WASHINGTON, DC: Aurora Dairy, based in Boulder, Colorado, the nation’s largest organic dairy producer, is once again facing allegations of improprieties. Aurora had previously been found in “willful” violation of multiple federal organic standards by USDA investigators in 2007.

This week an organic industry watchdog, The Cornucopia Institute, filed a formal legal complaint with the USDA in Washington alleging that one of the five industrial-scale dairies operated by Aurora, its High Plains dairy near Kersey, Colorado, is failing to graze their dairy cattle as required by the federal organic standards.

Family dairy farmers have recently appealed directly to USDA Secretary Tom Vilsack for swift enforcement action in response to giant corporations “gaming the system” and squeezing them out of business. They claim they are being placed at a competitive disadvantage. A national surplus of organic milk – largely created by factory farm dairies – and magnified by a soft economy – has been driving down prices paid to farmers.

“Here we have an industry where 1800 family farmers, and the reputable organic brands they supply, are continuing to have their economic survival imperiled by this $100 million scofflaw that has been allowed to continue in operation,” said Mark A. Kastel, Senior Farm Policy Analyst for Cornucopia.

Aurora’s milk is sold to many of the nation’s largest grocery chains, including Wal-Mart, Target, Safeway, Costco and others, for their cheap store brand label organic milk.

Aurora is allegedly primarily confining their dairy cows in giant barns and pens instead of being allowed to graze on fresh forage, and exhibit their natural instinctive behaviors, as the federal law mandates. When the cows are let outside they often only have access to substandard crops that are planted on an annual basis, and wither in the desert-like heat, instead of more hardy perennials that stand up to continual grazing throughout the growing season.

In response to a previous legal complaint filed by The Cornucopia Institute, in 2006, career staff at the USDA found that Aurora was in violation of 14 tenets of the organic regulations including confining their cattle to feedlots, instead of grazing, and bringing thousands of illegal conventional cows into their organic operation.

“Although investigators found that Aurora had perpetrated the greatest scandal in the history of the organic industry, Bush administration officials, who ran the USDA at the time, let the giant corporation off with minor adjustments to one of their five operations and placed them on a one-year probation,” Kastel added. In addition to being subject to decertification, the dairy could have faced millions of dollars in penalties.

Cornucopia had filed a subsequent complaint in 2007, outlining evidence that Aurora’s High Plains dairy was violating the law. At that point the Bush administration, through the USDA’s Agricultural Marketing Services, informed the farm policy research group that their concerns would be investigated and integrated into Aurora’s one-year probation monitoring.

“After recently scrutinizing USDA documents, obtained through a freedom of information request (FOIA), we are refiling these serious charges now, including making additional first-hand witness testimony available, because there is no evidence that the Department followed through with their commitment to investigate what Aurora has represented as a model pasture-based dairy,” said Will Fantle, research director of The Cornucopia Institute.

The controversy surrounding the legality of operating giant factory farms, each milking 2000-7000 cows, principally owned by Aurora or Dean Foods for their Horizon brand, has come to a head this year as competitors in the marketplace have been forced to lower prices paid to family-scale farmers, institute cut backs on production or even cancel their contracts with some dairy producers.

“This is an unmitigated disaster for many family farmers who are now facing no market for their organic milk and possibly losing their farms because of the softening economy and the overload of milk coming from these giant factory farms,” said Kathie Arnold of Truxton, NY, an organic dairy farmer milking 130 cows.

Meanwhile, USDA Secretary Vilsack recently met in Wisconsin with organic family farmers and their advocates who appealed to the new Obama administration to “cleanup the mess they inherited” at the USDA’s National Organic Program.

Farmers were heartened by the Secretary’s commitment to ramp-up enforcement at the National Organic Program and appoint officials there who will share the values of organic community participants. “We are focusing on rules that will level the playing field so that small and medium-size producers have a fair shot,” Vilsack said, and added: “I commit to you that we will enforce the [current] rules.”

The Bush administration received wide criticism in the organic industry for not only letting Aurora Dairy off the hook without any substantive penalties but also for their lax approach to investigating alleged improprieties by industry giant Dean Foods and its Horizon label. A large percentage of the Horizon milk comes from concentrated animal feeding operations or CAFOs. In 2006 the largest dairy operation supplying Horizon, with 10,000-cows, was decertified, but according to FOIA documents the 8000-head, corporate-owned Horizon dairy in Idaho has never been investigated.

“It is inexcusable that the past administration did not protect the vast majority of ethical dairy marketers and the family farmers we partner with,” said Ned Mac Arthur, President of Pennsylvania-based Natural Dairy Products Corp., bottler of Natural by Nature brand organic milk. “We are now placing our hope and trust in the new Obama/Vilsack administration at the USDA.”

“The good news that we continue to tell organic consumers is that based on our in-depth industry research 90% of all namebrand organic dairy products on the market are produced with true integrity,” Kastel affirmed. “No matter where someone lives in this country there are many wonderful brands of organic milk, cheese, butter, yogurt and ice cream that conform to not only the letter of the law but the spirit of what has made organics such a successful and fast-growing segment of our nations’ food supply.”

Cornucopia also asked the USDA to reopen investigations against the two NOP accredited certifiers associated with Aurora. The complaint alleges that the illegal activities identified by The Cornucopia Institute and the USDA at Aurora were overt and should have been uncovered by the certifiers, and the state of Colorado’s organic program and Quality Assurance International (QAI), if they had been fulfilling their oversight responsibilities.

USDA staff had previously recommended suspending the State of Colorado’s right to certify organic livestock facilities. Like Aurora itself the USDA entered into a consent agreement with the state of Colorado demanding improved staff training and understanding of organic livestock certification requirements.

