Consumers accuse milk ‘cartel’ of antitrust violations

The grocery shoppers say about 70% of dairy producers work together to restrict the raw milk supply in the United States and artificially raise prices.NORFOLK, Va. (CN) — A proposed class of consumers has sued 14 dairy marketing cooperatives in Virginia, accusing them of subsidizing exports to raise dairy prices artificially.​The consumers seek injunctive relief and damages under antitrust and consumer protection statutes of states that permit indirect purchaser recovery, targeting Cooperatives Working Together, currently rebranded as the NEXT Program, a farmer-funded national program developed and run by the National Milk Producers Federation. The 14 named defendants are program members.​"CWT is a cartel of dairy cooperatives and dairy producers that has been the subject of high-profile antitrust litigation previously," the consumers said in their complaint filed Monday in U.S. District Court for the Eastern District of Virginia. “The CWT cartel works to artificially fix, maintain, suppress or raise prices in the U.S. markets for dairy products such as (non-exhaustively) milk, cheese and butter.”​Through NEXT’s export assistance program, members use voluntary contributions to subsidize each other’s dairy exports to foreign markets. The program applies to anhydrous milkfat, butter and butter blends, natural cheeses, pasteurized process cheese, whole milk powder, ESL/aseptic fluid milk, cream, skim milk powder and milk protein concentrate. By using it to make cheese and other dairy products for export, NEXT members reduce the raw milk supply that could be used to make milk for American consumers.​"This directly reduces the domestic supply of such products and also diverts milk supply as an input to those products into foreign markets," the consumers said. “As a consequence of this supply restriction, CWT achieves the stated purpose of export assistance: domestic prices rise above a competitive level for any U.S. dairy products that are either directly subject to CWT’s export assistance or which use milk as an important input.”​In a 2026 press release, the National Milk Producers Federation announced the NEXT program contributed to the export of the equivalent of 74 million pounds of butter and 127 million pounds of cheese.​"The acknowledged dynamics of the dairy market are such that a substantial decrease in the supply of raw milk produces an immediate upward effect on the unregulated market price of butter and cheese in the national wholesale market for such dairy products," the consumers said. “The elimination of the supply of milk through converting it to cheese and other dairy products and then exporting it en masse had the necessary and intended effect to increase the unregulated price of those products in the national market.”​The consumers argue the scheme benefits dairy producers only if they expect reciprocity and expect their horizontal payments to raise domestic prices. In a 2012 update to CWT members, the program added 43 cents per hundredweight of milk received by dairy farmers.​"At a fundamental level, NEXT’s export investment has helped grow demand abroad for U.S. dairy and maintain the global competitiveness of participating cooperatives, even when U.S. prices have diverged from global markets," National Milk Producers Federation President Gregg Doud said in a press release. “Looking ahead, the program’s future is bright.”​According to the consumers, CWT has already shelled out over $270 million to settle antitrust litigation in the last decade. Several current defendants, including the National Milk Producers Federation and Agri-Mark Inc., settled a class action in 2020 over claims the CWT engaged in a conspiracy through the herd retirement program, in which farmers en masse killed the dairy cows in their herds to limit raw farm milk production. The dairy marketing cooperatives admitted no wrongdoing in the conspiracy, which ran from 2003 to 2010, but did pay $220 million.​The consumers also criticized the concentrated nature of the dairy market. Defendant Dairy Farmers of America produces close to a third of the entire country’s fluid milk.​"Barriers to entry have kept and continue to keep would-be competitors out of the dairy industry — the construction of plants/processing centers, the high cost and need to transport dairy products quickly due to their perishability, the time and space requirements needed to raise cows for milk production for dairy products, and the high cost that comes with marketing dairy products for sale to end users, like plaintiffs and members of the putative class," the consumers said.​The consumers argue the export assistance program-caused price inflation is passed through to American consumers. The consumers bring claims under the Sherman Act, state antitrust and consumer protection statutes and unjust enrichment.​"Milk, cheese and butter are household staples with few reasonable substitutes outside their respective categories," the consumers said. “Consumers may switch among varieties within a market, but defendants’ conduct, through raising raw milk prices, raised the prices of every variety within each market simultaneously.”Representatives of the dairy marketing cooperatives and the consumers did not respond to a request for comment.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads