Director of Regulatory Affairs.  Participation information can be found at www.nationaldairyfarm.com.

The National Dairy FARM Program™ is a voluntary, nationwide program designed to bring consistency and uniformity to animal care through education, on-farm evaluations and objective third-party verification.

The first phase of the program provided educational materials to producers through the release of the Animal Care Manual and the Quick Reference User Guide.  As a supplement to these materials, the Animal Care DVD is now available online in both English and Spanish at www.nationaldairyfarm.com.

The National Dairy FARM Program Animal Care video highlights best management practices for a variety of issues, including animal health, environment and facilities, animal nutrition, and transportation and handling.  The content of the video is consistent with the principles and guidelines of the National Dairy Animal Well-Being Initiative, which was introduced in 2008.

To participate in the National Dairy FARM Program, producers, co-ops, processors, and state and regional dairy producer organizations can contact NMPF.

For more information on the National Dairy FARM Program, contact Betsy Flores at (703) 243-6111 or log on to www.nationaldairyfarm.com.

A federal district judge pared back parts of a major dairy antitrust lawsuit, but allowed the bulk of complaints to proceed.

The class action lawsuit – filed in October 2009 and amended in January 2010 – was filed by (plaintiffs) Vermont dairy farmers Alice and Laurance Allen, and New York dairy farmers Garret and Ralph Sitts, against (defendants) Dairy Farmers of America, Inc. (DFA), Dairy Marketing Services LLC (DMS), Dean Foods and HP Hood LLC.

Between 2005-2009, the Allens and Sitts marketed milk through DMS, a milk marketing organization established in 1999 through an agreement between DFA and Dairylea Cooperative Inc.

According to court documents, DMS markets approximately 80% of the milk marketed in the Northeast, with milk going to both Dean Foods and HP Hood. The suit alleges price-fixing and conspiracy to monopolize and monopsonize the fluid milk market in the Northeast against all the defendants.

[Editor’s note: A monopoly is when there is a single source on the supply side (as in selling milk); a monopsony is when there is a single source on the demand side (as in buying milk).]

DFA, DMS, Deans and HP Hood sought dismissal of the charges on several grounds. Federal district judge Christina Reiss, U.S. District Court for the District of Vermont, heard oral arguments for dismissal on May 6, 2010, and issued the ruling on Aug. 30.

In her 41-page ruling, Judge Reiss dismissed all claims against HP Hood, and dismissed claims alleging a price-fixing conspiracy  between DFA and DMS. However, she ruled against a DFA request for dismissal of price-fixing claims on the basis of Capper-Volstead immunity, and denied all requests for dismissal by Dean Foods.

It should be noted a hearing to dismiss does not carry the same burden of proof as a criminal trial, and so failure to dismiss does not necessarily convey a finding that the claims are valid.