The recent decision by Danone North America, owner of Horizon Organic, to terminate contracts with 89 organic dairy farmers in Northeast states has angered organic and consumer groups, who say the decision will devastate small family farms in the region and runs counter to the company’s Certified B Corporation commitment. In response to the criticism, Danone says it remains committed to buying milk from small organic dairy farms.
Terminated contracts of 89 family dairy farms
In August, Danone/Horizon notified 27 farms in Vermont, 2 in New Hampshire, 14 in Maine, and 46 farms in New York that they were terminating their contracts to purchase milk by August 31, 2022.
In a statement, Danone said: “growing transportation and operational challenges in the dairy industry, particularly in the northeast, led to this difficult decision.”
According to Tina Owens, Danone’s senior director of food & agriculture impact, the company was, in some cases, paying as much as four times as much for freight costs.
“Starting a couple of years ago, we began to have significant trouble securing the right freight solutions,” she says. “COVID unfortunately exacerbated that, but we don’t want to blame COVID because the situation existed already.”
Danone is facing strong criticism from organic groups. Several organic farming organizations and advocacy groups, including Organic Farmers Association, Northeast Organic Dairy Producers Association (NODPA), National Organic Coalition (NOC), Real Organic Project, Cornucopia Institute, Northeast Organic Farming Association of New York (NOFA-NY), and others have issued a petition demanding that Danone/Horizon reinstate the farmers, citing the company’s B Corporation certification. The petition states: “As a certified ‘B Corp,’ Danone is required to use its business as a force for good, but this action from Danone is disgraceful and will hurt Northeast farm families and their communities.”
In her popular blog Food Politics, Marion Nestle wrote: “Danone is putting profit over social values. It does not deserve its B Corp status.”
“Very difficult decision”
Owens says the decision to terminate the contracts of the farmers was very difficult.
“We understand the effect that it can have on the farming family,” she says. “And it’s part of why we offered a one-year extension of the contract to make sure that we were bridging farmers into the future enough that they could start to imagine themselves possibly having a different customer or potentially a different way of operating the farm.”
Owens said that contrary to reports saying that Danone was shifting its milk production to large confinement dairies in western states, the company remains committed to buying milk from small family farms.
“We’re not moving volume out west,” she says. “The intention is to buy milk within a 300-mile radius of our western New York facility. If transportation issues are causing the problem, then moving to an even farther distance in a different direction is not going to resolve anything.”
Owens says that Danone has enrolled 50 new organic dairy farmers in New York State that are within the 300-mile radius of the Steuban Foods plant in Elma NY, which will process Horizon’s organic milk. With the new dairies, Danone will buy milk from more than 170 organic dairy farms within the 300-mile distance.
Further, Owens says that Danone’s large dairies with more than 1000 cows account for only 2% of the company’s organic dairies.
“We maintain contracts with over 500 family farms, and 90% of those are dairies have 100 cows or less,” she says.
“Forced to sell herds or leave farming entirely”
Still, the impact on the 89 farms terminated by Danone will be devastating if the farms cannot find other markets.
“Farmers may be forced to sell their herds or leave farming entirely,” says Lauren Webber, who along with her husband, Sam, operate the SamLaurEL Farm, a small dairy farm in Chesterville, Maine.
Prospects for finding another market appear dim. Three other buyers of organic milk in the region, Stonyfield Organic, Organic Valley, and Upstate Niagara Cooperative, appear to have limited capacity to accept new farmers.
Vermont Agriculture Secretary Anson Tebbetts was quoted as saying that “the organic market currently is not in a position to take on more milk or farmers.”
Organic Valley CEO Bob Kirchoff issued a statement saying: “Organic farming is facing the same crisis we’ve seen in conventional agriculture—consolidation, industrialization, ‘get big or get out.’ It will take a lot of people working together to solve it, but we all must be bold enough to believe we can.”
Loophole in origin of livestock rules
One issue raised by critics about Danone’s larger dairies is a loophole that allows producers to expand herd sizes quickly by routinely transitioning conventional animals into organic dairy herds. According to the NOC, this loophole has contributed to the oversupply of organic milk in the market, has had a devastating effect on organic dairy prices to farmers, and left many organic farmers and those transitioning to organic with stranded investments because there are no buyers for their milk. This past July, NOC urged USDA to finalize Origin of Livestock rules to eliminate the loophole.
According to Owens, Danone opposes the loophole, and has also urged USDA to finalize the rules. In a letter to USDA from December 2019, Chris Adamo, Danone North America’s vice president federal & industry affairs, wrote: “We believe that the potentially inconsistent interpretation and enforcement of the origin of livestock regulation can create significant economic disparities across the organic dairy industry.”
Working to find solutions
Organic groups are working to find solutions for the crisis the farmers are facing. Maddie Kempner, policy director for the Northeast Organic Farming Association of Vermont, says her organization is doing its best to seek solutions for alternative markets and to make sure the farmers feel “as individually supported as possible.”
Maine governor Janet Mills says her administration will do everything “we can to fight for this important industry, especially our 14 farms impacted directly by Danone’s decision.” She wrote to U.S. Secretary of Agriculture Tom Vilsack, urging his department to help the Maine organic dairy farms.
Meanwhile, a group of U.S. senators and congressional representatives from New York, Vermont, New Hampshire, and Maine also sent a letter to Secretary Vilsack urging him to close organic loopholes, strengthen enforcement, and use every tool available to support small- and mid-sized organic dairy farmers.
According to Owens, Danone is “continuing to outreach to each farm to understand what solutions are best for them and for their future.”
She says her company is working with regional government leaders in the hopes of developing a “regional solution for organic dairy across the states that have been impacted.”
Additional sources: Northeast Organic Dairy Producers Alliance, National Organic Coalition, Daily Journal, Food Politics
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Organic & Non-GMO Insights October 2021