Current and former Dean/WhiteWave employees now estimate the investment in their Idaho "organic" dairy as being between 20 and 22 million dollars (over and above their original cost basis). Even if consumers believe that operating an industrial dairy, with thousands of cows, isn't a betrayal to the values that the organic movement was founded upon, it's certainly questionable whether this facility can ever be operated profitably.
A Shot across the Bow
And now comes the warning. At The Cornucopia Institute, while acting as a corporate and governmental watchdog, we always say that the questions in this industry are about corporate ethics, not just about corporate scale.
Regardless of who purchases the Horizon organic label, and Dean's lesser-known organic brand, distributed in the Northeast, Organic Cow of Vermont, we sincerely recommend that they purchase "selected assets" of the operation from Dean Foods--without the white elephants--the corporate-owned Idaho dairy, a smaller corporate owned dairy farm in Maryland and a number of other certified organic "factory farms" that Dean Foods has either invested in or is leasing.
Consumers first come to organic food because they were looking for what they perceive to be safer and nutritionally superior food for their families. And there is now a growing body of scientific literature substantiating this perception.
But we know that the reason there is such little price resistance to the premiums in organics in general (organic milk sales increased by double digits in 2010) is that people think they are also doing something good for society.
Organic dairy customers think they are supporting a more ethical environmental approach, a more humane animal husbandry model, and they think that economic-justice for farmers is built right into the organic milk price.
So a new corporate parent could turn things around at Horizon. At least half of the milk right now, being packaged under Dean Foods' organic labels, comes from family-scale farmers. And we have no reason to believe they aren't every bit as ethical and authentic as the farmers shipping to other major brands.
The new owners might have to temporarily continue to purchase organic milk from the Dean Foods' dairies. But they can make it clear that they will put a program in place to help transition the brand to 100%, legitimate, organic farm milk. Then someone might have a winning investment in what is not just the largest organic dairy brand in the country but is the largest volume organic brand, period.
If this sincere advice is not heeded, investors will acquire not just a brand but an ongoing prairie fire that has made Dean Foods the pariah of the organic dairy business.
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