US Consumers Accuse Milk Cartel of Antitrust Violations

• A proposed class of consumers has sued 14 dairy marketing cooperatives in Virginia, alleging antitrust violations.
• The lawsuit claims the Cooperatives Working Together (CWT) program, now NEXT, subsidizes dairy exports to artificially inflate domestic prices for products like milk, cheese, and butter.
• Consumers assert this export strategy reduces the raw milk supply available for U.S. consumption, driving up costs.
• The complaint highlights CWT's history, noting over $270 million paid to settle previous antitrust litigation, including a 2020 herd retirement scheme.
• Defendants, including the National Milk Producers Federation, maintain the NEXT program boosts global demand and competitiveness for U.S. dairy.

The proposed class of consumers asserts that approximately 70% of dairy producers collaborate to restrict the raw milk supply in the United States, thereby artificially inflating prices.

A proposed class of consumers has initiated legal action against 14 dairy marketing cooperatives in the U.S. District Court for the Eastern District of Virginia, alleging widespread antitrust violations. The lawsuit contends that these cooperatives, through a program initially known as Cooperatives Working Together (CWT) and now rebranded as the NEXT Program, operate as a cartel to artificially inflate prices for various dairy products across the United States.

The consumers assert that roughly 70% of dairy producers are involved in a coordinated effort to restrict the supply of raw milk, thereby manipulating market prices. The complaint specifically targets the NEXT Program, a farmer-funded national initiative managed by the National Milk Producers Federation, claiming it functions to "fix, maintain, suppress or raise prices" for essential dairy items such as milk, cheese, and butter.

The legal action seeks both injunctive relief to halt the alleged practices and damages under state antitrust and consumer protection statutes that permit recovery for indirect purchasers. The plaintiffs argue that the defendants' actions have directly harmed consumers by driving up the cost of dairy products beyond competitive levels.

Central to the consumers' allegations is the NEXT Program's export assistance initiative. This program, funded by voluntary contributions from its members, is designed to subsidize the export of various dairy products to international markets. The list of subsidized products is extensive, including 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.

The plaintiffs contend that by converting raw milk into these products for export, the NEXT Program effectively reduces the domestic supply of milk that would otherwise be available to American consumers. This diversion of milk supply into foreign markets, the consumers argue, directly contributes to a diminished domestic availability of dairy products.

According to the complaint, this supply restriction achieves the program's stated purpose of export assistance by causing domestic prices for dairy products to rise above competitive levels. The National Milk Producers Federation itself highlighted the program's impact in a 2026 press release, noting that NEXT contributed to the export of the equivalent of 74 million pounds of butter and 127 million pounds of cheese.

The current lawsuit is not the first time the Cooperatives Working Together (CWT) program has faced antitrust allegations. Consumers point to a history of legal challenges, noting that CWT has paid over $270 million to settle antitrust litigation within the last decade alone. This history, they argue, underscores the cartel-like nature of the organization.

Among the previous settlements, a 2020 class action involved some of the current defendants, including the National Milk Producers Federation and Agri-Mark Inc. That case centered on claims that CWT engaged in a conspiracy through a "herd retirement program." Under this scheme, farmers were allegedly encouraged to collectively cull dairy cows from their herds, thereby limiting raw farm milk production and manipulating supply.

This pattern of behavior, according_to the consumers, demonstrates a consistent strategy by the dairy cooperatives to control supply and influence prices in the U.S. dairy market.

The consumers' complaint emphasizes the inherent dynamics of the dairy market, asserting that any significant reduction in the raw milk supply immediately drives up the unregulated wholesale market price for products like butter and cheese. They argue that the mass conversion of milk into export products, followed by its shipment abroad, had the "necessary and intended effect" of increasing unregulated prices in the national market.

Furthermore, the plaintiffs suggest that the alleged scheme only benefits dairy producers if they anticipate reciprocal actions and believe their horizontal payments will lead to higher domestic prices. An update to CWT members in 2012 reportedly indicated that the program added 43 cents per hundredweight of milk received by dairy farmers, illustrating a direct financial incentive.

Conversely, National Milk Producers Federation President and CEO Gregg Doud has defended the NEXT program, stating that its export investment has been crucial in expanding demand for U.S. dairy abroad and maintaining the global competitiveness of participating cooperatives, even when domestic prices diverge from international markets. Doud expressed optimism for the program's future, highlighting its role in the industry.

Source: Original reporting via CN