Partners with Agribusiness for Corporate Takeover

CORNUCOPIA, WISCONSIN: A report released today by The Cornucopia Institute, the nation’s most aggressive organic farming watchdog, accuses Wal-Mart of cheapening the value of the organic label by sourcing products from industrial-scale factory farms and Third World countries, such as China.

Wal-Mart announced earlier this year that they would greatly increase the number of organic products they offered and price them at a target of 10% above the cost for conventional food.

“We have received scores of press inquiries over the past few months asking us if Wal-Mart’s organic expansion was ‘good news or bad news’ for the industry,” stated Mark Kastel, Senior Farm Policy Analyst for the Wisconsin-based farm policy research group. “My stock answer has been: If Wal-Mart lends their logistical prowess to organic food both farmers and consumers will be big winners by virtue of a more competitive marketplace. However, if Wal-Mart applies their standard business model, and in essence Wal-Marts organics, then everyone will lose.”

The Institute’s white paper, Wal-Mart Rolls Out Organic Products—Market Expansion or Market Delusion?, makes the argument that Wal-Mart is indeed poised to drive down the price of organic food in the marketplace by inventing a “new” organic—food from corporate agribusiness, factory farms, and cheap imports of questionable quality. “Organic family farmers in this country could see their livelihoods disintegrate the same way so many industrial workers saw their family-supporting wages evaporate as Wal-Mart and other big-box retailers put the screws to manufacturers—forcing a production shift to China and other low-wage countries,” Kastel added.

Wal-Mart, already the nation’s largest organic milk retailer, partnering with the giant milk processor Dean Foods (Horizon Organic), recently introduced their own private-label organic milk packaged by Aurora Organic Dairy. Aurora, based in Boulder, Colorado, has faced a maelstrom of organic industry criticism and negative press for operating a number of industrial-scale dairies with thousands of cows confined in feedlot-like conditions. They are also the subject of two current USDA investigations into their organic management practices.

“If there was any previous doubt as to their intentions, partnering with Dean/Horizon and Aurora should leave no question in anyone’s mind as to how Wal-Mart is approaching its organic initiative,” proclaimed Steve Sprinkel long-time industry observer and columnist for the nation’s leading sustainable agricultural journal, Acres USA. Large percentages of milk from Horizon and Aurora come from factory farms, milking as many as 10,000 cows, allegedly without the required access to pasture. The two companies have also been accused of bringing nonorganic cows onto their farms. “Because of the intense media scrutiny there is no doubt that Wal-Mart entered into these relationships in blatant disregard to the ethical expectations of the consumers who have helped build organics into a lucrative $16 billion industry,” Sprinkel added.

This April, The Cornucopia Institute released a rating of the nation’s approximately 70 organic namebrand and private-label organic dairy products. Although almost 90% received a very high rating, Horizon and Aurora refused to participate in the study and received the Institute’s lowest score. And in a subsequent poll of their over 800,000 members, the Organic Consumers Association moved to boycott Horizon and Aurora dairy products. “It’s hard to believe that at this time Wal-Mart would embrace these products,” said OCA director Ronnie Cummins.

In addition to the report’s documentation of the Wal-Mart/factory-farm connection, the study also highlighted the company’s decision to lower the per unit cost basis on organic products by collaborating with its long-time trading partner China.

“Even if it were not for many serious concerns about the propriety of the certification process in China—and the fact that the USDA has provided little if any regulatory oversight there—food shipped around the world, burning fossil fuels and undercutting our domestic farmers, does not meet the consumer’s traditional definition of what is truly organic,” Kastel stated.

While Wal-Mart sources Chinese organic products, the industry’s largest organic and natural foods retailer, Whole Foods Market, announced plans this summer to greatly expand their offerings of locally grown produce in deference to organic consumer sentiments.

“Between Whole Foods and hundreds of the nation’s cooperatively owned natural foods groceries, we are certainly set up for a clash of the titans,” said Cummins. “Will consumers choose cheap industrial food, be it from factory farms or questionable Third World imports, or will they continue to support ethical processors and family farmers?”