A copy of the formal legal complaint alleging inadequate access to pasture at Aurora’s High Plains dairy, near Kearney, Colorado can be found at:
http://www.cornucopia.org/Aurora/AuroraHighPlainsComplaint_8-2009.pdf

MORE:

Photos of the High Plains dairy, and other factory farms owned by Aurora and Dean Foods, can be viewed in the photo gallery on the Cornucopia website: http://www.cornucopia.org/photo-gallery/

A 10 minute video, produced by documentarian Greta Wing Miller, of USDA Secretary Tom Vilsack’s appearance, listening to organic farmers heartfelt appeals for enforcement help, and his powerful on-point response, can be accessed in the video gallery on The Cornucopia Institute website: http://www.cornucopia.org/category/video-gallery/

Organic consumers recognizing that they had been defrauded when buying the milk produced by Aurora have taken the matter into their own hands by suing the giant dairy manufacturer and a number of major retailers that sell their milk, including Wal-Mart, Target, Costco and Safeway. Aurora is the largest private-label organic milk supplier in the United States. The class-action consumer fraud litigation is still embroiled in federal court.

Cornucopia, WI “The Cornucopia Institute has sent a formal request to the Chief of the USDA’s Dairy Promotion and Research Program, requesting that the program collect almost three years’ worth of unpaid dairy promotion “check-off” assessments from the Colorado-based Aurora Dairy.

Since February 2005, the USDA has exempted organic dairy producers from paying the 15 cents per hundredweight assessment that it requires of all conventional dairy producers. Aurora initially claimed the organic exemption, but following a comprehensive investigation of improprieties, the USDA’s national organic program found that its milk did not qualify as organic.

The exemption rule states that a producer must not only be certified organic, but must also “handle or market only products that are eligible for a 100 percent organic product label under the NOP as described in 7 CFR part 205.”

The investigation by the Agricultural Marketing Services Compliance and the National Organic Program concluded that Aurora Dairy “sold, labeled and represented milk as organically produced, when such milk was not produced and handled in accordance with the National Organic Program” regulations as described in 7 CFR part 205 from December 5, 2003, until April 16, 2007.

“The rules leave no room for doubt: if you don’t produce milk that meets the legal requirement to be certified as organic, you cannot claim to be exempt as an organic producer,” said Mark Kastel, codirector of The Cornucopia Institute, a farm policy group based in Wisconsin. “Aurora has already profited by charging organic consumers an unjustifiable price premium for milk that was not produced organically. Now it appears that they have also profited by claiming an exemption from the check-off program that was not their legal right to take. We are asking the USDA to rectify this situation,” Kastel added.

Cornucopia has asked that the USDA calculate the exact amount that Aurora Organic Dairy owes the Dairy Promotion and Research Program, and be charged retroactively for these unpaid assessments. It is likely that if the USDA concurs with Cornucopia’s conclusion, Aurora will be forced to pay hundreds of thousands of dollars in money now in arrears.

“Under USDA rules and most consumers” perceptions, dairy products are either organic or not, it is a case of black or white ” there are no shades of gray,” said Pete Hardin, the editor/publisher of The Milkweed, a monthly milk marketing report. “If Aurora was in multiple violation of USDA rules, then in my opinion these products were not organic and Aurora should forfeit its exemption from paying the dairy promotion check-off.”

Aurora, which operates five industrial-scale dairies in Colorado and Texas, was found by federal regulators to have “willfully” violated at least 14 provisions of the organic regulations. “Organic dairy farmers and consumers around the country were incensed that the serious violations went unpunished by the USDA,” Kastel added. This month, at least six class-action lawsuits around the country were filed claiming consumer fraud by Aurora.

The Aurora Dairy is the largest processor of organic private-label milk in the country and supplies approximately 20 grocery chains including Wal-Mart, Costco, Target, Wild Oats, and Safeway.

Aurora Organic Dairy near Gill will be allowed to continue operations despite a substantial fly problem bothering neighbors.

The Board of Weld County Commissioners decided on a split vote Wednesday to continue a hearing until August 2008 that could revoke the dairy’s special permit to operate the dairy with 4,500 cows.

Of central concern to dairy neighbors is a substantial fly problem that they say has inundated their properties and homes. Commissioners are giving the dairy until August to absolve the pest situation.

“I would like this dairy to disappear,” said Wendy Rogers, who owns a farm next to the dairy. “The dairy is too big to manage naturally.”

Rogers said the smell of natural insecticides that Aurora has been using on homes and property to kill the flies near the dairy has even made her sick.

“I’m disappointed in the county commissioners,” Rogers said after the four-hour hearing. “I thought they were there for us.”

Aurora officials admitted the problem and apologized to neighbors, but appealed to the commissioners to give them a second chance to rectify the pest situation. The farm is run by Scott and Brad Cockroft, and is called the High Plains Dairy.

“We’ve put systems in place so it will not happen again,” said Lee Sachnoff, lawyer for Aurora, which has its headquarters in Boulder. “We’re serious about this problem.”

Aurora officials said an inexperienced employee spread manure over the wrong field because the dairy’s new compost heap wasn’t working properly.

Some commissioners were in favor of revoking the permit from Aurora and others were in favor of reducing the number of cattle Aurora could have at the farm.

“I’m still in favor of immediate revocation,” said Commissioner Bill Jerke. “It’s pretty clear that they’ve burned some bridges with neighbors — they’re burning some bridges in this room today.”

Commissioner Bob Masden said the commissioners have never had to consider revoking a dairy permit like this before and called for a reduction of cows at the dairy.

“I know it doesn’t fit your financial model,” Masden said. “You guys created the situation; you guys get it fixed.”

