cows in field

From the NODPA Desk November/December 2020

By Ed Maltby, NODPA Executive Director

This issue is slightly late and apologies for that. The chaos of the last few months seems destined to continue, hopefully with some calmer times ahead. Whatever your political opinions, we do need some concrete action to happen for some stability in the organic dairy market and within our communities. The Origin of Livestock Final Rule (OOL) has gotten caught up in the politics of this administration, with the USDA wanting to secure its position in the lawsuit over the Organic Livestock and Poultry Practices Rule by questioning whether the OOL falls within the scope of the Organic Food Production Act (OFPA).

The Organic Trade Association (OTA) immediately criticized the USDA in order to maintain its position that OFPA did allow for further development of regulation about livestock health care. OTA and CROPP Cooperative pressured their members and other groups to join them in their letter to the USDA with a short timeline for signing on. OOL has nothing to do with livestock living condition or health care. It is a clarification of how conventional livestock that has transitioned to organic production is defined within organic certification and how that process happens. It is that simple.

When this OOL process first started back in 2008, when we were dealing with the Harvey lawsuit and the 80/20 allowance, there was a shortage in supply of organic milk; now, in 2020 we are coming out of a large surplus. The average size of organic dairies in Texas is now 4,647 cows with no shortage of organic dairy replacements that are organic from the last third of gestation. Rather than argue the merits of whether USDA’s assessment of the OOL Final Rule is correct, the USDA has said it is unenforceable. Let’s take that at face value, work with the new administration, and push through a Final Rule with as much speed as possible. We don’t need yet another Rule that certifiers say cannot be enforced and would be immediately subject to lawsuits. USDA and certifiers have enough trouble implementing and enforcing the relatively simple Pasture Rule ten years after it was passed. We will almost certainly have to continue to compromise with the wishes of OTA and processors to get a Final Rule passed but the damage is done and we need to shut the barn door as efficiently as possible and move forward. We will continue to fight for a commonsense solution.

The new CEO for CROPP Cooperative, Bob Kirchoff, published an opinion piece in Agripulse at the end of November 2020. His comments were rightly focused on the future. He mentions the Federal Milk Marketing Order (FMMO) and the contributions that the company has to pay to subsidize balancing conventional milk because a high proportion of CROPP milk is sold as Class 1 at retail. This totally ignored the large amount of organic milk that the company balanced through the FMMO with the most recent surplus. Producer owners also have to pay a penalty when there is a surplus. Imagine what that penalty would be if organic was outside of the FMMO! His comments ignore several important issues. The FMMO was established in the 1930s to aid farmers facing low milk prices. There was no standard pricing at the time, so the milk dealers controlled the price. This is what happens in the organic dairy supply market now, with producers being intimidated and harassed by milk buyers who impose a pay price that is dependent on their control of the market. Despite the obvious collusion amongst milk buyers, there is no base price for organic milk, and despite the fact the two major buyers follow each other’s pricing and offer non-organic requirements. Rather than look toward the future where Payprice is tied to the organic costs of production, CROPP still continues with the inaccurate comparison of organic and conventional pricing where the costs of production are completely different for the two production methods. The organic milk buyers have no problem with paying well under the costs of production and having fluctuations of over $10 per cwt in pay price on a ‘base price’ in a single year. Increasingly, the cost of producing organic milk in the Northeast is becoming unprofitable at today’s pay price. We used to predict that organic would follow conventional milk supply, which is reliant on large scale production with the economies of scale and exports to support pay price. Viewing the situation optimistically, organic is now at that crossroads. Many will say we have passed that point. As the CEO of a producer-owned cooperative whose mission is to ‘create a stable economic model for organic farmers’, Mr. Kirchoff is in a unique position to promote a more realistic organic supply marketing alternative that supports producers and does a better job of protecting them from the instabilities and fluctuations of the organic market. A sustainable supply has to depend on supply management, not only in times of crises, and to be applied across the whole of the organic market, not restricted to the whim and market requirements of individual buyers.

The basis of organic marketing is to promote the role of the organic producer and their farm families with feel-good images. Unfortunately, the reality is the producers who provide the raw product and support many levels of bureaucracy, management, shareholders and conglomerates have no leverage when it comes to negotiating pay price. CROPP Cooperative should be a leading voice for adjusting that dynamic and tying its supply and pay price to the realities of the cost of production by promoting an alternative rather than looking to exit the FMMO to save processing expenses. They should also be looking to support organic regulations that truly reflect organic integrity by tying the one-time exemption for the conversion of conventional dairy animals to a producer who wants to convert their whole herd rather than allowing start-up operations to purchase cheaper conventional animal or combine herds of conventional heifers or cows under different companies organized as LLCs. Given the narrow margins for balancing of the organic market, one new Texas herd of 4,000 cows transitioned from conventional animals in one year, and grazing irrigated desert, can dramatically upset the supply of organic milk and undermine a sustainable pay price. For a strong future for all organic dairy producers we need to address the inequities of the current system and work as a community to promote and implement a more appropriate supply dynamic that obviously must involve supply management. Happy New Year – 2021 at last!