What Horizon’s exit means for Vt. farmers
SHOREHAM — In 2017, Horizon Organic recognized Joe and Kathleen Hescock with an honorable mention for a national award praising their commitment to farming and their involvement in their community.
Last month, the Shoreham family, along with 88 other farmers in the Northeast, received a letter with news that Horizon’s parent company, Danone, plans to terminate their contracts on Aug. 31, 2022.
The Hescocks, who milk 325 cows at their farm, Elysian Fields, have been producing for Horizon since 1999. It’s been about a month since they received the letter, and the Hescocks don’t know what their future holds, or whether they’ll be able to continue farming at all.
“We’re at the point where if we don’t ship milk, it’s pretty hard to stay in business,” Joe Hescock said.
Because farmers in the organic program are paid a premium for their product, organic certifications have served as a way to maintain the economic viability of many of Vermont’s small- and medium-size farms.
Many close to the issue say gaps in federal regulations have allowed large farms around the country to maintain organic certifications, flooding the market and making it more difficult for Vermont’s organic dairy farmers to compete on a national scale.
Those who have current contracts with existing producers, like Organic Valley and Stonyfield Organic, remain on solid footing. But farmers without contracts are faced with tricky decisions, like finding innovative new markets, becoming larger, or abandoning the organic milk business altogether. Some say it’s also becoming harder for newcomers to access the industry.
Growing larger is a difficult task because of Vermont’s mountainous, forested landscape and strict organic certification rules. Some farmers say it’s also contrary to their mission.
“We’re really committed to producing food organically,” Hescock said. “It will be hard not to do it that way.”
Danone North America, part of the global, Paris-based food company, said in a statement to VTDigger that it plans to support “new partners that better align with our manufacturing footprint.”
“We are committed to continuing to support organic dairy in the East, and in the last 12 months alone, we have onboarded more than 50 producers new to Horizon Organic that better fit our manufacturing footprint,” the company’s statement reads. “This decision will help us continue providing our consumers with the products they love.”
Danone points to “growing transportation and operational challenges in the dairy industry, particularly in the Northeast.”
“It is devastating to see 28 Vermont farm families and 89 across this region dropped by Horizon, simply because they don’t meet the company’s plan to consolidate supply from larger farms in other regions,” U.S. Sen. Patrick Leahy, D-Vt, said in a statement to VTDigger.
Leahy helped author the national organic rules when he chaired the Senate Agriculture Committee.
The region’s conventional dairies have struggled for years “in a market that supports fewer, larger farms each year, and now that pattern is hitting organic farms as well,” he said.
According to 2021 data from the Vermont Department of Financial Regulation, the number of dairy farms in Vermont has decreased by 37% in the past 10 years and by 69% in the past 24 years. Organic dairy farms decreased by 8% between 2010 and 2020.
At the end of 2020, Vermont had a total of 181 organic dairy farms, according to the Northeast Organic Farming Association of Vermont, or NOFA-VT.
Nicole Dehne, NOFA-VT’s organic certification director, said the issue with organic farmers feels different because it’s revitalizing the state’s broader dairy industry.
“We’re already trying to think outside of the box about how to keep our dairy farms and how to have them be successful,” she said.
State officials, farmers, processors and others involved with the industry, have been convening for weeks to try to find solutions for the farmers affected by Danone’s decision to pull out of the region.
Vermont Agriculture Secretary Anson Tebbetts has assembled a task force on the matter. Members of Vermont’s delegation and representatives from the U.S. Department of Agriculture are working on the issue, and Dehne has met with regional members of the national Organic Farmers Association.
“I think that the state needs to start considering what we lose when we lose small farms,” said Abbie Corse, an organic dairy farmer who sells to Organic Valley and serves on the board of NOFA-VT of Vermont and on the Vermont Climate Council.
LOOPHOLE AND ENFORCEMENT
Two factors have made it increasingly easy for bigger farms across the country to become certified as organic. Both relate to gaps in the National Organic Program.
One such gap, meant to allow conventional farmers to make a one-time transition to organic farming, is a loophole that permits animals not raised organically to be transitioned to organic later on in their lives.
Some farmers have used the rule to continually raise young livestock non-organically, which is cheaper. That puts farmers who closely adhere to the spirit of the certification at a disadvantage.
“I believe that loopholes in our organic standards are being exploited by very large dairies and I have appealed directly to USDA Secretary (Tom) Vilsack to close these loopholes, which are now directly impacting our rural communities,” Leahy’s statement said. “My staff and I are working closely with state agencies and other stakeholders to look at every possible tool.”
