Remember Dean Foods?... It's America's biggest milk processor, and it filed for bankruptcy back in November. It also owns dairy-full brands like Friendly's ice cream and TruMoo chocolate milk. Dean may now merge with another major American dairy cooperative, Dairy Farmers of America, just to survive. The WSJ reports that regulators are now investigating the possible marriage. Here's the low-fat low-down:
- Dairy wary: American milk consumption has fallen around 40% in the past four decades — now milk is being produced by a smaller number of big plants (in 1980 there were 1,066 milk processing plants — in 2018, there were 459)
- Concerns: Some farm groups are worried the merger will hurt their businesses and lower the price they get paid for selling milk (already low)
- Investigation: The Justice Department wants to know how this merger would hit milk prices and competition, hence the probe
Overall US dairy consumption... is actually increasing (Americans love their cheese and yogurt). But, actual milk-drinking continues to decline (thanks to oat, almond, and the rest of the alt-milk gang). The bankruptcies of milk giants like Dean and Borden Dairy are keeping farmers on edge.
Big Milk regulation... The decision of this probe might determine the fate of many other milk-processing plants. If the deal goes through, DFA will gain a larger share of the milk market. That could mean less competition and fewer options for farmers, who might have to sell their milk for less. But some farmers think the deal might be good, if it saves a huge milk-buyer like Dean from collapsing.