Spilt Milk: COVID-19 and the Dangers of Dairy Industry Consolidation

30 Pages Posted: 18 Nov 2020

See all articles by Eileen Appelbaum

Eileen Appelbaum

Center for Economic and Policy Research

Jared Gaby-Biegel

affiliation not provided to SSRN

Date Written: August 15, 2020

Abstract

Consolidation came later in the dairy industry than in other agricultural sectors. A long history of dairy farmer cooperatives owned by their farmer members and vertically integrated to produce and distribute fluid milk and cheese products staved off industrialized farming and horizontal consolidation. But by 1990, advances in technology and a change in antitrust regulation enabled investor-owned firms like Borden Dairy and Dean Food as well as large farmer cooperatives like DFA, Prairie Farm and Land O’Lakes to dominate the industry.

Consolidation and the pursuit of economies of scale led to two inflexible and separate supply chains in dairy – one serving retail markets for consumers, the other serving commercial markets for institutional customers. The COVID-19 pandemic and economic lockdown revealed the lack of resilience and risks in a system dominated by a few large actors.

Viable reforms in the dairy industry that limit the domination by powerful actors can achieve resilience and improve the ability of the dairy industry to respond to disruptions.

Keywords: Dairy Industry, Industrialization, Consolidation, Monopolization

JEL Classification: L11, L12, L41, Q13

Suggested Citation

Appelbaum, Eileen and Gaby-Biegel, Jared, Spilt Milk: COVID-19 and the Dangers of Dairy Industry Consolidation (August 15, 2020). Institute for New Economic Thinking Working Paper Series No. 134
https://doi.org/10.36687/inetwp134 , Available at SSRN: https://ssrn.com/abstract=3731831

Eileen Appelbaum (Contact Author)

Center for Economic and Policy Research ( email )

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Washington, DC 20009
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HOME PAGE: http://www.cepr.net

Jared Gaby-Biegel

affiliation not provided to SSRN

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