Wal-Mart also depends on Natural Selection Foods, Earthbound Farms, a giant industrial enterprise farming tens of thousands of acres in California, Arizona, Mexico and Chile as their prime vendor for organic vegetables.

“I don’t think (consumers) have any idea just how industrialized it’s becoming (mainstream organics),” said journalism professor and author Michael Pollan in a recent interview with the St. Paul Pioneer Press. Pollan’s book, “The Omnivore’s Dilemma” has been a national bestseller. “There are some real downsides to organic farming scaling up to this extent,” Pollan added during the interview. He and others worry that the expansion of “Big Organic” will lower food quality, weaken standards and hurt small family farms.

In September, The Cornucopia Institute sent a letter to Wal-Mart CEO Lee Scott suggesting that Wal-Mart’s approach to organics would likely undermine the corporation’s campaigns to attract upscale shoppers to their stores and to help cleanse the reputation of world’s largest retailer in terms of the widespread criticism that it has endured due to its labor and environmental practices.

“We are afraid that you are grossly miscalculating your move into organics and underestimating the knowledge and commitment of the organic consumer. Those buying organic food are comfortable paying the historic premiums because they think that part of their purchase dollar supports a different kind of environmental, animal husbandry, and economic justice ethic,” the letter from Cornucopia read in part.

The letter also cited an example of Wal-Mart selling mislabeled conventional yogurt as organic. In addition, the Institute’s report red-flagged the retailer selling organic baby formula made with both questionable synthetic ingredients and processing materials. The report also suggests that Wal-Mart might lack the qualifications or commitment to oversee what promises to be one of the nation’s largest organic manufacturing, distribution, and retail networks.

“Wal-Mart’s move into organics is worrisome to investors who realize that the credibility of organic label, and the sustainability of organic farming, is of greater significance to their returns than the mere branding of the term ‘organic,’” said Daniel Stranahan, Investment Committee Chair of the Toledo-based The Needmor Fund. “If we undermine the legitimacy of organic label then we also undermine the investor and consumer confidence that have brought historic premiums to organic products.”

~

The Cornucopia Institute’s White Paper, Wal-Mart Rolls Out Organic Products. Market Expansion or Market Delusion?, along with a photo gallery containing images of some of the organic items now being offered for sale at Wal-Mart stores, and the letter sent by The Cornucopia Institute to Wal-Mart’s CEO, can be found on the organization’s Web page at http://www.cornucopia.org.

CHENEY, Washington, October 4, 2006 (ENS) - Treated sewage sludge sold to householders to spray on their lawns and gardens as fertilizer may be adding pharmaceuticals, flame retardants and other chemicals to the land, according to research by Chad Kinney, an assistant professor of chemistry and biochemistry at Eastern Washington University.

Nine different biosolid products, produced by municipal wastewater treatment plants in seven different states - Washington, Arizona, Wisconsin, Kansas, Colorado, Texas and Iowa - were analyzed for 87 different organic wastewater contaminants.

The 87 contaminants represent a cross section of medicinal, industrial and household compounds that enter wastewater treatment plants and may be discharged without being completely metabolized or degraded.

Fifty-five of the contaminants were detected in at least one biosolid product sold by government agencies as lawn-and-garden enhancements. Twenty-five compounds were found in every single one of the samples.

"No matter what biosolid we looked at, there were some of these compounds in it," said Kinney, whose research on the subject was published in online edition of the journal "Environmental Science & Technology."

The U.S. Geological Survey's Toxic Substance Hydrology Program supported Kinney's work, which he began while a postdoctoral fellow with the USGS.

Although government regulators and health officials said there is no immediate risk to public health, the study's authors called for more research on the long-term impact on the environment.

"We've been using biosolids for over 30 years safely," said Peggy Leonard, biosolids program manager for King County's waste treatment division, which makes the product GroCo. "As far as I know, there is no risk."

