Stonyfield Farm responds

Gary Hirshberg argues that his company is doing a lot to support organic dairy farmers

Posted by Guest author (Guest Contributor) at 3:11 PM on 07 Mar 2008

Read more about: business | food | agriculture | organic food

The following is a guest post from Stonyfield Farm President and CE-Yo Gary Hirshberg, written in response to a post by Ed Maltby, executive director of the Northeast Organic Dairy Producers Alliance.

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Gary Hirshberg

Londonderry, N.H.: These are difficult times for the organic dairy industry, and as we have demonstrated consistently for over a decade, we are deeply engaged in the effort to find solutions that balance escalating supply costs with the need to keep organic product prices within the average consumer's reach.

Stonyfield has consistently fought for farmers' interests, despite the pressures of the marketplace to reduce or hold prices for our yogurts. Over the past five years, the pay price we pay for organic milk has risen 34 percent, while Stonyfield has only raised the price of its 6-oz. yogurt 11 percent over the same period. We have endeavored to meet farmers' needs, while finding savings in other parts of our business.

The fact is, despite our supplier costs rising dramatically over recent years, we have worked hard to maintain an affordable price for the consumer. This is a very tough balancing act, but at the end of the day, the greatest thing we can do is to grow the organic segment that benefits all the players -- farmers, processors, and consumers. And Stonyfield has done just that, by converting 100 percent of our products to organic, increasing our purchases of family-farmer-supplied organic milk to over $60 million per year, and all the while investing in numerous strategies that will help our family farmers to thrive.

"Stonyfield Farm has been a trustworthy partner and has been diligent and unwavering in its support of organic dairy farmers," says Jim Gardiner of Otselic, N.Y., organic farmer and Northeast Organic Dairy Producers Alliance board member.

"Organic has to work for everyone in the chain -- from farm to table," says Organic Valley/CROPP Cooperative dairy producer and Vermont farmer Regina Beidler, who supplies milk to Stonyfield Farm for its yogurt. "We need to figure out how to deal with the unprecedented increase in organic feed costs, and working together, I'm confident that we will." Beidler adds, "Stonyfield Farm has always been an active and resourceful partner at the table working to help figure out how to make organic work for the dairy producer and the consumer."

Stonyfield Farm will only purchase milk from family farms, a stipulation that is explicitly spelled out in its agreements with both its organic milk suppliers HP Hood and Organic Valley/CROPP. Stonyfield purchases all of the milk for its yogurts and frozen products from Organic Valley/CROPP Cooperative, and licenses HP Hood to sell and distribute Stonyfield Farm Organic Milk. Stonyfield does not directly source the organic milk for the Stonyfield brand.

We sympathize with farmers' struggles with rising fuel, feed, and operating costs. As a processor, we are dealing with many of those same issues as well. Energy costs have risen dramatically, and we have invested significantly in implementing conservation efforts to hold these costs. On the other side, there has been an explosion of low-priced, competitive, private-label organic yogurts supplied by producers of non-family-farm milk, creating intense downward price pressure in the market. In short, there have been increased costs and pressures across the board, but we are not abandoning farmers, even as we face our own financial challenges.

Stonyfield Farm's mission is to drive consumer support for organic family farmers while proving it is profitable to be an organic processor. We believe this is the only way to convert our food system to healthy and sustainable organic practices and ensure that farmers are treated fairly. Average pay price (Midwest prices) over the past decade for organic milk for Stonyfield Farm's supplier of milk for its yogurt has steadily increased, compared to the "roller coaster" of prices paid to farmers for conventional milk.

In contrast to the extreme highs and lows of nonorganic-milk-farmer pay prices, Stonyfield Farm has never lowered the price it pays farmers for organic milk -- even during periods of significant oversupply, such as this past year. It is this stable and steadily growing pay price that has made organic dairying attractive to many farmers.

And as we work toward a paradigm of sustainable food production, reducing the farmer pay price -- a tactic favored by conventional dairy -- is not an option.

