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MOOMilk Organic Milk: Maine Dairy Farmers Might Have Business Model To Emulate

CLARKE CANFIELD   02/17/10 04:22 AM ET   AP

PORTLAND, Maine — Maine dairy farmers hope their new organic milk, called MOOMilk, becomes as popular among natural-food buffs as Maine lobster is among seafood lovers.

Ten dairy farmers formed Maine's Own Organic Milk Co., MOOMilk for short, last year after their contracts weren't renewed by large milk distributor H.P. Hood LLC. A year later, the first half-gallon cartons of MOOMilk have reached dairy cases in scores of supermarkets and natural-food stores in Maine, New Hampshire and Massachusetts.

MOOMilk gives consumers a new locally produced organic milk while offering farmers a glimmer of hope when the dairy industry is struggling, said dairy farmer Richard Lary, of Windy Acres Farm, in Clinton. In Maine, 200 dairy farms have gone out of business in the past decade, with 300 still in operation.

"We probably would have gone out of businesses without MOOMilk," said Lary, a third-generation dairy farmer who has 300 cows. "Hopefully this will take off, and if it does we can take on some of our fellow farmers and keep everybody in business in Maine."

There are an estimated 1,800 to 2,000 certified organic dairy farms in the United States, said Mark Kastel, co-director of The Cornucopia Institute, a farm research group in Wisconsin.

Three milk processors – Dean Foods, Organic Valley and Aurora Dairy – dominate the organic-milk market, he said. At the other end, there are a number of farms that bottle their own organic milk for sale at farm stands and local country stores.

In between, there are a handful of companies, like MOOMilk, that aim to become regional players, Kastel said.

The dairy farmers created MOOMilk after being put on notice last year from Hood, which is based in Lynnfield, Mass., that their organic milk was no longer needed because demand had slipped and there was a glut on the market. The farmers offered their product to national organic-milk companies but were turned away.

That left them with only two choices, or so they thought – waste three years they spent earning organic certification and return to selling regular milk or go out of business.

Instead, they formed a type of business called an L3C, a low-profit, limited-liability corporation that's eligible to receive grants and endowments the same way a cooperative or nonprofit can.

"If these guys in Maine are successful, this will be a model to emulate," Kastel said.

The company formed partnerships with a milk hauler to take product to Smiling Hill Farm in Westbrook, where the milk is processed and packaged in half-gallon cartons.

Oakhurst Dairy sells and distributes the milk in supermarkets, and an organic-product distributor in central Maine sells and distributes it to natural and specialty food stores.

The milk is sold in dozens of Hannaford, IGA, Shurfine and other grocery stores in Maine, New Hampshire and northern Massachusetts, said Bill Eldridge, general manager of MOOMilk. The company plans to get into Wal-Mart Stores Inc. locations in Maine this month and expand into other New England states by the end of the year.

A primary goal is to keep the farmers in business, Eldridge said. The way it's set up, farmers own 50 percent of the company and 90 percent of the profits are returned to them.

At retail, the milk has been selling for $3.99 to $4.29 a carton, roughly double the price of regular milk.

"For our brand, a number of consumers are buying it not because it's organic but because it truly is a statewide local brand that is actively supporting local farmers," Eldridge said.

Like most organic foods, sales of organic dairy products have risen fast in recent years.

Dairy is the No. 2 category behind fruits and vegetables for sales of organic foods, accounting for 15 percent of all organic-food sales in 2008, said Laura Batcha, of the Organic Trade Association in Greenfield, Mass.

Organic dairy product sales totaled $3.4 billion in the U.S. in 2008, up nearly 13 percent over 2007, she said. Sales are expected to be flat or show only modest growth in 2009.

The MOOMilk Co. plans to stay within the New England borders and has no intention of competing against the nation's big organic dairies. In time, it hopes to expand its product line to flavored milks, ice cream and other dairy products.

Despite the poor economy, MOOMilk secretary David Bright is optimistic the brand will succeed. With other organic-milk brands, consumers don't know where the milk comes from; but with MOOMilk, buyers will know it comes from Maine farms with the profits going back to those farmers, he said.

"There's more organic milk sold in Maine right now than we can produce," he said. "We're looking to replace some of the milk from New York or New Jersey or wherever else it's coming from."

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On the Net:

MOOMilk: http://www.moomilkco.com

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Filed by T.J. Ortenzi  |