This is Part 1 of a two-part series about California’s organic dairy industry. Read Part 2 here.
“Roll down your window for a second and tell me what you smell,” Rosie Burroughs instructs me. It’s early March and I’m in the passenger seat of her gigantic white Ford pickup truck, bouncing down a narrow, potholed dirt road on her farm in the rolling hills just east of Turlock, Calif. Her husband, Ward is sitting in the driver’s seat.
The Burroughs’ 4,000 acres of sweeping organic grasslands, which practically rest under the shadow of Yosemite’s Half Dome, are a pastoral dream. On the Saturday afternoon of my visit, a storm was brewing over the purplish mountains, sending gusts of pink petals from their neighboring almond orchards across the landscape.
I opened the window, gazing at a herd of cattle grazing not more than ten feet away from our car, half expecting the acrid stench of manure and animal common on larger factory farms to assault my nostrils. But I couldn’t smell anything, save for the faint scent of damp earth and rain brewing on the horizon. Rosie leaned back in her seat, content.
Ward, Rosie, and their three grown children operate California Cloverleaf Farms and Full Circle Dairy, two organic dairies milking 500 cows each, in addition to a pasture-raised chicken operation and organic olive and almond orchards. In 2004, they joined Organic Valley — the largest organic, farmer-owned co-op in the nation with sales topping over $900 million annually — and began shipping their milk to grocery stores across the country.
Their family’s dairy history runs much deeper though: Ward’s grandfather, Benjamin, began farming in 1896. Original glass bottles from his first enterprise, Walnut Grove Creamery, line the Burroughs’ dining room mantle alongside Organic Valley milk cartons emblazoned with portraits of Ward, Rosie, and their children and grandchildren. The Burroughs are literally the face of the company.
But they’re in trouble. Last year was the first in their entire farming history that the Burroughs didn’t make enough money to pay the bills, prompting them to close their third dairy operation. And they’re not alone. California’s ongoing three-year drought – the worst ever in recorded history — combined with slow responses from co-ops, has doomed many of the state’s dairies, raising questions about how just sustainable this form of “sustainable farming” really is — economically, ecologically, and otherwise. Pastured dairies throughout California, once exemplary models of sustainable and organic farming, are in jeopardy of imminent collapse.
For nearly 20 years, organic dairying promised a strong future for farmers, appealing to a new, more sustainable-minded generation and allowing them to charge more for their milk.
“One of the beauties we saw when we came into organics was that it was a place for young people to have a way into farming. But for the last two years now, we’re seeing people leave the farm,” Rosie says. “Young farmers who have dreamed of carrying on their family’s business, many of which have spanned multiple generations, are facing the emotional decision of not being able to farm if conditions don’t improve. That’s a tremendous amount of stress and strain, your family’s heritage is on the line.”
Organic dairy first appeared on supermarket shelves nationwide in 1993, and began booming in the late ’90s. Since then, dairy sales have been one of the fastest growing segments of organics, increasing 23 percent annually from 1999 to 2008. Organic milk sales are still stronger than conventional, non-organic sales — and on the rise — up 13.5 percent from last year, compared to a 1.1 percent decline in conventional milk sales.
California happens to have the highest concentration of organic dairies in the entire country. But that could soon change, thanks to a combination of factors mainly driven by the drought.
For starters, organic dairy requires grass — lots of it. The U.S. Department of Agriculture requires all organic dairy cows to graze on pasture during the grazing season for a minimum of 120 days. A third of all dry food — i.e. anything that isn’t fresh grass, like hay – has to be harvested from organic pasture as well. But when pastures go fallow due to drought, or when severe federal water restrictions leave farmers with little to none of their regular water supply, dairymen are left with few options but to spend thousands of dollars to import feed in order to keep their cows fed.
Nationwide demand for organic milk might be rising, but it’s also costing farmers a lot more money to produce out of pocket, and dairy co-ops have been slow to raise their farmer’s salaries by upping milk prices.
As a result, many western organic dairies have experienced negative profit returns for four of the last five years. An economic analysis of 12 organic dairies in California from 2008-2012 found that the dairies surveyed were “bleeding assets,” cumulatively losing more than $5 million dollars over the course of the survey. In roughly five years, some farmers have seen feed prices go up by roughly 55 percent, while their pay prices have increased by just fewer than 15 percent, according to the study, by the Western Organic Dairy Alliance, a Chico-based organization. An average dairy, the study found, was only still in business because its bankers were willing to keep waiving the farmers’ loan contracts.
“If farmers have had the resources to be able to borrow, then they’ve been able to hang on through these turbulent, difficult times,” Rosie says. “But there comes a time when the banks are going to say, ‘You’ve burned up your equity.’”
Very few dairymen process and market their own products. Most opt to join co-ops like Organic Valley instead, in which milk from multiple dairies is blended under the co-op’s label, for the assurance of a guaranteed marketplace. As members and partial owners of the co-op, dairymen can vote to negotiate their own pay prices, though the process is lengthy one and has to filter through several regional committees in addition to the co-op’s board of directors before going into effect.