Overall, no dairy processor has been more aggressive in supporting family farmer interests. Here is a list of some of Stonyfield's organic farmer support initiatives:

We were the nation's first dairy processor to pay farmers not to treat cows with the synthetic bovine growth hormone rBGH.
We have invested over $1.2 million in grants to farmers to assist with transitioning to organic.
We started a loan program to assist farmers transitioning to organic. The fund was launched by a six-figure personal contribution from Gary and Meg Hirshberg, as well as with support from Stonyfield Farm and Organic Valley/CROPP Cooperative.
We have provided tens of thousands of dollars in grants directly to farmers to improve sustainable farming practices.
We have paid hundreds of thousands of dollars annually to fund workshops, trainings, and other assistance to farmers.
With a grant of $450,000, we were the lead donor to the nation's first land-grant organic dairy at the University of New Hampshire.
In 2006, we hosted members of Northeast Organic Dairy Producers Alliance for a meeting at Stonyfield Farm, where we opened our financials to them to create a dialogue and increase understanding of the financial challenges facing everyone in the organic chain.
Late last year, we converted 100 percent of our product line to organic, ensuring a steady demand for the organic farmers' products.

In recent months, to address the unprecedented increase in organic farmer feed costs, Stonyfield has worked on several new initiatives to help dairy farmer profitability. These include increasing producer pay in 2008, funding a program with the Northeast Organic Farming Association of Vermont to provide energy audits and consulting to farmers to help reduce on-farm energy costs, and working with Organic Valley/CROPP Cooperative to find ways to reduce organic feed costs, such as long-term contracts with organic feed growers.

Everyone -- suppliers, processors, and consumers -- needs to understand there are enormous challenges in moving from a system where farmers have been undervalued to one where their vital role is both recognized and rewarded. We believe that the conversion to an organic, sustainable model is the only way to achieve this end.

About Stonyfield Farm
Stonyfield Farm, celebrating its 25th year, is the world's leading organic yogurt maker, and it produces organic yogurt, smoothies, cultured soy, frozen yogurt, ice cream, and milk. The company advocates that healthy food can only come from a healthy planet. Stonyfield donates 10 percent of its profits to efforts that protect and restore the environment, was America's first manufacturer to offset 100 percent of its CO2 emissions from facility energy use, and recently installed the largest solar array in New Hampshire to help power its production plant.

For story: Stonyfield Farm responds
12 Comments | Post a Comment

Like frozen yogurt,

this is a chilly response.

Instead of repeating how his company loves the Earth, etc., it would be better to hear that Gary Hirshberg actually took the time to visit Mark Ouellette, and seriously help him manage his costs.

Chickens deserve our true friendship! So do fish! So do other sentient beings! Let us learn to be kind.

by caniscandida at 2:09 AM on 08 Mar 2008

More like intentional business.

I disagree. This is some of the most open and detailed defense of business tactics that I've ever read. He's not trying to convince you Stonyfield is nice and shiny and benevolent--he's trying to explain the challenges facing the industry. But look at the prices paid for milk. That says to me that this company is actually trying to make this system work for all stakeholders.

If Stonyfield were trying to snowjob Grist readers this post would have been a lot more terse and have way more platitudes in it. You can't ever expect a for-profit corporation to do anything but seek profit, but I do believe those corporations can shift their practice to integrate human interests into their bottom line.

I think it's the only way we'll ever see significant change in the total system. But he's right: if Stonyfield folds the mission fails. The company HAS to be strategic. It's an issue of volume and focus. At this point Stonyfield is far too large to act as if they're a homey co-op of a few family farms. As explained in the post, their position currently is more of a liaison and organizer for the whole industrial organic dairy system. At that job I think they're excelling. I don't think it's possible for them to deal with each individual family's difficulties anymore.

But geez, they do energy audits for farmers. That's awesome!

