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GAO-19-695R 1 (2019-09-27)

handle is hein.gao/gaobaeaby0001 and id is 1 raw text is: G A O U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 September 27, 2019 The Honorable Kirsten E. Gillibrand Ranking Member Subcommittee on Livestock, Marketing and Agriculture Security Committee on Agriculture, Nutrition and Forestry United States Senate Dairy Cooperatives: Potential Implications of Consolidation and Investments in Dairy Processing for Farmers Dear Senator Gillibrand: Farmer-owned dairy cooperatives are a major player in the U.S. dairy industry. In 2017, cooperatives handled almost 85 percent of milk marketed by U.S. producers.1 Farmers form agricultural cooperatives, including dairy cooperatives, for purposes such as marketing milk and other farm products. In addition to marketing milk, some dairy cooperatives have diversified to also own and operate processing plants in an effort to earn revenue from the sale of products made from milk, such as butter, cheese, and yogurt.2 Legislation was enacted in 1922 to provide agricultural cooperatives with limited exemptions from antitrust legislation, enabling farmers who operate relatively small farms to bargain more effectively with companies that purchase farm products-such as dairy processors-by increasing their market power.3 Like other U.S. agricultural industries, the dairy industry has changed significantly over time. One major change has been consolidation (the shift to fewer and larger firms) along the dairy production and marketing chain, including among farms, processors, and retailers. As the industry has consolidated, dairy cooperatives have also consolidated. For example, in 1998, four dairy cooperatives merged to form Dairy Farmers of America, the largest dairy cooperative in the United States. As a result of consolidation, the number of U.S. cooperatives that market milk has decreased significantly over time. The U.S. Department of Agriculture (USDA) has primary federal oversight responsibility related to the dairy industry, including dairy cooperatives. USDA oversees the Federal Milk Marketing Order (FMMO) program, which establishes certain provisions under which dairy producers 12017 is the most recent year for which data are available from the U.S. Department of Agriculture. 21n this report, dairy processors include facilities that process milk for fluid consumption as well as those that manufacture dairy products. 3pub. L. No. 67-146, 42 Stat. 388 (codified at 7 U.S.C. §291). GAO-1 9-695R Dairy Cooperatives Page 1

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