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  • From: "TradingPostPaul" <tradingpost@riseup.net>
  • To: livingontheland@lists.ibiblio.org
  • Subject: [Livingontheland] Organic Milk Supply Expected to Surge as Farmers Pursue a Payoff
  • Date: Thu, 26 Apr 2007 19:24:01 -0600


Organic Milk Supply Expected to Surge as Farmers Pursue a Payoff
http://www.nytimes.com/2007/04/20/business/20milk.html?_r=1&oref=slogin

Dairy farmers are rushing to convert to organic milk production, and it is
largely because of a blueberry farmer who lives in Maine with a
solar-powered computer and an outhouse outfitted with a stained-glass
window.

Arthur Harvey, the blueberry farmer, persuaded a federal court in 2005 that
some regulations on organic milk were too lax, including those governing
how a dairy farmer can convert to organic status.

As a result, hundreds of dairy farmers decided to switch last spring so
they could complete the yearlong conversion before the more stringent
“Harvey” rule takes effect in June.

“When this court case was decided, we said, ‘Now’s the time for us.
Let’s do it,’ ” said Edward Walldroff, a farmer in La Fargeville,
N.Y., who said that five other dairy farmers nearby were doing the same
thing. “It’s really kind of exciting to see that happen, and know that
six smaller-type farmers have some real viability now.”

On a larger scale, Organic Valley, a cooperative based in Wisconsin that
sells dairy products, is adding 269 farmers this year for a total of 972;
it will process 45 percent more milk this spring than a year earlier.

Horizon Organic, the biggest organic dairy company in the country, added 64
organic dairy farmers in 2006 for a total of about 350, and about 230 more
are in transition, said Sara Unrue, a spokeswoman.

“It looks like we will have a serious oversupply in the next two
months,” said George Siemon, Organic Valley’s chief executive. “We
are now telling people, ‘Please stop thinking that there is a bottomless
market.’ ”

The sudden glut would be remarkable because there is usually a chronic
shortage of organic milk. Demand has been growing 20 percent or more a
year, so much so that in 2005, some retailers posted signs in their dairy
cases apologizing for not having enough of it.

While the increase should fix the supply problems, consumers probably will
not see lower prices. Several manufacturers and retailers said they did not
plan to reduce prices, in part because the oversupply would be quickly
absorbed by increasing demand. Organic milk can cost twice as much in
stores as regular milk.

At Whole Foods Market, the additional milk will be used to offer more
organic dairy products, like yogurt and cheese, a company spokeswoman said.

At the yogurt maker Stonyfield Farm, a subsidiary of Danone, the extra
supply will allow the reintroduction of organic smoothies and organic
fat-free quarts of yogurt, which had been discontinued because of supply
shortages, said Nancy Hirshberg, vice president for natural resources.
Stonyfield is buying 48 percent more organic milk this spring than a year
ago, she said.

“This boom was a gift from above,” Ms. Hirshberg said.

The Agriculture Department does not track the number of organic dairy
farmers, nor does the Organic Trade Association, the primary trade group.
But farmers say that many among them are converting to organic farming, and
Mr. Harvey’s lawsuit is not the only reason. Rock-bottom prices for
conventional milk have also pushed farmers to consider more lucrative
alternatives.

Farmers can charge nearly twice as much for organic milk, but feed costs
are higher and the conversion can be challenging, since no antibiotics or
growth hormones are permitted.

In addition, organic dairy farmers must give their cows organic feed,
meaning they graze on pasture land or eat feed grain that has not been
sprayed with chemical fertilizer or pesticide.

Last April, for instance, conventional dairy farmers received a national
average of $12.10 for 100 pounds of milk, compared with $15.20 in April
2005, according to the department. Organic dairy farmers, by contrast, were
paid about $22 for 100 pounds of milk last spring.

Under the current rules, dairy farmers can feed their cows 80 percent
organic feed and 20 percent conventional feed during the first nine months
of the yearlong transition. During the final three months, a farmer has to
feed the cows 100 percent organic feed.

But Mr. Harvey successfully argued that the regulation was more lenient
than Congress intended when it passed the 1990 Organic Foods Production
Act. As a result, the new regulation, which takes effect on June 9, will
require farmers to feed their cows 100 percent organic feed during the
entire transition year.

While it may seem like a minor change, dairy farmers say it is significant.
The challenge of making a dairy farm organic is that the farmer’s costs
rise during the conversion year, but they are not yet offset by the higher
income from selling organic milk. The high cost of feed corn is a big
factor; corn farmers see few incentives to go organic because they can make
so much money selling their crops to make ethanol.

Mr. Siemon of Organic Valley said that reducing retail prices because of a
short-term oversupply would hurt organic farmers and discourage
conventional farmers from converting.

“We don’t want to harm the viability of organics and the price point
that farmers need to make a decent living,” he said.

Those are some of the reasons that Organic Valley, Stonyfield and others
encouraged dairy farmers to convert last spring, taking advantage of the
more lenient feed regulations while they still lasted.

“Farmers were told, ‘If you were ever going to think about converting
to organic, do it now,’ ” said Katherine DiMatteo, an organic
consultant and the former executive director of the Organic Trade
Association.

Mr. Walldroff, the New York farmer, said that he had enjoyed substantial
savings by converting to organic farming before the more stringent rules
took effect. Under the existing rules, he said, he could feed his cows
about 20 percent soybean meal or some other feed concentrate and the
remainder could come from his pastures, which are organic.

“So over the course of the year, provided I had good forages, I
wouldn’t have additional expenses for the organic dairy cows except for
those last three months,” said Mr. Walldroff, a member of Organic Valley,
who said his milk would end up in Stonyfield yogurt.

Keith Marshall, a farmer in Orange, Va., said that he would complete his
yearlong transition in two weeks.

“We were kind of moving in that direction without realizing what we were
doing,” said Mr. Marshall, 48. He explained that he has permitted his
cows to graze on pastures for the last decade or so, as opposed to feeding
them in barns, which is increasingly the norm at conventional dairies.

He said he would sell his organic milk to Horizon Organic, which is owned
by Dean Foods. “I guess the 80-20 rule kind of pushed us to make that
jump.”

Mr. Harvey, who is 74, vows to continue pressing the Agriculture Department
to make sure the organic program is not watered down by the pressures of
big business. He said it did not bother him that dairy farmers were rushing
to beat the more rigorous standards.

“They would have done it sooner or later,” he said. “That they are
doing it in a bunch, that’s just the breaks.”









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