Basic facts:
Headquarters in Dallas, TX; CEO is Gregg Engles; 120 production plants in the U.S., U.K., Spain, and Portugal; 29,000+ employees; produces 2 billion gallons of milk per year; shareholders include: Microsoft, General Electric, Philip Morris, Citigroup, Pfizer, Exxon/Mobil, Coca Cola, Wal-Mart, Pepsi-Co, and Home Depot; Dean is second only to Nestle worldwide in terms of its dairy sales with $7+ billion in 2003; Deans now controls about 35% of all milk, 70% of organic milk, and 90% of soy milk in the U.S.; brands include: Hershey’s chocolate milk, Land o’ Lakes “Dairy Ease” lactose free milk, and Folgers ready-to-drink lattes, as well as three dozen other milk labels like Meadow Gold, Garelick, and Oak Farms.
Corporate History:
1925 Samuel E. Dean gets his start with evaporated milk, buying Pecatonica Marketing in IL
1927 Company changes name to Deans and buys more dairy plants in IL
1951 Deans opens its corporate headquarters in Franklin Park, IL
1961 Deans issues its first common stock to 1800 shareholders
1962 Deans expands beyond dairy through purchase of Green Bay Foods, a major pickle maker
1981 Deans is listed for the first time on the New York Stock Exchange
2001 Suiza buys out Deans, “new” Dean Foods moves its headquarters to Dallas, TX
2002 Deans buys out Boulder, CO-based White Wave, the maker of Silk soy milk, for $189 million
2003 Deans takes over operations of Morningstar Foods
2004 Deans buys out Horizon, a major U.S. organic supplier for $216 million
Dean Foods has been dubbed the “Microsoft” of the dairy industry for its aggressive expansion and leveraged buyout of competitors. The unprecedented merger with Suiza in 2001 was made possible by Dairy Farmers of America (DFA), which had already sold off its Southern Foods Group fluid milk outfit to Suiza in 2000. In exchange, DFA acquired a third stake in Dean’s fluid milk business and was able to place DFA representatives on Dean’s board of directors. Dean Foods also dumped its own dairy farmer producer pool into a separate joint venture controlled by DFA, Dairy Marketing Services (DMS). Deans has continued to strengthen its grip on the U.S. dairy market through exclusive supply contracting and interlocking management structures involving DFA and Land O’Lakes, as well as retail grocers like Ahold and Giant Foods. Farmers and consumers all pay the price, though, when the nation’s largest dairy processor is in bed with the nation’s largest dairy producer.
Federal anti-trust action was narrowly avoided (some would say cleverly negotiated) when Dean - Suiza agreed to spin off 11 plants in 8 states to a nominal “competitor,” National Dairy Holdings (NDH). Unfortunately, by allowing the merger to proceed, the Antitrust Division of the U.S. Department of Justice significantly lowered the bar on “allowable concentration.” This means that Deans’ overwhelming dominance in the dairy sector has now become the federal benchmark for acceptable market share throughout the U.S. food industry at both the regional and national level. Deans now has a quasi-dairy monopoly in many parts of the U.S.: Massachusetts—80%; Northern Alabama and Tennessee— 80%; Michigan— 80% and Texas— over 66%. If Deans is allowed to absorb what is left of the crumbling Italian-based Parmalat dairy empire on the East Coast, it would also control 85-90% of the lucrative New York City milk market. In preparation for this scenario, Deans hired outgoing Parmalat executive, Frank Ferrante, in Dec. 2003.
Horizon – Deans’ “Organic” Trojan Horse Subsidiary
Horizon began as humble yoghurt maker in 1992, buying organic milk from WI-based CROPP Cooperative (Organic Valley), but by 1994 established its own milk supply and soon eclipsed Organic Valley with its own line-up of 130 organic products from dairy to juice, reaping annual sales of $185 million in 2002. Bought out by Deans’ for $216 million in 2004, Horizon now sources milk from its own corporate farm, as well as from 200+ independent dairy producers.
According to Kevin O’Rell, Horizon’s vice president for research and development, who also happens to have a seat on the National Organic Standards Board (NOSB) “At Horizon Organic we have been involved in the creation of organic standards since day one and are aligned with the NOSB's commitment to provide a universal set of rules that will benefit consumers, companies and the environment. Providing animals the opportunity to fulfill their natural behavior patterns and the ability to roam free from indoor housing is important in the philosophy of organic agriculture as well as the animal's quality of life.”
Yet, many are now challenging Dean/Horizon’s commitment to organic beyond their bottomline. On Feb. 17, 2005 the Cornucopia Institute (http://www.cornucopia.org) filed two complaints with the USDA alleging factory farm style conditions on Horizon’s organic operations. The 4000-head Idaho farm in dispute is directly owned and managed by Dean/Horizon, while the 10,000 head farm in CA, split between organic and conventional, is owned by Case Vander Eyk, Jr. Cornucopia filed a third complaint on Jan. 10th against CO-based Aurora Dairy with its 5700 cows, another organic supplier to Dean/Horizon.
"It is our contention that you cannot milk 2000–6000 cows and offer them true access to pasture as required by the Organic Foods Production Act of 1990, the law that governs all domestic organic farming and food processing,” said Mark Kastel, Senior Farm Policy Analyst, at the Cornucopia Institute. “Both the Idaho and California operations differ little from conventional confinement dairies other than having their high-producing cows fed certified organic feed. Real organic farms have made great financial investments in converting to pasture-based production – enhancing the nutritional properties of the milk and for enhancing animal health – while it appears that these large corporate-dominated enterprises are happy just to pay lip service to required organic ethics."
Since the federal organic standards have nothing to say about labor practices, conditions for farm workers on some of these corporate mega-dairies appear abusive. Vander Eyk recently settled out of court for $360,000 following charges from his 125 low-paid non-unionized workers that they were not granted rest and meal breaks, denied overtime pay, and not reimbursed for purchase of mandated safety equipment. Organic principles of long-term sustainability and animal welfare are also being violated on these largescale organic operations when up to 40% of the cows are culled annually. As Michael Pollan wrote in the New York Times Sunday Magazine (5/13/01), “On Horizon's dairy farms in the west, thousands of cows that never encounter a blade of grass spend their days confined to a fenced dry lot, eating (certified organic) grain and tethered to milking machines three times a day." The milk cows on the Vander Eyk farm in CA don’t have direct access to pasture and are apparently “trucked” to fresh grass periodically to meet the organic rule.
