By MICHAEL GORMLEY and DAN HEATH
ALBANY — A top antitrust investigator from the U.S. Justice Department is investigating why New York farmers are getting record low payments for milk and consumers are seeing just a fraction of the savings.
Sen. Charles Schumer announced the effort Sunday. It follows his request for a probe after his office released a report that found the price paid to dairy farmers fell by almost half since January. At the same time, the retail price of milk fell just 15 percent.
Christine Varney, the assistant attorney general in charge of the federal Antitrust Division, will meet with farmers in coming weeks to investigate potential anticompetitive behavior in the dairy production system.
James and Elena Normandin own a dairy farm in Ellenburg. Theirs is one of many struggling dairy farms in the North Country.
"It's because there's no competition (among milk buyers)," Mr. Normandin said Sunday.
He said companies such as Dean Foods, the largest fluid-milk buyer in the United States, buy up all the milk, make their profit and leave the dairy farmers out of it.
Normandin said his expenses, such as feed, fertilizer, grain, fuel and hauling costs, have all gone through the roof at the same time the price he gets for milk has plummeted.
"My expenses will exceed my income by about $60,000 this year," he said.
It's good news a federal investigation is coming to the state of New York, Mr. Normandin said, but he wishes it had happened even quicker.
Even the oldest farms, those without mortgages or other major expenses, are only breaking even, he said.
"When a farm like that is on the verge, you know the others are struggling."
In a news release, Schumer's office said Dean Foods controls about 70 percent of the market for fluid milk in New England.
That lack of competition leaves farmers with few options as to where they sell their product.
A financial statement from the Dean Foods Web site states the company's net income for the third quarter that ended Sept. 30, 2009, increased 32 percent to $49.7 million from $37.8 million during that period in 2008. Schumer said the company's profits rose to $76.2 million in the first quarter of 2009 compared to slightly more than $30 million during the same period in 2008.
He said Dean Foods is only one of his concerns. Schumer wants to see greater transparency in how the market works.
"These anticompetitive practices on the part of the nation's largest milk processors are squeezing both consumers and dairy farmers while securing the middlemen record profits," Schumer said. "The Department of Justice is doing the right thing by sending the nation's top antitrust investigator to New York to suss out what's going on."
Schumer requested the action in August. He wants a review of market practices and how the price paid to farmers is kept at historic lows without a corresponding savings to consumers. He said the plunging wholesale prices have driven dairy farmers out of business nationwide and is a disaster for rural communities.
The times and locations of the interviews with farmers haven't yet been set.
Mrs. Normandin said her father bought their farm in 1959. She and her husband now run the farm, and her brother, Jay Carter, does the milking.
"The family farms are what you see disappearing," she said. "We've been waiting for someone to do something about this."
