March 26, 2007
Monday

Richard Cotta, CEO of California Dairies Inc., the nation's second-largest dairy cooperative, is guided by a simple business philosophy: "If you want milk with little blue dots, you'll have it, as long as you are willing to pay for it."

So, when a string of major customers, including supermarket giant Safeway, came to his co-op saying they would no longer accept milk from cows treated with a genetically engineered growth hormone, the co-op bowed to the inevitable.

In January, California Dairies' board voted to ask its members not to inject synthetic bovine growth hormone into their cows. If they do, their milk will have to be segregated and they'll pay a surcharge.

"Consumer demand is obvious," Cotta said.

The action by a co-op that ships 50 million pounds of milk every day is part of a sweeping, consumer-driven agricultural makeover, in which suppliers are forced to adapt to a changing marketplace. Demand for natural foods is rising, while increasing numbers of consumers are avoiding products that rely on antibiotics or growth hormones. And food retailers are listening.

Recombinant bovine somatotropin, or rbST, was approved by the Food and Drug Administration 14 years ago. Injected every two weeks into cows, it sustains lactation by stimulating cows' appetites so they eat more and produce more milk, perhaps an extra 5 quarts per day.

The hormone supplements the natural bovine somatotropin (bST), or bovine growth hormone, produced in a cow's pituitary gland. St. Louis' Monsanto Co., which developed the synthetic hormone known by the trade name Posilac, says the increased milk output translates to an average increase in net profit for dairies of $100 a year per cow.

The synthetic hormone may have been used in 20 percent to 30 percent of the nation's cows since it became available in January 1994, according to some estimates.

But what may be a significant value to dairies can't compete against the growing attractiveness of the natural-foods movement.

"Many customers have called to ask us to eliminate the use of hormones," said Teena Massingill, a spokeswoman at Safeway, which is based in Pleasanton, Calif. "Our goal is to provide customers products they want," she said.

Safeway eliminated rbST in its Northern California milk brands, Lucerne and Dairy Glen, in 2004.

Starbucks spokeswoman Sanja Gould in Seattle said the company is already rbST-free in stores in Northern California, New England, New Mexico, Montana, Oregon, Washington state, Idaho and Alaska. That represents 37 percent of its dairy volume. The company will be free of bovine growth hormone in other markets as supply becomes available, Gould said.

Other notable national dairy-based companies that are rbST-free include Ben & Jerry's Homemade Ice Cream in Vermont.

"We think its use is a step in the wrong direction toward a synthetic, chemically intensive, factory-produced food supply," Ben & Jerry's said in a statement.

For farmers, rbST can mean money in the bank. Dennis Areias, a third-generation dairyman who milks 282 cows at Den-K Holsteins on the outskirts of Los Banos, Calif., figures it could add $30,000 or so to his net sales each year based on current prices.

Areias is one of three California Dairies board members who voted against discouraging rbST usage. In an interview in the pounding rain at his farm last week, he said he will continue to use Posilac.

Putting "rbST-free" on labels is a marketing ploy, he insisted. It creates a milk category between organic and regular that brings a higher price with no reward for the farmer, he complained.

Milk may be labeled as rbST-free in the United States provided that it's specified that federal tests have shown no significant difference between milk from cows treated with rbST and those that haven't been treated.

"The guy in the middle has figured out a marketing thing, where he can print something on a box about being rbST-free, cause a little concern or question, and he is going to generate more money in the marketplace," the 50-year-old dairyman said, his voice rising with indignation.

"This is an FDA-approved product and now they are telling us we can't use it and the ladies buying the milk are getting shafted every time they pay a penny more," Areias said. "Whether it's organic, rbST-free or regular, it's all exactly the same."

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