Leahy, Jeffords Warn That Hood Milk-NDH Merger
Could Hurt Vermont Dairy Farmers

(WED., Nov. 20) – Senators Patrick Leahy and James Jeffords announced Tuesday that they will ask the Justice Department to investigate the impact on Vermont dairy farmers of the proposed merger of H.P. Hood Inc. and National Dairy Holdings announced last week by the two companies.  If approved, the merger would create the nation’s second-largest milk processing company.  The merger would allow one company -- Dairy Farmers of America (DFA) -- to control more than 90 percent of the New England fluid milk supply, with exclusive supply agreements with both Dean Foods and Hood Milk.

H.P. Hood, a New England icon, is acquiring the much larger National Dairy Holdings from Dairy Farmers of America (DFA) and other investors.  DFA owns a controlling interest in National Dairy Holdings, which was created as a spin off of the Dean Foods/Suiza Foods merger just last year.  As a condition of the sale, DFA will have an exclusive right to supply milk to all H.P. Hood plants -- including those currently supplied by Agri-Mark.  DFA has similar exclusive-supply agreements with Dean Foods and other fluid milk processors.

“Allowing one milk handler to control so much of the market could have a devastating effect on Vermont dairy farmers,” said Leahy, who chairs the Senate Judiciary Committee and is a senior member of the Agriculture Committee.  “Independent dairy farmers and other cooperatives could be cut out of the marketing system unless they give in to the will of the giant DFA conglomerate.”

If the merger is approved only two mid-sized bottlers in New England – the Oakhurst bottling plant in Maine and the Guida plant in Connecticut – and a handful of smaller plants will not have exclusive supply arrangements with DFA.

“Why else,” asked Jeffords, “would DFA relinquish control of National Dairy Holdings if not for the opportunity to monopolize the fluid milk market in New England?  If this merger is approved, hundreds of Vermont dairy farmers could have no choice but to market their milk through DFA.”

Furthermore, the merger could force other dairy cooperatives in the region to drop out of the federal milk marketing order system.  To participate in the Northeast order, at least 20 percent of a cooperative’s milk must be shipped to fluid milk plants during the fall.  By controlling access to most major fluid milk plants in the region, DFA could prevent other cooperatives, such as St. Albans and Agri-Mark, from qualifying to participate in the Northeast marketing order.  As a result, dairy farmers in New England ultimately could have no choice but to market their milk

through DFA.  In the longer term, if DFA is successful in monopolizing the New England market, the higher prices New England dairy farmers receive because of the high demand for fluid milk in the region could disappear.  As a national cooperative, DFA could “re-blend” its milk sales and receipts, pulling milk proceeds in New England down to the national average. 

The proposed merger of H.P. Hood and National Dairy Holdings currently is being reviewed by the antitrust division of the Department of Justice.  The agency has 30 days to decide whether to approve the merger or request additional information.

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