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Organic Milk Farmers in Northeast Under Pressure as Processors Look West

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SEARSMONT, Maine — Glendon Mehuren II’s Faithful Venture Farm, 35 miles east of the state capital of Augusta, looks as tranquil as the farms pictured on cartons of organic milk. Cows ramble among weathered barns perched on a hill surrounded by small pastures and woodlots.But things have been rough on the farm since August. That’s when Mr. Mehuren got a certified letter from Horizon Organic, which had been buying his milk for 16 years. It said it was terminating his contract in a year. Horizon delivered the same letter to 88 other organic dairy farms from Maine to New York.In December, Horizon gave all of the affected farmers a reprieve, extending their contracts until February 2023 and paying a bit more for the milk. But the future for small dairy farmers in the Northeast still appears difficult.For the past 20 years, organic milk offered a lifeline for small farms in the Northeast, allowing them to stay afloat while milking 100 cows or fewer. Now those farms are facing trouble because there is a lack of milk processors in the region and a glut of milk from huge organic dairies in Western states.On a brisk December morning, Mr. Mehuren and one of his daughters were milking their Holsteins in the small milking parlor, in six shifts of eight cows. His father was outside in a tractor, hauling hay. Mr. Mehuren quickly rattled off the names of the many nearby dairy farms that had failed over the past few decades. The farms that survived expanded, hoping that volume would offset low milk prices, he said.Organic milk has grown to account for more than 5 percent of the nation’s milk market.Tristan Spinski for The New York Times“Milk prices were very low in the early 2000s,” he said, and many small farmers felt the only options were to grow or die. “Then the organic deal kind of came along.”That gave smaller farmers a third option. Mr. Mehuren earned organic certification for his farm and dairy herd and began selling milk to Horizon in 2005.Since then, organic milk has grown to account for more than 5 percent of the nation’s milk market, and it is dominated by big businesses. Horizon Organic is owned by the French corporation Danone. Stonyfield Organic, the yogurt maker in New Hampshire that buys organic milk from New England farmers, is owned by Lactalis. And the farmer-owned cooperative Organic Valley, based in Wisconsin, now has more than a billion dollars in annual revenue.Meanwhile, bottling became consolidated in larger milk plants outside of New England. Ed Maltby, the executive director of the Northeast Organic Dairy Producers Alliance, said nearly all packaged organic milk is now ultrapasteurized, giving it months of shelf life.“It used to be that you had your supply locally to your market,” Mr. Maltby said. “Now that paradigm has been turned on its head. The whole concept of regionality has disappeared.”Sarah Alexander, the executive director of the Maine Organic Farmers and Gardeners Association, agreed.Glendon Mehuren II and Ms. Dickey, his daughter looking after a newborn calf. The farm got its organic certification in 2005.Tristan Spinski for The New York Times“If you go to a grocery store in Maine, there is Horizon milk on the shelves, and, yes, Horizon is picking up from 14 producers in Maine.” she said. “But the milk that’s on the shelves may be coming from Colorado, it may be coming from Ohio, it may be coming from Virginia.”Chris Adamo, the vice president for government affairs, policy and partnerships at Danone North America, said several factors contributed to Horizon’s withdrawal from New England.“The Northeast region provides a number of continuing challenges to pick up and transport milk to the processing facility we use in Western New York,” Mr. Adamo said in an emailed statement.“While the reduced mileage is important, it is only one factor,” he added. Mr. Adamo cited a scarcity of truck drivers as another.As Horizon withdraws, another challenge for organic dairy farmers in the Northeast is competition from larger farms.“There’s been an enormous growth of organic dairy farms west of the Mississippi — Texas, Colorado,” said Richard Kersbergen, a professor at the University of Maine’s Cooperative Extension program who has been working with Maine dairy farmers for 37 years. “That’s created a situation where these mega-organic dairy farms are able to produce organic milk at a much cheaper cost than those farms in the Northeast.”Organic milk has been a lifeline for small farms.Tristan Spinski for The New York TimesMany of those farms milk fewer than 100 cows.Tristan Spinski for The New York TimesOne company, Aurora Organic, has 27,000 dairy cows on four farms in Colorado and Texas, according to its website — the equivalent of about 500 small New England farms. Ms. Alexander called such operations “factory farms.”Amanda Beal, the commissioner of the Maine Department of Agriculture, Conservation and Forestry, said she was concerned that larger organic farms in the West were not being held to the same standards as those in the Northeast. Two rules for organic certification set by the U.S. Department of Agriculture have long been bones of contention: those requiring that organic livestock have access to pasture, and the “origin of livestock” rule limiting the conversion of conventional cows to organic.Ms. Beal said she would like to see the pasture rule more evenly enforced by organic certifiers nationwide. She said she also hoped that the U.S.D.A. would soon clarify the origin of livestock rule to eliminate loopholes used by larger dairies.