Claire Kelloway, writing in Washington Monthly, argues that large farm co-operatives have become powerful and are using that against their members.
She begins by noting that 115 dairy-farming members of the Dairy Farmers of America (DFA) co-operative have filed documents in court to support Department of Justice (DOJ) claims that major dairies conspired to hold down milk prices.
“A recent report by the Open Markets Institute, an anti-monopoly think tank where I work, argues that proper antitrust enforcement is critical to both level the playing field for cooperatives and to rein in cooperatives that no longer serve their members,” Kelloway wrote.
“By arguing that DFA’s exclusionary conduct and buyer power over dairy farmers could violate antitrust laws, the DOJ’s recent brief marks a step in the right direction.
“But bolder action is needed. To truly rebalance power in agricultural markets and ensure that co-ops serve their members’ interests lawmakers and antitrust enforcers need to break up dominant agribusinesses and institute stronger guidelines ensuring healthy, democratic cooperative governance,” she wrote.
She wants co-operatives to be forced to be more transparent with members and to adopt governance structures that keep decision-making in the hands of members and not concentrated in managers.
She said the lawsuit the dairy farmers filed claims that co-operatives conspired with each other to not “poach” members from each other and to sign exclusive supplier deals with big customers, such as Dean Foods and Chobani, in return for low prices.
The deals prevented co-op members from selling directly to Dean Foods or Chobani.
This reminds me of how the manager of the Waterloo County Supplies Co-op almost bankrupted the business by building a hog barn to provide weaner pigs that he then contracted to be grown to market weight.
When members learned the details, they were incensed that their co-op money was invested in production that competed with their farms.
They took back control and even though liabilities exceeded assets, they decided to dig the business out of the hole - and they did. And remained more vigilant over their co-op for the rest of their lives.
My father, when he was co-owner of a feed mill, told me that the local co-op was his least competitive worry because it marketed "elevator bottoms" to members, meaning the chaffy grain that rose to the top of the terminals and was the last removed.
That was great for co-op feed margins, but poor rations for hogs.
