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NY Times Exposes Wal-Mart's Ability to Sell Cheap Organic Milk--It's Coming from Factory Farms

Many organic foods have been popping up on the shelves of Wal-Mart in recent years, but none have been as popular as organic milk. For many shoppers, particularly mothers with small children, it is the first organic product they try.

Now organic milk is about to become much more widely available, as Wal-Mart rolls out its own organic brand, which will be cheaper than similar milk on the market. But critics worry that what consumers will be getting is adiluted form of organic milk.

Sold under Wal-Mart's popular Great Value label, half-gallon cartons of the milk have been quietly introduced at 1,200 supercenters and Neighborhood Markets, according to a Wal-Mart spokeswoman, Karen Burk.

Wal-Mart's own organic milk is likely to create stiff competition for many
other makers of organic milk < which comes from cows that have not been treated with hormones or antibiotics - and even sellers of conventional milk.

Harvey Hartman, president of the Hartman Group, a market research firm
working with Wal-Mart on its organic initiatives, said Wal-Mart's own brand of organic milk will mean a lot more will be sold in the United States.

"They're creating incremental users because they're removing one of the big inhibitors to buying organic, which is price," he said.

Last year, organic milk sales increased by 25 percent from the year before and Mr. Hartman predicts that Wal-Mart's brand could lift annual growth to as much as 35 percent. Currently, organic dairy represents 3.5 percent of all dairy products sold in the United States, according to the Organic Trade Association.

The organic milk Wal-Mart is selling under its own label comes from Aurora Organic Dairy, which also supplies Safeway, Costco, Target and Wild Oats with their store brands of organic milk. But Wal-Mart¹s entry into the market stirs greater attention from critics.

Activist groups, as well as some organic food retailers and dairies, contend that the company where Wal-Mart and the other big retailers get their milkoperates large factory farms that are diluting the principles of  organic agriculture and delivering customers a substandard product. They argue that Aurora's cows do not spend any significant time roaming pastures and eating fresh grass; instead they live on a diet high in grains.

"They are trying to cut corners in the interest of producing milk as cheaply
as possible," said Mark Kastel, senior farm analyst at the Cornucopia
Institute, which represents organic family farmers.

Wal-Mart and its supplier say that those allegations are misleading and that Aurora's two farms in Colorado and Texas are in full compliance with
Agriculture Department standards for organic dairy.

Executives at Aurora, which is based in Boulder, Colo., acknowledge that
their farms, with 4,000 cows in Platteville, Colo., and 3,300 in Dublin,
Tex., are among the largest organic dairy operations in the country. But
they say their animals are healthy and contented and that the company's organic milk is of the highest quality.

Wal-Mart's buying power is certainly cutting the cost of its organic milk.
An informal survey of organic milk at Denver area grocery stores found that Wal-Mart's label was 8 percent to 35 percent cheaper than other brands. At Wal-Mart, it was selling for an average of 10 percent less than Horizon Organic milk, the brand Wal-Mart has been carrying for three years. The controversy turns on how closely Aurora adheres to the principles behind the organic food movement. Many organic farmers say grass feeding is essential for organic dairy production because it is part of a cow's natural behavior. Milk from grass-fed cows, they say, is also higher in beneficia fatty acids than milk from cows fed grain, making it more nutritious.

At Aurora's Platteville operation, about 40 miles north of downtown Denver, 4,000 cows are put on grass only when not being milked or when they are nearing the end of a lactation cycle. That totals about two to three months a year. The rest of the time they stay in dirt-lined outdoor pens where they eat from an ample trough filled with a mixture of hay, silage, corn and soybeans.

Clark F. Driftmier, head of marketing at Aurora, said the company planned to reduce the number of cows in Platteville to 1,000 by next summer so all the animals could graze. In addition, he said, the number of acres of pasture at the Texas farm will triple by next spring.

The company, he added, is opening a 3,200-cow dairy farm in Kersey, Colo., that has been designed to allow for year-round daily access to pasture. Mr. Driftmier acknowledges these changes are being made partly in anticipation of the Agriculture Department's plans to tighten rules requiring more grazing for milk to be called organic.

Mr. Kastel of Cornucopia calls Aurora's efforts "greenwashing." He says the farm's acreage per cow will still be low and that the company is overtaxing its animals by milking them three times a day instead of twice, which is the norm at organic farms.

John Mackay, chief executive of Whole Foods Market, the nation's largest
organic food supermarket chain, toured Aurora's Platteville farm in May with Margaret Wittenberg, vice president for quality standards. They found it to be "unacceptable" and "not up to our standards," he said a spokeswoman, Ashley Hawkins.

While a 4,000-cow farm is not large among conventional dairies, which can hold as many as 25,000 cows, it dwarfs most organic farms. Jim Riddle, organic outreach coordinator for the University of Minnesota and former chairman of the National Organic Standards Board, said that putting thousands of cows on pasture is almost impossible.

Wal-Mart would not say how much it was paying Aurora for its milk and
whether that price was lower than the typical $26 per hundred pounds of milk that most organic dairy farmers get. But on its Web site, Aurora boasts that it is one of the lowest-cost producers of organic milk in the country, in part because the Platteville farm has a milking plant on site.
Because Aurora milks its cows three times a day and feeds its animals diets of calorie-dense grains, its milk production per cow is also higher than that of other organic milk producers. In Platteville, Aurora's annual milk output per cow is 20,000 pounds, according to the company, whereas most organic dairies get 14,000 to 18,000 pounds per cow, Mr. Kastel says.

Mr. Driftmier at Aurora says that grass feeding should not be the only
measure of animal health and well-being. "Our record of animal welfare is
certified by an independent third-party expert," he said. "Our animals are
outside all year long; they¹re never locked into barns."

In accordance with organic standards, Aurora cows also get no hormones or antibiotics and all their feed is grown organically.

Many in the organic industry, however, say that Wal-Mart, in its push to
move organics into the mainstream, could do more than simply search for the biggest and lowest-cost producer in the market.

Mr. Riddle, the organic coordinator, points to subsidy programs that dairy
companies like Organic Valley, Horizon Organic and Stonyfield Farms are
operating to help small and midsize dairy farmers move to organic methods.

"These programs are going to help alleviate the organic milk shortage by
next year,"  he said. "But you can't increase the supply overnight or place
orders and have them immediately filled. Organic takes time.""

Copyright 2006 The New York Times Company