Organic Valley cut organic family farmers income

Northeast Organic Dairy Producers Alliance
Contact: Ed Maltby, NODPA Executive Director
Tel: (413)772-0444; Email: ednodpa@comcast.net

HP Hood and Organic Valley cut organic family farmers income and NODPA praises Horizon Organic for honoring their contract with their farmers

For Immediate Release
Deerfield, MA: The Northeast Organic Dairy Producers (NODPA) today announced their support for organic dairy farm families who are fighting for their survival and denounced those companies that are lowering the price they pay farmers in order to fund increases in market share. “Across the northeast and midwest HP Hood is hiding behind the good name and ideals of Gary Hirschberg and Stonyfield Farm as they fire the same farmers that two years ago they used as part of their marketing for their organic milk,” says Executive Director Ed Maltby, “What is more important to the milk companies and cooperatives, market share or the health and welfare of their organic family farmers?”

Many organic dairy farmers are now faced with the difficult decision to either take on more debt (if anybody will loan them the money) or cut back on essential household expenses like health insurance or sell their cows to pay down existing debt. The higher prices that consumers pay for organic milk and dairy products doesn’t mean a high milk price for family farmers.

“The quest for "market share" is causing real chaos in our industry,” says Henry Perkins, Maine organic dairy farmer and NODPA President. “We wish to thank Horizon Organic for listening to our request to honor their contracts with farmers and not reduce their pay price. NODPA stands ready to start working with all processors to solve some of the problems that could well sink our industry. NODPA strongly recommends that consumers should use their purchasing power to support those brands that do not cut the price to farmers.”

“We invested $250,000 in our organic dairy with the expectation that it would increase our long-term profitability and sustainability; we trusted HP Hood that they would honor their pledge to us,” says Aaron Bell, a 30 year old Maine organic dairy farmer. Tide Mill Farm has been in the Bell family since 1765. “It would be a shame to close up shop after 8 generations with the ninth looking on with eager eyes.” Once the farm ceases organic production, it can take up to 3 years to become re-certified, “you just don’t turn the organic milk spout on and off at will.”

Bell and the other 7 farmers that HP Hood plans to fire this summer and fall are working with other milk companies and the State of Maine to find another buyer for their milk. They have met with US Senator Olympia Snow, who pledged her support in helping to solve their situation. It is uncertain whether they will find a buyer that will pay a reasonable price for their milk despite the fact that the projected growth for organic dairy for 2009 is 7-10%. (1) Organic milk companies now prefer farms that are closer to their processing plants or to existing routes for their milk trucks.

While the economic situation is creating hardship for everyone, organic dairy farmers are particularly vulnerable to the changes in the price they get paid for their milk. The majority of organic dairies are family owned operations that rely primarily on income from selling their milk wholesale. Since 2001, the average price paid to farmers for their organic milk has increased by only 29% while operational costs have increased by at least 50%.² By any measurement, whether they are for soft costs (insurance, living expenses) or production costs, this does not represent an adequate return for the skilled labor and capital investment of organic dairy producers or leave any money to maintain their property, or build a “rainy day fund.” (2) Now that HP Hood and Organic Valley are lowering the price they pay to farmers, it affects the bottom line of their business by an average of $8,000 annually, lowering their family income by the same amount or an average of a 20% wage cut. While most companies would be grateful for a 10% growth in this economy, some organic dairy companies are taking the short term outlook and firing their farmers or cutting their wages by 20%.

“I have no financial cushion,” says Maine organic dairy farmer Steve Morrison, “That loss of income from a reduction of my pay price means that my net income is decreased by the full amount as there is no way I can cut my other expenses.”

Processors have been pushing organic dairy farmers to produce more low cost milk based on using pasture and their own forage. They are now telling producers to cut production by 10-15% and that they can’t deal with the “spring flush” of milk from those farms that have expanded their use of pasture. The many mixed messages suggesting that farmers either reduce costs or lower their pay price is causing enough uncertainty that the next generation of organic farmers are questioning the long-term viability of organic dairy.

“Every crisis brings an opportunity. NODPA and FOOD Farmers have been urging all processors to engage in productive discussions on these issues for years. We implore processors not to waste this opportunity and engage with us now,” said NODPA Executive Director, Ed Maltby.

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NODPA – website www.nodpa.com or www.organicmilk.org
The mission of the Northeast Organic Dairy Producers Alliance is to enable organic dairy family farmers, situated across an extensive area, to have informed discussion about matters critical to the well being of the organic dairy industry as a whole, with particular emphasis on:

1. Establishing a fair and sustainable price for their product at the wholesale level.
2. Promoting ethical, ecological and economically sustainable farming practices.
3. Developing networks with producers and processors of other organic commodities to strengthen the infrastructure within the industry.
4. Establishing open dialogue with organic dairy processors and retailers in order to better influence producer pay price and to contribute to marketing efforts.

Federation Of Organic Dairy Producers (FOOD Farmers)
The Federation Of Organic Dairy Producers is an umbrella group for the three regional organic dairy farmer organizations: Northeast Organic Dairy Producers Alliance (NODPA), Midwest Organic Dairy Producers Association (MODPA), and Western Organic Dairy Producers Alliance (WODPA). FOOD Farmers represents over 1,200 or two thirds of organic dairy farmers across the country.