Digging Deeper


Farmers still seeking info on dairy case

(Peggy Lowe/Harvest Public Media)
(Peggy Lowe/Harvest Public Media)

As all reporters know, there’s always a lot left over from a story that doesn’t get into print or broadcast, simply because of time and space issues.

Sometimes that stuff that ends up on the cutting room floor, so to speak, is just as important as other details in the story and it’s difficult for me, Big Nerd that I am, to leave it lie.

That was especially true this week as I covered a story about a long-running class-action lawsuit filed by farmers against Dairy Farmers of America, the largest milk marketer in the country.

DFA, which represents 17,000 U.S. farmers, settled the case on Tuesday, as I reported, for $158.6 million, putting to bed a case that began in 2007, while admitting no wrongdoing. The 7,388 farmers, all based in the Southeast, claimed the DFA had betrayed them when the cooperative, which is supposed to represent them, instead made a “devil’s pact,” as one farmer called it, with Dean Foods, the country’s largest milk processor.

That pact cut out all competition, smothering prices for the dairy farmers. Executives took home millions, flew in corporate jets and hung out in posh hunting lodges, according to published reports, while farmers lost their businesses.

Farmers had wanted $1.2 billion in damages. DFA issued a statement saying the cooperative settled because executives wanted to put the issue behind them and work toward the future.  Where will they get the money for the settlement? DFA CEO Rick Smith told reporters he’ll write a check.

“We have the cash on hand. It’s not an insignificant amount of money, but we have the cash,” he said. “Right now we’ve got that amount of cash – plus – which sits effectively in a checking account, earning  zero basically.”

After the announcement on Tuesday, the farmers' lawyers also released a statement. Adding the $140 settlement from Dean Foods, which was reached last summer, farmers will share in some $300 million, attorney Robert G. Abrams of BakerHostetler said in a news release.

“The Southeast milk market has been reformed to the benefit of dairy farmers,” he said.

Neither side made Sam Galphin happy. I talked to Galphin, a veterinarian based in Raleigh, N.C., for an hour last weekend and much of what he told me didn’t get into my reports. Galphin, who is also a dairy farmer, has a unique perspective: for the last 30 years, most of those dairy farmers in the case were his clients and he watched while they struggled to survive.

Most significantly, Galphin lost a friend during the dramatic losses farmers suffered in the last decade. (According to the USDA, there were nearly 100,000 dairy farmers in 1997, but the figure was down to 59,000 as of 2007.)

Galphin testified in the case, filed in federal court in Greeneville, Tenn., that he was called out to his friend’s farm one day, only to find him dead. The farmer had been suffering financial problems, started drinking heavily because of his worries, and finally, took that way out.

“He killed himself while I was there because he knew I would take care of his family,” Galphin said. “And I did. I saw that the farm stayed together until they could get it sold and not have a complete disaster."

Galphin bristles at the term “consolidation” when used to describe what DFA and Dean did to the Southeast market. It was nothing short of a cartel, he said, and he believes the companies are complicit in his friend’s death.

So Galphin has been fighting to get the documents in this case, filed in U.S. District Court for the Eastern District of Tennessee, unsealed.  He asked the judge the day he testified in the case last spring to send each farmer the entire contents of the case.

“The dairymen, in general, do not know how this happened to them and who did it because this is all in the court documents,” Galphin said.

The most we know about what happened during that decade when DFA and Dean took $1 billion out of the Southeast market is thanks to this fine New York Times piece by Andrew Martin.

Some of the case documents are supposed to be made public, according to a judge’s ruling last spring, said Julie Walker, a dairy blogger who has covered the case for several years.

Let’s hope so. And let’s hope U.S. District Judge Ronnie Greer, who is overseeing the case, opts to put some sunshine into the Southeast dairy market. Because the farmers, industry folks and the public have a right to know how the country’s largest milk providers were doing business and whether significant reforms really were created by this settlement.