Still smarting from criticism over their role in sky-high food prices, American farmers are now being investigated for price fixing in the dairy markets.

The Wall Street Journal reports the Dairy Farmers of America, or DFA, is being investigated by the Commodity Futures Trading Commission for price manipulation. The DFA, the nation's largest dairy cooperative, is also being sued by farmers and retailers for skewing transactions to generate more profit. Dean Foods (DF), bottler of more milk than any other company in the U.S., is being implicated as well.

The DFA plays an intermediary role in the dairy markets. It picks up raw milk from member farmers and processes it for bottling, or for use as cheese and butter. The processed milk is sold to third party dairy companies and used in its own production facilities.

The federal investigation stems in part from the DFA's role in futures trading activity. According to The Journal, it pays farmers for raw milk based on a complex formula derived in part from futures prices for milk and cheese. Regulators want to know if the DFA engaged in trading that moved prices for its benefit.

The DFA is also being investigated for an under-the-table payment to a former board member. Although the group is cooperating with authorities and admits the payment was in fact made, it claims the current board only recently found out about the "unauthorized transfer of money."

The scandal and alleged market manipulation couldn't come at a worse time for farmers. Similar to big oil companies like Exxon Mobil (XOM) and Chevron (CVX) reaping huge profits on record oil prices, farmers are having a banner crop this year. Many blame high prices on the push for ethanol, while others point to rising demand in developing countries like India and China.

With a hotly contested farm subsidy bill being railroaded through Congress, farmers are under pressure to defend lavish government handouts. Their swollen bottom lines and fallow fields contrast sharply with images of the developing world, where million still don't have enough to eat. Farmers, for their part, argue that without subsidies they wouldn't be able to compete in the global market. Specifically, they point to European farms that are even more heavily supported than America's. 

Big Oil executives regularly trek to Capital Hill to defend relationships with the lawmakers that protect their bottom lines. It's not unlikely that big farmers will be the next to take the stand.