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Colorado Newspaper Says Pasture Controversy & OCA Boycott 'Has Hurt Horizon' Organic

Web Note: The Cornucopia Institute has reported that their research shows that approximately 50% of Horizon Organic's (a subsidiary of the dairy conglomerate Dean Foods) milk is coming from large dairy feedlots where the animals have little or no access to pasture, not 20% as the CEO of Horizon Organic, Joe Scalzo claims below. Horizon could easily clear up this discrepancy--assuming they have nothing to hide-- by publishing a comprehensive list of their dairy suppliers and their locations, along with itemized herd sizes. But of course what the OCA and organic consumers want is a formal announcement and timeline from Horizon on how and when they will stop sourcing milk from these inhumane and environmentally unsustainable dairy feedlots and start guaranteeing that 100% of their cows are grazing outdoors for at least 120 days a year, with 30% of their feed intake coming from pasture forage.

WELLINGTON - At Grant Family Farms, the warm summer silence is broken only by the buzzing and chirping of the bugs that work there. Instead of pesticides and chemicals, the 2,000-acre organic farm boasts insect condos and plants interspersed among the lettuce rows to attract the good bugs and repel the bad ones.

The farm, which grows a host of crops that takes their season from April through at least October, is one of many links in the nation's rapidly expanding organic food chain.

Other Colorado links abound, from Glenn Austin's 16-acre Paonia fruit farm to Broomfield- based Horizon Organic Dairy to Boulder-based Wild Oats Markets Inc.

And the chain is growing, as conventional groceries and even the state's 58 Wal-Mart stores beef up their organic offerings.

U.S. sales of organic food have seen double-digit growth annually since 1997. While organics only made up about 2.5 percent of total food sales last year, that's up from less than 1 percent nine years ago. The U.S. Department of Agriculture expects organic food sales to hit $23.8 billion by 2010, up 72 percent from 2005.

With that growth comes growing pains as supply works to keep up with demand but not to outstrip it and drive prices down.

"Nothing's more noble than raising wholesome food for people to eat," said Grant's marketing director, Val Manning. "But you have to make a profit to keep doing that."

Organic producers fought hard to impose strict standards on themselves with USDA certification rules that were implemented in 2002. Now, some increasingly face the question of how to keep up without compromising or diluting those standards.

Is big necessarily bad?

Organic milk illustrates that concern more than any other.

Demand for this product is growing by 25 percent per year, already outpacing supply and creating some shortages, said Horizon Organic CEO Joe Scalzo.

If it continues at that rate, he said, the industry will have to more than double the number of cows and acres dedicated to organic in the next five years.

The Broomfield-based company is owned by Dallas-based Dean Foods Co. While it buys about 80 percent of its supply from farms small enough to name their cows, the rest comes from thousands of cows on two big Horizon- owned farms in Idaho and Maryland, the source of much controversy of late as organic purists worry those facilities are less organic and more factory farm.

Cows on many large farms are fed organic feed but don't have access to grazing land. Horizon is helping about 200 small farms as they complete the three-year process to become certified organic and join the ranks of 340 current Horizon farmers, Scalzo said.

A report issued earlier in April by Mark Kastel of the Cornucopia Institute was critical of Horizon and private-label milk provider Aurora Organic Dairy for its large farm operations.

The group, which says it's dedicated to economic fairness and sustainable family farming, slammed both companies for their methods.

Criticism has hurt Horizon, with some small natural stores and co-ops dropping the brand. It has also kept Scalzo busy visiting the stores and taking journalists and critics - including Kastel - on tours of the Idaho farm.

"We stress that there's room for farms of our size and for family farms," said Scalzo, whose company supports a push for the -USDA to adopt stronger grazing standards and has been expanding its Idaho farm.

While dairy is the most talked about example of the testing of organic standards these days, it's not the only one.

There's evidence that producers of prepared and packaged organic foods are having to go farther afield for ingredients because domestic producers can't keep up with all the demand.

And produce growers must sometimes make tough calls when demand soars.

"The ideal for organic is a highly diverse farm, and that's always been the ideal," said Sam Fromartz, author of Organic Inc. "As you get larger operations, diversity spells complication."

In his book, Fromartz details the growth of the organics industry. One chapter focuses on California-based Earthbound Farms, whose organic salad greens sit on most American grocery shelves and whose growth is blamed by some for putting smaller growers out of business.

