Letter to the Editor: Organic dairy prices

Organic dairy companies need to face up to their responsibilities

Currently, national media is focused on those large organic dairies that have flouted the integrity of the organic regulations (see “Cornucopia’s Complaints Expose Outlaw Dairy Farms,” CG Jan.-Feb. 2008), while the economic plight of organic dairy farm families is largely ignored.

In 2006-07, the major organic dairy brands were paying large signing bonuses and transition payments as demand was high. As a result of this aggressive drive by the brands to increase supply, there was a slight surplus in the spring and summer of 2007, and as a result, a static farmgate price for a two-year period from January 2006 to January 2008. There is, once again, an under-supply of organic milk, but there has been no subsequent increase in the price paid to farmers (farmgate price).

In 2007, the drive for corn-based ethanol and increased demand for organic livestock feed, principally poultry, effectively increased the price of organic grain by over 30 percent. At the same time as purchased feed prices increased, the cost of fuel, labor, property taxes and many other farm inputs increased dramatically. While farm input costs have increased, organic dairy farm profitability has plummeted.

In early fall 2007, the Federation of Organic Dairy Farmers (FOOD Farmers), the national umbrella group for the three regional organic dairy farmer organizations, tried to start a dialogue with organic dairy cooperatives and processors on the economic problems that family farmers were facing. FOOD Farmers made many attempts to work with processors but was totally ignored by the leading brands, those who, effectively, set the price farmers get paid: Organic Valley, Horizon Organic and HP Hood (Stonyfield brand). In January 2008, these leading brands imposed a 4 percent annual increase in farmgate price on organic dairy farmers. This is less than the increase in the cost of living and has almost no impact on the 20 to 30 percent increases in fuel, feed and other farm inputs.

The brands, whether owned cooperatively or by shareholders, are exploiting the integrity and work ethic of those same family farms who they use to promote and market their packaged products. If family farms received a 20 percent increase in their raw milk price, they could pay their bills and re-invest in their land, buildings and equipment, providing an incentive for the next generation to continue the family farm. These farm families should be able to feed their family without using food stamps or other community-based programs, provide health insurance for their families, have the occasional vacation, and save for their retirement.

A sustainable organic industry needs to support every level of supply, manufacturing and distribution. Family farmers, the backbone of the organic industry, are not being listened to and the processing companies are not negotiating in good faith, preferring to impose a price on farmers that does not take into account the cost of production. When buying or ordering your organic milk, ask the supplier how the price for raw milk is set and whether they are negotiating in good faith with their farmers.

Like Cornucopia, FOOD Farmers is insisting on a level playing field for family farmers by having well-defined and clear language in the organic rule that will be universally interpreted by all certifiers. However, we also need to pay farmers a sustainable price for their high-quality, organic milk. When these conditions are in place, we will be able to safeguard the integrity of organic products and a future that is attractive to the next generation of organic farmers.

Ed Maltby, executive director
Northeast Organic Dairy Producers Association

See other articles from this issue: #135 March - April - 2008