AUDIO: Organic farmers say they’re being squeezed out

MODESTO
October 16, 2008 12:01am

California’s comparative handful of organic dairies says they’re being hammered by a perfect storm of higher operating costs, increased competition and a limit to the prices the market will support.

While farming has always had years of prosperity balanced against years when it was hard to make ends meet, the state’s 60-70 organic dairy operations say this year the squeeze on their bottom lines is tougher than ever.

“I’m a third generation California dairyman. I’ve been a dairyman all my life,” says Frank Coelho, who operates his family-owned 450-cow organic dairy east of Modesto.

“Usually we saw waves,” he says of the cyclical nature of the business. “But never this dramatic.”

Mr. Coelho, whose herd is large by organic dairy standards but less than half the size of California’s average conventional dairy, says his costs of feed to supplement pasturing have increased by 200 percent this year over last in the case of grain and by 100 percent in the case of alfalfa hay.

And earlier this year he was paying nearly $5 per gallon for diesel fuel for tractors that use 10-15 gallons per hour, he says.

Pressure comes from another direction as well, he says – “factory” farms, be they conventional dairies or organic.

Mr. Coelho says there are gray areas in standards set for organic milk. “Those have been taken advantage of by the big factory farms,” he says. “They can produce more milk at a cheaper rate because their animals are confined.”

(Frank Coelho talks about the organic milk industry in California and his family’s story in today’s CVBT Audio Interview. Please left-click on the link below to listen now -- or right-click to download the 15-minute MP3 audio file to your computer or mobile media device for later listening.)

Mr. Coelho is a member of the La Farge, Wis.-based Organic Valley farmers’ cooperative, which is made up of family farms in California and other states that produce organic milk, beef, pork, produce and other products.

“The way we’ve been dealing with the problem is just by educating our consumers, letting our consumers know where their product is coming from, who are they supporting, and, do you want to support the corporate factory farm or do you want to support the family farmer,” Mr. Coelho says.

Mr. Coelho’s struggles mirror those of other organic farmers – not just dairy -- across the country, says Mark Kastel, co-director of Wisconsin-based Cornucopia Institute, which describes itself as the organic industry's “most aggressive farming watchdog.”

He says the acquisition of major brands by corporate agribusiness, and their dependence on factory farms, threatens to force families off their land.

"This could be the end of the organic industry as we know it," says Mr. Kastel.

The Cornucopia Institute says the proliferation of industrial-scale dairies has bloated the organic milk supply, inflated the price of feed for dairy cows, and resulted in a financial crisis for family farmers, even as the market continues to grow—defying the general economic downturn.

Although the National Organic Standards Board, the expert panel set up by Congress to advise the Secretary of Agriculture, has voted to crack down on industry scofflaws five times since 2000, Bush administration officials have refused to act, the institute says.

The institute says it has filed formal legal complaints, seeking USDA enforcement, against two more operators of industrial dairies that the farm policy research group claims are "masquerading as organic."

Organic dairies, second only behind fresh fruits and vegetables, represents nearly $4 billion worth of annual revenue or about 15 percent to 20 percent of the organic industry.

Cornucopia’s legal complaints to the USDA target Phoenix, Ariz.-based Shamrock Farms, which operates an industrial dairy milking approximately 11,000 cows in the desert 54 miles south of their plant, and Rockview Farms Dairy of Downey, in Southern California, the operator of another industrial dairy in the desert north of Las Vegas, Nev. Neither company has issued a public statement about Cornucopia’s complaints.