One detail he left out of the book, though, is that as demand for the greens grew, the farm planted fewer of the plants designed to house beneficial bugs so it had room to grow more greens.

"The amount of beneficial habitat went down as demand went up," he said.

And it's likely the demand will keep growing. Recently, retail giant Wal-Mart detailed plans to add hundreds of new organic offerings and sell them for within 10 percent of their conventional counterparts.

There's a concern that as more farmers transition to organics, they'll be tempted to cut corners to meet demand, Fromartz said.

In the course of researching his book, Fromartz talked to several third-party certifiers and found some differences.

"They're following the same standards, but there's room for interpretation," he said. "There are gray areas, and some certifiers are more pragmatic than others."

Another concern for organic farmers is whether big players will jump in, effectively pushing down the higher prices they now earn.

Jonathan Allen's job as president of First Fruits International Limited is to get the best price he can for organic fruits grown by 10 to 15 farmers on between 500 and 600 Colorado acres.

In the past, organic farmers typically earned a premium of 20 percent to 50 percent more than conventional growers, Allen said. Today, that varies from year to year as supply and demand struggle to stay in balance.

"Five years ago, there's no way there was enough organic supply nationwide," he said. "But now, there's a tremendous amount of acreage coming on worldwide, and that really changes the supply side. All it takes is one industry to get some big growers to start converting conventional."

It takes a minimum of three years to transition land from conventional to organic land that's ready to be certified. Allen worries that if big conventional growers with thousands of acres in Washington state, for example, decide to convert to organic, it'll push the price of the fruit down and cut his clients' profits.

He's quick to point out that big players have to follow the same rules under USDA certification but that bigger operations will provide economies of scale the little guys can't match.

"Now, Wal-Mart says we'll just add 10 percent, well, that may work good for Wal-Mart, but it doesn't mean the (small) grower is going to be able to survive that way," he said.

Retailers also feel pinch

While organic milk is the fastest growing category, fruits and vegetables make up the largest portion overall, with 39 percent of total organic food sales last year, according to figures from the Organic Trade Association.

That makes sense, as surveys show customers tend to enter the organic market by first buying fresh fruits and vegetables, then migrating to milk, bread and then packaged and prepared foods.

The trend has been a boon to natural markets such as Boulder-based Wild Oats Markets Inc., which has been steadily increasing the area it devotes to produce and plans to make the department even bigger in the new flagship store it's building at Twenty Ninth Street in Boulder.

Wild Oats' organic produce inventory hovers between 70 percent and 80 percent, depending on the time of year and weather conditions for growers, said produce category manager Allen Jones.

The company fills in with conventional when organic isn't available or is too expensive, he said.

At Vitamin Cottage's 23 stores, all the produce is certified organic, and the lion's share in summer is locally grown.

"We've developed some good relationships with fruit suppliers on the Western Slope and vegetable growers here on the plain," said President Kemper Isely. "As long as there aren't weather issues, they come to us and ask us what we'd like. In the wintertime it's more challenging, and people don't understand if you don't have cucumbers."

Isely says he sees the supply chain growing and is optimistic that, if Wal-Mart's organic experiment pays off, it could bring even more organic shoppers into the fold.

There's evidence that other channels, including conventional groceries and mass merchandisers, are already grabbing more of the organic customer's dollar. OTA figures show that those stores represent 46 percent of the organic food sold nationwide last year, compared with 47 percent sold at natural markets.

Jones has seen rising demand for some products, most recently apples, drive the price up and the supply down, largely because a growing number of conventional stores are stocking them.

Overall, though, Wild Oats and Vitamin Cottage say they're confident that the vendor relationships they've developed over the years will pay off when it comes to keeping supply coming.

And it's likely that Wal-Mart will mostly boost its offerings of prepared and packaged organics, said Wild Oats spokeswoman Sonja Tuitele, and not make a big jump into fresh produce.

Outlets for small players

The remaining 7 percent of organic food sales last year came through other channels, including farmers markets and a relatively new venue called community supported agriculture programs.

The little guys, some of whom say they can't afford the price tag on USDA certification, are selling as much as they can grow.

Glenn Austin's 16-acre fruit farm in Paonia provides a bounty of organic food, including 15 varieties of apples, nine of peaches, plus nectarines, plums, apricots, cherries, berries and specialty potatoes in a good growing season.