Thomas Burke, a professor of public health policy at Johns Hopkins University in Baltimore, said Kinney's research is a wake-up call for the U.S. Environmental Protection Agency, which has promoted biosolids for decades because they contain the same nutrients - nitrogen and phosphorus - found in fertilizers.

"I don't think people understood before this that they might be applying pharmaceuticals and disinfectants to their front lawns," Burke said.

10.02.2006

By JEFF BARNARD
The Associated Press

GRANTS PASS, Ore. ? A team of Canadian scientists has found the most direct evidence yet that baby salmon pick up fatal infections of sea lice while swimming past salmon farms in British Columbia's Broughton Archipelago, and that the more salmon farms the more baby salmon die.

"Before we knew there were potential problems," said Martin Krkosek, a doctoral student at the University of Alberta who was lead author of the study released Monday by the American journal Proceedings of the National Academy of Sciences. "Now it is very clear we have severe problems here."

In natural conditions, the adult salmon that carry the sea lice aren't in the migration channels and rivers at the same time as young pink and chum salmon, so the little fish are not infested, said Mark Lewis, University of Alberta senior Canada research chair in mathematical biology, who oversaw the research.

But fish farms have changed that, raising hundreds of thousands of adults in floating net pens anchored year round in the channels where the young fish migrate. The young pink and chum salmon are only an inch long, and do not yet have scales to protect them from parasites, he said.

Ransom Myers, a professor of biology at Dalhousie University in Nova Scotia, who was not part of the study, said it was the most comprehensive to date on the issue and hoped it would push the Canadian government to take action to protect wild salmon.

Andrew Thomson, acting head of aquaculture for Fisheries and Oceans Canada's Pacific region, said the agency had yet to review the study, but was monitoring sea lice infestations of wild salmon, doing its own research, and was committed to protecting wild salmon.

"What we're seeing is infection rates of sea lice vary year by year, and populations of pink salmon show fluctuations year by year," he said. "It's a complex issue. We need to do more research on it."

Marine Harvest, which owns many of the 30 salmon farms in the archipelago, did not return a telephone call to its Campbell River, B.C. office for comment.

When West Coast salmon catches in the United States crashed in the 1990s, farmed salmon filled the gap in supermarket coolers, and Canada now has about 280 salmon farms that produce about 96,000 tons worth $387 million each year. About 70 percent goes to the United States. British Columbia has about 100 salmon farms, and Broughton Archipelago about 30.

There are nine salmon farms in the U.S. ? six in Maine, two in Washington and one in Tennessee.

Concerned about the impacts of hundreds of thousands of salmon crowded into net pens floating in coastal fiords down which baby salmon migrate, environmental groups have campaigned to convince consumers to boycott farmed fish.

Alexandra Morton, a biologist from Broughton Archipelago who took part in the study and is founder of the Raincoast Research Society, said she started looking into the issue in 2001 when a fisherman brought her a wild salmon covered with sea lice and asked her whether salmon farms were the reason.

"Every time one of us publishes on this issue, the Canadian government finds a little loophole and runs with it," she said. "First they said maybe it's not coming from the farms. When we nailed that one down, they said maybe they don't kill the fish. When we nailed that one down they said maybe they don't kill to affect the population.

"This nails that final loophole down."

The study examined 17,000 fish, which were netted at regular intervals along three different migration routes over the course of two years. Mortality rates at various points in the migration season ranged from 9 percent to 95 percent.

The study found fish died after being infected with as few as one louse, that the more louse on the fish the more likely it was to die, and that the more salmon farms along the migration route, the more likely the fish were to die. The highest mortality rate, 95 percent, came in the channel with three salmon farms at the end of the migration season, when sea lice were most prevalent. The other two channels had two farms.

"The basic physics says this result should not be surprising," said Neil Frazer, a professor of physics at the University of Hawaii who worked on the mathematical modeling that went into the study. "When you put a bunch of farmed fish into a system of wild fish and parasites, you automatically are going to greatly increase the number of parasites, because you now have a much better chance of finding a host."