Even if the commissioners revoke the permit, Aurora could still have more than 3,000 head of cattle on the land, though Aurora officials said it would cost the company millions of dollars.

Marc Peperzak, CEO of Aurora, said reducing the number of cattle at the dairy would be “impossible.”

“When I say millions, I’m not exaggerating,” Peperzak said. “It’s grossly unfair. It’s not right.”

Peperzak said the company has hired a “world-class” entomologist from Kansas to help mitigate the fly problem and added that Aurora is trying to help neighbors get rid of flies with spraying.

Laurie Exby, environmental specialist with the Weld Department of Health, said Aurora has to prove that they can remedy the problem.

“Their actions will speak louder than their words if they can do it,” she said.

What’s Next?

The Board of Weld County Commissioners will consider revoking Aurora’s organic dairy farm permit for a facility near Gill at 10 a.m. Aug. 13 in the Weld Centennial Center, 915 10th St.

Rocky Mountain News
By Joyzelle Davis

PLATTEVILLE, CO – Not far from the truck stops that mark the I-25 turnoff to Longmont, Colorado’s largest organic dairy spreads across 500 acres.

Some of the farm’s 1,075 black-and- white Holsteins amble across a pasture while others in open-air paddocks chew on a moist mixture that includes alfalfa hay, soy hulls and mineral supplements. Throughout the day, semi- trucks shuttle into a state-of-the-art plant where the milk is pasteurized, packaged and prepared to be sent to Wal-Marts and other supermarkets across the country.

Aurora Organic Dairy’s sprawling Platteville farm – one of five the company operates – might not be quite the bucolic image of a family farm that shoppers envision as they pay sometimes twice as much for organic milk. But founders of the nation’s biggest private-label organic milk provider say that such large facilities are necessary to capture economies of scale that lower prices and spread the ecological benefits of organic farming practices.

“If we really want to change what we do in agriculture, we have to be able to work with all sizes of customers and make organic milk available to people throughout the country and not just at high-priced specialty stores,” said Mark Retzloff, Aurora’s president.

The Boulder-based company’s critics contend that Aurora’s practices are jeopardizing the livelihood of the very small-scale family farmers that started the organic dairy movement. They charge that Aurora’s large farm simply pays lip service to organic ideals in order to capitalize on the premium prices consumers are willing to pay for organic milk.

Among other things, the critics allege that Aurora’s farms house too many cows and are located in inhospitably arid climates that prevent cows from grazing properly.

“It’s a bastardized system,” said Mark Kastel of the Cornucopia Institute, a Wisconsin-based farm policy research group that has filed several complaints against Aurora with regulators. “Their marketing secret is taking all of the good will developed by hundreds of farmers and applying it to factory farming.”

Retzloff, who has a long history as an organic-food entrepreneur, countered that many of the statements of Aurora’s critics are “nasty and filled with falsehoods.”

This week, Cornucopia announced that two lawsuits seeking class-action status for consumers in 27 states were filed in Denver and St. Louis for allegedly misleading consumers by selling milk labeled as organic though the dairy doesn’t meet federal standards. Aurora officials responded that their organic certifications are valid and there’s no basis to the claims.

The vitriolic dispute in August resulted in Aurora agreeing to make major changes in its operations after the U.S. Department of Agriculture threatened to revoke its organic certification for violations including not allowing lactating cows daily access to pasture during the growing season.

As part of the agreement, Aurora agreed to cull the size of its Platte- ville herd to about 1,075 milking cows, down from 2,100 in August and 4,200 about 18 months ago. The dairy will also add 400 acres of pasture by razing three-quarters of the farm’s existing paddocks and buildings.

Even with the changes, Aurora remains at the heart of the contentious debate over what constitutes organic, as large companies, including Wal-Mart and General Mills, crowd into the profitable market.

Milk leads organic sector

Organic milk is one of the fastest-growing segments in the already fast-growing organic market. U.S. retail sales of organic dairy products totaled $2.14 billion in 2005, the most recent data available, up from 24 percent in 2004, according to the Organic Trade Association. JP Morgan predicts that the organic dairy sector will post sales of $3.5 billion by 2010.

Cows that produce milk sold as organic must be free of hormones and antibiotics and fed chemical-free organic feed. But federal rules are silent on how pastoral an existence the animals are supposed to have. They say nothing about how much time cows should spend in the fields as opposed to feedlots. The USDA requires only that the cows have access to pasture.

Aurora’s Platteville farm contains 1,075 milking cows on 500 acres. While Aurora doesn’t have a specific percentage for how much of its cows’ diet comes from grass instead of feedlot grain, its goal is to have pasture comprise at least 30 percent during the typical May through September pasture season, said Clark Driftmier, Aurora’s vice president of marketing. Aurora milks its cows two or three times a day.

By comparison, Jim Greenberg’s central Wisconsin dairy is considered large for a family- run farm with 500 cows on 1,000 acres of pasture. His cows receive 70 percent of their diet from grass during grazing season, which typically lasts from the first of May to the first of November. He milks his cows twice a day, saying three times a day would move them off the pasture too much.

Aurora produces the same amount of milk as 300 average Midwestern dairy farms, said Greenberg, who employs five family members and eight others.

Since Aurora started, “I’ve heard more people voice skepticism about organic milk and how well the standards are enforced,” he said. “They say if it’s going on at such a large scale, people lose confidence whether it’s really organic.”

For Aurora’s Retzloff, that criticism over scale goes to the heart of the controversy, and he says the company doesn’t get any credit for the benefits its size can bring. He points to Aurora’s efforts to recycle the farm’s plant and water waste, use wind power at all of its farms and offices, and offer bilingual classes, health benefits and subsidized housing for farm workers.

