from AZCentral.com

Facing sky-high crop prices, some in the organic food industry are borrowing an idea from their conventional counterparts.

CROPP Cooperative, best known for Organic Valley milk, seeks organic grain growers willing to sign three-year contracts to supply feed to the La Farge, Wis.-based co-op’s livestock farms.

Such vertical integration is common in the conventional meat industry and parts of the organic business, but it runs counter to the independent spirit of many organic farmers.

The tight supplies and soaring cost of organic corn and soybeans is forcing the Organic Valley cooperative to try to lock in feed supplies. The co-op has 1,200 farms that produce milk, meat and eggs.

“We are hoping that we can develop a marketing model that begins to provide some stability” for farmers, said Lowell Rheinheimer, farm resources manager for the cooperative.

A leading organic grain trader, Lynn Clarkson, said organic grain farmers have long resisted contracting their crops, believing they can make more money on the open market, and he’s skeptical that will change. Instead, Clarkson, president of Clarkson Grain Co. of Cerro Gordo, Ill., said more outside investors would move into the industry, buy organic grain farms and sign long-term supply contracts with livestock producers.

It’s not just smaller producers that are being squeezed. Officials with dairy giant Dean Foods, producer of Horizon organic milk, said feed costs are “pressuring organic farm profitability.”

Organic products are one of the fastest-growing segments of the food industry. Sales of organic food totaled almost $17 billion in 2006, or nearly 3 percent of overall food sales, according to the Organic Trade Association. But production of the grain and soybeans needed for organic livestock has failed to keep up with the demand for milk and meat.

Full Story: http://www.azcentral.com/news/articles/2008/04/14/
20080414organicfarms0414.html