I don't know, I think they're genuine. At least, I really really want to think so.

by jmccharen at 6:20 AM on 08 Mar 2008

"business tactics"

Well, JMCharen, I hope you are right. We have been buying Stonyfield products for a while now (I think; milk and yogurt, I guess; I am the vegan here, I do not do that kind of shopping), and I assume we are not going to stop.

If Gary Hirshberg wants to be open and detailed, and to be more transparent than many another business, that is wonderful.

But notice the war-room-ish tactic, that his first instinct was to send us a generalizing explanation of his business, with a graph.

And for all I know, everything he says is great, and you are right, his is the "only way that we will ever see significant change in the total system."

Meanwhile, though, there is an aggrieved young farmer. What we really wanted to hear, straight away, from Hirshberg, was not his song-and-dance history, as glorious as it might be, but that he went and talked to that farmer, and encouraged him, and quieted his worries, with real strong assurances. Hirshberg is apparently not willing to do that.

So, I am missing the point about how his way of doing business is supposedly revolutionary and transformative. It sounds like the same-old to me.

Then, beyond all that, there is the totally other subject of whether the "organic dairy" designation in fact tells us anything useful about the well-being of the dairy cattle. That can wait till some other post. But we should remember that it is another shoe waiting to drop.

Chickens deserve our true friendship! So do fish! So do other sentient beings! Let us learn to be kind.

by caniscandida at 7:10 AM on 08 Mar 2008

Bigger than that

There are far larger points being missed in this discussion than whether Stoneyfield Farms is a 'revolutionary and transformative business'. The reality is that the hole in which Mark Ouellette is stuck is not of Stoneyfields making but is intrinsic to a particular way of seeing the farming and food supply business. Like the corn producers of the midwest who are systematically being pumped and dumped by the likes of ADM (to which I am certainly not comparing Stoneyfield), Mark appears to be conducting an operation which has little control over its input costs (he can only take a pay cut to balance the books) and no control at all over its output prices (he can only refuse to sell at the offered price). Whatever the purely agricultural and environmental merits of Mark's farm enterprise (and whatever the merits of Stoneyfields' business ethics for that matter) this is a definition of high vulnerability and not in any way a good model for sustainable farming practice. Being 'organic' does not exempt anyone from that iron rule. Mark's individual position is obviously deeply unsatisfactory but more than that, we cannot as a society afford for our farms, organic or otherwise, to follow a path which relies almost exclusively on monoculture products, distant markets and multiple intermediaries in the long term.

I recently posted a link in another thread (picked up by the excellent Tom Philpott) to the blog of a small biofuels coop in North Carolina which is facing a similar rock of out-of-control costs and the same hard place of unmoving market prices. But here's an example of another way of doing things, an ordinary contemporary farm which emulates the vertical integration of traditional sustainable farm practices: http://www.mapleviewfarm.com/. Maple View grows its own cattle feed and processes and sells its own milk, beef and ice cream, both to local stores and directly to local consumers. And local agricultural development organizers are helping other farms emulate Maple View's success by enabling cooperative processing centers and fostering connections with local markets.

I'm aware that that running a successful and sustainable farm business is an extraordinarily challenging task, that not every farm can be a Maple View, and that not every region is capable of supporting such farms. But I do remember that old admonition, which surely comes directly from our agricultural heritage, about eggs and baskets...

The true meaning of life is to plant trees, under whose shade you do not expect to sit.

by spaceshaper at 10:48 AM on 08 Mar 2008

Missed the big ones

He left out rotational grazing and local processing in dairy stores at farmer's markets. This would support coop owned year round farmer's markets that could compete with BIG box agriposionous food. Franchise these operations co-investing with local farmer coops. The brand name empowering local organic, transportation energy saving, healthy cem-free food.

Another better way to lead the company to growth would be to co-invest with farmers in wind, solar, and biogas energy systems to bolster farm income.

Government should likewise support this with a 10 cent per kwh subsidy payment directly to the farmer for the clean electricty supplied to the grid.

