Is organic milk worth its higher price?
(Reuters) - Organic milk costs more per gallon than premium gasoline, yet it is at the center of a similar debate as to whether organic milk is worth the extra money for the purported benefit it provides.
What is going on with this precious liquid that some people swear by and others dismiss?
Proponents say they will pay the price and seek out milk with the valuable, official "organic" label because it is healthier. Others argue that organic milk is nothing more than a marketing idea to drive up prices and that conventional milk is every bit as nutritious and safe.
Whatever your beliefs on organic milk, the fact is that it costs considerably more than "regular" non-organic milk and is in such short supply that its already-lofty price is rising.
Molly Keveney, spokeswoman for WhiteWave Foods' Horizon, the leading brand in organic milk, says consumers could typically expect to pay about $4.18 for a half-gallon of organic milk. And a 14-cent increase in the wholesale price is set to take effect on March 1.
The national price for regular unleaded gasoline in the United States rose to $3.58 a gallon in the week through February 13, according to the Energy Information Administration. It had started the year around $3.32 a gallon.
Meanwhile, non-organic milk can be found in certain locations selling for about $2.50 a gallon.
But Isabel Maples, a spokeswoman for the National Dairy Council, contends the difference between the prices is just marketing.
"When I talk to people about organic or not organic, they say they choose organic because they perceive that it's healthier. From a science point of view - as a dietician and a health professional - I want them to know the facts," she says.
According to Maples, the fact is conventional milk is both free of any harmful substances and as healthy as organic brands.
WHAT IS ORGANIC?
Organic milk, according to the standards set by the U.S. Department of Agriculture, comes from livestock that must follow these guidelines:
- At least 30 percent of the food they eat must be grazed at pasture during a grazing season of at least 120 days;
- No antibiotics or growth hormones may be used;
- All feed must be organic, and
- No meat or poultry by-products can be in the feed.
The diet of conventional dairy cows is not as fancy as their organic cousins. And they can be treated with antibiotics, although Maples notes that cows being treated must be pulled out of production and any testing that shows signs of antibiotics in the milk requires the entire shipment to be destroyed.
As for growth hormones, while it is still legal in the United States, a small percentage of the country's dairy cows are being treated with them, according to industry data. Many retailers no longer sell milk from treated cows.
About 4 percent of all dairy sold is organic, according to the most recent industry data.
Phil Lempert, a grocery industry analyst, says the demand for organic milk swelled when consumers began expressing concerns about growth hormones in conventional milk.
Seeing that the market was shifting, the grocery giant Kroger Co announced in 2007 that it would no longer carry milk that contained synthetic growth hormones. (A significant portion of the industrialized world - including Europe, Canada, Japan and Australia, had already banned the substance from their dairy products years earlier.) After that, Lempert says, one U.S. retailer after another followed.
If your concern about milk is synthetic growth hormone, he says you can buy any store brand in the country and get the same nutritional value as organic milk without worrying about those artificial hormones getting mixed in.
DRIVING UP THE PRICE
While organic milk costs more to produce than non-organic milk, that does not account for all of the price difference. Experts say markup varies regionally, but overall, there is a much higher margin on organic milk.
The major contributing factor to the price premium on organic milk is seen as supply versus demand.
When organic dairies drop their certification, it is not easy to replace them. It takes three years to complete the certification to become an organic farm, says Horizon's Keveney.
An increase in organic feed prices due to bad weather last year had a major impact on supply at a time when demand has continued to rise. Keveney notes there is currently about a 10 percent gap between supply and demand.
Michelle Howard, a consumer who owns a garlic farm and gourmet food business in Massachusetts, was disappointed to find a sign in place of her milk in the dairy case recently that noted a supply shortage. She says she is concerned about growth hormones and antibiotics in the food chain, adding she doesn't have to worry about that with organic milk.
"The FDA says that rBHG (growth hormone) is 'safe,' which it may be," Howard says. "I don't necessarily trust the government when it comes to food. ... But if you follow the antibiotic trail, you don't have to be a doctor to figure out this could, and likely does, lead to problems."
Howard says she would pay up to $5 for a half gallon - a significant premium to conventional milk - and is now paying about $3.50. It is the standards that are important, she says.
"At least with organic there is an accountability system. In addition to being hormone-free, those cows are being fed organic grain. A 'non-organic' hormone-free cow can still be fed genetically modified corn. So until there are standards developed around alternative labels such as hormone-free, we're sticking with organic."
Whether or not people are willing to shell out any price for organic milk, Lempert, for one, thinks it's a mistake, to encourage people to pay 25 percent to 60 percent more for organic milk for what he says is no advantage other than the idea of it. He blames a "weak supply chain" caused by a loss of organic farmers, not increased demand for the current shortage of organic milk. The organic industry, he says, is trying to use this current supply issue to draw attention to its products.
"Consumers, particularly in this economy, can't afford to overpay for something," Lempert says.
(Editing by Beth Gladstone, Lauren Young, Gary Crosse)