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0109 PD: Value-added processes of interest to the socially-conscious consumer

Daniel G. Giacomini Published on 23 December 2008

A growing number of today’s consumers of dairy products are not your father’s consumers. Today’s consumer is increasingly socially-conscious and willing to pay more money for products that they believe contribute to improved care for themselves, the animal, the land that it came from, the environment overall and their fellow earthly inhabitants.

They buy “green.” They don’t want food with chemical pesticides, added chemicals, additives, artificial preservatives and artificial flavors or colors. They are interested in what they perceive to be a healthier food

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. They are interested in how you treat your animals, how you treat your land and how you treat your employees. They don’t want food raised in ways that they perceive as poisoning the soil and the environment.

An article in Economist magazine – an article that otherwise did not support what it described as ethical-food shopping – recognized that this trend “sends a signal that there is an enormous appetite for change and widespread frustration that governments are not doing enough to preserve their environment, reform world trade or encourage development.”

In the 1960s, many of the green-buying consumers and supporters of these ethical-food initiatives were considered sandal-wearing, granola heads. Today, that same generation has gotten older, they got jobs, made money and had children. They know how to be activists, and now they vote with their ballot, their feet and their pocketbook.

They have passed their passions on to their children. Many of these quiet activists are now soccer-moms and corporate executives and range from those living in mansions and penthouse suites to the throw-back hippies living in tents.

This new activism continues to leave its mark. Over the years, this activism has changed our perspective on issues like smoking in public places, drinking and driving and a number of other issues.

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They have contributed to changing the entire veal industry as we knew it, what livestock operations did with their “downer cows,” the use of hot shots and how we slaughter the cows that supply the meat that goes into almost every fast-food hamburger sold in America.

In other words, this green, socially-conscious, ethical-food activism is not new, but it is growing and changing. And by all accounts, it will continue to grow in the future.

The socially-conscious consumers are willing to pay more money for products derived from processes they perceive to be of an “added value.” But, make no mistake, many of these consumers believe the additional dollars they spend give them the right to be at the decision-making table, essentially as part of the management team of the farm where those products come from.

It is your decision as a farmer to decide if you view this as a new form of fascism or as an input from a major player in the success of your farming operation that comes to the decision-making table with major insight into consumer demands and preferences.

Is this an unwanted intrusion or an opportunity for your operation to be more profitable? As it relates to dairy farm and livestock operations, this evolving consumer has a growing interest in healthy food, animal welfare and sustainability of the environment.

In the milk and dairy product marketplace, these preferences are being manifested in the growth of non-rBST fluid milk, an increased awareness of products associated with monitored animal-welfare programs that certify how the animals are being taken care of on the farm and programs dealing with on-farm sustainability.

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Many of these green-buying consumers also exhibit a general mistrust of the overuse of genetically-modified (GM) technology and a concern over their inability to make a true choice of accepting or rejecting products that utilize GM technology in the conventional food marketplace.

Many consumers resent that the choice of whether or not to consume GM technology-based food products has been taken away from them. It is unlikely they will accept cloned animals with open arms.

One program that a growing number of socially-conscious activist consumers see as bringing many of these issues together is certified organic. Forty-three percent of all U.S. consumers (particularly Baby Boomers) purchase some organic products.

Overall, the majority of consumers of organic foods and beverages believe they are buying food that is more natural and more wholesome, without additives, chemical pesticides and preservatives, is overall better for the environment, offering better nutrition and is better for their family and children in general.

Certified organic
After many years of growing from farmers’ markets and a few spotted apples on a few grocery store shelves, the government became involved in the organic industry with the passage of the Organic Food Production Act (OFPA) in 1990. The standards came about because the consumer wanted a more transparent and responsive supply chain, and the producer wanted a larger slice of the economic pie.

The organic industry itself supported national standards that would bring uniformity among the various standards that were being employed at the time, force reciprocity among certifying agencies and provide a greater assurance of organic integrity. After the passage of OFPA, the National Organic Program (NOP) was created under the direction of the USDA.

The NOP was created under the division of Transportation and Marketing under the Ag Marketing Service. In 1993, the USDA named the first National Organic Standards Board (NOSB) as a federal advisory committee to advise the Secretary of Agriculture on issues related to the organic industry; specifically issues related to the National List of Allowed and Prohibited Substances.

Regulations were considered through the 1990s and the “Final Rule” was published in December 2000. Full implementation of the Final Rule took place in October 2002. There is a great deal of misunderstanding about what certified organic is.

Certified organic is a production claim. Certified organic is about how food is produced and handled. Certified organic is not a content claim. It does not represent that a product is “free” of something. Certified organic is not a food-safety claim.

Certified organic is not a judgment about the quality and safety of a product, and it does not mean that organically-produced products are superior, safer or more healthful than conventionally-produced food. Certified organic is used to maintain the integrity of the “organic” label to the consumer.

