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Cooperatives are supposed to give farmers the voice and power they lack as individuals. DFA members, however, have accused their $11 billion co-op of not always acting in their best interests.
In 2007, members filed suit, alleging that the co-op conspired to keep down the prices farmers are paid. The suit also accused managers of cheating farmers through a pattern of inappropriate transactions with affiliates. According to court papers filed by the Justice Department, one dairy executive in a venture with the DFA made $70 million on an investment of several hundred thousand dollars.
The Wall Street Journal reported in May that federal regulators were investigating allegations that the DFA manipulated milk prices on the commodities market. The feds are also reportedly looking into a $1 million transfer from Hanman, who retired in 2006, to a former chairman of the board. Hanman's replacement, Richard P. Smith, has described the payment as an "improper transaction." (The money was returned.)
Before he started bottling his own milk, Shatto sold it to the DFA. He didn't have a choice. Industry consolidation has given the DFA and other super-co-ops near-monopolies in some parts of the country. The arrangement puts farmers at a disadvantage.
Being free of the co-op has not relieved Shatto of all pressure from conglomerates. Earlier this year, he traveled to Topeka and Jefferson City to fight legislation that would have restricted his ability to advertise that his cows are hormone-free.
Using a front called American Farmers for the Advancement and Conservation of Technology, the St. Louis-based Monsanto Company has tried to pressure states to regulate the labels on dairy products that come from untreated cows. Monsanto sells a bovine growth hormone under the brand name Posilac.
The Food and Drug Administration says recombinant bovine growth hormone (also known as rbST or rbGH) is safe. Its use, however, has not been approved in Europe, Canada or Japan. Earlier this year, Wal-Mart Stores announced that its private-label Great Value milk would come from non-rbST cows.
A Monsanto lobbyist testified in Jefferson City in favor of a bill requiring milk labeled as hormone-free to carry equally prominent disclaimers about the FDA not seeing a difference between milk from treated and untreated cows. The backs of Shatto bottles already bear this type of disclaimer. Still, Shatto was ticked off by what he saw as an encroachment on his freedom of speech. "I was afraid they were going to make me pick up all my bottles," he says.
In the end, the bottles stayed in circulation. The bills died in committee.
At the City Market, an earnest-looking guy in his 20s or early 30s asked Shatto about the amount of milk his cows produced. Shatto said that he gets seven and a half gallons per cow, with a few outliers producing 16 gallons.
The young man said he knew of a dairy farmer whose cows gave 20 gallons. Probably a hormone-inflated number, he concluded.
Shatto smiled. "That makes a difference," he said.
Paul McDonald and his wife, Kristine, approach the dairy case at Whole Foods. "If only somebody would make a root-beer milk," Paul says.
He's playing dumb. The McDonalds know all about Shatto milk and its flavors. Paul tells Barbara and Leroy that he uses their milk to make quick cheese and ice cream. "It's the only milk we buy," Kristine says.