Organic Dairy Suppliers Struggle to Meet Demand and Live Up to Their Image
By Rick Moss
"Be careful what you wish for" would have been an apt warning for the producers of organic dairy products. According to the Organic Trade Association, the sector has grown 24 percent since 2004 to now represent 3.5 percent of all dairy products sold in the U.S. The double-digit growth is currently driving demand that is 20 percent greater than what the industry is able to fulfill, according to an Associated Press article.
The brunt of the challenge has naturally fallen on the country's biggest distributor, Horizon Organic, owned by Dean Foods Co., and large private-label providers, such as Aurora Organic Dairy, which supplies Costco, Safeway, Giant and Wild Oats. These companies are also the target of sometimes virulent criticism and boycotts from members of consumer and industry watchdog groups who define organic milk as that which is produced on small farms where cows are able to graze a large part of the time.
Horizon, which sells about half the organic milk in the U.S., says it works hard to support small family farms, often helping them make the transition to organic. The company points out that it gets over 80 percent of its milk from 340 such operations, most with herds of 500 or fewer.
However, to meet demand, Horizon and Aurora have both turned to farms with herds of between 3,000 and 4,100 cows. Although these feedlot operations are strict in their use of organic grains, the cows necessarily are allowed less time to graze.
At the heart of the matter is the USDA's definition for organic milk and how much grazing time is required to make the grade. The agency is in the process of drafting a new ruling on the issue due out this fall, reportedly proposing a standard of 120 days per year in the pasture for organic milk cows.
So far, Horizon supports the idea; Aurora opposes it. According to Aurora spokesperson Amy Barr, the rules would be "unscientific" since pastureland in many areas cannot sustain herds for that length of time each year. And, she said, although grazing is important, it's overemphasized as the end-all for a cow's wellbeing.
Moderator's Comment: Will organic dairy suppliers be able to sustain the segment's growth while living up to consumers' ideal of what an organic farm should be? What route is best for the organic segment, farmers and the dairy business as a whole?
For small dairy farmers that have seized the opportunity, organics have been a godsend. Margins are decent and it gives them a chance to avoid selling out to large combines. But as the pressures mount to define the term "organics" so it's a tad more scientific than "home made" or "world famous," it should be interesting to see how economic pressures influence the USDA's ruling. - Rick Moss - Moderator