Organic milk market sours for Sonoma County dairy farmers
With gray skies drizzling upon him, Doug Beretta rode his all-terrain vehicle back to the milking barn after doctoring a downed cow.
The brown-faced Jersey had calved the day before and looked healthy that same night when Beretta checked on his animals. But the next morning the cow wouldn’t stand and showed signs of milk fever, a potentially fatal malady caused by low calcium levels in the blood. So Beretta, whose green overalls quickly became streaked with manure, slowly injected a solution of calcium and phosphorous into one of the cow’s veins. About an hour later the animal was back on its feet.
If only the third-generation farmer could find such effective medicine to turn around a struggling organic dairy industry.
Over the last 12 years, North Bay dairy farmers like Beretta have switched in droves from conventional milk production to certified organic operations. The conversions allowed them to earn a premium price for their milk and to gain more stability for their businesses as the market for conventional milk weakened.
But the U.S. today is awash in organic milk. Farmers have seen prices fall, and many worry whether their processors will keep taking their product.
“After Sept. 30, we have no idea if we will have a contract for our milk,” said Beretta, 54, who works the family’s Llano Road dairy west of Santa Rosa with his adult children.
11 solid years
Organic farming served the family well for 11 years, Beretta said. But since 2016 the farm’s income has fallen by a third, substantially reducing the margins between revenue and expenses.
The North Bay’s sweeping grasslands have been home to generations of dairy farmers. More than 150 years ago California’s first commercial dairy industry began in the headlands of Point Reyes.
For years milk was the region’s premier crop. Even today it ranks second after wine grapes, with dairy farmers in 2016 receiving ?$147 million for their milk in Sonoma County and $43 million in Marin County.
However, the North Bay has long been a more expensive place to farm than regions like the Central Valley. So for such crops as beef, eggs and milk, local farmers often look for niche markets that allow them to gain a higher price for their products and to avoid selling them as mere commodities. That has meant selling grass-fed beef, free range eggs and organic milk.
Two years ago 80 percent of the North Bay’s 90 dairies had been certified to sell organic milk. Beretta and others said today that figure is closer to 90 percent.
However, plenty of farmers around the U.S. also have gone organic in the last six years. The shift was prompted partly by tough times that conventional dairy farmers have experienced after the Great Recession.
In contrast, for most of that time organic farmers enjoyed profitable operations.
Many of the conventional farmers concluded “I’ve got to go organic or go out of business,” said UC dairy economist Leslie Butler.
Even as those new entrants came on the scene, many existing farmers reacted to rising prices by increasing the size of their organic herds. Butler and others said dairy farmers generally have the same game plan whether prices rise or fall. They milk more cows.
As a result, said Butler, “the market got flooded with organic milk.”
Cuts in price and production quotas followed. In the last two years the income at many dairies has fallen by a third, said Richard Mathews, executive director of the Western Organic Dairy Producers Alliance.
“The farmers are really hurting,” he said.
Travis Forgues, vice president of farmer affairs for the Wisconsin-based Organic Valley cooperative and brand, said organic dairy prices can’t keep dropping and still provide a sustainable income for farmers. Nonetheless, the cooperative regularly hears from nonmembers in dire straits. Some tell of no longer having a place to sell their milk, not even for prices far below those paid on the organic market.
“They can’t even get on a conventional truck now,” Forgues said.
For the Beretta family, the oversupply comes at a time of change with their longtime organic dairy processor, Wallaby Yogurt of American Canyon.
Wallaby was sold two years ago for $125 million to Denver-based WhiteWave Foods. Then last year French dairy giant Danone completed an acquisition of WhiteWave for $12.5 billion.
Beretta, who began shipping to Wallaby when his farm switched to organic in 2007, recalled meetings at his kitchen table with the yogurt company’s owner. Now news about contracts and other matters comes from a Danone staff member based out of state.
Even as prices have dropped, the dairy faces other challenges. Among them, a recent California law requires state farmers by 2022 to start paying overtime when workers exceed 40 hours of work per week. And the city of Santa Rosa has told Beretta and other farmers along the Laguna de Santa Rosa that it wants them to start paying to receive treated wastewater, a product that for decades they’ve used for free to irrigate their pastures.