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.
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Comments View as Flat
GreenEngineer Posted 4:18 am
12 Mar 2008
the value of value add
Tom,
White's suggestion gives farmers two ways to improve their profitability: selling direct to consumers, and selling value-added products like cheese.
Going the value-added route is obviously more lucrative, but is going to carry up-front costs for both equipment and marketing.
It seems that the easier route for cash-strapped farmers, at least in the short term, might be to hold off on the valued-added part, but immediately start selling fresh milk to consumers.
Is there some reason that that is a bad idea? Are there regulations that would prevent it? Or is the additional profit capture potential for direct sales of milk small enough that it's not worthwhile?
On a related note, I wonder about HP Hood. They are a farmer-owned cooperative, which means that if the farmers, who are the owners, feel that they aren't getting a fair price for their milk (or a fair share of the price hike that HP Hood has gotten), the should be able to do something about it. Yet they're complaining to Stonyfield. What's up with that?
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Tom Philpott Posted 4:34 am
12 Mar 2008
God questions, GE
Selling fresh milk to consumers is a massive headache, because you'd need a very expensive pasteurizer and bottling machine. J White suggestion is arguably easier, because farm-scale cheesemaking would equipment would be much cheaper. You won't need to pasteurize if you aged the cheese over a certain time period (I believe 60 days). Yes, marketing would be a headache; but there's a vibran market in local, raw-milk cheeses in New England and almost everywhere else, too.
The problem, of course, is skill. White was a master cheesemaker before he set up shop as a dairy farmer. It would be difficult to jump into cheese-making after a career as a farmer. Hence, no doubt, the hesitancy with which White's message is met.
JB Hood is a farmer-owned co-op? Are you sure? Here's what their Website says:
Victual Reality
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caniscandida Posted 4:48 am
12 Mar 2008
"happy farmers, happy cows"
Excellent post, Tom.
Chickens deserve our true friendship! So do fish! So do other sentient beings! Let us learn to be kind.
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bharshaw Posted 6:47 am
12 Mar 2008
Challenging Times
I suspect these will be challenging times for economic niches, like organic dairy. With the cost of living rising, families will put a premium on saving money, not on organic products. If I remember correctly, in the 1970's when we had a similar run-up in oil prices and cost of living, supermarkets came out with their unlabeled "generic" products.
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spaceshaper Posted 12:42 pm
12 Mar 2008
Shell game?
Looks like GE has investor-owned HP Hood mixed up with farmer-owned Organic Valley, which is indeed a coop. Easy to get condused, seems Stoneyfield buys milk from OV and licenses yogurt production to Hood.
One more reason to buy local. What, you thought Stoneyfield was actually a farm?
The true meaning of life is to plant trees, under whose shade you do not expect to sit.
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raevynn Posted 4:17 am
13 Mar 2008
Why dairy?
Personally, I choose to avoid all dairy.
When I consumed dairy, I did buy only organics, as I am well aware of the conditions on typical dairy farms, as well as the mega dairies (personal experience, living in the heartland).
Further along my life's journey, I decided that I cannot contribute to an industry that is detrimental to the environment, to animal well being, and to my own health. I'm much healthier now, with drastically reduced 'hormonal issues'.
Consider just saying No to dairy.
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parkprotector Posted 7:10 am
13 Mar 2008
Farmers Markets
Why isn't anyone pointing out the value (and potential) of the farmer's market? Most urban areas are ripe for a reliable farmer's market with organic, local, fresh fruits, vegetables, cheese, breads, etc., as well as byproducts such as wool and local crafts. Our area is even looking into a year-round, indoor/outdoor venue that offers the potential for a sustainable income to local farmers and artists. With the cost of fuel and increased interest in all things healthy and green, now is definitely the time for the Grange, Ag Extensions, and other organizations that serve the agricultural community to actively promote all viable alternatives.
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kmp Posted 7:41 am
13 Mar 2008
Avoiding dairy
isn't exactly going to help dairy farmers.
Presumably there is always an option to avoid a certain food if one has concerns about safety, toxicity, animal welfare, etc., but calling on consumers to simply stop eating any particular food group is overly simplistic.
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mskellyann Posted 6:07 am
14 Mar 2008
Farm-fresh milk
Yes, GreenEngineer, unfortunately there are restrictions in many states aganst selling farm-fresh, raw milk. Here in Vermont, where I live, and where dairy is a huge part of our economy, there are restrictions. But they're nothing compared to some states, where folks have been arrested and jailed for selling or buying raw milk.
Ironically, raw milk is better for you than pasteurized milk, and the healthy bacteria in such milk actually inhibit the growth of dangerous bacteria. And milk from clean, happy, well-kept cows is perfectly safe. See http://ruralvermont.org/food.html for more info, including some downloadable fact sheets.
Cheers!
Kellyann
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wildhawk905 Posted 9:11 am
19 Mar 2008
Farmers Markets
Excellent point! I only purchase eggs, poultry, fish(wild caught & smoked), dried beans, fruits & vegetables from our local farmer's market. They have organic flours and breads. There are cheeses from all over the world, spices and herbs. There are vendors who sell fresh & smoked pork/beef/lamb/and turkey.
It is a T-Th-Sat. indoor/outdoor(weather permiting operation) that has been in existence for over 50 years. Seasonal items are added, such as flats for planting gardens and landscaping/flower gardens in the spring and summer. Holiday items such as Christmas trees/Halloween pumpkins, etc. are available.
Our market is city owned property, with an independent manager. They have special functions year round such as chili cookoffs. In the summer there are outdoor food vendors selling bar-b-que, mexican, greek, soul food, and an ice cream stand.
The demand is there. The market master last year also started a program at the market to bring organic farmers together with consumers willing to purchase shares in the products of a farmer's operation, using the market location as a distribution point.
And this is in just a medium size town in the rustbelt section of the midwest.
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treefarmer59 Posted 12:06 am
21 Mar 2008
Stonyfield Farm
It might be helpful to know a bit of history. Stonyfield Farm yogurt works was started on a small hillside farm in Wilton NH more than 20 years ago. It was created as a way to financially support the non-profit Rural Eduation Center (I was a member of the Board). Gary Hirschberg, despite what anyone who doesn't know him may think, has a deep philosophical commitment to organic agriculture, family farms and environmental sustainability. No doubt, he and his company can't always make all the right decisions at every point in time, but the two decade history of Stonyfield is about as admirable as you can get in this complex world.
Let's not let the perfect be the enemy of the good. Stonyfield has made a difference, and will continue to do so. Constructive criticism is never bad however.
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wiscidea Posted 8:22 am
22 Mar 2008
Milk is Becoming a Luxury Good
I just paid $7.29 for a gallon of Organic Valley organic milk! I'd swear it was $6.29 per gallon last week. What happened?!
I had just gotten used to paying far more for organic than conventional milk. I had stopped wincing when I put it in my cart. I wasn't even afraid to tell friends and family, who complain about $3.00 per gallon milk, that I buy organic milk.
But I don't think I'll be able to pay $7.29 for a gallon of milk next time. There's something magical about that number. It's a tipping point for whether a beverage is expensive or inexpesive.
How much of this goes to the farmer? The processor? The petroleum industry? Is anyone working on building a hybrid milk truck for moving milk from the farm to the processor? Must be a lot of braking power to recapture.
It has become apparent, to me at least, that milk is indeed a luxury. I dread the day cheese is no longer affordable.
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Tasermons Partner Posted 9:43 am
22 Mar 2008
It's really bad for me...
...I consume more milk than I do gas, and milk is more expensive than gas!
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