New England ag officials and organizations are convening to find new markets for 89 dairies that are being dropped by Horizon Organic.
The farms, in multiple states across the region, will lose their current market on Aug. 3, 2022.
“Our goal is to try to save these 28 businesses,” said Vermont Ag Secretary Anson Tebbetts, citing the number of affected farms in his state.
Tebbetts has created a task force that includes farmers, other dairy processors, the Northeast Organic Farming Association and Farm Bureau to discuss potential solutions.
The task force met for the first time on Aug. 27.
“We don’t believe we have one simple answer for all,” Tebbetts said. “We’re committed to looking at multiple strategies, multiple options, and giving the farmer the best information so they can make an informed decision on the future of what they want to do.”
Options that might be available to the farms include selling to cheese processors that are looking to add an organic line, marketing directly to consumers, or even returning to conventional dairy.
Some organic dairy farms in Vermont have retained their membership in the Agri-Mark, Cabot and Dairy Farmers of America cooperatives.
Still, Tebbetts isn’t sure that farmers will want to leave the organic market for the lower-priced conventional market.
“The organic industry in Vermont is significant,” he said. “A number of our dairy farmers were some of the first to transition to organic in the ’90s, and some of those involved in this current situation were the early blazers of that trail.”
But much like the conventional market, the organic market has had its share of struggles in recent years.
“There’s a lot of organic milk out there, and it’s been difficult to find a place for it,” Tebbetts said.
A woman who answered the phone at Horizon’s 800 number said the decision to drop the dairies resulted from a recent study the company did analyzing the locations of its farms relative to its plants.
The company is trying to reduce transportation costs needed to produce its milk, though it remains committed to helping the New England dairies make a smooth transition, said the representative, who declined to give her full name.
Horizon’s cutoff is one of the largest dairy farm terminations in the Northeast since 2018, when Dean Foods dropped more than 100 farms nationwide, including 42 in Pennsylvania.
Dean gave its farms 90 days’ notice of termination, compared to the year Horizon is giving.
Matt Gould, president of Dairy & Food Market Analyst Inc. in western New York, said Horizon appears to be seeking economies of scale by shifting its purchases to large dairies in the West.
“There’s an economic reason. It’s to buy organic milk at a lower price than they can in the Northeast,” he said.
Losing a market can be particularly tough for organic dairies. While conventional milk could be routed to cheese or butter, the organic milk market depends heavily on fluid sales, Gould said.
But Gould also sees risk for Horizon, which is owned by the French multinational food company Danone.
Shipping milk is expensive, and Horizon could now find itself importing milk into New England instead of producing milk locally.
“I find it unusual,” he said.
Chris Wolf, a Cornell dairy economist, said it’s certainly possible that transportation costs contributed to Horizon’s decision.
“Milk hauling costs are high right now, at least in part because there seems to be a shortage of truck drivers,” he said.
He also noted that consumption of both organic and conventional fluid milk has declined compared to last year, when pandemic-related shutdowns prompted many people to eat largely at home.
Like Vermont, Maine has formed a working group to assist its farms that will be losing contracts.
Fourteen farms in Maine are affected. The remaining 47 farms are in New Hampshire and New York.
Tebbetts, the Vermont ag secretary, said that finding solutions could involve a regional approach, and he’s been in contact with Maine’s commissioner of agriculture, Amanda Beal.
Ryan Dennett, farmer programs director of the Maine Organic Farmers and Gardeners Association, said the farmers in her state expected they would be cut off at some point. They just didn’t know when.
“This was something we saw coming,” she said.
All 14 of Horizon’s Maine dairies are members of MOFGA.
Together the 14 dairies produce about 12 million pounds of milk per year, which is equal to three milk truck loads a week, Dennett said.
Dennett said Maine’s modest-sized dairies have been at a competitive disadvantage because the National Organic Program has expansive rules about how cattle can be added to organic farms.
“It costs more to raise a calf organically than conventionally. It’s cheaper to buy conventional heifers and then transition them to organic,” she said. “We see large dairies cut corners by constantly adding conventional cows to transition them to organic.”
USDA recently held a public comment period to consider tightening these regulations.
Maine’s dairy task force is considering a number of possible new markets for the Horizon farmers. These include creating a cooperative to market the state’s organic milk.
Direct marketing might be an option, but the equipment is too expensive for many of the farms to afford, Dennett said.
“I think collectively we need to think about investing in dairies and our infrastructure,” she said.
The dairies might also get picked up by one of the other organic processors in New England, such as Stonyfield and Organic Valley.
Neither company has been taking on new farms recently, but both processors are part of Vermont’s dairy task force and were at the Aug. 27 meeting.
“They’re engaged in what we’re doing,” Tebbetts said. “They could, over time, step forward and possibly offer these farmers contracts, but it’s just, I think, too early to tell.”
“We don’t yet know if there’s any way Organic Valley can help these farmers in the Northeast, but we will turn over every stone and link arms with every partner to see what’s possible,” said Bob Kirchoff, CEO of Organic Valley.
Rick Kersbergen, a University of Maine Extension dairy professor, said the goal is to find new buyers for the milk, but the group working to help these farmers will consider alternatives such as transitioning to beef.
“Trying to find them a market is a priority,” Kersbergen said. “But we have a year to plan for their farms, which isn’t much time.”