Austin grew up on farms in Tennessee and has been growing fruit in Paonia for more than 30 years, even as he held down a variety of other jobs from coal miner to school teacher.

"This is where my passion is," said Austin, now 63.

For years, he paid the $160 annual fee for state organic certification, but when the USDA program was implemented in 2002, the cost went up to $2,500 a year and farmers had to do the paperwork to certify each crop separately, down to each variety of apple.

"It doesn't sound like a lot, and I'm sure to companies like Dole and other large commercial farm producers it's insignificant, but to a small family farm, I just can't justify it," Austin said.

Austin made the decision that the new certification was too pricey for his small but diverse farm. Shortly afterward, he started selling another way - through a community supported agriculture, or CSA, program.

Each year at the beginning of the growing season, Austin signs up subscribers who pay between $375 and $975 each, money that goes to defray the farm's expenses.

Then, each week during the 20- to-25-week growing season, a box full of fresh-from-the-farm food shows up on their doorsteps.

The CSA movement is a growing one nationally for folks who care not only that their food is produced without pesticides but also that as much as possible of it is locally grown and therefore doesn't have to expend all the energy needed to bring it to markets far from its point of origin.

For Austin, the program has proved a success - subscriber ranks have grown from 30 families that first year to 140 last year. This year, the farm didn't market the program because it found 140 to be too much, Austin said, and it settled at 120 this year.

Austin, who also sells to chefs, some small natural food stores and at farmers markets, says buyers snap up all he can grow each year, and he's not worried about bigger players coming into compete in those channels.

Austin won't be part of Wal-Mart's push to add organics to its lineup - without federal certification, he can't even sell to Vitamin Cottage, he said.

Besides, his farm doesn't grow enough to fill the demand for truckloads at a time from larger stores, including Wild Oats, Whole Foods and the conventional grocery chains.

In contrast, Grant Family Farms already sells to big players.

Grant contracts with big Texas-based conventional grocer H.E. Butt and sells its organically grown produce under two labels.

About 25 percent of the vegetables sell under a certified organic label, and the rest are labeled conventional and sold at a lower price. For one thing, said marketing director Manning, salad greens, cilantro, spinach and other produce have a short shelf life.

For another, say others involved in organics, the big contract with Texas-based H-E-B gives the farm a reliable source to sell its products but doesn't provide sufficient organic demand.

"I'm sure they could find other people to buy their organic tonnage, but when you've got trucks already going to Texas, sometimes that makes more sense," said First Fruits' Allen.

Grant, which is reorganizing under Chapter 11 bankruptcy, has also spent years diversifying. The company, which listed $4.3 million in assets and $5.3 million in liabilities in its court filings, added an organic tree nursery several years ago.

This year, in light of the increased demand for organic milk, Grant has dedicated more of its acreage to growing corn and winter wheat to sell as organic feed, Manning said.

The farm is also confident that, in years to come, demand for its organically labeled lettuce and spinach and other crops will grow among existing retail customers, Manning said.

"There's now a much higher awareness of the value of organic," she said. "We're already seeing a much better trend."

What defines food as 'organic'?

 - Organic meat, poultry, eggs and dairy products come from animals that are given no antibiotics or growth hormones and fed organic vegetarian diets.

 - Organic food is produced without using most conventional pesticides, fertilizers made with synthetic ingredients or sewage sludge, bioengineering, or ionizing radiation. Before a product can be labeled "organic," a government-approved certifier inspects the farm where the food is grown to make sure the farmer is following all the rules necessary to meet USDA organic standards. Companies that handle or process organic food before it gets to supermarkets or restaurants must be certified, too.Source: U.S. Department Of Agriculture

Small farms and big business

Agribusiness: An industry engaged in the producing operations of a farm, the manufacture and distribution of farm equipment and supplies, and the processing, storage and distribution of farm commodities.

Note: Agribusiness for many has come to mean large factory farms that have grown over the past 50 years or so, using chemical fertilizers and pesticides to increase yields and cut the cost of food, making it impossible for many family farmers to compete.

Small farm: According to the USDA Small Farm Commission, a small farm has been defined as having less than $250,000 in gross receipts annually on which day-to-day labor and management are provided by the farmer and/or the farm family that owns the production, or owns or leases the productive assets.
Source: Merriam Webster Dictionary Source: National Family Farm Coalition or 303-892-5191

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