Appeal In National Dairy Lawsuit Will Delay Payments To Vermont Farmers

Jun 29, 2016

Many Vermont dairy farms are experiencing a tough summer, receiving very low prices for their milk while they’re dealing with high production expenses. The situation has gotten worse, because a financial settlement of a key lawsuit against a national dairy cooperative has been appealed. 

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This means that farmers won't see any of the settlement funds for at least a year. 

Earlier this month, a federal judge approved a settlement of a lawsuit that pit regional dairy farmers against a national dairy cooperative.

The farmers alleged that the co-op known as the Dairy Farmers of America had intentionally taken steps to artificially reduce milk prices paid to farmers back in 2009.

The $50 million settlement was to be shared among 9,000 farmers in the Northeast, with the average farm getting a payment of roughly $4,000.

But those payments are now on hold.

Dan Smith, a Vermont lawyer representing one group of plaintiffs in this case, says the settlement has been appealed to the Second Circuit Court of Appeals because one small group of farmers are unhappy with the terms of the settlement. They think the financial settlement is too low and that farmers deserve far more money to resolve this lawsuit.

"And one of the named representative farmers, a couple, have chosen to appeal the settlement." - Dan Smith, attorney

“The thrust of the settlement is to end the lawsuit, but as with any lawsuit a party to the lawsuit can appeal,” Smith says. “And one of the named representative farmers, a couple, have chosen to appeal the settlement."

Smith says it could be a while before the case is resolved. That's because this particular Court of Appeals usually takes at least a year before reaching a final decision.

"The settlement fund which would be normally be divided after this decision among the farmers will not be disbursed until the appeal is resolved,” Smith says.

The news of the appeal comes at a time when many dairy farmers are struggling financially, says Diane Bothfeld, the deputy secretary of the Vermont Agency of Agriculture.

That's because milk prices paid to the farmers are very low primarily due to an oversupply of milk.

"It's a tough summer. The milk prices are down low again ... it is really tough on some farms out there right now." - Diane Bothfeld, deputy agriculture secretary

“It's a tough summer. The milk prices are down low again. It's a cyclical process,” Bothfeld says. “We've talked about all the pressures locally, nationally and then globally … these prices go up and down. It is not easy, they [farmers] really can't budget, and it is really tough of some farms out there right now."

Bothfeld notes that even though the appeal of this case has delayed the financial payments, other non-monetary provisions in the settlement will go into place.

These include the creation of a farmer ombudsman, an independent advisory council to review the financial records of Dairy Farmers of America and an audit team to monitor DFA’s compliance with the lawsuit.

“I think those are important and … helpful for farmers, and yes, the money is important right now,” Bothfeld says. “But some of these other aspects could be helpful to farmers as well."

Bothfeld says all of these non-monetary provisions are critical to ensure that future pricing decisions made by the co-op are transparent to all dairy farmers.