030318 U.S. Consumers Paying More to Go Organic

Chicago - When Laura Donkel does her grocery shopping on Saturday mornings, she has no qualms about buying a gallon of organic milk for $6--more than double the price of regular milk.

Going organic was a decision the schoolteacher made 11 years ago when her daughter was 2 years old, and she says she has never regretted it.

"Organic milk comes from cows that are not fed hormones and graze on land that hasn't been sprayed with pesticides. That's important for me--especially for my children," said Donkel, who also has a 9-year-old son.

"I started reading about all the junk that was in milk," she said, adding that she became concerned about her children having illnesses as adults from drinking milk that was loaded with hormones.

That was when Donkel and her husband took traditional milk off the family table. She has gone on to join and support food co-ops, and occasionally travels 75 miles north from her Chicago home to buy organic products straight from a farm in Wisconsin.

ORGANIC FOOD TREND: UP

Organic food sales in the United States have climbed 20% for five straight years--the kind of growth that grabs the spotlight not just for farmers but for food corporations and the government as well.

Sales of organic foods reached $11 billion in 2002 and are projected at $13 billion in 2003, according to the Organic Trade Association, headquartered in Greenfield, Massachusetts.

Of such foods, organic dairy was the fastest growing segment in the 1990s, with sales up 500% between 1994 and 1999, the U.S. Department of Agriculture (USDA) said in a report in October 2002.

Even so, only two out of every 100 gallons of milk sold in the United States are organic. But that still amounted to $104 million of organic milk and cream sold in traditional grocery stores and $55 million in natural food stores during 2000.

In the U.S. food industry--a mature production base that churns out millions of tons of foodstuffs a year--organic dairy also has what companies love most: a rising trend.

"Organic milk today, just fluid drinking milk, is 1.86%-plus of all the food milk sold in the United States. I really believe it's quite possible that we could be 5% or 10% of the milk trade in our lifetime," said George Siemon, founder of Organic Valley, the largest farmer-owned organic cooperative in North America based in LaFarge, Wisconsin.

The fact that consumption is rising at premium prices has not escaped the attention of food industry planners.

That may be because there is more to organic than health.

Organic devotees often describe themselves as part of a socially conscious movement to "reconnect" with the food chain and support unadulterated, more traditional sources of food that they perceive helps, not hurts, the environment.

"There is a growing perception among a certain set of consumers that what happens in the environment really has an effect on them," said Holly Givens, spokeswoman for the Organic Trade Association.

So organic has become a catch-word for how land is treated and how family farmers are supported at a time when the U.S. food industry is driven by large farms with thousands of acres and animals and millions of dollars in financial backing aimed at producing cheap food.

CHASING THE ORGANIC TREND--AND LABEL

More than 10 years ago, organic milk was available only in U.S. natural food stores. But now it can be found in the dairy case at most major supermarkets in metro areas; milk from Organic Valley, Horizon Organic or Straus Family Creamery appear alongside cartons of standard local brands.

Basic to the acceptance of organic milk is that it meets the same standards for quality and safety as traditional milk, including pasteurization and homogenization.

But to earn the "organic" label, a green-and-white USDA seal, or use the word organic, milk and other foods must meet USDA's new national standards issued in October 2002.

Those standards came after almost a decade of caustic debates between corporate food lobbyists and pro-organic opponents of corporate farming.

The debate continues today. Just last month the U.S. Congress signed into a law a provision that overturned those standards that would no longer require organic livestock producers to use organic feed. The move caused an uproar among organic advocates, including U.S. Agriculture Secretary Ann Veneman, who has voiced support for the standards issued in October.

"It (October standards) provides assurances that when products are labeled organic, there have been strict requirements in place for producing, growing and processing," said Barbara Haumann of the Organic Trade Association.

The Organic Trade Association is launching a national advertising campaign to protect the original standards.

According to the national standards issued last fall, organic milk must come from government-certified farms where dairy cows are not fed antibiotics and growth hormones, not fed genetically altered corn or soybean meal, and graze on land certified free of herbicides or other chemicals.

The standards mean that companies like Oberweis Dairy in Illinois do not carry the organic label on their products, but still enjoy a thriving business promoting its milk produced without synthetic bovine growth hormone or antibiotics.

As consumers grow familiar with terms like "organic" and "healthy," milk firms and cooperatives are contracting with more individual farmers to produce milk that meets specific standards--a trend that is earning higher premiums for the farmers.

Organic farmers are currently earning $18 to $23 per hundred pounds for their milk, compared with traditional farmers who receive $10 to $12, industry analysts said.

Joe Placke, 46, was the first organic farmer in Lafayette County, Wisconsin, certified in 1995, with a 70-head dairy herd. "Now, there's about 15 and probably 15 more in the process of being certified. It's the only way to keep more farmers on the land," Placke said.

Organic Valley's Siemon agreed that organic farming is becoming a lifeline for many small farmers, thanks in large part to consumer preferences. "It's the consumer who's making a conscious choice to really support this movement," he said.

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