Organic Milk Supply Expected to
Surge as Farmers Pursue a Payoff
ANDREW MARTIN / New York Times 20apr 2007
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.
Edward Walldroff said he had saved money on feeding his cows by converting to organic farming before more stringent rules begin in June. Demand for organic milk has been growing 20 percent or more a year.
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. “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.’ ”
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.
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.”