Consolidation and Price Manipulation in the Dairy Industry

Abstract

Despite what the picture on the package suggests, the dairy products you buy probably don’t come from a local dairy farm that supplies a local processing plant. Over the last 20 years, the dairy industry has transformed from a local network of farms and processors to mega-dairies that sell their milk to a tiny number of corporate-style milk cooperatives and processing companies. Consolidation in the dairy industry has increased the size and power that large dairy cooperatives, fluid milk processors and dairy product manufacturers exert over dairy farms.1 There are now fewer companies at each step of the dairy supply chain and they are coordinated into powerful corporate alliances. These larger market players increasingly source their milk from industrial mega-dairies. But this increased scale and intensified production by farms, processors and manufacturers has not benefited farmers or consumers — farmers receive lower prices for their milk and consumers pay more at the grocery store.