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| Debating
big organics
Aurora Dairy's entry into the organic milk
market last month has set off another round
in the ongoing debate over the mainstreaming
of organics. In this issue we bring you
two excerpts from that discussion: a
reprint from the current issue of The Stockman
Grass Farmer, sounding the concerns
of at least one smaller organic dairy farmer;
and our own overview of the current situation,
including assurances from Aurora senior
vice president Clark Driftmier that all
Aurora Organic cows will have access to
pasture and that the dairy will raise all
its own replacement heifers.
What do you think? Does the certification
of Aurora Organic's dairy and bottling facilities
represent a bright new dawn for the U.S.
organic dairy sector, bringing organic milk
to millions of regular American consumers
nationwide and prompting the conversion
of thousands of acres of farmland to organic
production? Or does it herald a tough new
era for small, family-owned organic dairies,
in which the premium for organic milk will
erode and the difference between organic
and conventional foods will become less
meaningful? Let us know your views. Click
here to send an email to the editor.–NF.org |
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August 17, 2004: Small organic dairy
farmers nationwide are speculating about the long-term
impacts of a major new entry into the organic milk market.
Organic dairy list-servs have been buzzing with the
news that Aurora Organic Dairy, a subsidiary of Aurora
Dairy Group, one of the largest dairies in the country,
has recently completed the organic certification process
for a farm and bottling facility in Platteville, Colorado,
and is ready to start selling organic milk.
Industry experts say Aurora Organic Dairy is positioning
itself to become the second largest organic dairy company
in the United States, and will focus on providing organic
milk for supermarket store-brands. The Platteville dairy
is reportedly milking upwards of 4000 cows. Some 30,000
acres in northeast Colorado have been transitioned to
provide organic feed for the dairy.
Some of the concern among smaller dairy farmers stems
from the fact that Aurora Organic has strong ties to
the number one organic milk producer, Horizon Organic
Holding Corporation. Aurora Organic's president, Mark
Retzloff, was a co-founder and former president and
chairman of Horizon Organic, while the CEO and founder
of Aurora, Mark Peperzak, is also a major stakeholder
in and former chairman of Horizon. In addition, Horizon
Organic's main production site, a 4000-acre farm in
southern Idaho, used to belong to Aurora Dairy Group.
Horizon's Idaho facility has attracted criticism over
the past several years for allegedly probing the lower
limits of federal organic standards—by providing
only limited access to pasture for its cows, for instance.
Almost immediately, Aurora Organic's newly-certified
Colorado farm faced similar allegations: that only heifers
and dry cows—not milking cows—would have
access to pasture, and that the operation was structured
to continuously convert conventional heifers to organic
instead of raising its own organic calves to replenish
the milking herd.
In a recent phone interview with NewFarm.org, however,
Aurora Organic senior vice president of marketing Clark
Driftmier said that all the dairy's cows would have
access to pasture in accordance with national organic
standards. In addition, he said that to address concerns
within the organic community about the practice of converting
conventional replacement heifers, Aurora Organic had
moved to "an entirely closed herd" system.
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"Demand [for organic milk]
is really burgeoning—growth in demand is outstripping
supply. We think that will continue." —
Clark Driftmier, Senior Vice President of Marketing,
Aurora Organic |
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Driftmier said that despite widespread speculation
to the contrary, Aurora Dairy Group has no plans to
convert additional dairies to organic at this time.
Aurora had a summer intern who was given the assignment
of evaluating relative operating costs for organic dairies
in different parts of the country, and this may have
given rise to the rumors, suggested Driftmier. "Northeast
Colorado is an excellent place for organic dairy,"
he said, because of its high-quality hay production
and a climate in which animals can be outdoors year-round.
Driftmier acknowledged the close ties between Aurora
and Horizon—he himself, he said, was a former
Horizon employee—and emphasized that Mark Peperzak
and Mark Retzloff between them had given many years
of service to the organic community. Aurora Organic
president and Horizon co-founder Mark Retzloff has dedicated
his entire career to the organic and natural foods sector.
Before starting Horizon, Retzloff co-founded Alfalfa's
Markets, later absorbed by Wild Oats. He was recently
named treasurer of the Organic Trade Association's Organic
Center for Education and Promotion.
The biggest challenge Aurora faced in making the transition
to organic, Driftmier said, was in sourcing organic
grain, hay, and silage. All dairies are currently facing
steep feed prices, he observed. Nevertheless, he was
optimistic about the future of organic dairy in the
United States. "Demand [for organic milk] is really
burgeoning—growth in demand is outstripping supply,"
he said. "We think that will continue."
Aurora Organic will be focusing entirely on fluid milk
sales, Driftmier said. Beyond supplying private-label
organic milk for supermarkets, he said, they are considering
moving into institutional and food service markets.
It remains to be seen whether hefty investments in
corporate organic dairies will pay off. Aurora Organic's
transition period was financed with $18.5 million from
a private equity fund managed by Charlesbank Capital
Partners. Horizon Organic spent $24 million converting
its Idaho dairy to organic in the mid-1990s, and raised
$50 million with its first public stock offering in
July of 1999. Horizon's aggressive expansion included
the 1999 acquisition of Vermont-based Organic Cow and
UK-based Rachel's Organics, as well as the 2000 purchase
of Meadow Farms, a private-label UK milk supplier. But
Dean Foods, which completed a phased buy-out of Horizon
in January of this year, has recently been struggling
to maintain profits. Earlier this week it announced
plans to consolidate Horizon Organic with two other
divisions, White Wave soy products and Dean National
Brand Group, in an effort to improve profitability.
Laura Sayre is senior writer for NewFarm.org.
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