US group denies wrongdoing amidst milk price uncertainty

By Neil Merrett

- Last updated on GMT

Related tags: Dairy farmers, Commodity futures trading commission, Futures contract

A leading US dairy cooperative has denied any wrongdoing over
allegations that it may be involved in price fixing for some of its
products, as yet another country finds its dairy markets under
scrutiny.

With milk prices rising strongly during the last few years, amidst high levels of processor consolidation, a number of processors in Europe, and now the US, are facing investigations into their operations. Rick Smith, president of Dairy Farmers of America cooperative, said that the enquiries were not a new development and the company was confident that it has done nothing wrong in regard to its pricing. "As a large, national and international business, DFA receives a great deal of scrutiny, and is involved in various legal matters in the normal course of business,"​ he stated. "These legal matters include enquiries conducted by the Department of Justice and the Commodity Futures Trading Commission (CFTC)."​ DF is a processor of cheese and milk, which some reports suggest are the focus of the investigation. The company also manufactures ingredients. Industry pressure ​ While rejecting any involvement in the alleged price fixing, Smith said that the company has a responsibility to ensure that its members were getting the most possible value from their milk. "In the past couple of years, we have increased discipline in operations, divested of plants that have not made money, have worked to increase cost savings in procurement and are investing in many positive projects,"​ he stated. "Last year, we reported record internal earnings, and already, in the first quarter of 2008, we are experiencing beyond-forecasted profits."​ The CFTC declined to comment whether the enquiries could lead to further focuses on other dairy groups operating in the US, or whether it was even looking into the practices of Dairy Farmers of America. "The CFTC does not confirm nor deny the existence of any investigation/s or investigative activity,"​ a spokesperson for the organisation stated. Global investigations ​ One undeniable pattern within the current global dairy market has been the emergence of a number of investigations, particularly during the last year, involving allegations of price fixing in the industry. Back in December 2007, Nestle and Vivartia were named among a number of processors as facing fines imposed by the Greek competition authority for allegedly fixing dairy prices in the country.​ The charges, which totalled about €48m, were put in place following the findings of a year-long investigation that claimed that a number of dairy groups had shared price information in the country. News of these fines came just three months after a provisional decision was revealed concerning a similar investigation into UK dairy price fixing by the Office of Fair Trading (OFT). In the decision, announced on 20 September 2007, the OFT alleged that supermarkets and dairy processors, including Asda, Tesco, Arla Foods and Dairy Crest cheated consumers out of £270m (€389m).

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