NO. R-44.† Joint resolution requesting the Vermont Attorney General to investigate the antitrust issues associated with the proposed corporate merger between H.P. Hood Inc. and National Dairy Holdings.

(J.R.H.1)

Offered by:† Representatives Smith of New Haven and Starr of Troy.

Whereas, historically, family dairy farms have played a central role in the Vermont economy and continue to perform this role in the 21st century, and

Whereas, Vermontís agricultural economy generates one-half billion dollars a year from farm receipts and stimulates about $3 billion of economic activity in farm and farm-related businesses, and

Whereas, 74 percent of farm earnings in Vermont comes from milk, and

Whereas, most of Vermontís dairy farmers are members of regional cooperatives such as St. Albans or Agri-Mark, and

Whereas, nearly all of the milk originating on Vermontís dairy farms is marketed outside the stateís borders, and

Whereas, in order for a cooperative to obtain the most advantageous price for its milk, the cooperative must participate in the Northeast order under the federal milk marketing order system, and

Whereas, in order to participate in the Northeast order, a designated percentage of a cooperativeís milk must be shipped to fluid milk plants each fall, and

Whereas, for over a century, H.P. Hood Inc., one of New Englandís largest milk processors, has been a principal recipient of the milk produced at Vermontís dairy farms, and

Whereas, H.P. Hood has announced a merger with National Dairy Holdings (NDH) which is a partnership owned by Dairy Farmers of America (DFA) and several other investors, and

Whereas, NDH was created in 2002 and purchased the divested assets from the Dean Foods-Suiza merger, and

Whereas, in connection with the proposed H.P. Hood-NDH merger, DFA is being granted the exclusive right to supply milk to all H.P. Hood plants, including those which Agri-Mark and other cooperatives now supply, and

Whereas, DFAís proposed exclusive supply agreement with H.P. Hood, along with its existing exclusive supply agreements with other milk processors, such as Dean Foods, will result in DFA controlling a substantial percentage of the milk supply in New England, and

Whereas, because of the expiration of the Northeast Dairy Compact in 2002, and the historically low milk price since the expiration, the stateís dairy industry is already in crisis, and

Whereas, DFAís proposed role in the New England milk processing market may threaten the continued existence of Vermontís local cooperatives and the independence of the stateís dairy farmers, and

†††† Whereas, Attorney General William H. Sorrell and the Department of Justice are continuing their investigations, which were commenced in the fall of 2002, of the antitrust implications of the proposed H.P. Hood Inc.-NDH merger, now therefore be it

Resolved by the Senate and House of Representatives:

That the General Assembly supports and encourages Attorney General William H. Sorrell to continue his investigation of the antitrust issues associated with the proposed merger of H.P. Hood Inc. and National Dairy Holdings, and be it further

Resolved:† That the General Assembly urges Attorney General Sorrell to aggressively pursue a course of action, based on his investigation, which inhibits the further corporate consolidation of milk processing in New England and enhances the options available for Vermont farmers to sell milk at fair prices in an open marketplace, and be it further

Resolved:† That the Secretary of State be directed to send a copy of this resolution to Attorney General William H. Sorrell, to the Vermont Congressional Delegation, and to U.S. Attorney General John Ashcroft.