Wisconsin-based Organic Valley and other major organic brands are challenging the federal system regulating the sale of milk, which they claim favors conventional producers.
The Coalition for Organic Dairy Exemption, which also includes Aurora Organic Dairy and Horizon Organic Dairy, filed a lawsuit against the federal government questioning the constitutionality of requiring participation in the Federal Milk Marketing Orders program.
Seven Organic Valley farmers from across the country also filed a class action takings claim against the government, arguing they should receive compensation for six years of marketing order payments collected from their processor.
Federal Milk Marketing Orders regulate how processors buy milk from farmers within a certain geographic area. The system sets a minimum price for milk based on how it’s used, what’s known as the class. It also redistributes the historically higher revenue from selling milk for drinking, what’s referred to as beverage or Class I milk, to producers who have their milk turned into cheese, butter and other dairy products.
This revenue pooling process is what the organic processors and farmers claim makes their required participation in the marketing order unfair.
Adam Warthesan, Vice President of Government & Industry Affairs at Organic Valley, said beverage milk is the main product driving the organic dairy industry. He estimates that since 2006, over $400 million has been paid into the marketing order system by organic processors, which he said has primarily been redistributed to conventional producers.
“For a co-op like Organic Valley, that’s tens of millions of dollars a year that are being taken out of our farmers pockets,” Warthesan said.
He said those payments have increased by 60 percent since the U.S. Department of Agriculture implemented several updates to the marketing order system last year, pushing the cooperative and two other brands to take legal action.
“The time is now because every day that increased diversion of dollars out of the organic dairy ecosystem is harmful and severe,” he said.
Depression-era marketing system aims to protect farmers
The Federal Milk Marketing Order system was started during the Great Depression as a way to protect dairy farmers from an unequal pricing landscape for milk.
Agricultural economist Leonard Polzin from the University of Wisconsin-Madison said before marketing orders, farms located in rural areas with an abundance of milk were paid less than producers near large population centers. Farms selling to a cheese plant also received less for their milk compared to those selling to a milk bottler.
Polzin said the marketing orders were established to encourage the redistribution of milk within a geographic region and to level the playing field for producers.
The federal system has changed over time to try to keep up with the way the dairy industry operates, he said. This includes the updates made by USDA last year after a two-year process of taking feedback from farmers, processors and the rest of the industry.
“The spirit of the order is to promote orderly marketing of milk,” he said. “So in that framework or context, there’s been changes in order to reflect that or stay current.”
But organic farmers like Rem Perkins, an Organic Valley cooperative member from West Virginia, argue the system was not designed to protect their businesses.
He said leaving the marketing order system is not meant to pit organic farmers against conventional milk producers.
“We’re just saying ours is different,” Perkins said. “Please recognize that, and stop taking money out of our pockets that we’re not able to get back.”
Because consumers pay a higher price for organic milk, Warthesan said the base milk price set by the marketing order system also has little benefit for producers.
He points out that organic milk and other foods have been recognized as distinct from their conventional counterparts since 1990, when Congress ordered the creation of the National Organic Program.
But Warthesan said federal ag officials have never addressed how organic dairy should operate under the marketing order system, despite several petitions by the organic industry.
“The reality is also that consumers consider organic milk differently,” he said. “It has different positioning and different reaction in the marketplace than what conventional dairy does.”
This article is republished with permission from Wisconsin Public Radio
This article originally appeared on Wisconsin State Farmer: Organic milk producers push back on Depression-era pricing system
Reporting by Hope Kirwan, Wisconsin Public Radio / Wisconsin State Farmer
USA TODAY Network via Reuters Connect
