Horizon Organic, which plans to stop taking milk from Northeast producers, has announced it will extend contracts by six months, giving farmers more time to find new markets.

Last August, 89 organic farmers who sell their milk to Horizon — including 28 in Vermont — received a letter informing them that their contracts with the company would end on Aug. 31, 2022. With an already-flooded market, several producers have told VTDigger they wonder whether their farms will be able to survive the blow.

At the time, Danone, the global company that owns Horizon, said servicing farms in the Northeast is difficult and expensive, and the company planned to connect with more farms in other areas of the country that better fit their footprint. The company reported annual revenue of about $27 billion in 2020.

In a letter to Vermont officials on Monday, Danone Vice President Chris Adamo announced a four-part plan designed to “ease the impact of our transition on the organic dairy community.”

The plan includes:

• Optional six-month contract extensions, which would end Feb. 28, 2023.
• A “transition payment,” given per hundredweight on the milk from the affected producers during the last six months of the agreement. This payment also will be available to farmers who stopped producing for Danone after receiving the nonrenewal notification for their last six months of production with the company.
• Free access to financial consultants who specialize in agriculture.
• An offer to “explore co-investment solutions” with regional partners that would address the systemic issues that prompted the company’s departure, such as building a cooperative for a dedicated fleet of milk haulers in the Northeast.

“At first blush, we’re encouraged by this, because it does give all of us, including the farmers, a little more breathing room,” said Anson Tebbetts, secretary of the Vermont Agency of Agriculture, Food and Markets.

Solutions to the problem could involve setting up new processing centers in the region, or other organic processors could agree to take on more farmers, Tebbetts said. Six months would be a valuable amount of time to secure those measures, he said.

In an attempt to find or create markets for the farmers, the Agency of Agriculture and the Northeast Dairy Business Innovation Center will send a suite of recommendations to the U.S. Department of Agriculture later this week, Tebbetts said. The recommendations are a product of work by a task force partially led by U.S. Rep. Peter Welch, D-Vt.

Welch and U.S. Sen. Patrick Leahy, D-Vt., both received Monday’s letter from Danone. The two were among a band of Northeast lawmakers who penned another letter to the U.S. Department of Agriculture in September, urging it to close a loophole in the national regulations that put the region’s farmers at a disadvantage.

Specifically, they urged the USDA to more strongly enforce a rule that dictates the amount of time animals need to spend grazing and to close the Origin of Livestock loophole, which allows farmers to raise livestock using traditional practices before transferring animals to the organic program as adults. Both measures would level the playing field between larger farms, often located in the West and Midwest, and smaller farms found throughout the Northeast.

Many, including lawmakers and state officials, have wondered whether those two relaxed rules were part of why Danone exited the Northeast.

In an interview, Adamo said Danone can’t find enough drivers to take on the “challenging routes” and trek overnight to the processing plant in western New York.

The company has advocated for the Origin of Livestock rule, Adamo said, and the company sent letters in 2019 and 2021 to the USDA expressing that support.

“We believe that the potentially inconsistent interpretation and enforcement of the origin of livestock regulation can create significant economic disparities across the organic dairy industry. …  Therefore, we are grateful that USDA reopened this proposed rule and we support its finalization to ensure equity so that all farms are raising their herds consistently,” said the 2019 letter, which was reviewed by VTDigger.

As it terminates contracts with the 89 farmers in the Northeast, Adamo said the company is taking on about 50 new farms in states closer to its processing plant, such as New York and Pennsylvania. All 50 are “small family farms” of comparable size to the farms it’s bumping from the program, he said.

Welch said Danone needs to do more for the farmers it’s leaving behind.

While it’s “good news” that farmers will have some additional time and money, Welch said in a statement, “the bad news is that many of our farmers will still be left in the dark after the additional six months.”

“Danone knows that leaving our farmers behind is wrong, and they have the capacity to provide real support for the folks that have done so much for them — it’s why they have adjusted their exit strategy in the face of public pressure,” Welch wrote. “Danone should step up and do more — they should follow this offer with a more substantive and detailed effort to invest in family farms across the Northeast.”