Natural Foods Merchandiser

Organic dairy demand exceeds supply

As demand for certain organic products is surpassing supply, manufacturers are offering new incentives for farmers and looking to imports to fill the supply gap, while current shortages threaten to stunt manufacturers' growth.

Caren Wilcox, executive director of the Organic Trade Association, said certain segments of the organic industry, especially dairy and meat, are reporting shortfalls.

Gary Hirshberg, president and CEO of organic yogurt producer Stonyfield Farm, said the lack of supply has definitely hampered Stonyfield's growth. "Stonyfield Farm has seen an annual growth rate of around 27 percent for the past 13 years, forecast to rise to 30 percent this year," he said. "That would be 40 percent if supply were not an issue."

Large retailers, such as WalMart, moving into the organic segment are putting a strain on the supply, according to David Bruce, Farmer Communications Director for Organic Valley Family of Farms.

But there is no quick fix for a supply shortage in an industry that requires three years to convert from conventional to organic production, Wilcox said. "We're working hard to find farmers who are willing to convert," Wilcox said.

Manufacturers such as Stonyfield Farm are offering financial incentives to potential organic farmers, trying to expand their supply.

"We have invested heavily in creating long-term solutions to the problem by offering transition payment for farmers to convert," Hirshberg said. "We're spending millions of dollars to assist farmers during their transition to organic."

Stonyfield is also offering farmers support by sponsoring workshops and conferences on topics like organic herd health management and organic pasturing.

So far, Hirshberg reports that the efforts have been successful in increasing supply in both milk and fruit. "There's no question that farmers would not be able to go organic without help and premium," Hirshberg said.

Organic Valley Family of Farms is also actively recruiting new organic dairy farmers and offering transitional funds to farmers attempting to convert from conventional farming. Organic Valley is also working through political channels, pressuring local congressional representatives to sponsor funding to help farmers make the jump to organic.

But even if financial incentives may tempt conventional farmers to convert, infrastructure to support such rapid growth in U.S. organics is still lagging, said Bob Scowcroft, executive director of the Organic Farming Research Foundation. Wilcox points out that even if dairy farmers are willing to convert to organic, there might be shortages of organic feed.

According to Hirshberg, many nonorganic farmers have not been willing to consider organic because it has not been accepted by their trusted cooperative extension agents, who are based at land-grant institutions. Getting the ball rolling toward more organic support and education, Stonyfield Farm gave its largest grant ever, $200,000, to the University of New Hampshire to establish the first organic dairy program at a land grant university.

But Stonyfield still has had to rely on imported produce to keep up with high sales. For example, North America does not produce enough organic blueberries to keep up with the explosive rise in consumer demand. Because of the nature of the plant, organic crops cannot be harvested as rapidly as demand can increase. Scowcroft uses almonds and walnuts as examples—an organic nut crop cannot be planted and harvested within one season the way organic squash could be.

Though imported produce loses the added value of being domestic, Wilcox holds that supporting organic agriculture all over the world is a positive thing, as long as in the long run the environmental benefits of increasing organic production keep growing in the United States too.

Complications aside, Hirshberg remains positive about the shortages. "The current problem of supply and demand in organics is a problem of success," said Hirshberg. "Growth has outstripped supply."

Natural Foods Merchandiser volume XXVII/number 8/p. 1, 14

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