Danone Agrees to Help Mitigate Damage Caused by Pulling Out of Northeast

Danone North America, owner of Horizon Organic, will meet one of the requests of Northeast organic producer groups, in order to mitigate the damage resulting from Danone’s decision to move its milk sourcing to the west, a decision which leaves 89 organic dairies in the northeast without a market.

As WholeFoods has previously reported (1, 2), Danone made this decision in August, when it notified the dairy farm families that it would be ending their contracts and pulling out of the Northeast U.S. market, transitioning instead to larger farms closer to its western New York dairy processing plant. Many of the 89 affected farm families have been providing organic milk to Horizon Organic for decades, and had a hand in building the brand. 13,020 people signed a national petition asking Danone not to leave the Northeast, and a Maine petition garnered 2,214 signatures. The producer groups point out that Danone is a B Corp, committed to putting people above profits—and hold that this move is doing the opposite.

Danone has now agreed to extend farm contracts to 18 months. The company will also be providing a small transition payment for the affected farm families, consisting of 6% of the milk check for 6 months or $2 per hundred pounds of milk.

“We’re glad to get a response to our requests, which is one small step in the right direction,” said Sarah Alexander, Executive Director of the Maine Organic Farmers and Gardeners Association, in the press release. “There are still many details to figure out for our producers and lots of work to be done to improve infrastructure and ensure a future for organic dairy in the region. We look forward to continuing our discussions with Danone to ensure that they meet their commitments and work toward viable long-term solutions for northeast dairies.”

Five farming organizations met with Danone on November 18, in order to outline the petition requests and present two options that could help rectify the negative impact on the Northeast region. The first option asked Danone to stay in the Northeast, and invest in a processing plant that would give Danone the sustainability and reduction in truck miles that the company is hoping to obtain by shifting west. The alternative option asked that, if Danone insisted on leaving, the company could financially support the farm families: All 89 dairy farm families will either be forced into early retirement, or will have to make costly changes to their farms in order to be picked up by another company. For the second option, the group asked Danone to give a severance pay totaling $15m to all 89 dairy farmers, and to provide a $25m investment towards a new organic dairy processing plant in New England.

In a letter dated December 13, 2021, that Danone sent to the Northeast organic producer groups, Danone announced its plans to provide the affected producers with the option to extend their current contract for a total of 18-months, ending on February 28, 2023; to provide modest transition payments of an additional amount per hundredweight on the milk purchased from the producers during the last 6 months of their contracts, including to farms that have already exited Danone’s network after receiving the non-renewal notification; to provide farm consultants at no charge to the affected farms; and to explore co-investment solutions for Northeast dairy infrastructure.

“We would have preferred for Danone to stay in the region,” said Grace Oedel, Executive Director, Northeast Organic Farming Association of Vermont, in the press release “Horizon Organic has been in the Northeast region for over two decades and has a long-term relationship with all the organic farm organizations and our farmer-members. If they are determined to leave, we are glad that they are working towards meeting some of our requests to leave the region in a stronger position.”

That said, many questions still remain. “We hope to hear more specifics about how Danone plans to co-invest in solutions for Northeast dairy infrastructure,” said Kate Mendenhall, Organic Farmers Association. “The region needs a new organic dairy processing facility to be able to secure a future for Northeast dairy and provide local milk for the Northeast. We estimate that a new facility will cost at least $50 million to support the milk processing for the region as well as supplementary dairy processing needed to balance the local supply. Danone has the fiscal capability to help make that a reality for these farmers.”

And Ed Maltby, Executive Director of the Northeast Organic Dairy Producers Alliance, holds that the offering is nowhere near helpful enough. “It’s great for producers to be able to extend their contracts for an extra six months; however, the proposal lacks any substantive financial support to assist with the trauma that this decision has caused. Farmers are being offered myriad services by State governments and non-profits so any farm consultancy will not be helpful. Unfortunately, with Danone’s decision to leave the region, these farms will need to figure out what their future looks like. The contract extension will give them a little bit more time to investigate new paths forward for their families, but what they really need is a sound market with a good pay-price to give them a living wage.”

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The producer groups intend to continue working to manage the crisis and help those affected. They encourage consumers to buy directly from local organic dairy farmers and processers, as an antidote to corporate consolidation. And they request support from consumers, policy-makers, and businesses to enable investments in local infrastructure, allowing farmers to regain control of their own work and products and ensure that consumers have access to healthy and locally produced food.