“You’ve got to know where it all comes from,” Tony Azevedo tells me, gesturing toward the grass as we roll onto the pasture in a golf cart on his organic dairy, Double T Acres. His speckled herd dog, Guido, rests at my feet.
This clear, cloudless day in early March marks the first day his cows have been put out to pasture all year. But his pasture, what organic dairy is all about, Azevedo says, has suffered dearly because of drought. The grass should be up to our knees, yet it barely reaches our ankles. Pasture is probably the most underrated crop there is, Azevedo says, pointing out a few of the nearly 30 or 40 grass species on his property, like orchard, Bermuda, and rye. It’s green gold.
Azevedo is a pioneer in California’s organic dairy movement. In 1995, he was the first dairyman in the entire San Joaquin Valley to go organic, and he was also the first milk producer to join what would eventually become Organic Valley’s California division, which now includes 17 other operations, many of which are in the Central Valley or in Northern California’s coastal regions, like Humboldt. He’s been instrumental in encouraging many Central Valley dairymen to convert to organic – the Burroughs included.
Azevedo inherited his farm from his father, who immigrated to the San Joaquin Valley in 1948 from Portugal’s Azores islands, and began farming in the early ’70s. Now, Azevedo and his son, Adam, own 700 acres of farmland and somewhere between 650 and 700 cattle. “Deep down inside you want to farm,” he told me. “It’s a bred instinct that’s with everybody. Most of my life was never a job.”
But much like the Burroughs, the Azevedos can’t make a livelihood off of organic milk anymore. They decided to liquidate their entire herd, a gut-wrenching decision they made last year.
Cruising along their property, Azevedo is quick to jest — farmers have nothing if not for a sense of humor, he says — but he grows quiet when we pass the corpse of a bloated heifer on the side of the road who fell sick during the first cattle move, and the empty pens where his cattle used to be. It gives him kind of an eerie feeling, he says.
Azevedo traces the problem facing California’s organic dairy industry to co-ops being slow to respond to the onslaught of environmental and economic factors currently plaguing so many farmers. When I met with him in March, Organic Valley hadn’t yet moved prices to reflect higher costs of production. “We could weather this shit,” he said of the state’s ongoing drought. “This thing can be remedied very, very easily but it’s the gorilla in the room,” he said. “They’ve got to give some of that money back, not to Organic Valley, but to the farmer.”
Two months after my visit with Azevedo, Organic Valley finally noticed the gorilla. On May 1, the co-op’s milk prices across the country were raised an additional dollar per hundredweight — dairy producers are paid per 100 pounds of milk — and farmers in the Central Valley received an additional premium of an extra dollar on top of that, bringing the pay price up to $28.55 per hundredweight.
“There’s no doubt that Central Valley farmers have been struggling, and I wish we could have gotten that extra dollar sooner,” says Organic Valley’s CEO, George Siemon, one of the co-op’s original seven founders, who has operated his own family-run farm in Wisconsin’s Bad Axe River Valley since 1977. “I’ve been proposing that the Central Valley farmers get an additional dollar for quite a while. It’s hard to do that additional regional premium in one market when you’re not offering it in another. But with the drought in California, we were able to use that to say why we need to have an additional dollar for the Central Valley.”
But it’s still too early to know just how much the price increase will help the Azevedos, the Burroughs, and the rest of their organic dairying cohort in the region. “While the pay price increased a little bit, it hasn’t been enough to really get us out of the economic distress that we’re in,” Rosie says. “As time continues and feed prices escalate, I think many farmers are going to have really desperate, difficult decisions to make.”
The pay raise for farmers also means a 20 cent increase on supermarket shelves, and another possible price increase again in March 2015. How consumers respond to the retail price increase also still remains to be seen. “We have organic milk over four dollars a gallon and headed to five dollars, and there is a concern about that,” Siemon says. “We want to have a fair relationship with the consumers and we don’t want to raise the price higher than necessary, but it’s clear there’s a shift going on, and we’ve got to take care of our farmers.”
Part of that shift, Siemon adds, includes the possibility that the Central Valley might not be geographically sustainable for organic milk production anymore. “That’s the trend that without a doubt is happening,” he says. “It’s not just about organic dairy, it’s about livestock and agriculture, especially as the valley gets more orientated toward tree foods and vegetables. There’s a tremendous pressure on those farmers.”
Meanwhile, Azevedo says he has seen hundreds of family farms go out of business in his lifetime. “I’ll tell you right now, there are organic dairies in California who are out of business and they don’t even know it yet,” he says. And the almond orchards continue to creep in closer and closer to his property, too. “There’s been millions of acres brought into [almond] production that never should have been brought in. All the almond trees you’ve seen,” he tells me when I ask about the rows upon rows of orchards I saw on my drive in, “that was all once natural pasture just a couple years ago. Now that [landholders] are paying so much for land for almonds, the race for land here in the West is crazy.”
The irony is that while the Central Valley seems less and less able to sustain organic dairies, many of these farms are being replaced with crops that could be even more precarious. I’ll talk more about those in Part 2.