“It creates an unlevel playing field for our farmers,” Ms. Beal said. “I feel if the playing field were level, our farmers could certainly hold their own.”Ms. Beal asked Tom Vilsack, the secretary of agriculture, about this when she and her counterparts in other Northeast states met with him twice, via video, to discuss Horizon canceling the contracts.Ms. Beal understands organic dairy farms because she grew up on one. That farm, now run by her brother, is among those being dropped by Horizon.“I really want to emphasize that this isn’t about one farm or my family’s farm,” she said. “This is about 14 family farms in Maine and 89 family farms across the Northeast, and they are all, every single one of them, important.”At Faithful Venture Farm, while cleaning out the parlor between milkings, Mr. Mehuren said that he understood the trends in the dairy industry but that he didn’t think they were an improvement.“Having 10 farms milking 50 cows is hugely better for local economies than one 500-cow farm,” he said. “Consolidation seems to be the name of the game. The local hardware store closes and you have a Super Walmart.”Mr. Mehuren and other Maine farmers are hoping they will be able to sell their milk to Organic Valley or Stonyfield Organic, the only other commercial buyers for organic milk in the state.Cliff Bragg, left, with his father, Wayne, at their family’s organic dairy farm in Sidney, Maine.Tristan Spinski for The New York TimesThree generations work the farm, which the Bragg family founded in 1772.Tristan Spinski for The New York TimesHorizon’s extending contracts until 2023 was little consolation to Judy Smith on More Acres Farm in East Dixfield. Ms. Smith, 68, and her husband, Leslie, 77, had been milking 30 cows and selling to Horizon. They had been hoping to transfer the farm to their 40-year-old son. But Horizon’s August letter ended that dream. The uncertainty seemed too great, and they sold the dairy herd.“We were between a rock and a hard place,” Ms. Smith said. “We were heartbroken when those cows had to go, I’ll tell you what. They were more than just milk cows to us.” More

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    Crunch at Ports May Mean Crisis for Family Farms

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    It’s just 60 miles from El Dorado Dairy in Ontario, Calif., to the nation’s largest container port in Los Angeles. But the farm is having little luck getting its products onto a ship headed for the foreign markets that are crucial to its business.The farm is part of one of the nation’s largest cooperatives, California Dairies Inc., which manufactures milk powder for factories in Southeast Asia and Mexico that use it to make candy, baby formula and other foods. The company typically ships 50 million pounds of its milk powder and butter out of ports each month. But roughly 60 percent of the company’s bookings on outbound vessels have been canceled or deferred in recent months, resulting in about $45 million in missed revenue per month.“This is not just a problem, it’s not just an inconvenience, it’s catastrophic,” said Brad Anderson, the chief executive of California Dairies.A supply chain crisis for imports has grabbed national headlines and attracted the attention of the Biden administration, as shoppers fret about securing gifts in time for the holidays and as strong consumer demand for couches, electronics, toys and clothing pushes inflation to its highest level in three decades.Yet another crisis is also unfolding for American farm exports.The same congestion at U.S. ports and shortage of truck drivers that has brought the flow of some goods to a halt has also left farmers struggling to get their cargo abroad and fulfill contracts before food supplies go bad. Ships now take weeks, rather than days, to unload at the ports, and backed-up shippers are so desperate to return to Asia to pick up more goods that they often leave the United States with empty containers rather than wait for American farmers to fill them up.The National Milk Producers Federation estimates that shipping disruptions have cost the U.S. dairy industry nearly $1 billion in the first half of the year in terms of higher shipping and inventory costs, lost export volume and price deterioration.“Exports are a huge issue for the U.S. right now,” said Jason Parker, the head of global trucking and intermodal at Flexport, a logistics company. “Getting exports out of the country is actually harder than getting imports into the country.”Agriculture accounts for about one-tenth of America’s goods exports, and roughly 20 percent of what U.S. farmers and ranchers produce is sent abroad. The industry depends on an intricate choreography of refrigerated trucks, railcars, cargo ships and warehouses that move fresh products around the globe, often seamlessly and unnoticed.U.S. farm exports have risen strongly this year, as the industry bounces back from the pandemic and benefits from a trade deal with China that required purchases of American agricultural products. Strong global demand for food and soaring commodities prices have lifted the value of U.S. agricultural exports more than 20 percent over last year.Still, exporters say they are leaving significant amounts of money on the table as a result of supply chain problems. And many farmers are now struggling to keep up with soaring costs for materials like fertilizer, air filters, pallets and packaging, as well as find farmhands and drivers to move their goods.A survey by the Agriculture Transportation Coalition, which represents exporters, found that 22 percent of foreign agriculture sales on average were being lost as a result of transportation challenges.Delays at ports have particularly hurt products that move in corrugated metal containers, like cheese, butter, meat, walnuts and cotton.One company, Talmera USA Inc., which exports milk powder, cheese and dairy ingredients like lactose, had a