Upstate organic dairy farms facing crisis as key contract ending
Cows in a field at Raindance Farm in Westville, N.Y. Even as more consumers are willing to pay premium prices for organic milk, supermarkets are having trouble keeping it on the shelves as high feed and fuel prices have left some organic dairy farmers simply unable to keep up with demand. (AP Photo/Mike Groll)Mike Groll
Lawmakers and state agricultural officials seeking to find new market for key New York farming industry
by Joshua Solomon
ALBANY — Small-scale organic dairy farming in New York is facing a crisis as one of the largest distributors, Horizon Organic, told 89 farms in the Northeast — more than half of those in upstate — that it's ending its contract with them as a part of a shifting economic model.
The news was a gut punch to the regional dairy community as Horizon Organic, through its global corporation, Danone, issued nonrenewal notices late last month to the farms, including 46 in New York. Approximately 17 of those farms are in rural Washington County, although Danone would not confirm the number.
Despite the substantial hit to the small-farm, local organic dairy industry, which is recognized for its environmental benefits, the situation with Horizon Organic has unfolded rather quietly. The announcement in late August came during a busy time in New York politics: an expiring eviction moratorium, record flooding and the unveiling of a massive federal plan for infrastructure.
Compounding the problem, advocates say, is that farmers are not allowed to disclose that they are in contract with Horizon Organic — the company that markets a red milk carton with a smiling cow and a label that says “pasture-raised” and “hooray for our farmers!” — or else they risk having their contract terminated.
Danone offered an additional one-year contract to the farmers to “help facilitate a smooth transition,” which gives them about 11 months to find out what to do with their milk and their livelihood.
With that dynamic in place, advocates and experts explained that organic dairy farmers have been fearful to speak out, leaving them in the shadows of an industry that they worry is ready to pass them by.
And with a lack of attention on the issue, they are concerned about the viability of the farmers, the communities they support and the future of organic milk in New York, a question that also touches on the climate crisis as low-to-zero impact farms become less sustainable businesses.
“It’s obviously a huge negative impact on those individual farms and it’s a blow to the organic industry in New York,” said Lindsay Ferlito, regional dairy specialist for the Cornell Cooperative Extension. “It used to be an option for farms in this area and it’s starting to feel like it’s no longer becoming an option.”
'A sense of worry'
Danone said it wants all of the farms it works with to be within 300 miles of its production plant, which is in Elma, Erie County. There are 27 pasteurizing plants in New York, according to the state Department of Agriculture’s most recent data from 2019 — a number that has slowly been declining over the last decade.
Washington County, possibly the most hurt by Danone’s decision, is about 315 miles east of Elma. Its 17 producers with ties cut by Horizon make up nearly a fifth of dairy farms in the county, according to the state Department of Agriculture.
“There’s an ecosystem of businesses that surround these farms, and maybe the loss of one farm doesn’t impact the ecosystem, but when you talk about 10 or more farms being impacted because this co-op has pulled out, then this could have a material impact,” said Saratoga County Assemblywoman Carrie Woerner, a Democrat who represents both Saratoga Springs and parts of Washington County.
Woerner noted that it could also hurt veterinarians and fertilizer companies, as well as the local towns that rely on the farms as a part of their tax base to support schools and public safety.
It's unclear what share of the county or the state’s organic farms are affected because the state’s annual report does not include information on organics or statistics breaking down farms by size. The state, as of 2019, had nearly 4,000 dairy farms.
The number of farms producing milk has dropped by 25 percent over the last decade, with most of that decline occurring in the last four years. New York continues to produce the fourth-largest amount of milk in the country. Its production of yogurts, cheeses and butters also continues to rise.
Danone North America’s decision affects farms in New York, Vermont, New Hampshire and Maine. The corporation, with its headquarters in Colorado, said that transportation and operational challenges in the Northeast led to the “difficult decision.” It said it is continuing to work with at least 170 farms in New York, which they said have an average herd size of 30 cows.
“This decision will help us continue providing our consumers with the products they love,” Danone North America said in a statement.
Critics contend Danone’s decision has more to do with the company’s shift to alternative beverages, like its Silk brand, and to move more of its production to the Midwest, where they note that dairy farming typically is cheaper, in part, because of the scale of the industry and the abundance of feed.
Danone said that its western New York operation is its easternmost production plant. More than 40 percent of the state’s dairy is produced in western New York.
The question officials have been trying to answer is how can the small organic dairy farmers continue to thrive and sell their milk with Danone out of the picture.
“It’s just another challenge that producers are having to face, and whether or not other organic farmers are going to admit it, I think it puts a sense of worry to some of them,” said Casey Havekes, dairy management specialist for the Cornell Cooperative Extension.
Outside of the farmers hurt by Danone’s decision, Havekes, based out of St. Lawrence County, noted that other organic dairy farmers understand that the Danone move could be a harbinger for the organic milk industry in upstate New York.
