Milk is a quintessentially American kitchen staple and plays a fundamental role in our national diet. Dairy farming has long been a staple of our agricultural economy, with small dairies occupying a sentimental place in the American imagination. But over the past century, dairy farming has changed dramatically, from a market comprised of small producers to an increasingly consolidated, corporate industry.

In the first part of the twentieth century, milk production took place in a competitive, open market. Across much of rural America, dairy farms were commonplace. In 1940, the USDA counted about 4.6 million farms with milk cows (versus 105,000 in 2000). Milk processors, meanwhile, were small, local enterprises that competed strongly with one another, allowing farmers to sell their products to whoever offered the best price. Further, dairy farmers were able to freely organize themselves into cooperatives that enabled them to counterbalance the power of any bottler they thought didn’t treat them well: in the early 1940s, there were about 2,300 dairy cooperatives in America (versus 155 in 2007).

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But today, a handful of massive corporations and cooperatives work in concert to monopolize regional markets. Fewer buyers paired with chronic milk oversupply has collapsed milk prices and consolidated production in massive industrial farms, driving small farms out of business.

The number of dairy farms has dropped from 640,000 in 1970 to around 70,000 in 2003. And since 2003, half of those remaining farms have disappeared, leaving just 34,000 licensed dairies in 2019. Over this same period, milk production shifted to larger farms. In 2002, half of dairy cows lived on farms with 275 cows or less. Just ten years later, half of dairy cows lived on farms with 900 cows or more.

Dairy farmers are trapped in a cycle of overproduction and consolidation. On average, Americans drink 37% less milk than they did in 1970. But even with declining demand and dramatically fewer farms, overall U.S. milk production has only increased due to greater milk production per cow and the rise of larger industrial farms. Demand for other dairy products, such as cheese and yogurt, is on the rise but it is still not enough to absorb runaway milk production.

Oversupply collapses milk prices and creates perverse incentives for farms to double down, get bigger, produce more, and survive on volume – further increasing the milk supply and perpetuating the cycle. Prices paid to dairy farmers collapsed 40% between 2014 and today, and six years at below break-even prices accelerated dairy farm loss.

Cows on industrial dairies are given little access to the outdoors and these farms produce massive amounts of concentrated waste that pollutes the surrounding air and waters. Larger and more mechanized farms also require more hired labor, and increasingly dairy farms turn to exploitable immigrant and guest workers. These workers report sub-minimum wages and grueling working conditions, yet the dairy industry has recently lobbied to allow for year-round H2A guest worker visas to fill their labor needs, rather than compete for current and domestic workers by raising wages and working conditions.

Consolidation among dairy processors and cooperatives further weakens farmers’ bargaining power and drives production to fewer larger farms. Changes in antitrust enforcement precipitated a flurry of agricultural roll-ups since the late 1970s, including consolidation among dairy processors. Dean Foods, the largest milk processor in the country, bought fourteen milk companies and merged with Suiza Foods, the second-largest milk processor, between 1987 and 1998 alone. Today Dean sells 12% of all fluid milk and claimed to be five times larger than its next competitor in 2013.

To work with massive milk processors, cooperatives merged as well. The number of agricultural cooperatives dropped from 6,445 in 1979 to only 2,186 in 2014, largely due to mergers and buyouts. That included a four-way dairy cooperative merger to form industry goliath, Dairy Farmers of America, which today controls about 30% of the U.S. milk supply and handles more than two and a half times as much milk as the next largest co-op. While still technically a cooperative, DFA often acts its farmer members’ best interests to maximize profits in other parts of its business, such as processing.

Together, Dean Foods and DFA have been accused of colluding against dairy farmers and consumers for years. Three groups of farmers have received multi-million-dollar antitrust settlements over allegations that Dean and DFA used exclusive deals and no-poach agreements with other cooperatives to limit competition for farmers’ milk and suppress prices paid to farmers to guarantee cheap milk for processing.

Unfortunately, DFA recently took over the bulk of Dean’s assets in a bankruptcy sale, which the Justice Department approved despite antitrust concerns. This merger makes otherwise illegal collusion between Dean and DFA perfectly legal as internal business coordination. Dairy farmers have even fewer buyers for their milk and DFA has an even greater incentive to maximize processing profits, and thus, pay farmers less for milk. To add insult to injury, DFA will likely cut farmers’ milk checks to pay for this massive investment. A recent report by the Government Accountability Office (GAO) found that these investment withholdings lower farmers’ short-term earnings.

If DFA operated the way co-ops are supposed to, its farmer-owners would be able to decide if a major deal like acquiring Dean Foods was worth the risk. But because of its vast size and entrenched management, farmers have little control—an issue highlighted in the GAO’s recent report (more on this issue in our Cooperatives page).

In the face of this dairy crisis, farmers across the country are organizing around policies that would tackle consolidation and break cycles of overproduction by implementing supply management programs.