By Diane Brady
Business Week, October 2006

Next time you're in the supermarket, stop and take a look at Stonyfield Farm yogurt. With its contented cow and green fields, the yellow container evokes a bucolic existence, telegraphing what we've come to expect from organic food: pure, pesticide-free, locally produced ingredients grown on a small family farm.

So it may come as a surprise that Stonyfield's organic farm is long gone. Its main facility is a state-of-the-art industrial plant just off the airport strip in Londonderry, N.H., where it handles milk from other farms. And consider this: Sometime soon a portion of the milk used to make that organic yogurt may be taken from a chemical-free cow in New Zealand, powdered, and then shipped to the U.S. True, Stonyfield still cleaves to its organic heritage. For Chairman and CEO Gary Hirshberg, though, shipping milk powder 9,000 miles across the planet is the price you pay to conquer the supermarket dairy aisle. "It would be great to get all of our food within a 10-mile radius of our house," he says. "But once you're in organic, you have to source globally."

Hirshberg's dilemma is that of the entire organic food business. Just as mainstream consumers are growing hungry for untainted food that also nourishes their social conscience, it is getting harder and harder to find organic ingredients. There simply aren't enough organic cows in the U.S., never mind the organic grain to feed them, to go around. Nor are there sufficient organic strawberries, sugar, or apple pulp -- some of the other ingredients that go into the world's best-selling organic yogurt.

Now companies from Wal-Mart (WMT ) to General Mills (GIS ) to Kellogg (K ) are wading into the organic game, attracted by fat margins that old-fashioned food purveyors can only dream of. What was once a cottage industry of family farms has become Big Business, with all that that implies, including pressure from Wall Street to scale up and boost profits. Hirshberg himself is under the gun because he has sold an 85% stake in Stonyfield to the French food giant Groupe Danone. To retain management control, he has to keep Stonyfield growing at double-digit rates. Yet faced with a supply crunch, he has drastically cut the percentage of organic products in his line. He also has scaled back annual sales growth, from almost 40% to 20%. "They're all mad at me," he says.

As food companies scramble to find enough organically grown ingredients, they are inevitably forsaking the pastoral ethos that has defined the organic lifestyle. For some companies, it means keeping thousands of organic cows on industrial-scale feedlots. For others, the scarcity of organic ingredients means looking as far afield as China, Sierra Leone, and Brazil -- places where standards may be hard to enforce, workers' wages and living conditions are a worry, and, say critics, increased farmland sometimes comes at a cost to the environment.

Everyone agrees on the basic definition of organic: food grown without the assistance of man-made chemicals. Four years ago, under pressure from critics fretting that the term "organic" was being misused, the U.S. Agriculture Dept. issued rules. To be certified as organic, companies must eschew most pesticides, hormones, antibiotics, synthetic fertilizers, bioengineering, and radiation. But for purists, the philosophy also requires farmers to treat their people and livestock with respect and, ideally, to sell small batches of what they produce locally so as to avoid burning fossil fuels to transport them. The USDA rules don't fully address these concerns.

Hence the organic paradox: The movement's adherents have succeeded beyond their wildest dreams, but success has imperiled their ideals. It simply isn't clear that organic food production can be replicated on a mass scale. For Hirshberg, who set out to "change the way Kraft (KFT ), Monsanto (MON ), and everybody else does business," the movement is shedding its innocence. "Organic is growing up."

Certainly, life has changed since 1983, when Hirshberg teamed up with a back-to-the-land advocate named Samuel Kaymen to sell small batches of full-fat plain organic yogurt. Kaymen had founded Stonyfield Farm to feed his six kids and, as he puts it, "escape the dominant culture." Hirshberg, then 29, had been devoted to the environment for years, stung by memories of technicolor dyes streaming downriver from his father's New Hampshire shoe factories. He wrote a book on how to build water-pumping windmills and, between 1979 and 1983, ran the New Alchemy Institute, an alternative-living research center on Cape Cod. He was a believer.

