Dairy processor H.P. Hood has reduced its organic milk supply since late February by not renewing several Maine dairy producers contracts. Hood maintains that with the declining economy, the demand for organic milk has just not caught up with production, according to Hood spokeswoman Lynn Bohan.
“Due to a softening in organic milk sales triggered by the recent economic downturn, Hood has made this difficult decision,” Bohan said when the original cuts were announced. “Increased transportation costs also factored into Hood’s decision, as the raw organic milk procured in outlying areas must be shipped to the company’s processing plants.”
Last week, Bohan said she could not say how many producers have voluntarily agreed to a 15 percent cut in production and declined to discuss further contract eliminations.
In late February, Hood told eight Maine organic dairy farmers in Aroostook and Washington counties that their milk contracts would not be renewed. Hood then notified its remaining 14 contracted organic milk producers that they must cut their production this year by 15 percent.
Now, two major producers in central Maine also have been dropped by Hood: Richard Lary in Clinton, whose farm produces 11,000 pounds of milk every other day, and Mark McKusick in Dexter.
Both men have been outspoken against Hood’s practices, and Lary said Saturday he believes the pair are being punished by Hood for their active campaign against the production cuts.
For both conventional and organic milk, this spring is the worst of times for milk producers. Prices being paid for milk are way under the cost of production, back to Depression-era prices, farmers say. Because organic farmers are paid premiums for their milk, reverting to conventional will mean a massive pay cut for any organic farmer making the switch. Conventional farmers are paid about half what organic farmers get for their milk.
There are 72 farms in Maine that produce organic milk. Some sell to processors such as Hood, Organic Valley and Horizon Cooperative. Others sell to local markets, off-farm and through community-supported agriculture shares, in which consumers purchase shares in a farm’s coming harvest. Hood ships Maine’s organic milk to New York to be processed and packaged, then returns it to Maine, where it is sold as Stonyfield Farm Organic Milk.
Meanwhile, Maine’s dairy supporters — the Maine Department of Agriculture, Maine Farm Bureau, University of Maine Cooperative Extension, Downeast Business Alliance and others — are working together on a solution.
David Bright of the MFB Marketing Committee said a $90,500 emergency grant was submitted to the USDA last week to conduct a study of options and come up with a plan that would structure a statewide distribution system. This system would allow organic dairy farmers in Washington and Aroostook counties to move their milk — as a Maine-branded product — into grocery stores across the state.
Bright said the plan could provide a template for other states facing similar issues to use.
The details in the grant include:
• Certification for all milk farms, processors and shippers involved.
• Creating transportation routes that are most cost-efficient.
• Measuring and tracking each farm’s production for payment and tracking of quality and volume.
• Identifying or planning a processing facility for effective production of organic milk.
• Establishing quality standards for all Maine-produced organic milk products, including labeling and packing standards.
• Developing a marketing plan to promote local Maine agriculture.
While awaiting word on the grant, Bright said, nobody involved is sitting on their hands.
Several Maine dairies that now process conventional milk have been approached about taking on the organic milk. Oakhurst in Portland, Garelick in Bangor and Houlton Farms Dairy have been involved in these discussions, Bright said.
“Even Wal-Mart has expressed an interest in selling a Maine-branded milk and even locating a local foods processing center in Maine,” Bright said.
“The amount of support out there has been astounding,” he said. “Everyone is realizing that local is beginning to outtrump organic in the retail market.”
Bright said a lot of people buy Oakhurst milk because of its Maine Quality Seal, which ensures that 80 percent of the milk comes from Maine farms. “If people were offered a Maine-branded organic milk, they’d buy it,” he said.
Bright said the group is also looking at buying a facility, such as Houlton Farms, the Bangor-based Garelick plant or a defunct water-bottling plant in Garfield Plantation, and adapting it to the Maine-branded product.
“Right now, there is a lot of stuff circling, a lot of balls are in the air,” Bright said. Time is of the essence, he said, with the first dropped contract expiring in August, and others at various times through June 2010.
Organic dairies have grown by leaps and bounds throughout New England over the past 15 years. By 2006, organic dairy farming had become the fastest-growing agricultural sector in New England, and Maine had the highest percentage — 16 percent — of organic dairy farms compared with conventional farms in the country.
The farms that have been dropped in Maine’s two northernmost counties were heavily courted three years ago. Many of them were conventional dairy farms that were lured into organic because of Hood’s promises of security.
David James at James Pond Dairy in Charlotte switched to organic production just last June.
“Hood kept at us and kept at us to get going as organic as fast as possible. They promised a rosy future, then, three years later, they shut us off,” James said.