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December 14, 2021 Danone North America, owner of Horizon Organic, announced yesterday they will meet one of the requests of Northeast organic producer groups resulting from Danone’s decision to move its milk sourcing to the west, leaving 89 organic dairies in the northeast without a market. The request Danone is honoring is extending farm contracts to 18 months. They will also provide a small (6% of the milk check for 6 months or $2 per hundred pounds of milk) transition payment for the affected farm families. Five Northeast organic farm organizations met with Danone in November to discuss the company’s response to the 15,324 petition signatures submitted by nine organic advocacy organizations a few weeks prior. In this meeting, the northeast organizations made specific requests of Danone to repair the damage that leaving the entire Northeast region will have on the farm economy and rural communities.
Danone North America is one of the largest B Corporations and thus has committed to putting people over profits—a commitment its corporate decision to leave the Northeast region decision directly violates.
“We’re glad to get a response to our requests, which is one small step in the right direction. There are still many details to figure out for our producers and lots of work to be done to improve infrastructure and ensure a future for organic dairy in the region. We look forward to continuing our discussions with Danone to ensure that they meet their commitments and work toward viable long-term solutions for northeast dairies,” stated Sarah Alexander, Executive Director of the Maine Organic Farmers and Gardeners Association.
On November 18, Northeast Organic Farming Association of Vermont, Northeast Organic Farming Association of New York, Inc., Maine Organic Farmers and Gardeners Association, Northeast Organic Dairy Producers Alliance, and Organic Farmers Association met with Danone North America executives to outline the petition requests including two options the company could take to rectify the negative impact on the Northeast region and violation of their B Corporation commitment.
The first option presented asked Danone to stay in the Northeast and invest in a processing plant that would make Danone’s supply chains more sustainable and reduce truck miles. The alternative option the group presented was for Danone North America/ Horizon Organic to leave the northeast but financially invest in the region, providing necessary support for the transitions the 89 dairy families are facing. The group asked Danone to give a significant severance pay totaling $15M to all 89 dairy farmers who will either be forced into an early retirement or will be required to make costly changes to their farms to be picked up by another company. This second request also asked Danone to provide a $25M investment towards a new organic dairy processing plant in New England. In Danone’s response, they maintain they will leave the region, but made some concessions on contract extensions and payments.
“We would have preferred for Danone to stay in the region,” says Grace Oedel, Executive Director, NOFA-VT. “Horizon Organic has been in the Northeast region for over two decades and has a long-term relationship with all the organic farm organizations and our farmer-members. If they are determined to leave, we are glad that they are working towards meeting some of our requests to leave the region in a stronger position.”
In a letter dated December 13, 2021, that Danone sent to the Northeast organic producer groups Danone announced its plans to provide the affected producers with the option to extend their current contract for a total of 18-months, ending on February 28, 2023; provide modest transition payments of an additional amount per hundredweight on the milk purchased from the producers during the last 6 months of their contracts, including to farms that have already exited Danone’s network after receiving the non-renewal notification; provide farm consultants at no charge to the affected farms; and explore co-investment solutions for Northeast dairy infrastructure.
“It’s great for producers to be able to extend their contracts for an extra six months; however, the proposal lacks any substantive financial support to assist with the trauma that this decision has caused. Farmers are being offered myriad services by State governments and non-profits so any farm consultancy will not be helpful. Unfortunately, with Danone’s decision to leave the region, these farms will need to figure out what their future looks like. The contract extension will give them a little bit more time to investigate new paths forward for their families but what they really need is a sound market with a good pay-price to give them a living wage,” said Ed Maltby, Executive Director of the Northeast Organic Dairy Producers Alliance.
“We hope to hear more specifics about how Danone plans to co-invest in solutions for Northeast dairy infrastructure. The region needs a new organic dairy processing facility to be able to secure a future for Northeast dairy and provide local milk for the Northeast,” says Kate Mendenhall, Organic Farmers Association. “We estimate that a new facility will cost at least $50 million to support the milk processing for the region as well as supplementary dairy processing needed to balance the local supply. Danone has the fiscal capability to help make that a reality for these farmers.”
The producer groups will continue their work to manage the crisis on the ground and help the affected farm families. They also plan to continue to work to hold Danone accountable to its B Corporation social responsibility commitments. The group encourages consumers to buy directly from local organic dairy farmers and processors as an antidote to corporate consolidation in the organic sector. Support from consumers, policy-makers and businesses committed to the northeast will enable investments in local infrastructure, allowing farmers to regain control of their hard work and ensure consumers have access to healthy and locally-produced food.
Ed Maltby, Executive Director, Northeast Organic Dairy Producers Alliance