By Ed Maltby, NODPA Executive Director
News from producers is that many are working through their transition to different buyers, with some surprised at how impersonal the process is, especially those who have been with the same processor for a decade or two. For many of the organic family farms in the northeast that tend to be small to mid-size, their relationship with a buyer is very personal and change is never easy, but financially necessary.
Pay Price varies by milk buyer, location and size and some buyers are waiving their standards to take on new producers. Many brands and processors are developing new relationships with co-packers to cover their lack of supply, as an alternative to purchasing spot milk. Origin Milk is reported as attracting producers from Kalona Farms in Ohio at a $52/cwt pay price. Kalona Farms has a checkered history with how they work with Plain communities’ farms (more information on their history in the March/April 2020 NODPA News). CROPP Cooperative is reported as having paid an extra $4/cwt loyalty bonus for June milk for those producers who are committed to staying with them.
Uncertainty remains regarding USDA actions, tariffs, drop in the value of the dollar and employee agreements. Hopefully, time will lessen the chaos and bring some consistency to the many issues that directly affect family farms. There is a push from five House members from California’s San Joaquin Valley, led by Rep. Jim Costa, for USDA to fund a vaccine for H5N1 in dairy cattle. They sent the Ag Secretary a letter urging her to develop and evaluate an H5N1 vaccine for dairy cattle.
There is continued fear of losing many of the necessary program expansions at the NOP that we fought so hard for over the years because there is no clear indication of the level of staffing for the program. One piece of very good news is that Jenny Tucker returned as Deputy Administrator of the NOP as of June 2, 2025, after previously serving from 2018 to early 2025, then had a brief tenure in the Specialty Crops Program. Jenny’s knowledge and experience with the program will bring more stability and will strengthen the NOP’s ability to move forward. Thanks to Christopher Purdy for his service at NOP; he will now become Chief Innovation Officer at USDA Agricultural Marketing Service.
In 2016-2017 we were not prepared for fraud that destroyed the organic supply market. This time we need to be actively aware of any potential problems. Wherever profit exists, some will exploit loopholes and bypass regulations. With demand high for organic milk and supply short, processors are competing for any milk they can find at a competitive price, sometimes not looking beyond the farm gate. With the price of organic dairy cows so high and the availability relatively short, the opportunity for fraud in the transition process is profitable. The greater, consistent implementation of the Origin of Livestock, Pasture Rule and Strengthening of Organic Enforcement means that certifiers have more tools at their disposal to prevent some of the more egregious regulations’ violations that have happened in the past, for example, changing conventional cows to organic while they were in transit. Some producers may be looking to expand their cow numbers and there may be other larger operations that will either expand or set up new operations by transitioning conventional cows to ‘new’ operations.
For certifiers, who we know have their own problems with certifying livestock operations, they need to treat all new operations that are using the one-time exemption or are establishing larger operations by rapidly expanding their existing ones as HIGH RISK. New operations, on established organic dairies or already certified land, that transition conventional animals using a one-time exemption because they have a new name, present a significant fraud risk. Certifiers need to be even more aware of the need for detailed and verifiable data, plus continuous monitoring of the Organic System Plan through the whole start-up process. This will be time consuming work that requires skilled and knowledgeable certification professionals. Any existing operation that is expanding will need the pasture to do so as part of their new OSP before bringing organic cows onto the property. Producers and processors need to work together to ensure a high level of implementation of the regulations and be willing to report any instances that they feel do not meet those regulations.
Aurora Organic Dairy Corp., Horizon Organic LLC, and Cooperative Regions of Organic Producer Pools D/B/A/ CROPP Cooperative, submitted individual petitions to the USDA Secretary on April 29, 2025, asking that: “…… Petitioner respectfully prays that the Secretary exempt certified organic processors, like Petitioner, from regulation under the FMMO system, compensate Petitioner for the Taking of its identifiable and specific settlement funds paid during the applicable statute of limitations period, and, in addition, grant such other relief as is just and equitable under the circumstances.” The same language was used in all three petitions, apart from changes in details about the individual petitioner.