Organic veterans

Most of Aurora’s top executives aren’t newcomers to the organic food business. Retzloff co-founded pioneering Boulder natural-foods store Alfalfa’s in the 1970s, which was later purchased by Wild Oats. He went on to help start Horizon Organic Dairy in the early ’90s along with three other co-founders, including conventional dairy farm owner Marc Peperzak, and he helped turn around Rudi’s Organic Bakery.

Horizon revolutionized the organic dairy industry, selling organic yogurt, a variety of cheeses, milk and butter plastered with its “happy cow” mascot waving the organic flag. The Boulder- based company, which was later purchased by Dean Foods, quickly became the largest provider of organic dairy products in the country and the first company to successfully launch a national organic dairy brand.

Horizon also drew the ire of small farmers for its large-scale farming practices.

The supermarkets that Horizon shipped its milk to were constantly asking whether they could provide private-label milk. At the time, doing so would’ve been impossible – organic cows were so scarce that Horizon needed every ounce for its own brand.

But Retzloff and Peperzak saw an opportunity. As much of 70 percent of the conventional milk market was sold through generic store brands, while the private-label milk market hardly existed. At the same time, stores like Safeway, Whole Foods and Target were focusing on building their own private-label organic lines to make organic products more affordable.

So in 2003, Peperzak decided to start Aurora Organic as a dairy that would exclusively produce and package milk for supermarket customers, never using its own label.

Aurora was created to “focus solely on the red-headed stepchild” of private-label organic, said Driftmier, who also worked with Horizon.

Helped by $18.5 million in seed money from the investment arm of the Harvard University endowment fund, Peperzak underwent the yearlong transition process to convert his conventional dairy farm in Platte- ville to a certified organic dairy. Before the first carton of milk came off the line in 2004, the wait list of customers was far longer than the number of companies it could actually supply, Driftmier said.

“What Aurora’s done is studied the market quite well,” said William Wailes, head of animal sciences at Colorado State University. “Sometimes, the price needs to come down for people to buy more.”

Within the next three years, Aurora added another four dairy farms in Colorado and Texas and now supplies about 20 grocery stores and posts annual revenues above $100 million. As the company adds more and more cows, it has expanded into new products in recent months, including gallon-sized jugs of milk. Retzloff said the company plans to eventually move into the largely untapped market for restaurants, schools and other institutions, which purchase nearly half of the conventional milk produced.

Big stores among clients

As a private-label supplier, Aurora Organic says it can’t discuss its clients. But among those publicly named are Wal-Mart, Target, Costco, Safeway and Wild Oats.

Spokespeople for Target and Safeway say they’ve received few if any customer complaints in the wake of the USDA’s action and remain confident in Aurora’s USDA certification.

“We are confident in our relationship with Aurora based on the fact the USDA upheld their organic status,” said Brie Heath, a spokeswoman for Target, which sells Aurora’s milk under its Archer Farms brand.

Aurora’s Driftmier said the dairy’s customers have been “supportive.” The only customer Aurora is losing is Wild Oats, following Whole Foods’ purchase of the natural foods market in August. Whole Foods is in the process of replacing Wild Oats’ private-label milk with Whole Foods’s 365 Everyday Value private-label brand, which comes from a cooperative of small family farms.

Aurora produces all of its own milk and collects, pasteurizes and packages it all at its Platte- ville site. That’s a change from Horizon, which purchases milk from smaller organic dairies, including Greenberg’s, to supplement its own production.

Family farms like Greenberg’s have been on the decline for the past 50 years, squeezed by giant farming operations, and the only way Greenberg and many others have been able to stay in business is by finding a niche like organic farming. While there’s enough demand for organic milk to keep everyone busy, they’re worried that large farms like Aurora might eventually lead to overproduction.

“If organics gets exploited, there will be no small family farmers left,” said Steve Pechacek, founder of milk and cheese provider Organic Choicewho formerly ran a 100-cow dairy farm in Wisconsin. “It will only be the large industrial farms.”

davisj@RockyMountainNews.com or 303-954-2514

Fortune
By Marc Gunther, Fortune senior writer

(Fortune) – Mark Retzloff, a pioneer of the $16.7 billion organic food industry and president of Aurora Organic Dairy, lobbied for years for strict government regulation of organics. He got what he wanted – and then some.

Two months after Aurora, a Colorado-based company that makes store-brand organic milk for big retailers like Wal-Mart, Costco, Target and Safeway, settled U.S. Department of Agriculture allegations that its milk didn’t meet national organic standards, the war of words between Retzloff and his foes shows no sign of abating.

Retzloff is threatening to sue critics who claim that Aurora committed consumer fraud.

Much to its adversaries’ dismay, Aurora didn’t pay any fines when it settled with the USDA.
“We don’t think we did anything wrong,” says Retzloff.

But critics counter that Aurora is hardly a victim – and scoff at Aurora’s efforts to silence them. “We don’t know of any scandal in the history of the organic industry that approaches the magnitude of this one,” says Mark Kastel, co-founder of The Cornucopia Institute, an advocacy group that filed complaints against Aurora that led to the USDA action this spring.

“These were serious violations,” continues Kastel. “The scale was tremendous. And they were willful.”

An organic milk ripoff

Yes, passions are running high in the lucrative organic milk business. Both Marks – Retzloff and Kastel – say they want an organic food industry that benefits consumers, farmers and the environment. But they can’t agree on what the industry should look like.

Retzloff wants the business to get big, fast, in order to capitalize on economies of scale, bring down prices and spread the environmental benefits of organic farming far and wide. “Organic milk shouldn’t cost so much that only elites can afford it,” he says.

