US federal regulators are involved in an ongoing investigation into whether Dairy Farmers of America has manipulated the price of milk, a spokesperson for the group told just-food yesterday (19 May).
The farmer-owned dairy cooperative controls about a third of the US’s milk supply.
The Commodity Futures Trading Commission is looking into the group’s trading of cheese futures on the Chicago Mercantile Exchange.
The US department of agriculture sets a minimum price of milk based in part on a survey of cheese prices, including futures prices. It is therefore alleged that through the manipulation of cheese futures prices the farming group has influenced the price of milk.
“We have cooperated fully with the CFTC probe,” the DFA told just-food.
According to the Wall Street Journal, the CFTC is preparing to bring charges against DFA. However, both the regulatory body and DFA were unable to comment on such speculation.
“We do not believe we have violated any laws, and we have and will continue to cooperate,” Rick Smith, president and chief executive of the DFA, said in a statement.
Although the price of milk has dramatically increased this year, jumping about 13.5%, the DFA noted that the investigation is examining alleged activity from 2004.
The Kansas City-based dairy cooperative also faces antitrust lawsuits by farmers and retailers for allegedly conspiring to suppress prices it paid for raw milk in the Southeast, while raising prices to retailers, the Wall Street Journal reported. DFA declined to comment.