About four years ago, I attended a workshop by Jonathan White, the maverick New York State cheese maker/baker/dairy farmer of Bobolink Dairy.
Like a Southern Baptist preacher thundering from the pulpit — only with a Northeastern accent and lots of good humor — White had a message to deliver. He exhorted conventional dairy farmers to sell half of their herds, invest the proceeds in cheese-making equipment, and turn their remaining cows out to pasture.
Don’t give your money away to feed, seed, or fertilizer suppliers, and don’t give your milk away for pennies to the big processors, he exhorted. Feed your cows grass and turn their milk into cheese, and then sell it directly to consumers.
He promised salvation for those who followed his advice: near-zero input costs, higher revenues, and — unheard of for conventional dairy farmers — steady profitability. White admitted that his message met with resistance among his jaded peers. White summed up their attitude like this: “My grandfather lost money doing it this way, my father lost money doing it this way, and I’ll be damned if I won’t lose money doing it this way, too.”
They’d often engage in a bit of gallows humor at their plight, White added: “I lose money on every gallon, but I try to make it up on volume.” That simple sentence sums up the treadmill faced by farmers who work within a highly consolidated, industrialized food system.
White noted that when he visits conventional dairy farms, he often teases farmers by standing next to the tap through which their milk flows into the dairy truck, to be mixed with the milk of their peers and hauled off to the corporate-owned processing plant, where it’s then pasteurized, packaged, and sold profitably to supermarkets throughout the area. Pointing to the tap, White tells the farmers, “You should really have that hole stopped up. The value of your farm is leaking out through that thing.”
White’s presentation focused on a literally dying breed: small-scale conventional dairy farmers. Large operations that confine cows into feedlots, with their economies of scale and proximity to the few remaining dairy processing facilities, now dominate conventional milk production.
Are the same economic forces now shaping the organic milk market? That’s the message of a fascinating recent debate on Gristmill between Ed Maltby of the Northeast Organic Dairy Producers Alliance and Gary Hirshberg of Stonyfield Farm. Malby opened with this post; Hirshberg quickly countered; and Maltby answered here.
Maltby opened with an indisputable fact: organic dairy farmers are struggling. Their expenses — fuel, energy, health care, and feed — have skyrocketed, while the price they receive from processors has been relatively stagnate. Maltby quoted several organic farmers who are barely hanging on under the circumstances.
Hirshberg didn’t dispute this characterization. “These are difficult times for the organic dairy industry,” he conceded. Hirshberg should know. Stonyfield ranks as by far the largest U.S. organic yogurt producer. As of 2004, it was claiming to hold a “a 77% dollar share of the U.S. organic yogurt market” — a position I doubt has declined much, if at all, in the years since.
It also must be noted that while Hirshberg is a famously independent player, he and his company ultimately answer to European yogurt giant Groupe Danone, which owns 85 percent of Stonyfield shares.
So the farmers represented by Maltby and the Northeast Organic Dairy Producers Alliance — many of whom run 50-60 cow operations — are dealing with a multibillion-dollar entity in Stonyfield/Danone.
Hirshberg makes the case that Stonyfield has acted as a benevolent giant. It only buys milk from real family farms that regularly give cows access to pasture — not the industrial-organic confinement operations called out by the Cornucopia Institute, that great documenter of corporate attempts to hijack organic.
And the price Stonyfield pays the farmer-owned cooperative Organic Valley — through which it sources milk for its yogurt — has risen 34 percent in the last four years. (According to Maltby, farmers themselves have seen only a 20 percent increase). Hirshberg seems to realize the hike has not been enough of a raise to cover farmers’ rising costs, but he points to an important mitigating factor:
[T]here has been an explosion of low-priced, competitive, private-label organic yogurts supplied by producers of non-family-farm milk, creating intense downward price pressure in the market.
Hirshberg is right on this score. Stonyfield is competing with private-label “organic” yogurts that source milk from mega-dairies that confine their cows, feed them organic corn, and mock the “access to pasture” stipulation of USDA organic code. The USDA’s efforts to rein in these fake-organic dairies has been feeble at best; what few actions it has taken came only after well-documented hell-raising by the Cornucopia Institute.
However, Stonyfield also licenses its name to HP Hood, a large dairy processor based in New England. Under the Stonyfield name, HP Hood markets organic fresh milk in the Northeast. Hirshberg says nothing about the price HP Hood pays to organic farmers; Maltby charges that pay hikes in response to higher production costs have been paltry.
Hirshberg and Maltby both paint a picture of an industry under pressure — squeezed by high input costs and ruthless competition from corporate farms.
Each makes an appeal for protecting his own interests. “Stonyfield Farm’s mission is to drive consumer support for organic family farmers while proving it is profitable to be an organic processor,” Hirshberg declares.
Maltby counters that the profitability of organic processors can’t come at the expense of the farmers that supply them. Farmers face precarious finances; they don’t have “the deep pockets of Dean Foods, HP Hood, or Danone,” Maltby writes. He points out that several New England dairy farmers have already switched back to conventional production, because the cost-price conditions are actually more favorable.
I stand with Maltby. Stonyfield’s marketing literature brims with allusions to happy farmers and happy cows. Consumers should pressure the company to pay more to farmers — a multinational giant like Danone can handle a period of low profitability more easily than farmers can.
And if Stonyfield and other large organic-milk buyers won’t budge, farmers should seriously consider the advice of Bobolink Dairy’s Jonathan White, mentioned above: exit the commodity market altogether, and begin selling cheese directly to consumers.
But consumers want access to both family-farmed milk and cheese, so let’s hope Stonyfield and other big buyers budge.
