ALBUQUERQUE, N.M.  — Dairy Farmers of America (DFA) and Select Milk Producers have agreed to pay a combined $34.4 million to settle a class action lawsuit alleging price-fixing in the Southwest milk market.

 The suit, filed in April 2022 by dairy farmers in New Mexico federal court (Othart Dairy Farms LLC et al v. DFA Inc. et al, No. 2:22-cv-00251), alleges DFA and Select conspired through their marketing agency in common — Greater Southwest Agency (GSA) – along with joint ventures in processing, and other means to suppress prices paid to producers in New Mexico and portions of Texas, Arizona, Kansas, and Oklahoma from January 2015 through June 2025.

Though both cooperatives deny wrongdoing, DFA indicates it chose to settle to avoid the cost and complexity of prolonged litigation. This is not DFA’s first such settlement. It paid $140 million to settle the Southeast class action in 2013 and $50 million to settle the Northeast class action in 2015.

At the heart of the Southwest case is whether the cooperatives crossed the legal line between allowable cooperative marketing and unlawful price suppression. Plaintiffs allege that GSA, the marketing agency owned by the two cooperatives, and joint ventures like Southwest Cheese and Portales Dairy Products were used to share pricing data and coordinate pay structures, including nearly identical payment rates and “production base penalties,” as well as strategic de-pooling of milk.

In March 2024, U.S. District Judge Margaret Strickland ruled the case could proceed, finding the plaintiffs plausibly described horizontal coordination that violated Sherman Act rules. She held that even as farmer-owned cooperatives that are allowed limited coordination for marketing, they cannot conspire to depress member payments under antitrust law.

The preliminary settlement agreement, filed July 24, 2025, calls for DFA to pay $24.5 million and Select $9.9 million, pending court approval. It also includes non-monetary terms: both co-ops have agreed to dissolve GSA, conduct antitrust training for marketing staff, and provide better pay transparency and milk check education for members.

Court documents state the settlement was reached only after “substantial fact discovery” and pre-trial preparation.

The 74-page complaint claims these practices forced many producers to use generations of built-up equity and/or exit the business entirely. The complaint alleges DFA and Select’s market dominance — together controlling more than 75% of the region’s milk — pushed other buyers to follow suit, holding down raw milk prices across the Southwest region.

More than 85% of the Southwest’s milk is marketed by cooperatives, according to the documents.

The lawsuit also highlights the industry’s vulnerability to price coordination, citing the lack of pricing transparency and the complex way milk pricing is structured. While USDA’s Federal Milk Marketing Orders (FMMO) set minimum milk prices for pooled milk, DFA and Select often negotiate private sales, sometimes with affiliates or joint ventures, that ultimately control what member farmers are paid.

The complaint states further that both cooperatives engaged in “selective and increasingly frequent” de-pooling of milk sales with the cooperatives pocketing the profit instead of passing it on to farmer-members. Even as the commercial divisions of the cooperatives reported record profits, producer pay remained “consistently low,” the suit alleges.

USDA data show the number of Southwest dairies declined sharply over the past decade, with New Mexico seeing the steepest (37%) decline from 150 dairies in 2014 to 95 in 2024, and cow numbers down 26% from 323,000 head in 2014 to 240,000 in 2024. In addition to other factors, New Mexico’s monthly mailbox milk prices have been the longstanding lowest in the nation, consistently averaging $2.00/cwt below the national average.

Both DFA and Select agreed to the settlement terms without admitting liability. If approved by the court, the agreements will release both cooperatives from future claims related to this matter.