Rising Concentration in Milk Processing, Dairy Industry Undermines New York's Rural Economies

Today, Food & Water Watch released an analysis that found that New York dairy farmers - and their rural neighbors - were harmed as consolidation in the milk processing and handling industry increased. Between 1982 and 2007, New York lost 64.6 percent of its dairy farms in 24 rural, upstate counties as the number of milk processing companies and milk handlers grew fewer in number but larger in size.

"Medium-sized dairy farms used to form the foundation of rural economies in upstate New York," said Food & Water Watch Executive Director Wenonah Hauter. "But the effective coordination between the nation's biggest milk processor Dean Foods and the biggest milk handler Dairy Farmers of America has threatened the economic vitality of New York's rural communities."

Food & Water Watch's report, The Economic Cost of Food Monopolies, found that the number of milk processing plants in New York fell by nearly half from 61 in 1992 to 37 in 2007 and other large dairy product manufacturing plants closed over the past decade. The declining number of plants made dairy farmers more dependent on fewer milk processing companies and fewer, larger milk handlers. A class-action suit brought by dairy farmers in New York and other northeastern states charged that the biggest milk processor and biggest milk handling cooperative worked in concert to effectively lower the prices farmers receive.

"Independent dairy farmers in New York cannot get fair prices for their milk when only a few firms buy, handle and process milk," said Waterville dairy farmer Gretchen Maine. "The corporate style co-ops like DFA and the big processing companies like Dean have bought up the marketplace and now dairy farmers just have to accept whatever low prices they offer us for our milk while paying higher prices for our inputs."

As dairy farms disappeared, the remaining farms became larger to survive and secure sales with the big handlers and processors. Food & Water Watch compared two New York dairy counties with different trends in their dairy farms. Historically New York's dairy leader, St. Lawrence County lost 77 percent of its dairy farms between 1982 and 2007. Despite this drastic decline, it remained tied for the county with the most dairy farms in the state in 2007, which is indicative to the overall drop in dairy farms across New York. On the other hand, Yates County started with very few dairy farms, but small-scale Mennonite dairy farmers migrated to the county over the past three decades. Yates was the only county to have an increase in the number of dairy farms and had stronger economic performance than St. Lawrence County, despite St. Lawrence's status as a dairy leader.

"These two counties tell a typical story: more small- and medium-sized farms contribute more to the economy than fewer larger farms," noted Hauter. "Household earnings rose in Yates County but fell in St. Lawrence; the number of small businesses increased 30 percent in Yates County compared to only a 6 percent increase in St. Lawrence County."

The Yates County experience demonstrates that more medium-sized farms can provide more economic benefit for rural communities, but Mennonite farming practices may provide little guidance for other independent producers. Mennonite farmers use fewer inputs and expensive equipment, rely on plenty of low-cost family labor and typically have little farm debt. These are pre-conditions that most farmers and communities will be unable to replicate, and it is striking that the only county in New York to see growth in its number of dairy farms had these unusual characteristics.

This study of New York dairy farms was part of a multi-sector examination of the cost of economic consolidation in the food and agriculture system. Other sectors and regions included Iowa hog production; poultry production on Maryland's Eastern Shore; organic soymilk production and organic soybean farming; and California's processed fruit and vegetable industry.

"The consolidation of the food and farm sector is sucking the economic vitality out of rural America and shipping it off to Wall Street," said Hauter. "These findings shine a much-needed light on the negative economic impact that farm and agribusiness monopolies have on farmers, consumers and rural communities."

A copy of the report, The Economic Cost of Food Monopolies, can be downloaded here: https://www.foodandwaterwatch.org/reports/the-economic-cost-of-food-mon...