Many advocates of organic farming, including Leahy, have pushed to pass what’s called an “Origin of Livestock” rule. The rule would allow farmers to transition animals from conventional to organic only once.
Tom Berry, agriculture policy adviser for Leahy, testified before Vermont’s Task Force to Revitalize the Dairy Industry on Monday when members were discussing options for the farmers affected by Horizon’s departure.
Leahy has drafted a letter to the USDA encouraging passage of the Origin of Livestock rule, Berry said, and it’s currently being circulated among the Vermont delegation and delegations from other Northeastern states for additional signatures. The letter should become public later this month.
In a 2019 letter urging the USDA to adopt the rule, NOFA-VT surveyed three organic dairies to estimate the cost difference between raising animals organically and conventionally.
“The first farm milks 200 Holsteins and uses nurse cows,” the letter reads. “They estimate it costs them $2,800 to raise a heifer organically to calving. They estimated that it would cost about $1,500 to raise the same heifer conventionally; a difference of $1,300 per animal.”
The other two farms, both with Jersey cows, estimated the difference would amount to $800 per animal.
“This loophole puts producers truly meeting the intent of the regulations at a substantial economic disadvantage and damages the integrity of the organic label,” NOFA’s letter reads.
The second gap relates to national enforcement of the pasture rule, which requires organic livestock to spend a certain amount of time grazing in pastures.
“It’s clear that that’s been loosely enforced at best,” Berry told members of the task force. “On a number of large farms, the physical requirements of exposing hundreds and hundreds, if not thousands, of cows to pasture on the required basis kind of baffles any practical person as to what that looks like.”
Berry told the group that Leahy’s letter will also ask the USDA for increased enforcement of the violations, which are more likely to be taking place on farms not located in the Northeast.
Vermont officials don’t know whether other producers for Horizon are taking advantage of the loophole in the origin of livestock rule, or whether they’re violating the pasture rule. But the company’s departure from the Northeast has been widely seen as a symbol of a growing reality that organic farmers must grow or consolidate to compete in a national market.
CRACKING OPEN VERMONT’S ORGANIC DAIRY MARKET
Some of the remaining processors that purchase milk from Vermont producers are working against that tide. Organic Valley, for example, is a farmer-owned cooperative, and representatives say the company is staying put in Vermont.
“Organic farming is facing the same crisis we’ve seen in conventional agriculture – consolidation, industrialization, ‘get big or get out,’” Bob Kirchoff, CEO of Organic Valley, said in a statement. “It will take a lot of people working together to solve it, but we all must be bold enough to believe we can.”
What, exactly, Organic Valley can do to help the farmers affected by Horizon’s decision is still unclear, though it’s involved in ongoing discussions with various groups.
“Organic Valley started as a cooperative in 1988 because of a farming crisis,” Kirchoff said in an interview with VTDigger. Back then, he said, conventional agriculture was faced with the same types of “get big or get out” choices.
“Things have come full circle a bit,” he said. “This isn’t really super surprising to any of us.”
While farmers have always faced challenges, they’re now seeing inflation for inputs, weather extremes, shifts in consumer behavior, and complexities with hauling milk. At the moment, many companies are struggling to find haulers, and accessing farms on rural backroads is an extra burden that companies are becoming less likely to take on.
Kirchoff said farmers with the cooperative are encouraging the company to find a market for the milk.
“We’re doing those things,” he said. “We can’t make promises, but obviously, we do have empathy.”
Several solutions to the problem have been floated, like a Vermont brand of organic milk, processed in-state, that could be shipped to local markets and the New York and Boston areas. Dehne said no one has come forward yet with the necessary experience and capital.
Some producers may be able to sell their milk to cheesemakers in the state, she said.
Dehne likes the idea of convincing existing processors, like Organic Valley and Stonyfield, to pick up these producers, guarantee a buyer that can give the product a Vermont label, then sell it on a regional scale. The state could help such an effort by selling the product in Vermont’s public institutions, like schools, she said.
“They don’t have to worry about the contracts with the producers, they don’t have to worry about the transportation, they’re just purchasing the product and marketing and distributing it,” she said.
Conversations are ongoing about plans like this, but “whether that happens, I don’t know,” she said.
During testimony before the state’s dairy task force, Corse said in general, offering farmers assistance like retirement planning and better options for childcare could make the industry more viable for young farmers looking to enter the market.
“The macroeconomics aren’t working out for small farmers,” Corse told VTDigger. “And so if we believe in small farmers, many of whom tend to either be certified organic or be practicing organically, then we’re going to have to make a decision to invest in that type of farming, and in organic farming.”
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