But producing yogurt amid the rudimentary conditions of the original Stonyfield Farm was a recipe for nightmares, not nirvana. Meg, an organic farmer who married Hirshberg in 1986, remembers the farm as cold and crowded, with a road so perilous that suppliers often refused to come up. "I call it the bad old days," she says. Adds her mother, Doris Cadoux, who propped up the business for years: "Every time Gary would come to me for money, Meg would call to say 'Mama, don't do it."'

Farming without insecticides, fertilizers, and other aids is tough. Laborers often weed the fields by hand. Farmers control pests with everything from sticky flypaper to aphid-munching ladybugs. Manure and soil fertility must be carefully managed. Sick animals may take longer to get well without a quick hit of antibiotics, although they're likely to be healthier in the first place. Moreover, the yield per acre or per animal often goes down, at least initially. Estimates for the decline from switching to organic corn range up to 20%.

Organic farmers say they can ultimately exceed the yields of conventional rivals through smarter soil management. But some believe organic farming, if it is to stay true to its principles, would require vastly more land and resources than is currently being used. Asks Alex Avery, a research director at the Hudson Institute think tank: "How much Bambi habitat do you want to plow down?"

IMPOSSIBLE STANDARD For a sense of why Big Business and organics often don't mix, it helps to visit Jack and Anne Lazor of Butterworks Farm. The duo have been producing organic yogurt in northeastern Vermont since 1975. Their 45 milking cows are raised from birth and have names like Peaches and Moonlight. All of the food for the cows -- and most of what the Lazors eat, too -- comes from the farm, and Anne keeps their charges healthy with a mix of homeopathic medicines and nutritional supplements. Butterworks produces a tiny 9,000 quarts of yogurt a week, and no one can pressure them to make more. Says Jack: "I'd be happiest to sell everything within 10 miles of here."

But the Lazors also embody an ideal that's almost impossible for other food producers to fulfill. For one thing, they have enough land to let their modest-sized herd graze for food. Many of the country's 9 million-plus dairy cows (of which fewer than 150,000 are organic) are on farms that will never have access to that kind of pasture. After all, a cow can only walk so far when it has to come back to be milked two or three times a day.

STEWARDS OF THE LAND When consumers shell out premiums of 50% or more to buy organic, they are voting for the Butterworks ethic. They believe humans should be prudent custodians not only of their own health but also of the land and animals that share it. They prefer food produced through fair wages and family farms, not poor workers and agribusiness. They are responding to tales of caged chickens and confined cows that never touch a blade of grass; talk of men losing fertility and girls becoming women at age nine because of extra hormones in food. They read about pesticides seeping into the food supply and genetically modified crops creeping across the landscape.

For Big Food, consumers' love affair with everything organic has seemed like a gift from the gods. Food is generally a commoditized, sluggish business, especially in basic supermarket staples. Sales of organic groceries, on the other hand, have been surging by up to 20% in recent years. Organic milk is so profitable -- with wholesale prices more than double that of conventional milk -- that Lyle "Spud" Edwards of Westfield, Vt., was able to halve his herd, to 25 cows, this summer and still make a living, despite a 15% drop in yields since switching to organic four years ago. "There's a lot more paperwork, but it's worth it," says Edwards, who supplies milk to Stonyfield.

The food industry got a boost four years ago when the USDA issued its organic standards. The "USDA Organic" label now appears on scores of products, from chicken breasts to breakfast cereal. And you know a tipping point is at hand when Wal-Mart Stores Inc. enters the game. The retailer pledged this year to become a center of affordable "organics for everyone" and has started by doubling its organic offerings at 374 stores nationwide. "Everyone wants a piece of the pie," says George L. Siemon, CEO of Organic Valley, the country's largest organic farm co- operative. "Kraft and Wal-Mart are part of the community now, and we have to get used to it."

The corporate giants have turned a fringe food category into a $14 billion business. They have brought wider distribution and marketing dollars. They have imposed better quality controls on a sector once associated with bug-infested, battered produce rotting in crates at hippie co-ops. Organic products now account for 2.5% of all grocery spending (if additive-free "natural" foods are included, the share jumps to about 10%). And demand could soar if prices come down.