Kastel, meanwhile, is arguing for new standards that would better protect small-scale, family farmers – many of whom started the organic movement in the 1960s. “It’s cheaper to produce milk on big farms,” he concedes, and “nothing in the organic law says you can’t produce milk in Colorado and ship it to Portland, Maine, stupid as that is. But environmentally, it’s a sellout.”

In theory, there should be enough business for everyone. Organic dairy is expected to be a $3.5 billion business by 2010, according to J.P. Morgan. Of that, $1.8 billion will come from organic milk sales, double today’s level.

The man who brought organics to Main Street

Retzloff, a big and bald 59 year-old, has made a lot of money in organics. He helped start two natural supermarket chains and co-founded Horizon Organic Dairy, which created the first national brand of organic milk before it was acquired by Dean Foods (Charts, Fortune 500).

“I was an environmental activist as a student at the University of Michigan in the 1960s,” he told me last week at the Natural Products East Expo in Baltimore. “Ever since then, I’ve been a huge advocate of changing the way we do agriculture in the U.S., one acre at a time.”

In 2003, Retzloff and Marc Peperzak, one of his partners at Horizon, started Aurora with backing from Harvard University’s endowment, among others. They saw a business opportunity in selling store brands of organic milk. While store brands of conventional milk account for more than 50% of milk sales, store brands (like Safeway’s (Charts, Fortune 500) O-Organic) register less than 10% of organic milk sales.

Aurora has done well. Annual sales this year will top $100 million. The firm owns and operates farms in Colorado and Texas, as well as its own processing facilities.

Last spring, though, the USDA cited 14 “willful violations” of organic standards and threatened to revoke Aurora’s organic certification. Among other things, the USDA said that Aurora cows did not get sufficient access to pasture and that cows fed conventional grain were introduced too quickly into the organic herd.

Aurora settled the USDA charges in August. Without admitting any wrongdoing, the company agreed, among other steps, to reduce the size of its herd at a farm in Plattsville, Colorado, from 4,200 to 1,000 cows.

Read more on the Green Biz

Retzloff says current rules are too vague about how much access to pasture is required, and that other violations were either trivial or committed by a supplier, which the company no longer uses. “People are saying you’re not putting your cows out to pasture,” he says. “Well, we are. Just not the way you’d like us to.”

While Retzloff feels victimized by the USDA charges, others say the company got a mere slap on the wrist.

The Federation of Organic Dairy Farmers, a.k.a. FOOD Farmers, says the agreement between USDA and Aurora sets an “unacceptable precedent” because “major, multiple violations occurring over several years” did not lead to any penalty. For his part, Cornucopia’s Mark Kastel calls the consent agreement “a sweetheart deal.”

It’s not clear whether this war of words is a struggle for the soul of the organic milk industry, a battle for market share, or both. Don’t be surprised if it finds its way into a courtroom before long.

Minneapolis Star Tribune
By Matt McKinney

Ever wonder how Target Corp. could sell its organic milk for dollars less than other stores? Turns out the milk might not have been truly organic after all.

Last month, the U.S. Department of Agriculture (USDA) said it had threatened to revoke the organic status of Aurora Organic Dairy, a Colorado farm that supplies Target and Wal-Mart, among others, with its organic milk.

The government found that from late 2003 until this spring Aurora, under retailer labels such as Target’s Archer Farms, essentially sold conventional milk slapped with an organic label.

Both Aurora and Target defend the product as organic, noting the company was allowed to keep its organic certification.

At its heart, the government slap is about how to care for an organic cow. But it’s also a display of how the ever more mainstream appeal of the $16.7 billion organics market has pressured farms to adopt large-scale efficiencies common in conventional operations. But often those efficiencies — such as herd sizes that number in the thousands and the use of troughs to feed animals rather than grazing — clash with the tenets of the organic movement.

Disputes are not unusual in the organics industry, created by Congress in 1990 through the Organic Foods Production Act, as the nascent movement struggles to define itself.

An earlier lawsuit forced the USDA last year to change the way conventional cows are converted to organic. And a large California dairy that had 10,000 cows, about a third of them deemed organic, saw its certification suspended earlier this year by certifier, Quality Assurance International, for skirting the organic rules. That dairy, Vander Eyk, has since vowed to reapply for certification.

That case, and the Aurora one, were brought to the attention of regulators by the Cornucopia Institute, a fledgling group based in northern Wisconsin that since 2004 has charged itself with protecting the integrity of the nation’s organic food supply.

Cornucopia filed two complaints against Aurora in 2005, peppering them with photos of the size of Aurora’s herd and showing the cows living on barren fields. Since Cornucopia has waged a public-relations battle to force Aurora to downsize its operations. Cornucopia executive director Mark Kastel contends that a 5,000-head dairy farm cannot adequately pasture its cows, that it’s just not possible to move that many animals back and forth from pasture to milking barn twice or three times a day.

Aurora recently fought back, threatening to sue the watchdog group, according to Kastel, who provided a copy of a letter from Aurora.

The Aurora case reached a crescendo last month when the USDA revealed that it had threatened to revoke Aurora’s organic status for failing to provide enough pasture for its cows and selling conventional milk as organic, among other things. In a letter sent April 16 and made public last month, the Agricultural Marketing Service, a USDA agency, wrote that it found 14 “willful violations” of organic rules, from inadequate pasture to nonorganic bedding to sending organic cows to conventional farms for a period before retrieving them for milking.

The farm avoided a total revocation of its certification by signing a consent agreement last month that put its operations on probation for one year, with the possibility of losing organic accreditation for five years as punishment for further violations.

