Organic Broadcaster

Dairy alliance advocates for tighter standards to bolster integrity of organic label

By Ed Maltby

The Northeast Organic Dairy Producers Alliance (NODPA) is in its 20th year and remains committed to representing producers and their interests. NODPA was created in February 2001 at a summit meeting of organic dairy producers in the Northeast after one processor arbitrarily lowered its farmgate price and farmers’ future pay price was threatened. These producers came together to discuss critical issues within the organic dairy industry: maintaining a sustainable milk price, the National Organic Program, alternative milk markets, and building effective communication lines between fellow producers in the Northeast and beyond.

NODPA is independent and is supported by producers and service providers. It does not pool milk and sell it because that could be a potential conflict of interest in balancing the pay price of producers against the necessities of the marketplace. Also, it does not act as an agent for its producer members since they prefer to negotiate their individual contracts and member-owner agreements so NODPA has no loyalty to any one brand or company. It does run a regularly updated website with a deep set of archives including market prices and pay price news, regular e-newsletters, bi-monthly printed newsletters, and maintains the ever-popular ODairy listserv for news, views, and animal health advice. In addition, NODPA organizes and facilitates annual field days, meeting at different locations throughout the Northeast. NODPA belongs to and plays an active role in the Organic Farmers Association and the National Organic Coalition, plus is a member of the National Sustainable Agricultural Coalition. NODPA uses these channels to represent producer interests in Washington and at the USDA.

After 20 years of work, what lessons have been learned in representing the core interest of those that actually produce the raw material for organic dairy products? The majority of organic dairy producers have no alternative but to sell on the wholesale market. Some try other alternatives in direct marketing but risk capital, their property if they are sued, and a reasonable lifestyle. Buyers of organic raw milk at the farmgate operate as a monopsony (a single buyer substantially controlling the market) that allows little leverage in pay-price negotiations. There is no Federal subsidy or guaranteed price. Organic dairy producers need to maintain the integrity of the organic seal to ensure their livelihood.

Organic dairy has been a key entrance point for many organic consumers but, unfortunately, is now seen as a loss leader by many retailers. Private label/store brands have replaced long-standing brands as leaders in the retail market. Organic dairy is a commodity and is in a race to the bottom in competing for large retail contracts. The larger handlers of milk compete against large, vertically integrated organic dairy operations to satisfy the demands for low-priced packaged milk. The pay price in 2021 reflects the cost of production of large operations that have economies of scale, not the production and living costs of the small to medium-sized operations. Organic milk companies have been sold many times or have well-rewarded executives. So, how can the playing field be leveled to allow operations of all sizes to thrive and sustain local communities?

NODPA’s work has concentrated on maintaining the integrity of the organic seal and fighting for organic standards that are practical, soil-based, focused on animal welfare, and consistently enforced across all certifiers and geographic areas.

Organic standards

Enforcement, enforcement, enforcement—that’s what the industry needs. But first, we need regulations that are clear, can be applied consistently, reflect the core integrity of organic production (soil-based), and can be legally enforced (that word again!).

Without those ingredients, there is no integrity within the label. With no integrity, there are no committed consumers. Without committed consumers, there is no market.

As for “market premium” for organic dairy producers, there is none. That premium paid by consumers goes to retailers, marketers, and processors. Conventional dairy farmers are paid, on average, 50-60% of the retail price of their fluid product. Organic dairy farmers are paid, on average, 30-35% of the average retail price. The higher pay price reflects increased costs.

Changes in federal regulations take time and concerted effort. NODPA led the way in organizing stakeholders to correct the abuses of those organic dairies that were not primarily grazing their animals during the grazing season. By advocating at the National Organic Standards Board meetings, providing extensive comments on the proposed regulation, plus holding numerous meetings with leaders in Washington D.C., producers were able to assist in developing language on the pasture requirement that was fair, practical, and easy to implement. For a layperson, access to pasture would seem to be enough of a definition to consistently regulate a common standard. However, those large and small dairies that did not have productive pastures would be allowed by certifiers to interpret that requirement simply by being outside or in an exercise yard. The coordinated efforts of producers, milk buyers, and nonprofits brought about a regulation that defined the access to pasture in terms that could be supported in a court of law. While USDA invested in a blitz of education about the regulation soon after its adoption in 2010, there were still many cases of abuse and inconsistent interpretation by certifiers 10 years later when USDA launched their Strengthening Organic Enforcement program.