Farmers themselves, with University ag extension services helping out, should shift to the much lower cost, earth friendly, rotational grazing dairying mode. Even investing in the expensive items, like milking parlour and milk storage equipment with neighbors.

Small cheese making cooperative efforts seem to be profitable too. With the Stonyfield marketing/franchising power to help these small businesses would get great local and regional outlets for their products. It would encourage specialized, high quality food.

You guys need a development specialist for this. you can pay me in Banilla yogurt. I love that stuff. I just need a lifetime supply, like Kramer's deal with the coffee company. Hehey.

http://amazngdrx.blogharbor.com/blog

by amazingdrx at 11:19 AM on 08 Mar 2008

Charge more

Far be it for me to suggest something so anti-capitalistic, but, wouldn't it make sense to raise yogurt prices?

I've been buying Stonyfield Yogurt for as long as I can remember; in fact, it was the first yogurt that I could tolerate, and still one of the few that I like. And for as long as I can remember, yogurt has been about $1. How can that be? I'm guessing I started eating (and buying my own) yogurt in the early 90's. I know, at some point, Stonyfield switched from an 8 oz to a 6 oz serving size, so I guess they made up 25% of price point right there, but still - it's been nearly 20 years.

Maybe my memory of the price in the past is faulty (see above 20 years) - but would it really impact market share significantly if Stonyfield raised yogurt prices by 5 cents or so? I have no idea what commerical yogurt yield from milk is, but my home cheese making book has a recipe stating that 1 gallon of milk (with some inputs) yields about 1 gallon (or 128 ounces) of yogurt, or approximately 21, 6-ounce servings. Therefore a mere 3 cent increase in the standard 6-ounce serving would cover the 60 cent deficit currently being felt by family farmers.

I'm sure this is overly simplistic - I have about as much idea of how to run a huge, multi-national yogurt company as I have about running an organic dairy farm. But simplistic or not, would it not work? Many people trust the Stonyfield brand, and certainly part of that trust must be garnered due to the commitment to the family farm. Surely, if a price increase were instituted in response to increasing price pressure on the small family farmer (and marketed as such) the loss of Stonyfield customers could be minimized?

by kmp at 2:40 PM on 08 Mar 2008

Good points.

I think it is important to remember that we're comparing what has become a rather large corporate entity to smaller cooperative models. Stonyfield is, indeed, doing business about as usual, with some good modifications. They are a large entity with built-in apathy towards individuals, and I don't think this is a sustainable thing. In the end we can't keep ignoring one another, or the well-being of the animals that feed us. I guess what I was pointing out is that Stonyfield is dealing, about as ethically as possible, with the abstract aggregate of their dairy farmers, and Hirshfield writes about them as an aggregate. It's the rising tide lifts all boats concept. It doesn't work for all the boats though. Never has.

I would absolutely prefer to see a relocalized food economy that has a million different models. It'd be more secure, more interesting, and um...tastier, I imagine. It's really sad how the organic food movement has mostly just become another mega-agri-business sector.

I guess it's back to the garden for me.

by jmccharen at 8:45 PM on 08 Mar 2008

Well sure

I think that passing the added cost to pay farmers a living wage/milk price would fly if it were marketed that way kmp. Excellent suggestion.

Higher prices for better food can be ameliorated by eating less and less costly protien, instead of eating costly chem meat every day, substitute organic eggs for instance. And organic meat a couple times per week.

The total cost would actually be less and so would health care costs.

But organic definitely could compete on price too if and when some of the cost saving techniques like rotational grazing, investment in farm based renewable energy, and direct local processing/marketing are employed.

http://amazngdrx.blogharbor.com/blog

by amazingdrx at 9:20 PM on 08 Mar 2008

12 cent rise?

From the first article:

"USDA Agricultural Research Service and the universities of Vermont, Maine, and Wisconsin indicate that the base price paid to family farmers in the Northeast in 2007 should have been $28.50 and needs to rise to $33 for 2008 rather than the current average of $27.50."

