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Got milk? To fill demand, Wisconsin-based Organic Valley dips into factory farming

Mike Ivey  —  7/02/2008 5:59 am

Over the past 20 years, Wisconsin-based Organic Valley has grown into the nation's largest organic cooperative, carving out a niche selling milk from small dairy farmers who treat their cows like members of the family.

So imagine the shock within the organic food world when an industry watchdog group recently discovered Organic Valley quietly has been getting some of its milk from a giant Texas dairying operation with more than 5,000 cows.

"Buying milk from this factory farm could potentially be catastrophic to our marketplace reputation," said Darlene Coehoorn, a longtime Organic Valley member from Rosendale, Wis., where she milks 50 cows with her husband, Dan.

Headquartered in La Farge, Organic Valley sells organic dairy and other food products in all 50 states under various labels. It now represents more than 1,200 organic farmers in 34 states, with sales rising to $432 million last year, a three-fold jump since 2003.

With the growth, however, Organic Valley has found it increasingly difficult to meet demand. To be certified organic by the U.S. Department of Agriculture, farmers cannot use chemicals on their crops or growth hormones or antibiotics in their livestock.

When two small organic dairy operations in Texas went out of business last year, the cooperative was faced with a tough decision: either ship organic milk from the Midwest or buy it from a giant -- albeit local -- producer.

"Sometimes you have to make compromises; that's just the nature of business," said Organic Valley co-founder and CEO George Siemon. "I made the decision to buy the product, and I'm willing to take the heat."

Siemon said Organic Valley managers did visit the 50,000-acre Natural Prairie Dairy operation in Delhart, Texas, and found that, unlike other factory farms, the operation was doing some grazing as opposed to strictly confining cattle to a feedlot.

But the relationship with Natural Prairie Dairy has angered many Organic Valley members, who fear doing business with a mega-farm will ultimately cost Organic Valley customers and hurt the cooperative's hard-earned reputation.

"What I find most objectionable is the fact that some giant dairy that doesn't even qualify for membership in our co-op can get by with the bare minimum of meeting federal organics standards, but family producers are expected to uphold the high standards set forth by Organic Valley," said Coehoorn, who also serves as president of the Midwest Organic Dairy Producers Alliance.

Just how long Organic Valley will continue buying milk from Natural Prairie Dairy remains unclear. In May, Siemon told the co-op's executive committee it would cease buying milk from the Texas dairy effective June 1, but that date has since passed.

Siemon said last week that Organic Valley would continue the relationship in order to ensure it has a milk supplier in Texas, the second-most populous state in the U.S. with 24 million residents. Organic Valley milk is sold there under the Texas Pastures label.

"It's only temporary, but we need to keep the local Texas thing going to ensure we can get enough milk into the plants," he said.

The source of Organic Valley's Texas milk was revealed by Mark Kastel, senior farm policy analyst with the Wisconsin-based Cornucopia Institute, which has generally been a cheerleader for the organics industry.

Cornucopia in the past has come down hard on Dean Foods for buying milk for its Horizon organic line from factory farms. Dean is the nation's largest dairy company with sales of $12 billion last year.

"We've always held Organic Valley in high regard," said Kastel. "But once we discovered that OV was cutting some of the same corners as Dean Foods, we have the ethical responsibility to treat both organizations the same way."

In particular, Kastel criticized Natural Prairie for expanding its herd with year-old heifers raised on conventional, genetically engineered feed and managed with antibiotics and other drugs banned in organics. He said the farm was treading a fine line with its organic certification.

The controversy surrounding factory dairy farms has escalated over the past few years, with the Cornucopia Institute filing a series of formal legal complaints with the USDA over Dean Foods' suppliers in California, Colorado and Texas.

"What Organic Valley is doing is betraying consumer trust," said Kastel. "The problem is there are over 1,000 family farm members whose livelihood depends on their reputation."

Last July, Organic Valley opened a new $17.5 million distribution warehouse in Cashton, an event attended by Wisconsin Gov. Jim Doyle, who praised the growth of the state's organic industry. Wisconsin now has more than 800 certified organic farms, up from 422 in 2002.

In total, Wisconsin has about 75,000 farms. The figure includes some 14,000 dairy farms, varying in size from a few dozen cows to over 3,000.

Mike Ivey  —  7/02/2008 5:59 am