The reason for having three petitions is that the companies chose to challenge the USDA under the petition process mandated by the 1937 Agricultural Marketing Act (AMA)7 U.S.C. § 608c(15)(A) which states that only handlers can bring a 15A petition under this process as they are the regulated entity. The AMA is focused on administrative procedures. Any petition is managed through the USDA Hearing Office which has traditional protocols and is paper based (in other words-slow). The Secretary and the USDA Dairy Programs are represented by the USDA Office of the General Council and the petitioners are represented by long time FMMO legal expert Chip English of Davis Wright Tremaine LLP of Portland, Oregon. The Administrative Law Judge determines the schedule, and there has already been a meeting between the petitioners’ lawyer and the Office of General Council. To my knowledge, there is no defined timeframe for deciding on whether there will be a hearing on the petitions. No changes to the order will occur until the process is resolved.
The three petitioners view this as the best approach to end the requirement that Class 1 milk is part of the FMMO, and therefore handlers are required to pay their share to whatever Order they finally sell their product into. The payments into the Pool generally benefit organic and conventional manufacturing Classes of milk. The petitioners are the companies most financially impacted. The approximate annual amount paid into the Federal Orders for Class 1 for organic milk is estimated at $50 million, which will vary due to non-organic factors. Aurora and Horizon Organic LLC stated in their respective petitions that they paid approximately $11.7 million each year from 2019-2025, and CROPP paid approximately $8.3 million each year for the period 2019-2025. The companies estimate that the most recent changes to the FMMO will see an increase in obligation of 50-70%.
Since this is an administrative petition, there is no mention in the petitions of what will happen to the publication of organic data supplied by the FMMO or a minimum Pay Price tied to the FMMO, as there was in the two previous attempts to exempt organic from payments in 2015 and 2024. There is hope that those issues will be addressed if there is a hearing in the future. There was no mention in the petitions about the effect on organic manufacturing companies that currently receive money from the Pool. Although organic milk has been primarily marketed as Class 1 fluid for the last 20 years, during the FMMO hearing presentations there was data supplied that approximately 40-45% of the total volume of organic milk is now used in manufacturing.
The exemption will especially benefit small to mid-size processors who market mostly fluid organic milk because the payment is significant compared to their relatively modest gross income. For example Straus Dairy, which is one of the most ethical processors, has a program for monitoring producers’ expenses and aligns pay price with costs of production and return on capital, but they are required to pay into the CA Federal Order.
Producers should not expect any resolution of this issue to increase pay price, though it has been suggested that there may be a trickle-down effect of any savings which will obviously benefit the viability of the companies. With the two largest companies that supply organic packaged milk now owned by investment and equity groups that dominate fluid supply in all 50 states, it is plain who will benefit the most from any changes.
In an interview on Food Tank with Danielle Nierenberg, Shawna Nelson, CEO of CROPP Cooperative, discussed the cooperative business model, the mentorship opportunities available to farmers within their network, CROPP’s commitment to a good Pay Price, the importance of investing in succession and transition plans to support producers, and future developments in organic farming. Shawna Nelson mentioned the confidence the Board has in her abilities, explaining how quickly she was appointed by the CROPP Board without a national search. A discussion about being an interim CEO to replace former CEO Jeff Frank turned into a job interview with the CROPP Board the next day, and resulted in her immediate appointment as CEO that same day. In the interview, she praised the work of founding CEO George Sieman and how much she had learned from him.
CROPP Cooperative has announced some key promotions which include the following:
Other key new employees include Georgia Katsafouros as Vice President, Sales; Trent Wehlage as Key Account Manager; and Glenn Reichart, Director, Contract Manufacturing Fluid.
Horizon Organic LLC is hiring employees at many different levels to establish their infrastructure, including VP of Manufacturing Operations and Procurement. They have many staff that previously worked for Horizon under their many different owners. A key hire at the beginning of 2025 was Jake Schmitz as Senior Farmer Relations Manager who previously worked at CROPP as a regional manager.
Posted: to Industry News on Sun, Jul 13, 2025
Updated: Sun, Jul 13, 2025