The farm agreed to make changes, adding 75 acres of pasture, for a total of 400 acres, at its Platteville, Colo., farm, and to shrink herd size from 4,200 cows to 1,070, according to a company spokesman. Aurora will also allow the organic certification of one of its facilities in Greeley, Colo., to expire.

Aurora is billing the agreement as a dismissal of the USDA case, a sentiment Target echoed this week in response to questions.

Target is confident

“Target is confident that our Archer Farms Organic Milk is organic,” said spokeswoman Brie Heath.

Cornucopia wants retailers to better police their organic food supply, and publishes a “milk scorecard” on its website that grades each brand according to its adherence to organic principles. Milk from Aurora gets the lowest rating.

“There’s no excuse for Target at this juncture” to continue purchasing milk from Aurora, Kastel said.

Heath disagreed, noting no change is planned with its milk supplier. She said the company plans to expand its organic offerings, in large part because customers have asked for it.

A 2007 survey coming out next week from the Organic Trade Association says organic dairy sales, which include eggs, were 4.07 percent of total dollar sales at grocery stores last year, double that of sales in 2002. All organics, meanwhile, were 2.8 percent of grocer’s sales.

The rise in demand has brought a counter-intuitive drop in sale price this year, in part because so many organic farms have come online in the last year, creating a glut of organic milk where there was once a shortage. The industry now pays farmers about $25.50 to $30 per hundred pounds of raw milk, or hundredweight, for organic milk, and $21 to $22 per hundredweight for conventional, said Edward Maltby, a milk pricing expert based in Massachusetts. A year ago conventional milk was closer to $14 per hundredweight.

The rapid rise in number of organic dairy farms — some people estimate as many as 1,500 in the country today — has outpaced the ability of the USDA’s Agricultural Marketing Service to regulate it, argued Theresa Marquez, chief marketing executive for Organic Valley, a farmer’s co-op based in Viroqua, Wis.

“They are really stretched out and don’t have enough funding,” she said.

That’s a real problem, said Barth Anderson, the Research and Education Coordinator at the Wedge Food Co-op. “The organic system needs to have a system of checks and balances to see what the certifiers are doing, because the certifiers have a tremendous amount of power.”

And if larger farms skirt the rules it could dilute the industry’s marketability, Kastel. “They are squandering the goodwill that real farmers and real organic business people have built over the decades.”

Matt McKinney 612-673-7329

Matt McKinney  mckinney@startribune.com

CORNUCOPIA, WI: Announcing the filing of additional legal complaints with the USDA, and threatening civil litigation, the nation’s most aggressive organic watchdog, The Cornucopia Institute, blasted the USDA for not penalizing the industry’s largest organic milk producer after government regulators found that they have perpetrated consumer fraud by violating the federal organic labeling law.

On August 29, the USDA announced that Colorado-based Aurora Organic Dairy had willfully violated 14 provisions of the regulations of Organic Food Production Act. Aurora operates a dairy processing facility in Colorado and five giant factory-farms in Texas and Colorado. The USDA investigation began after the agency was alerted to organic irregularities at Aurora’s over two years ago.

“This giant agribusiness enterprise, with majority ownership by Charlesbank, the investment arm of the Harvard endowment fund, was found to have illegally confined their cattle to feedlots, depriving them of fresh air and healthy grazing conditions as required by law,” said Mark A. Kastel, Senior Farm Policy Analyst for the Wisconsin-based Cornucopia Institute. In addition Kastel stated, “Aurora was also found to have brought in conventional cattle to their operation instead of milking cows that had been managed organically for their entire lives. This corporation was out and out cheating.”

The fact that the founders and managers of Aurora had been some of the most successful entrepreneurs in the industry, having also founded Horizon Organic Dairy prior to its purchase by Dean Foods, has left many in the industry resentful of what they call a “sweetheart deal” between the USDA and the giant dairy operator.

“Anyone found to be committing willful violations of the regulations, anyone, should not remain certified,” affirmed Jim Riddle former chairman of the National Organic Standards Board and a recognized international authority on organic certification. Family-scale farmers from all over the country have questioned on Internet forums whether they would have been allowed one year of supervision instead of being fined and having their organic certification revoked, after being found to have willfully violated the law.

Aurora is the leading private-label organic milk processor supplying store brands for Wal-Mart, Target, Costco, Wild Oats, Safeway, and many other grocery chains.

The USDA launched their investigation based on a formal legal complaint over Aurora’s management practices filed by The Cornucopia Institute in November 2005. Cornucopia had first alerted the Agency of Aurora’s irregularities with a legal complaint in January 2005, but the USDA closed the case without conducting any investigation, for what Cornucopia describes as “political reasons” revealed in documents obtained through the Freedom of Information Act by the watchdog group.

This week the nonprofit farm policy research group filed an additional legal complaint alleging that a newer 4000-4200 head dairy that Aurora has brought into production, which the company describes as a “pioneering green-fields model for organic dairies,” was also skirting the law. (Click here to view a photo gallery of the Aurora factory-farm.)

“Our initial investigations, including photography, satellite imagery, and interviews with dairy industry professionals who visited the facility, indicate that this giant farm is also not grazing their cattle or providing pasture in accordance with federal law,” stated Will Fantle, research director at Cornucopia. “Although they have more pasture, the number of cows per acre does not meet legal precedents, and the quality of the pasture, grown in the semiarid conditions of Colorado, also does not meet legal definitions, this corporation is continuing to “game the system” and needs to be brought to justice.”

Cornucopia also announced the filing of a legal complaint against the two USDA accredited certifiers associated with Aurora. The complaint alleges that the illegal activities identified by the USDA at Aurora were overt and should have been uncovered by the certifiers, Quality Assurance International (QAI) and the state of Colorado’s organic program, if they had been fulfilling their oversight responsibilities.

