Dean Foods to be sold to Dairy Farmers of America
Dean Foods is the largest milk processing company in America.
In November, the company announced it was filing for Chapter 11 bankruptcy, due to declining milk demands. The DFA announced they had reached an agreement to purchase 44 of Dean's facilities; a move that has some worried about the power DFA now holds. UW-Extension Agricultural Agent Lyssa Seefeldt says she can understand why some farmers may be concerned.
“DFA is the largest dairy cooperative, so I think that is where the concern comes in that you'd have the largest co-op owning the assets of where that milk could potentially end up,” she says.
Dairy Farmers of America is the largest dairy co-op in the country, representing over 14,000 farmers.
“Because they are that farmer-owned co-op, they have a little bit of leverage because they have the assets that could come in to be able to purchase those dean foods assets, where some other entity might not have the capacity to bring in the capital to make that purchase all at once,” Seefeldt says
Seefeldt also says some farmers may worry about the control the DFA will have after the merger.
“That is I think were some of the concern comes in is, that there might be potential that you have one large entity that owns where that fluid milk might be going,” she says
Wisconsin is obviously known as “The Dairy State.” But in terms of production, it should be called “The Cheese-Making State.”
”The impact for Wisconsin dairy farmers is probably not going to be a big thing we feel, because we are largely a cheese making state,” Seefeldt says. “If Wisconsin was a country in its own right, it would be the third or fourth largest cheese producer in the world.”
Dean Foods only has one plant in all of Wisconsin, located in De Pere. Seefeldt says she believes DFA is just trying to protect its farmer members.
“I think the intent is just making sure they have an outlet for that milk,” she says.
The price for the deal is reportedly a base of $425 million dollars. Dean Foods produces milk under brands like Dairy Pure and TruMoo, as well as dairy products under Land O'Lakes and Organic Valley.
In a news release sent to WEAU, the Dairy Farmers of America President and Chief Executive Officer Rick Smith say, “As Dean is the largest dairy processor in the country and a significant customer of DFA, it is important to ensure continued secure markets for our members’ milk and minimal disruption to the U.S. dairy industry. As a family farmer-owned and governed cooperative, no one has a greater interest in preserving and expanding milk markets than DFA. We are pleased that we have come to an agreement on a deal that we believe is fair for both parties.”