But success has brought home the problems of trying to feed the masses in an industry where supplies can be volatile. Everyone from Wal-Mart to Costco Wholesale Corp. (COST ) is feeling the pinch. Earlier this year, Earthbound Farm, a California producer of organic salads, fruit, and vegetables owned by Natural Selection Foods, cut off its sliced-apple product to Costco because supply dried up -- even though Earthbound looked as far afield as New Zealand. "The concept of running out of apples is foreign to these people," says Earthbound co-founder Myra Goodman, whose company recalled bagged spinach in the wake of the recent E. coli outbreak. "When you're sourcing conventional produce, it's a matter of the best product at the best price."

Inconsistency is a hallmark of organic food. Variations in animal diet, local conditions, and preparation make food taste different from batch to batch. But that's anathema to a modern food giant. Heinz, for one, had a lot of trouble locating herbs and spices for its organic ketchup. "We're a global company that has to deliver consistent standards," says Kristen Clark, a group vice-president for marketing. The volatile supply also forced Heinz to put dried or fresh organic herbs in its organic Classico pasta sauce because it wasn't able to find the more convenient quick-frozen variety. Even Wal-Mart, master of the modern food supply chain, is humbled by the realities of going organic. As spokesperson Gail Lavielle says: "You can't negotiate prices in a market like that."

While Americans may love the idea of natural food, they have come to rely on the perks of agribusiness. Since the widespread use of synthetic pesticides began, around the time of World War II, food producers have reaped remarkable gains. Apples stay red and juicy for weeks. The average harvested acre of farmland yields 200% more wheat than it did 70 years ago. Over the past two decades chickens have grown 25% bigger in less time and on less food. At the same time, the average cow produces 60% more milk, thanks to innovations in breeding, nutrition, and synthetic hormones.

It's also worth remembering how inexpensive food is these days. Americans shell out about 10% of their disposable income on food, about half what they spent in the first part of the 20th century. Producing a budget-priced cornucopia of organic food won't be easy.

Exhibit A: Gary Hirshberg's quest for organic milk. Dairy producers estimate that demand for organic milk is at least twice the current available supply. To quench this thirst, the U.S. would have to more than double the number of organic cows -- those that eat only organic food -- to 280,000 over the next five years. That's a challenge, since the number of dairy farms has shrunk to 60,000, from 334,000 in 1980, according to the National Milk Producers Federation. And almost half the milk produced in the U.S. comes from farms with more than 500 cows, something organic advocates rarely support.

What to do? If you're Hirshberg, you weigh the pros and cons of importing organic milk powder from New Zealand. Stonyfield already gets strawberries from China, apple puree from Turkey, blueberries from Canada, and bananas from Ecuador. It's the only way to keep the business growing. Besides, Hirshberg argues, supporting a family farmer in Madagascar or reducing chemical use in Costa Rica is just as important as doing the same at home.

Perhaps, but doing so risks a consumer backlash, especially when the organic food is from China. So far there is little evidence that crops from there are tainted or fraudulently labeled. Any food that bears the USDA Organic label has to be accredited by an independent certifier. But tests are few and far between. Moreover, many consumers don't trust food from a country that continues to manufacture DDT and tolerates fakes in other industries. Similar questions are being asked about much of the developing world. Ronnie Cummins, national director of the nonprofit Organic Consumers Assn., claims organic farms may contribute to the destruction of the Amazon rain forest, although conventional farming remains the proven culprit.

Imported organics are a constant concern for food companies and supermarkets. It's certainly on Steve Pimentel's mind. "Someone is going to do something wrong," says Costco's assistant general merchandise manager. "We want to make sure it's not us." To avoid nasty surprises, Costco makes sure its own certifiers check that standards are met in China for the organic peanuts and produce it imports. Over at Stonyfield, Hirshberg's sister, Nancy, who is vice-president of natural resources, was so worried about buying strawberries in northeastern China that she ordered a social audit to check worker conditions. "If I didn't have to buy from there," she says, "I wouldn't."

