WisBusiness: Organic industry under strain as 21st annual conference opens
2/26/2010

By Marc Eisen
For WisBusiness.com

The wretched economy probably won't dampen the turnout at this weekend's Organic Farming Conference in La Crosse. Organizers of the 21st annual gathering expect last year's record turnout of 2,650 to be surpassed by the time the last walk-in shows up for the Thursday-night-to-Saturday conference at the La Crosse Center.

The gathering is a combination pep rally, reunion, trade show, Chautauqua, political rally and big-time party for farmers who share a common mission of fighting industrialized agriculture and its dependence on chemical additives.

"Something special happens here," says Faye Jones, the conference's long-time organizer and executive director of the Midwest Organic & Sustainable Education Service in Spring Valley. "It's almost like magic. The conference is a source of inspiration and rejuvenation," she explains, before organic farmers head to their fields for spring planting.

George Siemon, the CEO of the farmers' co-op that markets under the Organic Valley label, agrees. "The conference has a warm, familiar, family-type feeling. Some people think it's the heart of the organic movement."

If it is the heart, many of the attendees must be experiencing palpitations, because the organic movement is under unexpected stress.

Organic farming had been a burgeoning niche market in the overall farm economy, but last year it hit a wall.

"The estimates I've seen for 2009 show that sales of organic products declined by a half of one percent," says Laura Payne of the state Department of Agriculture and Trade Protection. "This is pretty significant. Organic sales have been growing at 20 percent-plus a year for the last 15 years."

Indeed, a shortage of organic milk prompted "too many people to enter the market all at once," says Siemon. "They just brought on too much milk at the same time, and then the economy crashed."

Because organic dairy farmers draw a price premium for the quality of their product, conventional dairy farmers have fared even worse, observers say.

Jim Goodman, who farms 500 acres near Wonewoc with his wife Rebecca and brother Francis, saw the small organic co-op he belongs to get hammered. Cheesemakers like Cedar Grove are its major customers.

"In February, our pay price was $28 for organic milk, with premiums for quality and fat content pushing it over $30 per hundredweight," he says. But by July, demand had fallen so greatly that half of Goodman's milk was being sold as conventional product at a guaranteed price of $15 per hundredweight -- still better than the $9 or so conventional dairy farmers were getting from their swamped processors, he points out.

On a far larger scale, a similar dynamic played out with the powerhouse Organic Valley co-op, which is based in Viroqua and has owner-members in 37 states, including 517 farm families in Wisconsin.

The co-op has been one of the great success stories in the organic industry, racking up more than a half-billion dollars in sales. But 88 percent of its revenue is dairy-derived, and that was a problem in 2009.

"It's really tough when you're experiencing 26 percent annual growth, and all of a sudden you go down to zero," says Siemon.

"We had pretty much let our farmers produce all they wanted," he recounts. "We had to get a handle on that quickly; otherwise, we'd have to lower our pay price. You have to do one or the other -- lower your supply or lower your pay price."

Organic Valley's response was to have its dairy members cut production by 7 percent, meaning they could either cull their herds or sell the overage at lower conventional prices.

All this had a big impact on Organic Valley's bottom line. Diminished consumer demand resulted in 2009 sales of a disappointing $520 million -- a 1.3 percent decline from 2008 and the first-ever sales drop in the co-op's 21-year history.

"There has been a lot of hindsight -- we should have done this or that," says Siemon. "But still we've all stuck together, which shows you the value of a co-op."

Not all organic farmers took it on the chin in 2009. Richard de Wilde, whose Harmony Valley farm in Viroqua is perfectly situated to serve both the Madison and Twin Cities markets, says: "2009 was a superb year."

He recounts that with trepidation he raised his subscription rates for weekly deliveries of a garden box by 4-to-5 percent with no resistance: "Last year was the first time we had to turn people way in the cities," he notes. And sign-ups this year are ahead of last year's pace, de Wilde adds.

All this lends support to Jones and other observers saying that a substantial chunk of people are willing to pay premium prices for food, despite the recession. For those consumers, organic food is both tastier and healthier, and they like supporting local farmers as a statement of their social and political values.

Says Siemon: "Organic is a deep word that has its own lifestyle and way of thinking." It involves not just the chemical-free production of food, he says, but respect for the land and for the people you work with.

Such thinking has made Wisconsin a national leader in organic farming. New data shows that Wisconsin is second only to California in the number of certified organic farmers with 1,155. (Several hundred additional smaller farms are considered organic but aren't certified.)

The Badger State is number one in organic dairy and livestock production and number two in organic crop farms, which includes fruits, vegetables and nursery plants.

Sounding an upbeat note at a tough time, Harriet Behar and Jerry McGeorge of the Wisconsin Organic Advisory Council pronounce the state's organic farmers "well equipped to weather lower prices," according to the state's freshly released 2009 status report on organic farming.

Many of those farmers will be in La Crosse this weekend to compare notes, drink craft beer at noisy receptions, peruse 152 organic-related vendors and attend 73 workshops ranging from "Organic Management of Soybean Aphids," to "Managing Nests for Native Bees," to "GMOs and the Fight for Organic Integrity."

Featured speakers include Chuck Hassebrook, executive director for the Center for Rural Affairs, who's an advocate for family farms, on Friday and Dr. Margaret Melon of the Union of Concerned Scientists, who will speak on food safety on Saturday.

The conference has longstanding ties to La Crosse and ranks among the top five or ten events the La Crosse Center will host this year, according to Dave Clements of the La Crosse Area Convention and Visitors Bureau. He expects the event will generate $1 million or more in economic activity for the community.

NOTE: Look for more on Wisconsin organic farming, including the dispute over pasture rules, in a post-conference story on Monday.


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