By Ed Maltby, NODPA Executive Director
This summer has seen contracts cancelled across New England and New York and a dramatic increase in feed costs. One hundred and thirty-five organic dairies in the northeast have lost their contracts since July 2021. Horizon/Danone has cancelled eighty-nine farm contracts and Maple Hill Grass Fed has cancelled forty six contracts. Many organic farmers that have not lost their contracts wonder if they might be next. And then we have the crazy high prices for feed protein which might break the back of some of the more precarious farms. Organic corn and soybeans are at record high levels as pay price stagnates and milk buyers start to impose trucking charges. Many producers are questioning their future in organic dairy in a market where the consumption of organic milk increases each year, inputs increase, the retail price stays the same but pay price drops.To read all of the updates and articles, please go to the "News" Dropdown menu and click on the Danone & Maple Hill Terminate 135 Dairy Contracts Folder
|
Year |
Organic Fluid milk sales (million pounds) |
Change year to year |
|
2008 |
1,676 |
|
|
2009 |
1,602 |
-4.60% |
|
2010 |
1,799 |
11.00% |
|
2011 |
2,074 |
13.30% |
|
2012 |
2,157 |
3.80% |
|
2013 |
2,267 |
4.90% |
|
2014 |
2,491 |
9.00% |
|
2015 |
2,438 |
-2.20% |
|
2016 |
2,573 |
5.20% |
|
2017 |
2,577 |
0.20% |
|
2018 |
2,594 |
0.70% |
|
2019 |
2,604 |
0.25% |
|
2020 |
2,880 |
10.59% |
In a conversation with NODPA, Mitch Clark, Vice President of Operations for Maple Hill who is based in Denver, Colorado, said that 21 organic dairy farms had been given 180-day notice in July, and another 25 farms received their 180-day notice in early November. That will leave 135 farms in the New York region shipping to Maple Hill. Hauling costs will be shared with each producer and Maple Hill does not comment on pay price but producers have reported that pay price has been reduced. He confirmed that Maple Hill has a strong market that is growing. Mitch regretted the ending of contracts and hated that they had to do it but “structural changes in the organic milk balancing equation” has caused them to reevaluate their supply.
On October 13, Stonyfield Organic/Lactalis announced its plans to help save at-risk northeast organic family farms by inviting a number of farms into their direct supply program during the coming months. This announcement built on the work already done in the past few months by Brit Lundgren, from Stonyfield, who has been talking with farmers, attended the NODPA Field Days, and through her work on the Vermont Task Force. Stonyfield Organic informed the New York Organic Dairy Task Force that their team was looking at ways of taking on some of the farms in New England that have lost their Danone contract. Their team of people is working to examine where there might be new markets for milk. They reported that they have updated their New Hampshire plant in 2019-2020 and their parent company, Lactalis North America, will be processing in New England for the long term. Stonyfield is looking at ways to expand production to be able to take more milk from CROPP Cooperative that supplies approximately 80% of their raw organic milk.
CROPP Cooperative is gathering information on all farms in both the Horizon and the Maple Hill situations. Their short-term work is specifically with the Maple Hill farmers, as they have a much shorter deadline and OV’s grass fed milk market is growing. They will be vetting the entire group of Maple Hill farmers, and hopefully, will be able to make some final decisions on this situation by the end of November, depending on decisions by the board of directors. Travis Forgues, Executive Vice President of Membership for Organic Valley/CROPP Cooperative, shared that they are cautiously optimistic that they will be in a position to help these farmers out. As for the Horizon/Danone farmers, CROPP expects to be moving forward in the next 30-60 days to visit the farms and see how they fit on routes, and if their quality and standards match up with CROPP. One of the biggest hurdles that CROPP has been dealing with has been the backlog of Active Base Requests to increase production of existing member/owners that they have been working through during the last very difficult 5 years. Travis Forgues commented that, “I’m happy to report that we have been able to grant over 60 million lbs. in requests from the Midwest through New England in the last three months. The notifications to these farmers, if they don’t already have them, will be getting to them soon.” He stressed that this has been a big lift, and very important for their owners to get their base increases before they look to take on more supply. CROPP is now finalizing their 2022 budget, and looking at how they can reach out and help these stranded farmers. They are working hard to ascertain their direction as quickly as possible. CROPP continues to be optimistic that they can help, but they are going to be methodical and not make promises that they can’t deliver on. “CROPP remains committed to the region, and is trying to find a path where we can help the region with this looming disaster,” Travis commented.
Reports are that Chobani representative Roberta Osborne, Director of Farm Sustainability, has been visiting farms in northern New York that have been dropped by Danone with a view to starting an organic line. The Chobani plants in South Edmeston, NY, and its second plant in Twin Falls, Idaho, are not currently organically certified. The Idaho plant is the world’s largest yogurt making facility. Chobani has started the process of filing for an initial public offering that could be valued as high as $10 billion.
In the intervening three-plus months since the termination letters were sent to the Horizon/Danone farms, there has been a lot of action and many questions have been raised.
Many very good people have responded to the actions of Danone and Maple Hill. For those farm families who are directly affected by the loss of contracts, there is no silver bullet but, hopefully, many different options will emerge that might prove effective. Processors are stepping up where they can without endangering their existing producers.
We can see some long term solutions that will create opportunity in the future with the passage of the Origin of Livestock (OOL) and Strengthening Organic Enforcement (SOE) next spring (assuming they have the right language in the final rules and these are implemented immediately). Enforcement on the pasture rule, especially on identifying the growing season for the farm’s location rather than just looking for the bare minimium of 120 days. And, there’s encouraging news that the Texas Department of Agriculture (TDA) has posted this notice on its website, “Please note for LIVESTOCK CERTIFICATION ONLY: TDA is currently not accepting any new applications for organic LIVESTOCK certification.” Hopefully, the NOP can withstand outside political pressure to reinstate the TDA as a certifier for their organic dairies. Enforcement on domestic and foreign fraud might encourage the growth of more domestic organic soybeans and corn to satisfy the huge demand from the organic poultry industry and the large organic dairy CAFO’s. A lot more organic consumers have been educated about organic dairy and where the premium dollars they pay at retail end up – not with the farmers, who only receive approximately 35% of the retail price as opposed to the 60+% conventional farmers receive. A higher pay price than conventional market is required to meet the higher cost of organic dairy production, it is not a premium. An average farmgate payprice of $31 per hundred does not cut it, and now we have high feed prices which should mean an increase in pay price or a special MAP to cover the increased feed price. It seems unlikely that the buyers will give an increase to cover the extraordinary increase in inputs.
So many opportunities were missed in the past that could have prevented this predictable situation of New England and Northern New York farms being dumped or at least mitigated it. Obviously, better and consistent enforcement of regulations is high on the list, as was completing the Final Rule for OOL in the Obama administration. The Department of Justice ruling that Danone had to divest itself of Stonyfield Farm before they would allow the purchase of WhiteWave to go ahead should have also addressed the continuing lack of competition on the supply side in New England. To cut so many farms at one time, in a market that is still in recovery rather than waiting for some basic corrections, does not reflect the intent of the agreement signed by Danone when it completed the WhiteWave purchase. It is evident from the response that NODPA and others have had from consumers over the actions of Danone, that consumers do not support Danone’s actions but do support paying farmers their cost of production and a living family wage. Danone has an opportunity to make it right and correct its missteps that have caused such unneccesary hardships and stress while we are still suffering the effects of the pandemic. We will continue to work to make that happen.
