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Can a Mega-Dairy like Dean/Horizon Organic be Called Organic?

It's no secret that sales of organic foods are booming.

Although organics still account for less than two percent of total food sales worldwide, the market is growing much faster than the rest of the grocery industry. The world organic market has been growing 20 percent a year since the early 1990s, with future growth estimates ranging from 10 to 50 percent annually depending on the country.
In the U.S., organic products are now available in nearly 20,000 natural food stores and most conventional grocery stores. Nearly two-thirds of the organic milk and half of the organic cheese and yogurt are sold through regular supermarkets, lined up right next to the Coffee-Mate.

Understandably, this tremendous growth has sparked interest among farmers, who have built larger dairies to try and meet soaring demand, and investors seeking to cash in on the latest trend.

One 4,000-head Idaho factory farm is even owned and managed by the country's largest organic dairy marketer, Dean/Horizon. Another farm in California, with 10,000 cows split between its organic and conventional operation, also supplies Dean/Horizon.
But there's a rub.

Are dairy products still "organic" if the milk comes from a factory operation with 5,000 cows confined in a feed lot?

Not according to the Wisconsin-based Cornucopia Institute, which has been waging a two-year battle over alleged violations of the nation's organic food laws.

The group last year filed formal complaints with the U.S. Department of Agriculture, asking it to investigate whether factory farms operating in Idaho, Colorado and California were in compliance with organic food laws.

"It's our contention you cannot milk 2,000 to 6,000 cows and offer them true access to pasture as required by the Organic Foods Production Act of 1990," says Mark Kastel, senior policy analyst and co-founder of the Cornucopia Institute.

While the entrance of larger producers has certainly made organic foods more mainstream it's also presenting some tough competition.

Jim Miller, a dairy farmer from Columbus, said he went to great expense to convert 1,475 acres and 340 cows to organic production. That also meant converting some of his best and most fertile fields to pasture.

"We should not be put at a competitive disadvantage by taking the high-road in organics," says Miller, who markets his milk with the Organic Valley cooperative in La Farge. But the Cornucopia Institute has gained little traction with the USDA. So instead the group is now putting pressure directly on Dean Foods, the largest milk bottler in the U.S. with about a third of the market.

The "new" Dean Foods was born in 2001 when Suiza Foods Corp. of Dallas acquired the brand, changed its name to Dean Foods and its stock ticker symbol from "SZA" to "DF." Dean has since been expanding its product line into the alternatives market, buying the Silk soy milk brand in 2002 and Horizon Organic in 2003.

Last week, Cornucopia filed a proposal on behalf of Dean Foods shareholders, saying the company is jeopardizing the value of its shares by misleading customers about its organic brands.

"When consumers pay a premium for organic milk, they generally have the expectation that cows have access to pasture and gain a sizable percentage of their nutrients from grass," said Steven Heim, director of social research with Boston Common Asset Management, which is representing Dean shareholders.

Dean Foods, which has touted its investments in the organic milk labels as a way to make its shares more attractive on Wall Street, has balked at the resolution and filed a formal protest with the Securities and Exchange Commission asking for permission to omit it from the 2006 proxy statement.

Kastel, a former lobbyist for the Wisconsin Farmers Union and candidate for the state Assembly from the La Farge area, maintains that organic food advocates aren't ideologically set against large scale organic farming - only against those who betray the ideals that have drawn consumers in increasing numbers to organic food.

"We're not inherently condemning all large corporate players," he says. "We just want to make sure that they don't kill the golden goose that's been so helpful."

Mike Ivey is a business reporter at The Capital Times. He can be reached at 252-6431 or at mivey@madison.com

Published: March 7, 2006

Copyright 2006 The Capital Time