Milk is such a seemingly simple, ubiquitous product. Consumers hardly think that its production entails so much hard work for so little economic certainty. Barry Easterbrook has a great article about the US dairy industry which is now appearing in Gastronomica. It’s perfect for a lengthy weekend read, especially if you want to learn about how our food system completely overcomplicates production and pricing. Sometimes the results are unfortunate for individual producers. For the food law geeks, if you read between the lines of the article, there is some good stuff in there about how the massive domestic milk cartel, Cooperatives Working Together, does its thing.
CWT is an agricultural cooperative, in the news lately as the defendant in a substantial antitrust class-action suit. The Easterbrook article gives you a better insight into CWT’s price manipulation tactics and supply controls which the class action suit found to be so objectionable.
CWT exploits the Capper-Volstead Act to exempt its price fixing and market manipulation practices among is dairy members. The Act ordinarily exempts agricultural cooperatives from anti-trust laws. Agricultural cooperatives qualify for the exemption only under limited conditions. The most important condition, and the one most often overlooked and violated, is that all cooperative members must also be producers of agricultural commodities in order to qualify for the exemptions. Once these conditions have been met, members have some, but not unlimited, ability to coordinate sales, marketing and pricing activities. The recent lawsuit alleges that CWT violated this rule by admitting members who were not producers, such as marketing organizations, distribution groups, and other trade organizations.
By their own very public admission, CWT’s programs successfully mitigated the price fluctuations which make dairy farming such a difficult and risky enterprise. They did it in part by making your milk more expensive. Whether or not they blew their Capper-Volstead exemption is another story.
The Easterbrook article and the recent lawsuit are nice tie-ins. Commodity production turns farmers into price-takers, an unenviable position in which to be considering how susceptible producers are to price fluctuation. Non-farmers can hardly imagine what a hard life that must be. It is perfectly understandable how an organization like CWT would push the limits of food law to mitigate the financial risks of its membership.
Yet there is another way for dairy farmers to achieve price stability. Changing consumer demand has allowed for organizations like Hudson Valley Fresh to opt out of the commodity production system altogether. Their milk is not anonymously co-mingled into a great big tank.Hudson Valley Fresh members have successfully de-comoditised their milk by taking a more active role marketing and distributing their own product. This involves a far less risky business and legal strategy because their success does not depend on pushing the limits of anti-trust law. They made their own discreet pipeline for milk which conforms to separate production guidelines, so they have more say over the destiny and price of their product. Think small.