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The organic dairy industry was thriving when Allen and Jean Moody bought a 200-acre Wisconsin dairy farm in 2006 and joined the ranks of farmers churning out milk raised without growth hormones, pesticides or other chemicals.
Three years later, the good days are gone, and the Moodys aren’t alone in wanting out.
A growing number of farmers who went all-natural in the years when organic food sales were growing at a double-digit pace are giving up their organic certifications. Organic farming is costly and labor-intensive, and many consumers are no longer willing to pay the price in a recession.
Sales in the U.S. of organic foods sold mostly at supermarkets are expected to drop 1.1 percent to $5.07 billion this year, according to the Chicago-based research firm Mintel. While the drop is small, it is the first in an industry that has seen annual growth of 12 percent to 23 percent since 2003.
The organic dairy industry has been the hardest hit, with farmers squeezed by soaring feed costs and plummeting milk prices.
The soured market has been particularly bad news for Moody, 53, and his 51-year-old wife, who put their farm in La Farge, Wis., up for sale last summer after deciding that running a dairy was too much work at their age. The credit crunch has left a string of would-be buyers unable to seal the deal even as the Moodys’ milk buyer has cut his rate roughly 10 percent.
“We’re kind of in limbo land right now. It’s just really tough – I told my wife we may be here another two or three more years before things turn around and the money supply loosens up,” Moody said.
The recession and credit crisis also have made times uncertain for George Mears, who raises organic corn, buckwheat, wheat and soybeans on 140 acres near Delphi in north-central Indiana. Much of it becomes feed for livestock that produce organic eggs, milk and beef.
Some buyers are no longer willing to buy grain on contract because of uncertainty about the economy. And one company that buys Mears’ grain has been slow to pay – Mears suspects because it can’t get credit to buy grain up front.
“We’re usually smaller farmers, and you send a semi load or two of grain and that’s like a quarter of your income for the year,” he said. “You just don’t drop a fourth of your income on the farm without some hardship.”
But the Midwest Organic Services Association issued 200 new organic certifications this year for a total of 1,200. Some believe organics still have a greater potential for profit than conventional farming, said Bonnie Wideman, director of the group. Others are committed to chemical-free farming.
That’s the case for Jeff Evard, 36, who raises tomatoes, onions, eggplant and broccoli on a 10-acre organic farm in south-central Indiana. Half of his produce goes to about 65 families who pay up front for a season’s worth of fresh vegetables and fruit. The rest heads to farmers’ markets in Bloomington, about 30 miles away, or is sold to organic wholesale stores.
Mindful of the recession, the farm’s business manager recently lowered the price of the farm’s top spring seller – cherry tomatoes – from $4 to $3.50 a pint to stave off a drop in demand.
“I’ve sold out of tomatoes every week for the past three or four weeks,” Evard said.
