cows in field

Organic Dairy Family Farmers need a fair share of the retail dollar

They require at least a 40c a gallon increase in their milk price to stay in business

Added January 19, 2012. A remarkable turn-around in demand for organic dairy products in 2011 has resulted in shortages on supermarket shelves, but organic dairy family farmers find themselves not being able to increase production because they can't pay their bills. Sales of organic milk and packaged dairy product are at an all-time high and there is more organic milk being produced by family farms than ever before, but organic dairy farmers are leaving the industry because they are not being paid enough to cover the increased cost of feed, fuel and family expenses. Farmers require a fair share of the retail dollar. Currently, retailers and farmers receive the same amount for each ½ gallon of organic milk sold.

"For the last year we have been telling theprocessors that we are losing money," says Liz Bawden, NODPA President and New York organic dairy farmer, "Now the milk buyers need more milk and we can't afford to buy the feed to increase production. Some dairy farmers are going out of business. We require at least a 40¢ a gallon increase to be able to pay our bills and stay in business."Organic farm families are suffering while processors and retailers thrive, and consumers have a product with a retail price 20¢ per gallon lower than in 2008 (1). A recently published summary of a seven year study by the University of Vermont showed that organic dairy farmers have lost equity in their business since 2006, suffering heavily in 2009, with many farmers only able to remain in business because of federal safety-net programs. The amount that farmers receive for their milk is now at 2008 levels, despite increases in the cost of all inputs. In a depressed economy, retail sales of organic dairy are growing at 8-10% annually; thus the consumer wants the product and is willing to pay from $2.50 for store brand and promotional organic milk to over $4.50 a ½ gallon for branded product. Demand for organic dairy ingredients is also increasing. Processors are "sweating bullets" to deliver milk to different parts of the country. Cash return to retailers is increasing as the price to the consumer rises.

"It's time to push the envelope on what the market can bear for a retail price," says George Wright, New York organic dairy farmer and NODPA Treasurer. "Processors and retailers need to examine whether they need to earn as much or more than farmers from a ½ gallon of organic milk. Consumers need to ask why farmers don't get their fair share."

It's time to trust the consumer and ask for an increase in retail prices so farmers can receive a living wage. It's time for the retailers to respect their customers and not 'margin up' an increase in retail price. Traditionally, a price increase is split three ways: between the farmer who produced the milk, the processor that packages the milk, and the retailer who puts it on a shelf. It is time that the retailer and processor respect their farmer partners and farmer-owners by passing the entire increase on to the farmers to keep them in business.
The rising cost and availability of inputs-- dramatically for corn, fuel and quality forage-- has many farmers feeling the strain of cash flow with few reserves. Hay has doubled in price and protein feed has increased by over 60%. Organic dairy farmers are anticipating and planning for a net loss, cutting their feed costs to a minimum and hoping to survive. For those that have changed their production in response to processors' request for more winter milk, the costs of inputs for this time will make winter milk production unprofitable. Seasonal incentives fail to cover even the overhead costs of winter production.

For former NODPA Board president and Organic Valley producer/owner Steve Morrison the answer is simple, "If processors and retailers work with the interests of their farmers at heart, this necessary adjustment of supply and demand can be accomplished quickly and safely with an immediate increase in pay price of at least $5/cwt., while a more long term solution can be worked on to address the real requirement of an increase of $8-9/cwt."

Organic milk is great for the consumer and great for the environment. It's time to make it great for farm families who provide employment, tax revenue and benefit the environment, and are the backbone of our rural communities.

For more information, contact:

Ed Maltby at; 413-772-0444 or 30 Keets Road, Deerfield, MA 01342.

(1) As collected by Federal Milk Order Market Administrators based on a survey conducted one day between the 1st and 10th of each month (excluding Fridays and weekends) in selected cities or metropolitan areas. One outlet of the largest and second largest food store chains are surveyed.