Organic opportunities

Steve Tripoli Aug 16, 2006

KAI RYSSDAL: Here’s a career opportunity: The pay’s modest. Even in a good year. You do get to be outside every day. And when I say every day, I mean all 365 of them. But you’ll have more work than you can handle. Vermont’s organic dairy farms are booming. From the Marketplace Entrepreneurship Desk, Steve Tripoli has more.

STEVE TRIPOLI: The milking parlor on Steve Getz’s Vermont farm moves to the soft rhythms of a “pulsator.” It’s a machine that’s gently drawing milk this day from a brown-and-white Jersey cow named Daffodil.

Getz and his wife, Karen, make raw milk cheese, about 10,000 pounds of it a year. This is a new world for them. Until recently Steve was a high-tech marketer who’d only dreamed of farming. He says a dramatic rise in the price of organic milk changed that.

STEVE GETZ: It’s possible on a well-run organic dairy now, to make just over $30 a hundredweight compared to probably $12 a hundredweight for conventional milk. There’s huge market demand.

Huge demand has created a severe organic milk shortage that drives the big price difference. With organic milk running two-and-a-half times the nonorganic price, Getz has growing company around Vermont.

Across the Green Mountains in tiny Washington, Vermont, Russ Deberville is rejoining the business his family abandoned 20 years ago.

The Debervilles stopped milking because they couldn’t make money at it. But Russ Deberville says the economics of organic change dairying for small farms especially.

RUSS DEBERVILLE: And you can run a smaller operation. We can run a 40-50-cow operation organically, and that’s what organic likes. They like the small farms, so they don’t mind pickin’ us up. And, it works well for us.

It isn’t just that organic dairy processors don’t mind picking up small farms like Deberville’s. They’re hotly pursuing them. Deberville signed with the Organic Valley co-op and got an 18-month contract with high prices locked in. He had two other suitors so he also got a fat signing bonus. Conventional dairy farmers don’t learn what they’ll get for their milk until after they’ve shipped it.

A state away in New Hampshire the organic milk crunch is hitting hard on the production line at Stonyfield Farm, the world’s largest organic yogurt producer.

CEO Gary Hirshberg says soaring demand for organic milk and yogurt is leaving his production lines well short of their needs.

GARY HIRSHBERG: I would say demand is running about twice as strong as supply. We could use 100 percent more milk than we currently have.

Organic dairy product sales have doubled in the past four years. That’s left Stonyfield scrambling. The company once touted its completely organic product line. But now it’s been forced to up its nonorganic products to 40 percent of output.

Hirshberg says processors like him are throwing incentives at farms converting to organic just to stay competitive. And Stonyfield recently invested overseas to get more milk.

So Hirshberg says there’s plenty of opportunity for anyone pondering a move into organic dairying.

HIRSHBERG: This is a worldwide phenomenon. To farmers who are concerned — Will the organic market be there? — all you have to do is stop and look at every single commodity area, literally from milk to cat food, to even clothing. Organic, in all of those categories, is the fastest growing trend. It’s out there.

Amid the good news, small farmers like Steve Getz have one worry: That the surge to organic will pressure the government into loosening standards defining what “organic” means. That might bring a rush of giant, low-cost competitors.

It hasn’t happened yet, and small farmers plus CEOs like Hirshberg say it shouldn’t. They say organic milk won’t keep attracting customers unless strict controls over chemicals, drugs and animal feeding procedures stay in place.

I’m Steve Tripoli for Marketplace.

Steve Getz prepares the Jersey cow named “Daffodil” for milking at Getz’s organic dairy farm in Bridport, Vt.

Russ Deberville in his pasture with some of his “employees” near Washington, Vt.

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