Big Organic Cries “Foul!” in Wake of Weekly Story on Earthbound Sale to WhiteWave.December 18th, 2013
Monterey County Weekly
By Mark C. Anderson
First born-in-Carmel Valley mom-and-pop Earthbound Farm sold to WhiteWave for $600 million. That was last Monday.
I promptly wondered if that was good (organic for everyone!), bad (corporate control of organic giants can’t be healthy) or a bit of both.
“Organic going big business and mainstream is bittersweet not just because it raises issues about scalability and accountability, but because the origin story of EBF is so homespun and local,” I wrote in a blog post that linked to my largely enthusiastic food coverage over the past half decade.
Weekly food contributor Ari LeVaux quickly dove into research on the buyer, WhiteWave, and its parent, Dean Foods.
The findings weren’t all pleasant, and included the fact that Dean and WhiteWave have lowered their organic standards on items like their Silk soy milk and have pushed out past partners after acquiring their companies.
Then it really got interesting, as Big Organic responded with its own thoughts.
First Aurora Organic Dairy and Director of Communications Sonja Tuitele took exception with the piece, specifically this paragraph:
One-time Horizon supplier, Aurora Dairy, has had a long history of complaints. In 2007 Aurora was found by U.S. Department of Agriculture investigators to have willfully committed 14 violations – some with multiple instances – of federal organic standards. Aurora faces 19 class action and consumer fraud lawsuits in federal court, according to Cornucopia Institute, an organic watchdog group.
Their reply included this:
Those lawsuits challenging our organic status were dismissed both at the District and Appellate Court level. What remained were some challenges to marketing claims on customer packaging that did not have anything to do with organic production methods. Those remaining claims were settled with no admission of wrong-doing by Aurora Organic Dairy.
We turned to organic watchdogs Cornucopia and asked them to weigh in.
Co-director Mark Kastel had this:
Career civil servants at the USDA recommended that they be decertified and barred from organic commerce. They lawyered-up and negotiated a favorable settlement with the USDA. But that does not remove from the public record their initial findings. They were still sanctioned and forced to materially change their operation (reducing their 4500-cow confinement dairy and platform, Colorado to about 800 cows and they were under a one-year probation as part of the agreement).
I think the settlement was for $8 million. And yes, as is customary, they admitted no guilt. But outfits don’t payout $8 million in less there is meritorious complaints against them and they feel vulnerable if they ended up litigating the dispute. The plaintiff’s attorneys were fine with the settlement because they got the cash payout for their clients. They were not enforcement agents. They were looking after the interest of their clients.
Earthbound also took exception to the piece.
Cabaluna was most troubled by the paragraph about the Goodmans’ ongoing role with WhiteWave:
What do you mean by this: “It isn’t clear at this point that the Goodmans want to stay on?” I know you didn’t speak with Myra or Drew. I talk to them every day and they are excited about continuing as advisors.
A final note from Cabaluna:
Your calculation about what they will pocket is way off. I can’t give you a figure but know that it doesn’t take into account many, many factors.
LeVaux’s calculation—that they would make $60 million on the sale—was labeled as an estimate, and based on the fact that the Goodmans own 10 percent of Earthbound, and it sold for $600 million.
The Weekly did print that HM Capital bought in to Earthbound in 2010, when it was actually 2009. We regret the error.