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August 22, 2022 A year ago, Danone North America, which owns the organic dairy brand Horizon Organic, notified 89 organic dairy farm families in Maine, New Hampshire, Vermont, and New York they were terminating their dairy contracts in 12 months’ time and stopping all sourcing of milk in New England. Danone’s swift regional exit marked the largest simultaneous contract termination organic dairy has ever seen. The organic dairy market is relatively small with only a few buyers left after years of mergers and acquisitions, so when a major buyer like Horizon leaves, there are few options for farmers. The news was devastating to these farm families, many of whom have provided organic milk to Horizon Organic for decades and were instrumental in building Horizon’s successful brand.
In the year since Horizon’s announcement, some of the farms have gone out of business, some have been lucky to find another dairy buyer, many have had to make significant, costly upgrades to their farms, and all dairies have suffered from inflation, skyrocketing feed prices, and summer drought. Danone owes these farmers a future because their healthy, organic milk has helped make Danone one of the largest multinational dairy companies in the world.
In the past year, Northeast organic producer groups representing the affected farmers have asked Danone to support these farmers before they leave the region by 1) giving farmers another 6 months on their contracts, 2) making a significant investment in organic dairy processing infrastructure in the region, and 3) providing farmers with severance pay. Danone responded in December agreeing to give farmers the extra 6 months on their contracts, a minor severance payment, and to invest in the region. To date, all farms were offered the contract extension, very few farmers say they have received their severance payments, and Danone still has not made any financial investment in the region’s organic dairy industry.
In contrast, these same Northeast organic producer groups along with other regional stakeholders met with the USDA last fall to identify the responses needed to protect the farms and the rural communities that rely on the thriving and longstanding organic dairy industry. Agriculture Secretary Vilsack took these recommendations seriously, announcing a $20 million investment in the region in March 2022 to support organic dairy farmers during this crisis. Surely Danone can match this.
Danone simply has not done enough, and U.S. taxpayers should not be picking up the tab to clean up Danone’s economic mess left behind as they exit the Northeast. Danone must, at a minimum, match the $20 million taxpayer investment for northeast organic dairy. Danone’s 2021 year-end sales were €24.3 billion. Danone CEO Antoine de Saint-Affrique stated, “we ended the year on a strong note…We delivered on our commitment to return to profitable growth…with recurring operating margin at 13.7% in 2021. This was enabled by a strong focus on execution and a step-up in productivity, a pro-active approach to pricing and the disciplined implementation of Local First.” But to farmers in the Northeast, Danone achieved these profits by putting Local Last.
“Farmers in Vermont have experienced an excruciating year, facing mental health strain and huge financial investment on their farms to maintain organic management. Danone needs to step in to give farmers a fighting chance to keep Vermont organic dairy a viable industry for the next generation,” says Grace Oedel, Executive Director of NOFA-VT.
In Maine, Sarah Alexander, Executive Director of MOFGA comments, “We have lost dairy farms in Maine and fear we could lose more. There is local motivation to rebuild our local dairy infrastructure, but we need Danone to at least match the taxpayer investment of $20 million that the USDA made in the wake of Danone’s decision to leave the region. They owe the region’s organic dairy farmers and consumers at least that much.”
“Recently Northeast organic producer groups met with Danone to request the much-needed regional investment the company committed to provide,” says Kate Mendenhall, Organic Farmers Association. “They acknowledged their commitment but then kicked the can down the road. It’s time they pay up to support a viable future for the 89 farmers they have left behind.”
Bethany Wallis, Executive Director of NOFA-NY adds, “New York has the most farms losing contracts and many are in bad shape with an unclear future. Danone’s B-Corp social commitment and claims of putting local first needs to be realized in the Northeast.”
“An investment of $20 million to match the USDA contribution would make a huge impact towards repairing the damage Danone has caused in the region,” says Ed Maltby, NODPA. “The most recent economic downturn coupled with drought conditions have turned a crisis into a near emergency and Danone has the resources to live up to their commitment to invest in the region. It’s time they embody their social mission and do right by the Northeast rural communities they have impacted, giving these farmers a future.”
Northeast Organic Farming Association of Vermont, Northeast Organic Farming Association of New York, Inc., Maine Organic Farmers and Gardeners Association, Northeast Organic Farming Association of New Hampshire, Northeast Organic Dairy Producers Alliance, Organic Farmers Association, together ask Danone North America to invest a minimum of $20 million in the northeast organic dairy industry. These groups have submitted proposals for how a Danone North America investment can make the greatest impact where it’s needed most.
Ed Maltby, Executive Director, Northeast Organic Dairy Producers Alliance
Posted: to Danone & Maple Hill Terminate 135 Dairy Contracts on Thu, Aug 25, 2022
Updated: Thu, Aug 25, 2022