“We’re at the end of the line, and the first ones to be dropped when there’s a downturn in the market,” Watson told the researchers last year.
The decision by Danone signals that the organic dairy boom is slowing after nearly two decades of explosive growth. From 2002 to 2017, organic dairy revenue in Maine grew from roughly $3.7 million to $49.2 million. Over the same period, the number of organic dairy producers also grew from 20 to 79 farms, including smaller operations that sell directly to consumers, according to the report.
The loss of a major buyer also is the latest blow to a broader Maine dairy industry that has been contracting for decades.
While the 79 organic dairy farms represent roughly 30 percent of the total number of dairy farmers in Maine, they account for only about 6 percent of the milk produced. The total number of dairy producers has declined dramatically over the last seven decades. In 1954, there were 4,578 dairy producers in Maine. In 2017, that number had shrunk to 286, according to data from the U.S. Department of Agriculture.
“Growing transportation and operational challenges in the dairy industry, particularly in the northeast, led to this difficult decision,” Danone North America said in a statement. “We are committed to continuing to support organic dairy in the east, and in the last 12 months alone, we have onboarded more than 50 producers new to Horizon Organic that better fit our manufacturing footprint. This decision will help us continue providing our consumers with the products they love.”
Bragg and Webber both said the long-term impact could reach beyond their own fields and into the bottom line of the businesses they patronize for feed, supplies, equipment and fuel, not to mention the milk-drinking public.
“It’s a big deal,” Bragg said. “The consumer loses out. … We have some of the best-quality milk. We’re pretty much losing a generation and they won’t be replaced. We don’t know what’s going on. We’re waiting. It will be all done next September 1 unless another dairy comes in.”
The Maine Department of Agriculture, Conservation and Forestry has convened a working group of stakeholders to address what may come next for the dairy farmers.
Last week, DACF Commissioner Amanda Beal planned to hold direct talks with Danone about its decision to leave Maine. But the agency has no power to force a reversal, and its direct leverage over the broader dairy market is also limited. Danone is only required to notify the agency of its decision, which it did in accordance with policy, Beal said in an interview.
In the coming weeks and months, Beal said she expects agency staff to reach out to each farm whose contract was canceled to begin a discussion about what they want and how the state may be able to help them move forward, whether that’s pivoting to a new agricultural product or finding a new buyer for Maine organic milk.
Among potential resources at the agency’s disposal is $20 million in federal stimulus funding that DACF must spend on agricultural infrastructure, along with regularly available farm grants. But cash alone cannot overcome the realities of the tight commercial dairy market, at least in the near term.
“I think if anyone could readily do something right now, they would, but it really depends on the state of the dairy market and the state of the dairy economy,” Beal said. “The reality is our organic dairy farmers are supplying milk that leaves the state to be packaged and comes back. So the logical step would be to look at the infrastructure gap that exists there. We, the department, and the other organizations in the state are committed to helping them in any way that we can.”
In recent years, organic milk produced in Maine had to be picked up from multiple locations, trucked to a central processing and packaging plant in Albany, New York, and then shipped around the region to stores. Larger dairy farms in the Midwest, however, may have thousands of milk cows at a single farm, meaning companies including Danone can make a single stop, said Ed Maltby, executive director of the Northeast Organic Dairy Producers Alliance, and who is based in Deerfield, Massachusetts, in the Berkshires.
“Danone is effectively consolidating their supply base,” Maltby said. “The way they’ve done it is (what) any large conglomerate company would do. They do it impersonally. It’s not as if they are holding meetings with farmers in the area and saying these are the challenges we’re having in transporting milk and can we work together.”
Danone’s move to utilize larger farms completes a cycle of consolidation Maltby has seen in other sectors of agriculture. For organic milk, demand began to soar the late 1990s and early 2000s, and from about 2002 to 2010, the industry grew between 10 percent and 15 percent each year.
The rocket-ship growth drew in smaller farmers who saw the potential to earn a more stable living while also taking better care of the land and their animals, Maltby said, especially in the Northeast, where the climate is friendly to growing the pasture grass that organic dairy thrives on.
“The stable price plus the more natural way of farming was very attractive,” Maltby said. “(At one point) there were over 200 organic dairy farms in Vermont and up to 17 in Maine, and that was because the brand and the buyers at that time were looking for farms near to their major markets,” including Boston and the New York City region, he said.
Over the years, the forces of consolidation that had become rampant in other agricultural sectors came to the burgeoning organic milk business, he said. Horizon Organic, which was founded in Colorado in 1991, was rolled up through an acquisition in 2004 by Dean Foods. Nine years later in 2013, Dean spun off a portion of its business, including Horizon, into a new entity, WhiteWave; Danone then purchased WhiteWave in 2016 for $10.3 billion.
Maltby said there are now roughly three large players in the American milk business: French businesses Danone and Lactalis, and Organic Valley, a Wisconsin-based farmer-owned agricultural cooperative that is the largest of its kind in the United States. Maltby said Organic Valley largely supplies milk for store-brands.
Source: pressherald.com