Cornucopia also asked the USDA to sanction the two certifiers for consulting with and helping Aurora with damage-control and the public relations fallout after the USDA enforcement action was issued August 29. Representatives speaking for the two certifiers continued to praise Aurora for their organic management practices in the company’s August 29 news release and failed to mention their own negligence in Aurora’s organic fraud.

“It is incumbent upon organic certification officials to maintain the highest level of impartiality and to protect their organizations from conflict of interest. QAI and the state of Colorado have failed miserably in meeting this mandate,” Fantle stated.

In addition to the new legal complaints, Cornucopia is conferring with a team of lawyers about a potential civil action on behalf of farmers and other processors that have been economically injured by a flood of surplus milk, much of which has come from illegal Aurora facilities. In the third quarter of 2007 organic farmers started to see the price of their milk drop, and some have been shut out of the marketplace.

“The majority of all organic farmers in this country, and the brands that we sell our milk to, truly believe in the ethics that are the foundation of our industry,” said Steve Pechacek an organic farmer from Mondovi, Wisconsin, and immediate past president of the Midwest Organic Dairy Producers Association. “We cannot allow greed and the inaction of the USDA to tarnish the reputation of organic products,” Pechacek added. “We sincerely hope that the USDA will act on the new Cornucopia complaints, and if the executive branch won’t, we will seek justice in the courts.”

Cornucopia has consistently emphasized that the vast majority of dairy brands in the marketplace are from highly ethical companies. Cornucopia maintains a listing and scorecard so that consumers can identify brands whose milk comes from ethical family farmers who maintain high environmental standards and practice humane animal husbandry.

During the course of our investigation of Aurora Organic Dairy, we identified willful violations of the Organic Foods Production Act of 1990 (OFPA), as amended (7 U.S.C. 6501 et seq.), and the regulations thereunder (7 CPR Part 205), by Aurora Organic Dairy. The violations are listed in the enclosed document, Aurora Organic Dairy, Case No. M-005-06, Violations by Aurora Organic Dairy, dated March 7, 2007.

Of the 14 separate violations detailed in the USDA’s letter to Aurora, perhaps this one is the most damning:

From December 5,2003, to the present, AOD sold, labeled and represented milk as organically produced, when such milk was not produced and handled in accordance with the National Organic Program (NOP) regulations (7 C.F.R. part 205), in willful violation of7 C.F.R. — 205.102, 205.200 and 205.400(a).

You can read the full letter here that eventually led to the enforcement action on August 29.

In addition to being the nation’s largest producer of private-label organic milk (anonymous, private-label products and organics should possibly be considered an oxymoron) Aurora also markets milk under their own label, High Meadows.

We would encourage interested readers to visit our website – click on the navigation button for “Dairy Report and Scorecard.”

On the scorecard you can find our ratings, published last year, of 70 name-brand and private-label organic dairy products. We are currently in the process of updating the scorecard and will be adding approximate 20 new brands. If you do not see one of the brands in your market represented please contact us and we will make sure we include them in our updated study.

Mark Kastel
Senior Farm Policy Analyst
The Cornucopia Institute

At 7:20 p.m. EST, August 29, the USDA issued an emergency news release announcing that they had sent a Letter of Revocation to the Aurora Organic Dairy. In lieu of revoking Aurora’s organic certification, the Agency has instead entered into a consent agreement requiring the nation’s largest certified organic dairy to make substantial and wide-ranging changes to the livestock management practices at their operations in Texas and Colorado. (A copy of USDA’s news release is copieed in full below.)

If the terms of the agreement are not met, USDA officials warn Aurora’s management that the agreement they have reached “will be withdrawn” and the Agency may “revoke the organic certification” for Aurora’s Platteville, CO dairy processing plant that packages private label milk for several national chains, including Wal-Mart, Costco, Target, and Safeway. The USDA also warns Aurora’s officials that their operations “will be closely monitored for compliance with the provisions of the agreement.” Although Aurora is the largest private-label organic milk supplier in the United States they also market milk under their own label, High Meadows.

Additionally, Aurora has agreed not to renew the organic certification for its Woodward, Colo., facility.

Earlier on Wednesday, August 29, management at Aurora sought to preempt the USDA announcement by issuing their own crass public relations spin on the matter. Aurora asserted that the formal legal complaints Cornucopia filed with USDA against Aurora in 2005 and 2006 were dismissed. The complaints were not dismissed. In fact, Wednesday evening Cornucopia’s Mark Kastel received a call from a high-ranking USDA official to say that the Agency had specifically rushed their official news release on the events out to the public in an effort to dispel the misinformation caused by Aurora’s factually erroneous representations.

Although we should be proud at The Cornucopia Institute that our meticulous research and well documented legal complaints have resulted in this action, and the previously announced decertification of the 10,000-head Vander Eyk dairy in California, we are still not wholly satisfied with the outcome and enforcement action taken by the USDA.

After years of delay Aurora, having expanded to five industrial scale dairies in Colorado and Texas, is still being allowed to remain in business despite being found guilty of multiple violations of organic law. These were not accidental violations — they were willful and premeditated violations of the law by a multimillion dollar business enterprise, the largest organic dairy producer in the United States.

All of the allegations that we outlined in our legal complaints are delineated in this consent agreement. The investigators at AMS compliance have obviously done their jobs well and are to be commended for their diligence. But it is the political appointees at USDA that have decided to let Aurora off somewhat easy in this matter. This is exactly what we warned about in our news release of August 14.

