By JOHN DILLON Staff Writer The nation's dominant milk processor has grabbed a large slice of fluid milk sales from the St. Albans Cooperative Creamery, prompting concerns about a potential monopoly growing in the region's milk market. Sen. Patrick Leahy, D-Vt., has written the U.S. Justice Department's Antitrust Division about the growing market clout of Suiza Food Corp. of Dallas, a company that has rapidly emerged as the main player in the New England wholesale milk market. Suiza controls about 70 percent of the fluid milk processing and distribution in New England, according to one study. Its expanding market share threatens to limit choices for both farmers and consumers, milk industry observers said. Earlier this month, the St. Albans Cooperative Creamery told its members that as of May 1, its main customer, Stop & Shop Supermarkets, will close its Readsville, Mass., plant and buy milk instead from Garelick Farms of Franklin, Mass. Suiza owns Garelick. The 560-member St. Albans co-op has sold milk to Stop & Shop for 25 years. The sales brought $45 million to $50 million into the co-op's treasury, or about 30 percent of its annual revenues. Co-op General Manager Leon Berthiaume said last week he hoped to meet soon with Garelick executives to see if the co-op could also supply some of its milk needs. "It's certainly a very difficult time for everyone involved. It just continues to be another sign of the major changes talking place in our dairy industry," he said. Suiza's foray into New England - and the subsequent closure of several milk processing plants in the region - concerns Vermont dairy officials who fear that farmers will have fewer places to sell their milk. "Basically, there are fewer buyers for milk. Certainly, that may not be in everyone's best interest," Berthiaume said. Leahy, in his letter to the Justice Department, noted that Stop & Shop's decision to end its long-term relationship with the St. Albans co-op and buy milk from Garelick eliminates another market for the region's dairy farmers. The closing of bottling plants and the continuing consolidation in the dairy processing industry "could represent a serious threat to the economic livelihood of many farmers in the New England region," Leahy wrote. Suiza Vice President Cory Olson did not return a call for comment Friday. Over the last two years, Suiza has bought several major regional dairies, including Garelick; Fairdale Farms of Bennington; West Lynn Creamery in Lynn, Mass.; the dairy operations of the Cumberland Farms convenience store chain; New England Dairies of Hartford, Conn.; Nature's Best of Cranston, R.I.; Seward Dairy in Rutland; and Grant's Dairy of Bangor, Maine. Suiza is the nation's largest dairy operator, with 51 manufacturing plants in 23 states and Puerto Rico. As it has moved into New England, Suiza has closed processing plants in Connecticut and Rhode Island, Leahy's letter notes. Suiza also is a strong opponent of the Northeast Dairy Compact Commission, which oversees a regional pricing system that has set fluid milk prices above the federal minimum. Suiza has lobbied against the dairy compact and last year refused to pay a required assessment that the compact commission uses for operating costs. Last year, the Justice Department said it intended to halt Suiza's proposed purchase of Broughton Foods, an Ohio-based milk processor. Justice Department officials said they were concerned that the proposed acquisition would result in higher prices for milk sold to school districts in Kentucky. However, the government allowed the sale to go forward when Suiza agreed to sell off Southern Belle, a fluid milk company based in Somerset, Ky. Suiza controls about 20 percent of the fluid milk business around the country, but its influence in New England is much greater, said Peter Hardin, editor of The Milkweed, a Wisconsin publication that tracks the dairy industry. Hardin published a study last year that showed Suiza controls 70 percent of the fluid milk processed and distributed in New England. "Suiza has come out of nowhere in the past five or six years to become the largest by far U.S. dairy processor," Hardin said in an interview. "They're in a growth mode... They're sweeping up more of the pieces." Independent farmers - those not affiliated with a cooperative - used to sell to the many milk handlers Suiza has acquired. But Hardin said the recent acquisitions means farmers have fewer options to market their milk, particularly because Suiza's prime supplier is Kansas City-based Dairy Farmers of America, the nation's largest dairy cooperative, which is also expanding in the East. "What we are seeing in New England is the worst case regional microcosm of events that are playing out nationwide in which DFA is seeking to trap non-member raw milk suppliers into Suiza plants and force them ultimately into a membership relationship with DFA," he said. DFA has substantial debts and its farmer-members must pledge their milk checks as collateral to cover the co-op's obligations, Hardin said. Ken Becker, executive director of the Northeast Dairy Compact Commission, said it's too soon to gauge the impact to the compact from Suiza's growth. But with fewer processing plants in the region, farmers' milk may be shipped out of New England to be bottled, he said. Only milk that comes into the region for processing receives the higher compact price. Becker said that after Suiza bought Seward's Dairy in Rutland, it closed the plant. It also closed some of Cumberland Farms' plants and a processing facility it bought in Connecticut. "So there's been a number of dairies in New England that have shut down operations without any corresponding increase in new construction," Becker said. "It's certainly a trend, the question is: What's the prognosis. We've all got to start paying more attention to it." The upheavals in the dairy industry will likely be a hot topic for members of the St. Albans Cooperative Creamery as they gather for their 81st annual meeting Monday. Manager Berthiaume said Stop & Shop was a great customer and always paid "competitive premiums" - prices higher than the federal levels - during the 25 years of business. The St. Albans co-op's other main customer is Ben & Jerry's Homemade Inc., which is being courted by several multinational food corporations. Stop & Shop, owned by Royal Ahold, a global supermarket company, decided that its milk bottling operation no longer fit into its "core business," Berthiaume said. The supermarket chain decided to close and assigned the milk contract to Garelick Farms. Berthiaume said he is confident a market will be found for the co-op's milk after May 1. "Stop & Shop indicated they would be assisting us in the transition to a new market," he said. Hardin, who has studied the dairy industry for years, said the changes occurring now in New England deserve Department of Justice scrutiny. "New England is going to make antitrust history," he said. "The question is whether the federal government has the guts to do anything about it." r

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