Point Reyes Light - April 5, 2001

Straus creamery owner battles state over milk pricing

By Gregory Foley

Owners of the Straus Family Creamery in Marshall last Friday testified before the state Department of Food and Agriculture in support of a petition they have filed to change milk-price regulations they say are unfair to organic dairy processors.

Albert Straus, manager of the organic creamery, said his operation in essence is required to subsidize conventional milk producers. State regulations established in the 1960s, before the organic dairy industry existed, have not only boosted consumer prices for organic milk by 78 cents per gallon, but in the last seven years he’s had to pay out more than $1.3 million to support non-organic dairies that cost less to operate, Straus said.

"We’re subsidizing the conventional processors and it’s defeating our own purpose," the dairyman said. "I thought the organic industry would work to support family farms, but state laws are actually discouraging organic production. We’re essentially being double-taxed."

Colorado colleague

Joining Straus in the petition is Horizon Organic Dairy, a Boulder, Colorado-based corporate dairy producer and manufacturer that buys milk from more than 100 organic dairies in the West. At issue are state regulations that require all California dairy processors – either milk bottlers or dairy product manufacturers – to contribute fees into a "pool" designed to ensure a sustainable income for milk producers.

The Milk Stabilization Act regularly establishes minimum prices which processors must pay out to farmers depending on the end product, with fluid milk demanding the highest price and cheese the lowest.

The Milk Pooling Act then requires processors each month to pay into a pool so that producers that sell milk in lower-classed categories can earn as much revenue as those who sell their product for higher-valued uses. A processor’s end product, such as butter or cheese, in part determines the calculated amount that a particular operation must contribute to the pool.

Organics disadvantaged

However, Straus argues, the system was designed to reflect only the values of conventional milk and to generate reasonable incomes for conventional producers. Unfairly over-taxed are organic processors who pay more to their producers for milk.

Using organic feed and keeping in line with other requirements of the California Organic Foods Act costs more, yet the pool system does not recognize those costs, and the amounts paid out to organic producers do not adequately support organic dairies, he said.

Moreover, Straus argues, he as a processor is not only paying higher prices for organic milk, but is forced to pay into the pool with no adjustment. "Organic processors like us pay their dairy farmers much more than the pool prices set for conventional milk, but still have to pay into the pool as if we were only paying the lower pool price for our milk," he explained. "This money, in effect, is used to support the non-organic producers’ prices."

Costs more on the shelf

In the end, Straus said, consumers of organic milk pay exorbitant prices at the store, and his business is essentially taxed twice – once upon buying milk and then again by the state.

In their petition, Straus Family Creamery and Horizon Organic Dairy have asked the Department of Food and Agriculture to set fees for organic producers that reflect the true cost of producing organic milk.

"We’re not trying to change the system totally," Straus said. "We’re basically asking for a credit for the fact that we pay our producers a higher price for fluid milk than the conventional price."

In front of a moderator last Friday in Sacramento, Straus, his mother Ellen Straus, Two Rock organic dairyman Joe Tresch plus Horizon Organic representatives argued their case. Meanwhile, several representatives of conventional dairy alliances opposed any break for the organic processors.

"We made our case, but the conventional industry is unanimously against us," Straus said. "They’re basically saying that milk is milk."

The state is allowed 60 days to render a decision on the petition. Those interested in writing to the state in favor of the petition or to learn more about the issue can visit the Straus Family Creamery website at www.strausmilk.com.

Point Reyes Light Cover | News | Coastal Traveler