Northeast Organic Dairy Producers Alliance

 

    
 

















 

A response to Gary Hirschberg:
Taking an Opportunity to Widen the Discussion

by Ed Maltby, Executive Director, NODPA

I want to thank Gary Hirschberg for replying so quickly to some of the points that we have been raising for the last six months.  Gary and Nancy Hirschberg, and the many employees of Stonyfield have been pioneers in the organic movement, along with folks like George Siemon of Organic Valley and Mark Retzloff of Aurora Organic Dairy.

Gary has long been a leader of the organic community and has helped shape the way in which the industry has expanded. In answering some of Gary’s points I’d like to widen the discussion, and move away from sound bites and platitudes that are the bane of our society and share some of the difficulties of organic dairy that we all struggle with day after day.

Who pays the farmers?

Stonyfield Farm does not pay farmers directly. Stonyfield buys milk for its yogurt from Organic Valley, a cooperative owned by farmers. The price that Organic Valley farmers get paid for their milk has gone up 20 percent in the last 5 years. If Organic Valley has increased their price to Stonyfield by 34 percent, then Gary needs to go back to Organic Valley and find out why.

Gary is right to say that the price that farmers receive for their milk has not gone down -- but it also hasn’t increased in response to increased costs over a two-year period. The increase that Organic Valley (not Stonyfield) gave its farmers in January was 8 cents a gallon, or a 3.7 percent increase, the first increase in 2 years.

How can Stonyfield ensure that farmers get a fair price for their milk?

Gary and Nancy Hirshberg are leaders of the organic dairy community. They can exert great influence on how the organic dairy industry develops. From a practical point of view, they can, and are, working with Organic Valley, their main supplier, to ensure that their farmers are paid a price that reflects the cost of production for family farms.

In the retail packaged milk market, Stonyfield licenses its name to dairy processor HP Hood, which uses the Stonyfield name and Gary’s words on its carton. Therefore Gary should insist that HP Hood pays its farmers a fair price or withdraw his name and support for a product that doesn’t meet the high ethical standards we have come to expect from the Stonyfield brand.

Gary and Nancy’s support for organic:

It is great that Stonyfield, Organic Valley, Aurora Dairy and Horizon Organic have donated so much money to organic education and research. In the absence of support for research and education on organic dairy from the USDA, the companies have taken responsibility for providing that necessary support by investing their profits in programs coordinated by universities, non-profits and farmer groups. Writing on the side of packages and on websites that Stonyfield supports farmers does great things for the marketing of organic product, but only helps farmers if it’s true.

Gary should be proud that Stonyfield has enough of a profit that they can donate 10 percent of its profits to environmental groups. Unfortunately, in 2007, Organic dairy farmers did not have any profit and could only pay themselves an average of $6 an hour. This is despite the fact that these farmers maximize their production from their pastures with intensive rotational grazing and produce as much of their winter feed as is possible. Unfortunately, they have no control over other costs that are spiraling out of control.  There is no incentive for young farmers or the next generation of family farmers to enter organic dairy when they will be paid a price for their milk that doesn’t cover the cost of producing it. All of Gary’s good work will be wasted unless existing farmers receive a price for their milk that allows them to pay their bills and support their families.

It’s not realistic to increase the price quickly:

Farmers understand that there is a complicated market and everyone needs to tighten their belts. Organic dairy farmers predicted this deteriorating situation six months ago and have been attempting to work with processors to anticipate the problem and provide long term solutions.

All our meetings, phone calls, letters, and emails have been met by, “we are working on it ourselves; be patient.” If we had started the price correction six months ago, it could have been done in small steps. Now farmers have been forced to use more radical methods.  I wonder how many processors and their employees have had to cancel their health insurance and cash in their IRAs and retirement funds to keep the company going? How many company owners are laying off their help and adding more hours on to their work day?  That is what family farmers are being forced to do.

Oversupply of organic milk:

The “significant” oversupply lasted six months and happened at a time when the price for conventional milk was as high as organic milk. The larger companies and manufacturers were able to sell that excess milk into the conventional market or increase their production of organic butter, milk powder, and ice cream so did not suffer large losses.  The smaller cooperatives and manufacturers were the hardest hit.

Why the price squeeze is happening:

The argument that farmers hear from the processors is that the entry of the Stonyfield Farm brand of organic milk into the market, which is packaged and marketed by HP Hood, caused an increase in competition for shelf space and sales between all the brands which resulted in the lowering of wholesale prices for packaged organic milk. There was also an increase in competition from store brand milk which are packaged for stores like Whole Foods, Trader Joe’s, Stop & Shop, etc., by Organic Valley, Horizon Organic, HP Hood, Aurora Dairy and Dairy Farmers of America.

But why should farmers pay the price for competition between brands?

Do any of these companies go back to their supplier of gas and diesel and say “because we have increased competition in our market we are only going to pay you 80 percent of what it cost you to produce the oil.” Building market share has to be funded by the owners and shareholders of the marketing companies who will receive the eventual profit, not by farmers who do not have the deep pockets of Dean Foods, HP Hood or Danone (who is now a majority owner of Stonyfield).

Affordable retail prices are a great goal but, again, not at the expense of an unsustainable pay price for farmers. Gary has improved the efficiencies of the Stonyfield plant and organic dairy farmers are very innovative, independent and efficient. Perhaps the real cost of a truly organic and sustainable product that is produced in a way that truly cares for family farmers is just more expensive. As organic dairy grows, we need to ensure that family farms are able to grow with it.

I would welcome taking Gary on a tour of organic dairy family farms so he can see the suffering at first hand. Unless we very rapidly address this problem, paying a fair price to family farmers who produce organic milk, the only farms that will be able to afford to produce organic milk will be the large corporate farms in the midwest and west of the country.

I challenge Gary to use his great knowledge and influence to work with us to provide a better future for organic dairy farmers. Let’s all step away from platitudes and rhetoric, admit that organic dairy family farms are not being paid enough for their milk, and commit to working together to find a sustainable solution.


 



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