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Got Organic? Demand Lifts Vermont Dairies

TROY, Vermont - For the first time in decades, dairy farmer Dexter Randall could pay all his bills on time.

Wooed by signing bonuses and the prospect of doubling his earnings, the burly 60-year-old switched to organic milk over the past year. He says it is the only way to save his farm and his family's future -- all of it invested in 460 acres in the shadow of Jay Peak mountain.

Tina Durrance greeted a cow at the New Venture Farm. (Wendy Maeda/ Globe Staff) "With conventional milk, there was no light at the end of the tunnel," Randall said. "Now, I have true hope."

Across the country, an increasing number of farmers are abandoning conventional ways for organic dairy farming: They keep their cows free of antibiotics and hormones, and they let them graze on pure pastures day after day, instead of locked up in a barn.

Nowhere is the change more apparent -- and growing more rapidly -- than in Vermont, where organic dairy farmers account for nearly 10 percent of the state's 1,200 dairy farms. By next year, that is expected to double, according to the Northeast Organic Farming Association of Vermont.

Consumer demand for organic milk is exceeding supply, resulting in shortages for the past two years. Supermarkets can't keep shelves stocked, and Stonyfield Farm, the New Hampshire yogurt maker, has discontinued organic smoothies and certain yogurts because it can't find enough organic milk.

To boost supply, dairy companies are offering bonuses, free grain, and veterinary care, among other perks, to farmers who agree to convert their herds. Some rivals are even launching bidding wars in an attempt to steal one another's farmers. This has meant a boon for farmers, who can earn twice as much for organic milk as they earn for ordinary milk. Last week, Organic Valley, a national organic dairy co-op that receives 11 percent of its milk supply from New England, earmarked an additional $2 million to help more farmers make the transition.

For many New England farmers, organic dairying has become the only lifeline in a region that has seen thousands of dairy farms, unable to compete with huge Midwest conglomerates, shuttered in recent years . The buzz about organic milk, and the many incentives, has also been doing something else that had been unheard of in these parts: attracting new farmers.

Peter Decker sold his Florida auto body shop and spent $500,000 to start an organic dairy farm this year in Barton, Vt. Decker, and his girlfriend, Tina Durrance, have no farming experience, but say they believe this is a good investment. The couple acknowledged that their friends think they are crazy.

"I can work from home," Decker said. "It's cheaper on gas, and my employees -- the cows -- always show up for work."

The organic industry is small, making up about 2.5 percent of all retail food sales last year, but it is a fast-growing market. For organic milk, US sales jumped to $1.075 billion in 2005, 25 percent over the previous year, according to the Organic Trade Association in Greenfield, Mass.

In December, Stonyfield donated $200,000 to the University of New Hampshire to help launch an organic dairy farm for research, education, and outreach, making it the country's first land-grant university to have an organic dairy farm. Meanwhile, officials in Vermont are pushing the organic movement, funneling $75,000 in state funds to hire people to help spur conversion.

Although the higher milk price and large bonuses for joining the organic industry are attractive, the transition isn't easy. It can take up to three years for farmers to convert their land, making sure it is free of pesticides, herbicides, or artificial fertilizers. For at least a year, herds must be fed expensive organic grain and allowed to graze in pastures, rather than have food always brought to them. Farmers can't use hormones or antibiotics, and instead must treat sick cows using natural and herbal medicines such as aloe vera juice.

"It's definitely a challenge," said Cheryl Devos, who runs her family farm with her husband, J. D., in Ferrisburg, Vt. "But it's worth it."

Devos decided to switch her herd of 250 cows to organic because she could no longer pay her bills with conventional milk prices sinking due to overproduction. She planned to sign up with Organic Valley but during her last year of transitioning, Horizon Organic and Chelsea's HP Hood began a bidding war. Devos ultimately signed with Horizon, which offered her a larger $33,000 signing bonus, more than $100,000 to pay for three months of organic feed, among other perks.

"When you're a conventional farmer, nobody cares about your milk," Devos said. "When we became organic, everyone wanted our milk."

Bidding wars are common nowadays. "Competitors come in and offer extra premiums for this and extra premiums for that and cut private deals," said George Siemon, Organic Valley's chief executive. ``When that happens, we lose some farmers."

Jule Taylor , general manager of milk supply at Horizon, which is owned by dairy giant Dean Foods Inc., said the company is proactive and makes sure it provides what farmers need.

"Other buyers tend to follow our lead," Taylor said. "It's very competitive for milk in the Northeast region."

The fierce fight means good times for now, but many New England dairy farmers have concerns about the reputation of organics as the market moves mainstream, with behemoths like Wal-Mart expanding its organic offerings.

The Cornucopia Institute, a Wisconsin farm policy research group, says the booming market and severe shortage of organic milk has led some manufacturers eager to make a profit to engage in substandard dairy practices. The institute has accused Horizon, which supplies to Wal-Mart, of using industrial-size farms that provide cows little or no access to pastures. Horizon said it believes pasturing is part of organic farming, and that the United States Department of Agriculture needs to clarify pasture standards under the organic program.

For Randall, joining a farmer cooperative like Organic Valley was one way to support small family farmers like himself and resist the corporations that he says have destroyed the conventional dairy system.

"Getting bigger is not getting better, especially here in New England," Randall said.

Copyright 2006 Boston Globe