shipment delayed so many times that its load finally wound up on the original vessel it was assigned to after the ship had left the port in Seattle, circumnavigated Asia and returned weeks later.Mr. Anderson said that his company’s customers were beginning to look to suppliers in Europe, New Zealand and other countries for their purchases, even though the U.S. dairy industry has a reputation for high quality. “Frankly none of that matters to the customer if we can’t get it there,” he said.Part of the problem is that shipping companies are able to charge far more to ferry goods from Asia to the United States than vice versa, so they don’t want to waste time waiting for a less lucrative load departing from the West Coast.According to data from Freightos, an online freight marketplace, the cost to ship a 40-foot container from Asia to the U.S. West Coast soared to $18,730 in November — more than 17 times what it cost to make the reverse trip.As a result, more than 80 percent of the 434,000 20-foot containers exported out of the Port of Los Angeles in September were empty — up from about two-thirds in September 2020 and September 2019.Mario Cordero, the executive director of the Port of Long Beach, said that the price differential encouraged shipping companies to get their containers “back to Asia A.S.A.P. so you can load it with import items.”“And unfortunately the American exporter is impacted by this approach,” he said.El Dorado is part of one of the nation’s largest cooperatives, California Dairies, which manufactures milk powder for factories in Southeast Asia and Mexico.Adam Perez for The New York TimesThe company ships more than a thousand 20-foot containers of dairy products out of the country each month.Adam Perez for The New York TimesIn recent months, up to 60 percent of the company’s bookings on outbound vessels have been canceled.Adam Perez for The New York TimesA supply crunch in the trucking industry is also affecting farmers, as truckers find better pay and hours delivering holiday gifts than hauling soybeans and swine.Tony Clayton, the president of Clayton Agri-Marketing Inc., in Jefferson City, Mo, exports live animals around the world for breeding. He said the company is competing at both ports and airports for space for dairy heifers, swine and goats. And many livestock truckers have found that they can earn more hauling dry freight.“It is a challenge,” Mr. Clayton said. “We’re all fighting and competing for those people who will sit behind the steering wheel.”The infrastructure bill that Congress passed on Nov. 5 aims to remedy supply chain backlogs by investing $17 billion in American ports, many of which rank among the least efficient in the world.The bill also includes funding to improve railways, roads and waterways, as well as a provision to fund pop-up container yards outside the Port of Savannah, in Georgia, to ease congestion. It will also lower the minimum age of truckers who can cross state lines to 18, in a bid to attract more workers to a profession that has become a key bottleneck in supply chains.In September, the U.S. Department of Agriculture also announced it would dispense $500 million to help farmers deal with transportation challenges and rising materials costs.John D. Porcari, the Biden administration’s port envoy, said farm exports are a “primary focus” for the administration, and that the White House was trying to encourage private sector companies, including ocean carriers, to get the supply chain moving.The White House held a round table with agricultural exporters on Friday, and Mr. Porcari plans to visit the Port of Oakland, in California, one of the biggest export points for agriculture, this week.“We know that some sectors have had more trouble than others, and we’re working to eliminate those bottlenecks,” Mr. Porcari said in an interview. While agricultural exporters have welcomed long-term infrastructure investments, they remain concerned about more immediate losses. Mr. Anderson — whose company is responsible for nearly 10 percent of America’s milk supply and a fifth of American butter production — said he had been frustrated that much of the public dialogue from the government and in the media had focused more on consumer imports.“Are we going to get toys for Christmas? Are we going to get chips for automobiles? We think those are real concerns and they need to be talked about,” he said. “What’s not being talked about is the long-term damage being done to exporters in the world market and how that’s going to be devastating to our family farms.”El Dorado is a third-generation dairy. Delayed and canceled shipments are having a devastating impact on farmers’ finances.Adam Perez for The New York TimesIncreased costs for gasoline, trucking and warehouse storage are also contributing to food price inflation.Adam Perez for The New York TimesIt has been difficult for farmers, who must negotiate contracts in advance, to pass on higher costs for fuel, fertilizer, pallets and other products.Adam Perez for The New York TimesAgricultural exporters have had to get creative to bypass congested ports and warehouses. Mr. Anderson said his company was considering rerouting some shipments more than a thousand miles to the port in Vancouver.Mike Durkin, the chief executive of Leprino Foods Company, the world’s largest maker of mozzarella cheese, told House lawmakers this month that nearly all of the company’s 2021 ocean shipments had been canceled and rebooked for a later date. More than 100 of the company’s bookings this year had been canceled and rebooked 17 times, Mr. Durkin said, equating to a five-month delay in delivering their cheese.In the interim, Leprino Foods has had to pay to hold its cheese in refrigerated containers in carrier yards, racking up an additional $25 million in fees this year. More