New England Correspondent
BURLINGTON, Vt. — Vermont's U.S. Sen. Bernie Sanders (I-Vt.) wants a federal antitrust investigation of dairy giant Dean Foods, a second increase in USDA's support price for cheese and tighter quality standards for milk going into processing plants.
And those are just the beginnings as his point person on agricultural policy, Jennifer Nelson, explained this week as the dairy industry in Vermont and across the Northeast continued to wobble under depressed milk prices and rising costs.
"Bernie is mounting a broad assault, and he's leaving no stone unturned," Nelson said. A partner in a Ryegate, Vt., dairy farm, Nelson has been on Sanders' staff for the 11 years during which he has served in Congress and, since 2006, the U.S. Senate.
Sanders wants the U.S. Justice Department to look into Dean Foods, the Dallas-based company that markets milk and dairy products under more than 50 different brands and which controls as much as 70 percent of the fluid milk trade in the New England area, primarily through its Garelick Farms brand.
Nelson said Sanders is formalizing a request to the head of antitrust enforcement in the Obama Administration, Christine Varney, to determine if Dean Foods is controlling the regional milk market and to look into broader issues of consolidation and anticompetitive practices in the dairy industry.
Varney has indicated she will take harder line on antitrust enforcement than predecessors in the Bush and Clinton Administrations.
Sanders over the past three weeks has engaged in spirited communication with Gregg Engles, CEO of Dean Foods. Sanders invited Engles to come to Vermont to explain how its prices are set, but so far Engles has declined.
In a letter to Engles, Sanders wrote, "It is our understanding that Dean Foods controls large portions of the market for fluid milk in a number of regions of the United States. It controls 90 percent in Michigan, about 80 percent in Massachusetts, 80 to 90 percent in Tennessee, 70 percent in New England, over 80 percent Northern Alabama and over 70 percent in Northern New Jersey."
Such dominance puts Dean Foods in a powerful position to affect prices throughout the dairy market chain, Sanders argued.
Engles responded by saying the farm milk price decline is "part of the cyclical nature of the dairy industry" and not the fault of Dean Foods.
"Along with our customers and consumers, we need these farmers' businesses to be healthy over the long term," Engles wrote.
But Sanders shot back that "For him to say they have no control over milk price is absolutely absurd." Dean Foods posted earnings of $76 million for the first quarter of 2009, up from $30.8 million in the comparable period a year earlier, while Engles has received compensation averaging $21 million annually over the past six years.
While Sanders was skirmishing with the Dean CEO, he was also calling on USDA Secretary Tom Vilsack to schedule hearings and proceed to modify the federal milk marketing order pricing system to achieve an $18 per hundredweight blend price, which he said would save U.S. taxpayers by eliminating Milk Income Loss Contract (MILC) payments.
"This would come only at the expense of a small handful of processors who continue to make record profits while dairy farmers are going out of business," Sanders wrote Vilsack.
Sanders wants Vilsack to lower the somatic cell count (SCC) standard to 450,000 and to bar Grade B milk for human consumption from the market.
Shipment of canola meal from Canada that's been embargoed should be resumed promptly to help lower grain prices, and USDA should increase purchases of hamburger for nutrition programs to strengthen cull dairy cow prices.
Sanders wants Vilsack to consider supporting legislation to better regulate to importation and use of milk protein concentrates (MPC) that are displacing domestic milk. And he wants the federal Commodities Futures Trading Commission to examine the Chicago Mercantile Exchange's dairy commodity trading and its use by USDA in setting farm milk prices.
As Nelson explains Sanders' multi-pronged dairy crusade to Vermont farm groups she says achieving regional food security and preserving the infrastructure that supports agriculture should be paramount public policy goals in the Northeast.
"While dairy is hurting badly, we need to keep in mind that other areas of agriculture here are doing a lot better and farms numbers are growing. But we need to make sure all sectors are healthy."