ST. ALBANS — Farmers may gain two advocates within Dairy Farmers of America (DFA) and Dairy Marketing Services (DMS) if the court approves a proposed settlement in the anti-trust case filed against the two dairy giants.
The two new positions — a farmer ombudsman and an advisory committee member — will give farmers more of a say in the operation of DFA and DMS.
“This gives the opportunity for the farmer’s voice to be heard and acted upon,” said Alice Allen, lead plaintiff in the anti-trust case filed in 2009.
Plaintiffs in the class action suit alleged that between them the defendants controlled access to processing plants and forced farmers to work through DFA and DMS to access markets for their milk.
The settlement also addresses concerns raised by farmers appointed to represent the interests of non-DFA members. The new settlement will prevent DFA/DMS from owning a controlling interest in Dairy One, a milk testing company for 10 years.
For five years, when a milk test finds bacteria or other contaminants, an additional test will be done at a facility selected by the farmer from a list approved by the USDA Order One administrator.
Farmers whose milk is found to have contaminated a truckload of it can face significant financial penalties. At a hearing last year, farmers argued those penalties were levied without independent testing, placing farmers at the mercy of DMS and DFA, and giving the two interconnected organizations substantial control over farmers’ livelihoods.
Milk testing is also a significant determinant of farmers’ pay. Farmers are paid more for milk with higher fat and protein levels, for example. Under the proposed settlement, farmers who dispute the results of the component testing conducted by DFA or DMS may request additional testing at two facilities approved by the market administrator.
In the case of both adulterated milk and component testing, the farmer ombudsman will be able to serve as a mediator at the request of either the farmer or DFA/DMS. The ombudsman will also have the authority to order additional component testing.
“I think these new added milk testing provisions when there is a possible error/discrepancy should be appreciated by farmers,” said Allen. “Especially the fact that the labs used for this special testing will be selected by the farmer in question from a list of accredited labs provided by the FMMO 1 Market Administrator.”
Under the terms of the settlement, the advisory council member will be charged with advocating for better pay prices for farmers and ensuring milk sale proceeds are invested in a manner that benefits farmers.
This position will last for four years.
The council member will have the access to the full records of DMS and DFA’s Northeast Advisory Council (NEAC), and will be able to request a third-party review of DFA and DMS’s financial statements and consolidated accounting.
Both the advisory council member and the farmer ombudsman will issue independent reports to farmers annually.
ELECTIONS, TRANSPARENCY AND SUPPLY CONTRACTS
The revised settlement increases from 30 months to four years the amount of time during which DFA and DMS cannot enter into full supply agreements with milk processors. Under those agreements, DFA and DMS would become the sole supplier of milk to a processor, forcing independent farmers and other cooperatives to sell their milk through DMS to gain access to those markets.
There are exceptions. DFA/DMS may renew existing agreements with five H.P. Hood facilities, two Dean Food facilities, Swan Valley in Swanton, Maplebrook Farm in Bennington and Leprino Foods in New York.
DFA and DMS may also enter into full supply agreements with new milk processors when those agreements are considered necessary to the opening of the business. Those agreements are to be reviewed by the ombudsman.
In addition, the boards of DFA and DMS will now have to review and approve all supply agreements. Any member of DFA or farmer whose milk is marketed by DMS will be able to request, in writing, a summary of the terms of any supply agreement.
The settlement will also allow any member of DFA or DMS to terminate the relationship at any time in the next four years without penalty.
The settlement includes the release of court documents previously kept sealed. “This, I think, can be a rare opportunity for farmers to take a look at documents detailing activity a farmer might have suspected but couldn’t verify,” said Allen. “We have all heard alleged activity of DFA that we thought was questionable so now there will be that opportunity to read many of those documents.”
DFA agreed to disclose additional information about the cooperative’s finances to members via annual reports and a members-only portion of its website. The identities of board and committee members, and the money they are paid, will be made public.
Finally, NEAC in conjunction with the ombudsman will review milk checks for clarity and transparency, with an opportunity for farmers to have input into the review.
Similarly, NEAC and the ombudsman will review election procedures within DFA to determine if changes are needed.
THE MONEY
The proposed financial settlement remains the same — $50 million, with $25 million coming from DFA and $25 million from DFA.
The settlement does not state how much of those funds will be used to pay the plaintiff’s attorneys, but does limit attorneys’ share to one-third. Previously, plaintiff attorneys had sought $16.6 million in payment.
Northeast farmers are expected to receive roughly $4,000 each.
Farmers who produced milk in the Northeast between 2002 and 2014 who wish to weigh in on the proposed settlement at a Federal District Court hearing on May 13 in Burlington must inform the court in writing of their desire to be heard by April 29.