In the search for more profit or to maintain their status quo, businesses will look for loopholes in regulation. Some regulations have so many loopholes that abuse of the intent dominates the implementation of the rule. The Origin of Livestock (OOL) regulation is one such situation. All species of organic livestock have to be organically managed from the last third of gestation, with a few exceptions. In order to build a domestic organic dairy herd in 2002 when the National Organic Program (NOP) was launched, an exception was created for transitioning a conventional dairy herd to organic. Instead of three years, the transition could be accomplished in one and there was an allowance for using transitioning land to grow feed plus allowing a mixture of non-organic feed in a final ration. The 80-20 mixing of organic feed was stopped in 2008 after a lawsuit, but at the same time, USDA NOP introduced guidance on different ways of transitioning conventional dairy animals to organic which added to the confusion. This institutionalized a two-track system for transition, plus many different interpretations by certifiers as to what made up a dairy herd and whether the transition had to be completed within 12 months.

In 2013, a report by the USDA Inspector General highlighted the inconsistencies in the implementation of the transition allowance; in 2015, USDA introduced a Proposed OOL Rule. This coincided with a shortage of fluid milk and the transition of many dairies to organic plus a rapid expansion of large dairies using the continuous transition loophole. As winter follows fall, the shortage of organic milk became a glut, and the pay price plummeted by as much as 30%. The glut of milk was caused primarily by the rapid expansion of large dairies continuously transitioning conventional animals to organic.

With pay price settling at a level below production costs, the Trump administration mothballed the Proposed OOL Rule. The ability to continually transition a large number of conventional milking cows to organic production with the support of some leading certifiers ruined many small to midsize organic dairies.

Now, with a new administration has come a revival of the 2015 Proposed OOL Rule. It was re-opened for comments to ensure that any new regulation can be legally enforced. (The comment period closed July 12.) NODPA and others have asked for clarity, consistency, and regulatory enforcement in how a conventional dairy herd can be transitioned to organic production. There has to be a level playing field for all organic dairy producers, no matter the size of their operation, location, certification agency, or ownership. The regulation must stop continuous transition and stop the two-track system that has caused an uneven economic playing field for how dairy producers can move to or grow their organic production. The one-time transition must happen over a 12-month period and under the supervision of a certifier as part of the producer’s Organic System Plan. Transitioned animals are not organic from the last third of gestation and cannot be sold, gifted, or transferred to another operation as organic. The one-time transition exemption must be tied to the “responsibly connected person(s)” to fulfill a primary goal of the proposed rule—to prevent organic dairies or individuals from transitioning multiple conventional herds or groups of animals. The Final OOL Rule must preclude producers or operations from circumventing the one-time exception to a very basic rule of organic livestock regulation—animals can only be organic if they are under organic production from the last third of gestation. No other species have this exception.

Organic regulation must not reflect the needs or capacity of individual businesses or the market opportunities available. It must reflect the core values spelled out under OFPA (the Organic Foods Production Act). Retaining the integrity of the label is more important than the dollar growth in an organic market. Without that integrity, the label will die and the sweat and financial equity of many farm families will have been wasted.

NODPA has brought its experience to the development of this Rule over 15 years as it did to the development of the Pasture rule and numerous NOSB recommendations. This rule needs to be tough and as tight as possible. There will be loopholes that will be exploited, but we must not be afraid of stating a strong case for strict enforcement, even if it causes hardship to some potential farms looking to transition to organic production. The Final OOL Rule must prevent the one-time transition of a non-organic dairy herd from being a convenient tool to undermine the organic dairy market by allowing the transition of large numbers of conventional dairy animals when there is a shortage of organic milk.

Ed Maltby is the Executive Director of the Northeast Organic Dairy Producers Alliance.

 

From the July | August 2021 Issue

 

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