For many companies, the preferred option is staying home and adopting the industrial scale of agribusiness. Naturally, giant factory farms make purists recoil. Is an organic label appropriate for eggs produced in sheds housing more than 100,000 hens that rarely see the light of day? Can a chicken that's debeaked or allowed minimal access to the outdoors be deemed organic? Would consumers be willing to pay twice as much for organic milk if they thought the cows producing it spent most of their outdoor lives in confined dirt lots?

ETHICAL CHALLENGES? Absolutely not, say critics such as Mark Kastel, director of the Organic Integrity Project at the Cornucopia Institute, an advocacy group promoting small family farms. "Organic consumers think they're supporting a different kind of ethic," says Kastel, who last spring released a high-profile report card labeling 11 producers as ethically challenged.

Kastel's report card included Horizon Organic Dairy, the No. 1 organic milk brand in the U.S., and Aurora Organic Dairy, which makes private-label products for the likes of Costco and Safeway Inc. Both dairies deny they are ethically challenged. But the two do operate massive corporate farms. Horizon has 8,000 cows in the Idaho desert. There, the animals consume such feed as corn, barley, hay, and soybeans, as well as some grass from pastureland. The company is currently reconfiguring its facility to allow more grazing opportunities. And none of this breaks USDA rules. The agency simply says animals must have "access to pasture." How much is not spelled out. "It doesn't say [livestock] have to be out there, happy and feeding, 18 hours a day," says Barbara C. Robinson, who oversees the USDA's National Organic Program.

But what gets people like Kastel fuming is the fact that big dairy farms produce tons of pollution in the form of manure and methane, carbon dioxide, and nitrous oxide -- gases blamed for warming the planet. Referring to Horizon's Idaho farm, he adds: "This area is in perpetual drought. You need to pump water constantly to grow pasture. That's not organic."

Aurora and Horizon argue their operations are true to the organic spirit and that big farms help bring organic food to the masses. Joe E. Scalzo, president and CEO of Horizon's owner, WhiteWave, which is owned by Dean Foods Co., says: "You need the 12-cow farms in Vermont -- and the 4,000 milking cows in Idaho." Adds Clark Driftmier, a spokesman for Aurora, which manages 8,400 dairy cows on two farms in Colorado and Texas: "We're in a contentious period with organics right now."

At the USDA, Robinson is grappling with the same imponderables. In her mind the controversy is more about scale than animal treatment. "The real issue is a fear of large corporations," she says. Robinson expects the USDA to tighten pasture rules in the coming months in hopes of moving closer to the spirit of the organic philosophy. "As programs go," she says, "this is just a toddler. New issues keep coming up."

Few people seem more hemmed in by the contradictions than Gary Hirshberg. Perhaps more than anyone, he has acted as the industry's philosopher king, lobbying governments, proselytizing consumers, helping farmers switch to organic, and giving 10% of profits to environmental causes. Yet he sold most of Stonyfield Farm to a $17 billion French corporation.

He did so partly to let his original investors cash out, partly to bring organic food to the masses. But inevitably, as Stonyfield has morphed from local outfit to national brand, some of the original tenets have fallen by the wayside. Once Danone bought a stake, Stonyfield founder Samuel Kaymen moved on. "I never felt comfortable with the scale or dealing with people so far away," he recalls, although he says Hirshberg has so far managed to uphold the company's original principles.

The hard part may be continuing to do so with Danone looking over his shoulder. Hirshberg retains board control but says his "autonomy and independence and employment are contingent on delivering minimum growth and profitability." Danone Chairman and CEO Franck Riboud expresses admiration for the man he considers to be Danone's organic guru, but adds: "Gary respects that I have to answer to shareholders."

The compromises that Hirshberg is willing to make say a lot about where the organic business is headed. "Our kids don't have time for us to sit on our high horses and say we're not going to do this because it's not ecologically perfect," says Hirshberg. "The only way to influence the powerful forces in this industry is to become a powerful force." And he's willing to do that, even if it means playing by a new set of rules.