In November of last year, Dean Foods announced it was filing for Chapter 11 bankruptcy. The company announced back on November 12th that it was looking at a possible acquisition by the Dairy Farmers of America (DFA). This possible acquisition made some producers and consumers fear that a monopoly could be formed by the DFA. These concerns haven’t gone away, plus we have new concerns to think about as the deal nears even closer to reality.
Peter Carstensen is a Professor at the University of Wisconsin Law School. While he doesn’t say, “monopoly”, he does hint at the fact that a merger or acquisition between Dean Foods and the DFA would not necessarily bode well for consumers.
Carstensen says not only should the consumer be worried; the dairy farmers will have to aware of previous attempts of the DFA to lower milk payment prices. Having an almost -single buyer atmosphere with no competitive marketplace for dairy farmers to sell is not a good prospect for the future.
According to Carstensen, the writing was on the wall for Dean foods long before the bankruptcy was announced. He is concerned with the lack of a plan by Dean Foods to reverse the trend before it got out of control.
We don’t have a lot of time to find clarity in this situation, and producers will still need to move milk to facilities that are close to their farms.
The U.S. Justice Department is currently weighing the terms of the agreement between Dean Foods and the Dairy Farmers of America. If the Justice Department refuses the deal, Carstensen says there is still time for Dean Foods to find alternatives.