Major points that were detailed in the original Cornucopia legal complaints and that are also addressed in the consent agreement include:

Aurora was not allowing their animals access to pasture

Aurora brought in animals to their herd from a contract heifer ranch that was not certified organic

Aurora converted animals from conventional to organic production when the regulations (because of their initial 80/20 conversion) prohibited that practice

Aurora purchased organic feed for their Texas operation from a friend of the dairy manager who had sprayed his crops with herbicides during transition

During all of this time, Aurora was building market share, helping drive the price down for “real” organic farmers, and being a driving force behind the current surplus in the organic dairy market. They were defrauding consumers by selling milk that did not qualify to be labeled as organic.

The USDA chose not to levy any fines and Aurora is being allowed to remain in business.

It must be noted that – 205.100(c)(1) of the organic regulations states that “any operation that knowingly sells or labels a product as organic, except in accordance with the Act, shall be subject to a civil penalty of not more than $10,000 per violation.

This is only a partial victory in protecting the economic interests of the family scale dairy farmers we work for.

Stay tuned. We will aggressively be telling consumers, and the wholesale buyers, that have been buying milk from Aurora, that they have been scammed by charlatans. Hopefully ethical businesses will discontinue their relationship with Aurora and we will see the surplus eaten away by new demand for “real” organic milk.

And now, a personal word from Mark Kastel:

I want to thank the staff of The Cornucopia Institute for their hard work over the years in pursuing our complaints against Vander Eyk, Aurora and Dean Foods/Horizon (the only factory-farm dairy operator, profiled in our complaints, that has yet to be adjudicated by the USDA). I particularly want to thank our research director, Will Fantle who is responsible for crafting our legal complaints and our legal counsel, Gary Cox, who has helped review documents and spearheaded our lawsuit against the USDA for release of related documents they had illegally withheld from the public.

I especially want to thank the many members of The Cornucopia Institute who had confidence in our work and have financially underwritten the expenses related to this campaign. It is an honor to work for the organic farmers of this country who I have so much respect and admiration for.

Mark, of course, was directly responsible for much of the onsite investigations and analysis of the farming operations and deserves huge thanks for his persistence and dedication to Cornucopia’s mission.

We will be releasing more news and analysis when it becomes available. A photo gallery of Aurora’s factory-farms can be seen under our photo gallery link in our navigation column.

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What follows is the text of the news release issued by USDA on this matter.

Billy Cox (202) 720-8998
Angela Harless (202) 720-4623

AURORA ORGANIC DAIRY SIGNS CONSENT AGREEMENT WITH USDA’s AGRICULTURAL MARKETING SERVICE

WASHINGTON, Aug. 29, 2007 — The USDA Agricultural Marketing Service (AMS) has entered into a consent agreement with Aurora Organic Dairy (Aurora) in response to a Notice of Proposed Revocation issued earlier this year alleging violations of National Organic Program (NOP) regulations. Under the consent agreement, Aurora’s Platteville, Colo., facility must meet several conditions in order to continue to operate as a certified organic dairy operation. These conditions include removing certain animals from the organic herd and ceasing to apply the organic label to certain milk. Additionally, AMS will exercise increased scrutiny over Aurora’s operations during a one-year probationary review period. If Aurora does not abide by the agreement during that time, AMS may withdraw from the agreement and could revoke the organic certification for Aurora’s Platteville, Colo., plant.

“The organic industry is booming and the National Organic Program is a high priority for USDA,” said Bruce I. Knight, under secretary for marketing and regulatory programs, “and through this consent agreement consumers can be assured that milk labeled as organic in the supermarket is indeed organic.”

Under terms of the consent agreement Aurora also must file new organic systems plans for its Platteville, Colo., and Dublin, TX, facilities. These new plans will address all of the inconsistencies between its operations and the NOP regulations identified in the Notice of Proposed Revocation.

Major adjustments required at Aurora’s Platteville, Colo., facility include:

1) providing daily access to pasture during the growing season,
acknowledging that lactation is not a reason to deny access to pasture;
2) reducing the number of cows to a level consistent with available pasture with agreed maximum stocking densities;
3) eliminating improperly transitioned cows from its herd and not marketing those cows’ milk as organic; and
4) agreeing to use the more stringent transition process in the NOP regulations for animals added to its dairy herd.

Aurora also agreed not to renew the organic certification for its Woodward, Colo., facility. Additionally, Aurora agreed to enter into written agreements with suppliers of animals for its Dublin, Texas facility that verify the certification of those suppliers and the proper transitioning to the organic status of those animals.

AMS initiated its investigation of Aurora based upon a complaint alleging insufficient pasture for its animals. In investigating this complaint, AMS investigators also uncovered the improper transitioning of animals and a failure to maintain adequate records.

Aurora’s Platteville, Colo. and Dublin, Texas plants will be closely monitored for compliance with the provisions of the agreement. If AMS finds the terms of the consent agreement are not being met, then the agreement will be withdrawn and AMS could revoke the organic certification for Aurora’s Platteville, Colo., plant.

As a result of the investigation, Aurora’s certifying agent, the Colorado Department of Agriculture (CDA), agreed earlier this year to make several changes in its operation, including attending increased NOP training and hiring additional personnel.

Congress passed the Organic Foods Production Act (OFPA) of 1990. The OFPA required the U.S. Department of Agriculture (USDA) to develop national standards for organically produced agricultural products to assure consumers that agricultural products marketed as organic meet consistent, uniform standards. The OFPA and the National Organic Program (NOP) regulations require that agricultural products labeled as organic originate from farms or handling operations certified by a State or private entity that has been accredited by USDA.

The NOP is a marketing program housed within the USDA Agricultural Marketing Service. Neither the OFPA nor the NOP regulations address food safety or nutrition. Additional information about this program is available on the National Organic Program Web site at www.ams.usda.gov/nop.