Dairy Farmers Co-Op faces price-manipulation probe: report

May 19 (Reuters) - U.S. federal authorities are investigating allegations that co-operative Dairy Farmers of America manipulated milk and cheese prices, and are separately reviewing a secret transfer of cash to a former director of the organization, the Wall Street Journal said on Monday.

Dairy Farmers, the nation's largest dairy co-operative, also faces antitrust lawsuits by farmers and retailers for allegedly conspiring to suppress prices it paid for raw milk in the Southeast, while raising prices to the region's retailers, the newspaper said.

The Commodity Futures Trading Commission is looking into whether Dairy Farmers sought to drive up the price of milk through its trading of cheese contracts at the Chicago Mercantile Exchange, the newspaper Journal said.

Cheese prices at the exchange affect milk futures and are a key component of a U.S. Department of Agriculture formula to set the minimum prices that dairy farmers receive for raw milk, it said. Consumer milk prices have risen about 32 percent since the start of 2004, compared with a 15 percent increase for food prices in general, the newspaper said, citing government data.

Dairy Farmers did not immediately return a call seeking comment.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Kim Coghill)

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