It should be a guarantee to the consumer that organic production and handling practices used in producing and manufacturing that product meet National Organic Standards. It is not a license to help producers and processors simply “add value” to their products. But if regulations are consistently and ethically adhered to, this label has and will continue to “add value” to certified organic products.

As a result of the fact that certified organic is a process claim and not a health claim, there is increasing animosity between organic and conventional segments of the marketplace whenever a health claim is associated with organic products.

Segments of the conventional marketplace increasingly produce studies showing that there is no difference between organic and conventional food. Since there are no potential patent opportunities behind proving that organic food is healthier than conventional food there is considerably less research money spent to support that claim.

Organizations like The Organic Center are trying to develop peer-reviewed research to evaluate the potential benefits of organic food and farming.

Organic production
Organic production is defined in the rule as “a production system that is managed in accordance with [OFPA and its] regulations ... to respond to site-specific conditions by integrating cultural, biological and mechanical practices that foster cycling of resources, promote ecological balance and conserve biodiversity.”

It is based on a number of organic principles that include encouraging stewardship of the earth; promote, sustain or enhance genetic and biological diversity (biodiversity) of the soil and its surroundings; optimize soil biological activity; minimize soil erosion; develop a harmonious relationship between land, plant and livestock; respect the physiological and behavioral needs of livestock; and minimize use of off-farm inputs.

Irradiation, use of sewage sludge and excluded methods, including GM, are prohibited.

Conversion to organic
The conversion process to organic allows for existing farms, herds and flocks to follow the existing organic regulations for a period of time while still receiving conventional prices for their products before becoming certified organic.

Land and crops must be managed for three years without prohibited materials or methods. Milk and milk products must be from animals that have been under continuous organic feed and management for no less than 12 months prior to producing organic products.

Slaughter animals must be organic from the last third of gestation (the last third of gestation before the slaughter animal itself was born). Animals that have been organic and leave organic production, in any way, cannot be reconverted back into organic production. The conversion of land and the dairy herd can occur concurrently.

The law allows for 3rd-year conversion home-grown feed to be fed to that operation’s dairy animals during the 12-month conversion for those animals.

Once the entire dairy herd has converted to organic production, all animals must receive 100 percent certified organic feed and management. All feed must be certified organic. Pasture must be organic.

Feed additives and supplements that are natural are allowed unless prohibited by being listed on the national list, while those that are synthetic must be on the national list to be allowed. The emphasis of pasture for dairy (and other ruminant) animals has evolved. There was no mention of pasture in OFPA in 1990.

To a certain extent some pasture was assumed and there was little concern for a need to set minimum standards. As a result, the requirement to have dairy animals on pasture as listed in the final rule that went into effect in 2002 was worded only as an “access to pasture.”

However, as the industry evolved and consumer perception changed, there has been an increasing commitment to “add teeth” to the regulation for a requirement for pasture access. A rule change for pasture access is being processed by NOP to be published in the Federal Register once it has received all the necessary approvals.

Feeding the organic dairy cow
The difference between conventional and organic rations greatly depends on the level of additional inputs offered to the cow by the operation’s management. Low-input conventional rations, with or without pasture, consisting of hay, silage and a feed mill grain mix will look very much like the low-input organic ration of organic hay and silage, organic pasture and an organic feed mill grain mix.

However, high-input rations can look very different. The high-input conventional ration typically contains hay; silage; corn; other grains; whole cottonseed; protein seeds or meal (usually soy- or canola-based); other byproducts; bypass fats and proteins; and extensive mineral, vitamin and other supplement additives including but not limited to synthetic amino acids.

The high-input organic ration is much more restrictive. It might include organic hay; organic silage; organic corn; limited availability of other certified organic grains, protein seeds or mechanically-processed meals (usually soy or linseed), limited or no byproducts, no animal slaughter byproducts, no synthetic amino acids, an allowed vitamin/mineral supplement and pasture.

The use of rBST and Rumensin are not allowed in certified organic dairy operations. In most cases, there seems to be a greater potential for milk production loss in herds that have converted to organic that utilized a high-input conventional ration than a low-input conventional ration.

As they are no longer allowed to utilize many of the modern “tools” of high milk production, the chance of experiencing a greater loss is larger. However, high-quality management often accompanies the more intensive implementation of the high-input tools on a conventional operation, and that level of management continues when the herd converts to and becomes organic.

Therefore, higher-quality management can often mitigate at least a portion of the production losses expected as a result of converting.

A key factor affecting the decline in milk output seen on each dairy operation after they convert to organic production will be closely tied to the lower quantity of quality organic forage the cows consume. While many herds experience a 10 percent drop in production after conversion to organic production, this is not always the case.

I worked with one dairy herd that actually showed a higher rolling herd average after their first year of organic production than they had prior to beginning their conversion to organic. In this case, we were able to finance and make major improvements in the feeding systems used on the farm by converting to organic production. PD

References omitted but are available upon request at

— The original version of this article was presented at Professional Dairy Producers of Wisconsin Annual Business Conference, Madison, WI, March 13, 2007

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