Hotline Blog

Follow us on

Regulators Probe Dean Foods Merger

By Todd Horwitz 

Federal antitrust regulators are probing a possible deal between a major U.S. dairy cooperative and Dean Foods Co., the bankrupt milk-processing giant, as the dairy industry realigns after decades of declining milk consumption.

Officials and people in the industry said the Justice Department is discussing with farmers and retailers the potential impact of such a deal on milk prices and competition in the dairy business, as Dean explores asset sales after filing for bankruptcy.

Dean, the top U.S. milk processor by sales, sought Chapter 11 protection in November after struggling for years with slumping demand. That month, the Texas-based company and Dairy Farmers of America, the largest U.S. dairy cooperative by membership, said they were in deal discussions, which have continued.

Monica Massey, DFA’s executive vice president, said the deal was subject to regulatory approval. “When the largest processor of raw milk in the world files for bankruptcy, we have an obligation to do what we can to secure those markets and work to minimize disruption to our members and other farmers,” she said. “If a deal is reached, we will fully cooperate with DOJ officials, as we have done with past transactions.”

In 1980, 1,066 plants across the U.S. processed an average of 50.1 million pounds of milk annually, according to U.S. Department of Agriculture data. By 2018, there were 459 plants each producing an average of 103.9 million pounds of milk. The plant closures and consolidation have challenged dairy farmers, forcing some to find new buyers and leading others to close their milking parlors. The Agriculture Department reported about 37,500 U.S. dairy herds at the end of 2018, down from about 57,000 in 2008.

A deal between Dean and DFA would unite two Dairyland giants. Dean is the biggest U.S. milk processor by sales, selling $4.8 billion worth in 2018. Dairy Farmers of America estimates that it markets nearly one-third of milk in the U.S., counting Dean as the cooperative’s biggest customer. DFA also runs milk-bottling plants and consumer dairy brands of its own.

Todd “Bubba” Horwitz

OH Staff Writer

Author

Real News. Real Profits.

Trade Alerts – Podcasts – Webinars – Online Courses