The New York Times
May 29, 2009
Organic Dairies Watch the Good Times Turn Bad
By KATIE ZEZIMA
RANDOLPH CENTER, Vt. -- When Ken Preston went organic on his dairy
farm here in 2005, he figured that doing so would guarantee him
what had long been elusive: a stable, high price for the milk from
his cows.
Sure enough, his income soared 20 percent, and he could finally
afford a Chevy Silverado pickup to help out. The dairy
conglomerate that distributed his milk wanted everything
Mr. Preston could supply. Supermarket orders were skyrocketing.
But soon the price of organic feed shot up. Then the recession
hit, and families looking to save on groceries found organic milk
easy to do without. Ultimately the conglomerate, with a glut of
product, said it would not renew his contract next month, leaving
him with nowhere to sell his milk, a victim of trends that are
crippling many organic dairy farmers from coast to coast.
For those farmers, the promises of going organic -- a steady
paycheck and salvation for small family farms -- have collapsed in
the last six months. As the trend toward organic food consumption
slows after years of explosive growth, no sector is in direr shape
than the $1.3 billion organic milk industry. Farmers nationwide
have been told to cut milk production by as much as 20 percent,
and many are talking of shutting down.
"I probably wouldn't have gone organic if I knew it would end this
way," said Mr. Preston, 53.
Here in New England, where dairy farms are as much a part of the
landscape as whitewashed churches and rocky beaches, organic dairy
farmers are bearing the brunt of the nationwide slowdown, in part
because of the cost of transporting feed from the Midwest. The
contracts of 10 of Maine's 65 organic dairies will not be renewed
by HP Hood, one of the region's three large processors. In
Vermont, 32 dairy farms have closed since Dec. 1, significantly
altering the face of New England's dairy industry.
"We expect to lose a lot more farms this year," said Roger Allbee,
Vermont's secretary of agriculture.
Hood and the two other big processors, Horizon Organic and Organic
Valley, say cutting contracts, pay and production are necessary to
absorb overproduction and offset softening demand. Organic Valley,
a nationwide cooperative, told Maine organic dairy farmers last
month that its sales growth had dropped to near zero from about 20
percent six months ago.
"Our inventory is overstocked," said John B. Cleary, the
cooperative's New England regional pool coordinator.
For many farmers, the changes coincide with crushing debt
resulting from the cost of turning organic, which can run hundreds
of thousands of dollars. In addition, the price of organic feed
has doubled in the last year. Credit has dried up for some, and
others say it is nearly impossible to sell cows and so thin their
herds.
And while processors project growth of about 6 percent in organic
milk sales this year (a decline from the 12.7 percent reported for
2008 by the Organic Trade Association), some analysts say that
forecast is far too optimistic. The United States Department of
Agriculture says sales of organic whole milk in February were 2.5
percent lower than in February last year, with sales of organic
reduced-fat milk 15 percent lower.
"We're in big trouble," said Craig Russell, an organic dairy
farmer in Brookfield, Vt., who owes $500,000, mostly from
converting his farm to organic in 2006.
Mr. Russell quit a day job as an accountant to farm full time last
year. "I made more money in six months than in five years of
conventional farming," he said, but his farm is now barely hanging
on. The price he receives from the distributor dropped another $1
per hundredweight on May 1, just when he most needed money to
prepare for the summer grazing season.
"It's going to cost me more to make milk than sell milk," he said.
In an effort to provide a safety net, Vermont last month expanded
a low-interest loan program for farmers.
While most conventional farmers are accustomed to withstanding
price volatility, "organic hasn't weathered this kind of storm,"
said Mr. Allbee, the state's agriculture secretary. Farmers are
finding that organic food is not for every consumer, he said, "and
doesn't guarantee that you will have a market forever."
Some farmers are considering selling their organic milk on the
conventional market just to make some quick money. Others are
looking to sell raw, or unpasteurized, milk directly to the
public. The Vermont House of Representatives passed a bill this
month to increase the amount of raw milk a farmer can sell that
way.
At the annual meeting of the Maine Organic Milk Producers last
month in Waterville, farmers debated whether they could tap into
the locavore movement, marketing their milk as local food. Russell
Libby, the organization's executive director, wondered, "Is it
possible to produce a product with a Maine label on it?"
Right now it is not, because some Maine milk is processed out of
state. But farmers like Aaron Bell, whose contract with Hood will
not be renewed when it expires, thinks the idea will save their
farms.
"We're so remote, we're high and dry otherwise," said Mr. Bell,
whose farm is in Maine's easternmost reaches. "Unless we find our
own market."
Back in 2006, Mr. Bell carried the banner for organic dairy
farming, appearing with his wife on Martha Stewart's show to
promote small family farms. He still believes in organic food, but
not so much in the business model.
"They say it's heaven for the small farmer," he said, "but the
small farmer is the one screaming the loudest right now."
Bruce Drinkman, who milks 60 cows on his organic farm in Glenwood
City, Wis., has seen his income drop 40 percent since Jan. 1. To
keep the farm going, he has dipped into his retirement savings and
dropped his health insurance. But without a loan, his wife has had
to draw money from her I.R.A. to help out.
"Our Plan B is if we don't have a decent year, we're done," said
Mr. Drinkman, who has farmed for 30 years.
"I'm 46," he said. "I wonder what I will do if I can't farm
anymore."
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