Havekes said it's her understanding that many of the farmers notified by Horizon may be looking to get out of the business altogether, including attempting to transition to conventional production — where their small scale could make it challenging — or switching to a cash crop. Some may try to remain in the dairy market despite the slim odds.
“It’s devastating for some of these farms, especially those that have been in their families for generations and turned to organic for not only a way to provide a sustainable income, but also to provide a sustainable environment,” said Ed Maltby, executive director of Northeast Organic Dairy Producers Alliance.
'Very concerned'
Two issues at the federal level advocates see that can be solved: the U.S. Department of Agriculture’s rules to transition livestock into organics and Danone’s public-benefit corporation status.
An open comment period by the USDA on how to transition a farm’s animals to organic has been extended several times since it opened in 2015. The rules on the book, experts noted, are relatively loose and allow for an unequal playing field.
“Many family farms invested time, sweat and equity in building their individual operations,” Maltby said. “They need the federal government to get these rules in place, enforce these rules to ensure it’s a level playing field across the country.”
Maltby hopes public pressure, as a byproduct of the Horizon decision, can place enough pressure on the USDA to move forward with its rules.
“This is not just about a federal regulation,” Maltby said. “This is about the essence of organic certification and organic agriculture.”
Danone, in fact, told the USDA in 2019 that it wanted stricter rules, too.
“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,” Danone North America Vice President Chris Adamo said in a letter to the USDA.
The Organic Trade Association similarly told the USDA that it is concerned about how an unequal playing field could harm the industry at-large.
“It is clear that this inconsistent interpretation of the standard is creating an uneven playing field for organic dairy producers,” the association wrote in its letter, signed by Danone.
In the two years since those comments, the rules have not changed from the practices they warned were creating unequal playing fields. Now, Danone is moving away from the Northeast small farms it supports, for what lawmakers understand to be a cost-saving issue, which has raised grief from those farmers who wish the laws became stricter.
“New York’s organic farmers follow the top standards and most secure regulations, ensuring consumers get some of the nation’s best organic dairy products from New York farms,” said Allison Biasotti, spokeswoman for U.S. Senate Majority Leader Charles E. Schumer.
Biasotti said Schumer is looking into the issue to “ensure that New York’s world-class dairy farms are given their fair shot.”
Danone’s public benefits corporation status is also raising concern that the move is in direct contrast to that commitment to the community.
“This is exactly the type of thing that B Corporations (which meet high social and environmental standards) were set up to try to avoid,” said Marion Nestle, professor emerita of nutrition, food studies and public health at New York University. “They can get by on the letter of B-Corp., because they’re probably doing something on sustainability. This is just enormously hypocritical.”
The state Department of Agriculture acknowledged the fallout of Horizon’s move on organic dairy farmers and is seeking to help them find a new market.
“We are very concerned that Danone North America has not renewed its contract with some of our own New York family dairy farms,” spokeswoman Jola Szubielski said in a statement.
The department is working with the USDA and the other three states that saw Danone pull out, Szubielski said. They are trying to find other processors and cooperatives for the organic, small-scale dairy farmers to send their milk, which was “a very successful strategy in the past.”
“It is critical that we continue to work together to provide support to these hard-working families and to provide sustainable solutions that will help to strengthen the dairy industry in New York state,” Szubielski said.
State Sen. Daphne Jordan, a Republican who represents Washington County and was informed by the Times Union about the issue, said her office will work with the state to ensure the farmers have a buyer for their products. Jordan pointed to the rising cheese industry as a possible solution.
Jordan said she learned that Horizon was leaving because of the cost of shipping. It costs less and is easier to manage getting their milk from the Midwest, she was told. Then they can get their milk from “a few large farms as opposed to going to 90 different farms across New York state.”
“While we never want to see a business leave — and we’ve seen far too many do so — Horizon’s departure should serve as the impetus for New York to explore transferring these affected farms into an organic co-op to help market and sell their products or facilitate their transitioning toward producing more organic cheese,” Jordan said.
Woerner, the Washington County representative, noted any additional production the state could support could be helpful, like a plant in upstate New York that would handle the organic milk. She said she is ready to fight for financial support if needed during the next state budget cycle and is reaching out to the Department of Agriculture for assistance.
A question that remains, she said, is whether Horizon’s business decision to source its milk elsewhere, like in the Midwest, would leave any need in the organic market in New York.
First, her focus is on the local farmers, who have less than a year to figure out their next steps.
“For many dairy farmers, they are the sixth, the seventh, the eighth, the ninth-generation farmer in their family that’s been farming the land,” Woerner said. “There’s a very significant personal impact when you are the generation that couldn’t make it work.”
U.S. Rep. Elise Stefanik, whose sprawling district includes many of the farms affected by Horizon's decision, did not respond to a request for comment.