- Cooperatives Working Together, a national group that's membership produces about 70% of all U.S. milk, has settled a class-action lawsuit from a consumer group for $52 million, according to Forbes.
- The class-action suit was brought by the animal rights group Compassion Over Killing, which claims that CWT artificially inflated the price of milk and other dairy products by killing hundreds of thousands of cows.
According to a statement from Jim Mulhern, president and CEO of the National Milk Producers Federation, the group is settling the suit to put the issue behind them and move on to other issues. "It is important to note that the court has found no antitrust violation and CWT makes no admission of wrongdoing in this settlement. The activity at issue in this litigation — the herd retirement program — has long since been terminated by CWT," the statement says.
While animal groups continue to fight those who cut down livestock populations, the practice is in fact legal.
Companies sometimes buy out small farms’ milk cows to process them for meat, eliminating some of the competition. This is known as a herd-buyout program and is generally frowned upon.
While a $52 million sounds large, it is a small price to pay, considering milk from U.S. cows represented more than $40 billion over the course of the last year.
Gary Genske, treasurer of the National Dairy Producers Organization, told Bloomberg there's another dimension to the problem. While demand is surging for dairy products like yogurt, he said dairy processors, who are responsible for making and selling the products, often demand more milk than they actually need. This creates a glut in supply and drives the overall price of dairy down. The "herd retirement program" flipped the tables in dairy farmers' favor.
This news could incite consumer frustration with the dairy industry, but it’s unlikely they move en masse to alternative milk products, despite the category's rise over the last year. By settling, the dairy industry has also been able to keep the situation in the past; claimants in the class action suit needed to have bought milk between 2003 and 2010. Meanwhile, tighter controls on supply and demand could help keep milk production at sensible levels, benefiting farmers, processors and consumers alike.