Organic Dairy Suppliers Struggle to Meet Demand and Live Up to Their Image

Jun 29, 2006

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

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3 Comments on "Organic Dairy Suppliers Struggle to Meet Demand and Live Up to Their Image"

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Laura Davis-Taylor
Laura Davis-Taylor
15 years 10 months ago

Amen to Mark’s comments…they support the fact that organic advocates are very passionate about the lifestyle and everything that it represents.

As easy as it is for consumers to find information in this day and age, those of us who support organic companies will find out quickly if a company like Horizon alters their behavior for profits and mass production. Horizon will be best positioned if they stick to the ethical business guidelines that brought them success in the first place. It’s likely the only thing that will keep their customers!

Mark Lilien
15 years 10 months ago

Organic dairies that stick to the highest standards of animal care have an excellent marketing opportunity to tell their story. Using the product labels and their web sites, at minimal additional cost, they can show photos (videos on the web), charts, and explain the details: romancing the product and how it’s produced. They can arrange tours for children and their parents, and network with farms that have bread and breakfast facilities. By running short occasionally, they can emphasize the fact that they don’t use “factory farming,” which also encourages consumer hoarding.

Bernice Hurst
15 years 10 months ago
There are many problems with growing demand for organic products and, more importantly, their identification and perception. Yes, especially with dairy and produce, consumers have a certain idea of what the farm must look like. Based on this, they are not happy when they find out about large herds whose milk is technically organic because of the feed the cows are given as opposed to having time to graze outdoors. Those consumers who eat processed organic food are also generally under the impression that this is good because of the way they believe the basic ingredients are produced. They ignore the fact that the finished product may contain salt, sugar and fat totalling a similar number of calories as a non-organic version. They may also ignore the fact that cpg is mass produced, organic or not. Now that bigger companies are gobbling up smaller organic producers to provide fodder for their higher priced lines, and generally sticking to the letter of the law even if they are finding ways to include some artificial ingredients (permissible… Read more »

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