It looks like a 12 cent rise in the price of a 2 pound container of yogurt (around $3.50 now?)would get the farmers what they need? If I figured right. Consumers would pay that if it were explained to them.

Local production and sales that saves transportation costs and renewable energy could reduce costs more than that, far more.

How much could farmers shave from their cost by substituting healthier grass feeding for corn and grain? Even organic corn is not a natural food for cows. and it's very expensive.

Feed cost would seem to be around 7 cents per pound for regular dairying. For organic is it double? Substitue 3/4 grass feeding for the normal ration, and you get the cost saving needed too.

How about capital cost reduction from rotational grazing? it would all seem to add up to a very competitive possibility for organic. As feed and fuel prices rise, this type of operation would benefit.

http://amazngdrx.blogharbor.com/blog

by amazingdrx at 12:27 AM on 09 Mar 2008

Organic pasture?

Maybe one of the problems with grass feeding is "certifying" pasture land as organic - I'm not sure how that is done. Otherwise you are simply buying organic grass instead of organic corn (if such a thing is possible).

Maybe a barter system with a local corn/grain producer? Once a week you bring all the milk, cheese, etc. he can handle and he gives you a standing discount on feed prices?

I don't know; in an age when everyone seems obsessed with getting more and more money, I seem to spend time thinking about how to do away with the necessity for money. Health insurance is the one big cost I can't seem to get around.

by kmp at 9:53 AM on 09 Mar 2008

Certified

No need to get rid of money, we just need to stop it's use as a tool to manipulate every aspect of life into just a part of the corporate bottomline.

Certifying your own pasture is worthwhile, given the high price of certified feed. 163 bucks per ton for ground agribizz chem corn, 380 bucks per ton (and rising) for organic corn.

Certification transition is problematic. Stonyfield helps farmers with that financial risk, government ought to do it too. Pay a 10 cent per kwh subsidy to farmers for each renewable kwh. That would help.

Healthcare? Well if you feed cows corn, even organic corn, they tend to get sick. A weakened immune system breeds disease organisms. Then antibiotics are applied. Breeding stronger resistant disease organisms.

Rotational grazing is working to revive family farming here in Wisconsin. wisconsin public tv has a great program on farmers who skipped a generation, became proffessionals, then went back to revive a farm that went out of business with the old methods. They revived it with rotational grazinmg, and they get time off every winter. unlike regular farmers.

Biogas energy from manure and farm waste is here too, farmers are selling power to the grid. And producing organic fertilizer.

Money, capitalism, the will to financial happiness, financial prosperity and security, all work well together.

Unless the economic system is manipulated for monopoly corporate bottomline considerations exclusively. Excluding competition, innovation, and quality of life for we the people.

The family farm is the ancient birthplace of capitalism, real competitive small business capitalism.

http://amazngdrx.blogharbor.com/blog

by amazingdrx at 12:06 PM on 09 Mar 2008

Certifying land as organic

Pastureland & cropland are deemed organic if they have been free of pesticide and synthetic fertilizers for a period or no less than three years. Strangely, however, manure from animals that are not necessarily raised organically can be used on those fields. So what? How about porcines (one gene removed from humans, or something like that) that are fed hormones & antibiotics, whose waste is then used on the same fields? Sounds unbelievable, doesn't it? That's what I thought when I was told this information while touring the U. of NH's Organic Dairy farm in Lee, NH, the other day (whose milk, mind you, is sold to the Organic Valley Farms co-op from which Stonyfield buys their milk!). The Animal Science Coordinator on site at the farm, who oversees a pig research center on site, was my source of info. He said that he knows of no studies in which it has been proven that hormones & antibiotics pass through a pig's system to its waste. Sound like a Planet mars joke? When I know more, you'll all know more!

By nature, men are nearly alike; by practice, they get to be wide apart. Confucius, The Confucian Analects

by lioninjluy at 7:30 PM on 10 Mar 2008
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