Milk processors HP Hood and National Dairy Holdings LP are planning to merge.
And those plans concern many people in New Hampshire.
Local dairy farmers say the merger could squeeze them out of business.
And 2nd District Congressman Charles Bass supports an anti- trust investigation.
NHPR?s David Darman has more.
Congressman Bass has joined Vermont?s two Senators in supporting the anti-trust investigation.
Bass says he thinks the merger would create a dairy company that?s just too big.
10 08 on the face of it, to me, it looks anti-competitive. I think its important that the justice department give it a full review, and I hope to hear a response to this letter soon. 10 20
The combination of Hood and National Dairy Holdings would create the region?s second biggest processor.
But Hood spokesperson Lynn Bohan defends the merger.
She says it is necessary to improve Hood?s competitive position.
21 ?the newly merged company, will still only represent less than one third of the processing volume in new England versus dean foods. But the newly merged company will allow us to better compete with dean foods on a national level.
Dean Foods is the nation?s biggest dairy. It owns Garelick Farms, one of Hood?s major competitors.
National Dairy Holdings chief executive, Tex Bashirs, used to be an officer of Dean Foods.
Pete Hardin, is editor of ?The Milkweed? in Wisconsin, a dairy industry newsletter.
And he says Tex Bashir still has a very cozy relationship with new competitor, Dean Foods.
36 235... Mr bashirs, according to dean foods annual statement, receives several million dollars in consulting fees from dean foods in calendar 2001. so,, the point I?m making is, even though dean foods and national dairy holdings may ostensibly be competitive, the relationships are very, very tight, and I find this very troubling. 316
The merger troubles New Hampshire dairy farmers as well.
Many farmers are anxious that a Hood combination with National Dairy Holdings will change the way they sell milk.
New Hampshire farmers now sell their milk to processors through small cooperatives or on their own.
Hood has long bought from these cooperatives and individual farms.
But Hood?s potential partner, National Dairy Holdings, gets most of its milk from a big cooperative, Dairy Farmers of America.
DFA is part owner of National Dairy.
Despite this, Hood?s Linda Bohan promises her company will keep buying supplies from the smaller producers after it merges with National Dairy Holdings.
24 it is our intention to continue to work with the diary coops that we?re currently working with?and there are several, agra mark, dairy farmers of America, and the Maryland Virginia cooperative.24 :17
But Agriculture Commissioner Steve Taylor, who is a dairy farmer himself, doubts Hood will be able to keep that promise.
Taylor says farmers in Minnesota and other states were coerced into exclusive agreements to supply Dairy Farmers of America.
The alternative was not selling their milk at all.
30 37 once they did join, if they actually signed a contract, they found they were taking a licking on the price, compared to what they had been getting, previously. So, the record at the national level is not good. 30 54
NH farmers face other problems.
At Pine Lane Farm in Contoocook, everything looks fine, and sounds ok.
20 moo moo moo
Farmer Rich Houston says his 170 cows produce 1500 gallons a day.
The only problem is, each ounce sold produces a loss for the farm.
27 24 the price for hundred weight that we?re getting right now is about 12 dollars and 44 cents, and our break even price somewhere just under 14. so, we?re losing, what?s that, better than 10 percent, every time the truck comes. 27 38
Houston is losing money even though he automated his approach.
Houston?s farm and others like it in New England simply can?t produce milk at the low cost of large western dairies.
Steve Taylor says New England started losing the price war when Congress ended the Northeast Dairy Compact last October.
05 05 the dairy compact that operated from 1997 to 2001 was very effective and reasonable way to stabilize the dairy farm sector in the northeast. It worked really well here in new England? 05 25
Critics of the compact say it kept consumer prices high.
But Taylor points out supermarket prices haven?t fallen even though the price paid farmers has gotten lower and lower.
And the food industry, the supermarket trade, has figured out, you can make a lot more money holding the price up, and perhaps not accepting quite as much volume of sales, and so that?s what?s been happening. Actually for much of the dairy case, prices are up from where they were a year ago. 03 48
This period of high supermarket prices coincides with a wave of consolidation in the dairy industry.
National Dairy Holdings became a force in the industry last year, when the nation?s largest dairies merged.
Hood?s proposed merger with National Dairy Holdings is in many ways, just the latest chapter in this book.
The justice department ruling on the merger may be many months away.
National Dairy Holdings would not comment on this story because of the investigation.
