Scandal Fuels Meltdown in Organic Dairy Industry

A slowdown in the
sales of organic milk and dairy products, attributed in recent articles by the New
York Times and other media outlets to the weakened economy, has organic
dairy farmers from coast to coast at or near financial collapse. But a
worsening scandal in the industry might be doing more to economically injure
organic family farmers than the flattening of demand for organic dairy
products.

Since 2005, a handful of giant factory farms, each milking
thousands of cows, have been accused of skirting strict federal organic
regulations and creating a surplus of cheap "phony" organic milk
flooding the market and driving down profit margins for legitimate industry
participants. The Cornucopia Institute estimates that as much as 30-40%
of organic milk is now coming from giant industrial operations, milking as many
as 7000 cows each.

Last week, a judge in federal district court in St. Louis,
rejected 19 class-action lawsuits filed by consumers who are claiming fraud in
the sale of "organic" milk coming from one of the giant
operations. In 2007, federal investigators found the Aurora Dairy had
"willfully" violated 14 different federal organic regulations.
Consumers in 40 states sued, alleging fraud in the manufacture of organic milk
sold as storebrands in Wal-Mart, Target, Safeway, Costco and other national
chains served by Aurora.

Lawyers representing consumers
involved with the class-action lawsuits vow that they will appeal the
judge's initial ruling, especially in light of a recent Supreme Court
decision that clearly gives citizens the right to sue corporations that
allegedly act illegally even though federal regulatory agencies provide
statutory authority over certain industries.

According to Mark Kastel, the Senior Farm Policy Analyst for
The Cornucopia Institute, the dismissal was particularly distressing
"because Bush Administration officials had substantially softened USDA
penalties recommended by enforcement staff for Aurora's organic
transgressions." Cornucopia first alerted the USDA to
Aurora's violations by filing formal legal complaints with the agency.

"The very essence of the checks and balances system in
our three branches of government provides for citizens to seek remedy, when
regulatory agencies fail to enforce laws passed by Congress," said Gary
Cox, a Columbus, Ohio-based attorney with experience in the organic industry.
"It is our contention that a judicial review of the alleged
misconduct by these giant corporations, and the lack of enforcement by the
USDA, is not only appropriate but imperative."

The outcome of the pending suits will not only impact
consumers but many organic dairy farmers whose livelihoods are now threatened
by the giant corporate dairy marketers. A glut of organic milk on the
market now has the nation's organic processors attempting to reduce their
supply and cutting prices paid to farmers. Dean Foods, the nation's
largest milk processor, and owner of the Horizon Organic brand, and H. P. Hood,
a giant Boston-based milk bottler, that controls the Stonyfield milk label,
have both terminated contracts with farmers or allegedly attempted to strong
arm some of them out of business.

"I have invested my life in building this dairy farm,
and Hood encouraged many dairy producers to make major investments and ramp-up
for organic production, now my entire livelihood and the financial future of my
family is at risk," said Kevin Poetker who milks 200 cows near Waterloo,
IL, 24 miles SE of St. Louis.

Even Organic Valley, the farmer-owned cooperative that is
second only to Dean Foods in organic milk sales, has cut prices to their
members and asked them to reduce their milk production by 7%.
"Farmers who build their herds make long-term financial and management
decisions, and just shutting off even 7% of their milk is no easy task,"
Kastel said.

Thousands of letters, mostly from organic farmers, have been
sent to president Obama and USDA secretary Tom Vilsack asking them to
immediately intervene and undertake aggressive enforcement of organic
regulations, something lacking during the past administration.

The USDA's handling of the Aurora violations is not
the only instance where its enforcement actions have gone awry. Other
alleged violations have gone uninvestigated by agency staff. Cornucopia
has filed several additional complaints, based upon direct observation of
practices employed on other huge feedlot dairies owned by Aurora and Dean
Foods.

"Either the USDA refused to investigate or, when they
actually found violations, they have allowed illegal activities to
continue," Kastel lamented. "We are now appealing to the Obama
administration for a more ethical approach to enforcement in these
matters. Congress gave the USDA the responsibility of overseeing the
organic industry and now we are happy that some on Capitol Hill are considering
launching an investigation into, seemingly, favorable treatment for some corporate
players."

If there is good news for
consumers, it's that they have alternatives in the marketplace.
"Consumers seeking authentic, nutritionally superior organic milk have
many choices and we hope they will support the family farmers, the heroes who
built the organic industry," stated Ronnie Cummins of the Organic
Consumers Association.

A multi-year research study by The Cornucopia Institute
created a scorecard, posted on its website (www.cornucopia.org),
rating all 110 organic brands based on their ethical and legal approach to milk
production. The study indicates that 90% of organic milk, cheese, butter
and yogurt marketers are clearly subscribing to both the "spirit and
letter of the organic regulations."

"These giant factory farms are a bad aberration.
Unfortunately they are associated with a couple of the largest participants in
the industry. We need consumers to step up and make careful choices in
the supermarket so they reward the true heroes in this industry and send a
strong message to the bad actors," Kastel said. "Some organic
farmers out there desperately need the help and support of consumers."

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A copy of the judge's decision, from the US District Court,
Eastern Division of Missouri, in St. Louis, can be obtained by contacting The
Cornucopia Institute.

The organic dairy products scorecard can be viewed at:

https://www.cornucopia.org/2008/01/dairy-report-and-scorecard/

The Cornucopia Institute website is:

https://www.cornucopia.org

The USDA's National Organic Program website is:

https://www.ams.usda.gov/AMSv1.0/NOP