In 2005, national sales of organic milk increased 24 percent by volume and 27 percent in value, totaling $499 million in sales, according to the Organic Trade Association. But with a host of new multi-million-dollar agribusinesses investing in organic production, and with consumers frightened amidst reports of E. coli outbreaks and other health concerns, there is a growing battle emerging over just what the organic label means.

On one side are a handful of huge dairies with as many as 4,000 cows that supply milk to Dean Foods (NYSE: DF), and chains like Wal-Mart (NYSE: WMT), Costco (Nasdaq: COST), Safeway (NYSE: SWY) and Wild Oats (Nasdaq: OATS). As demand for organic dairy products outstrips supply, corporate labels represent 65 percent of the market. But some argue the mega-dairies have also tarnished the organic label by keeping cows penned and not raising them with organic feed.

On the other side is Organic Valley, a cooperative of more than 800 farm families across the United States. With $245 million in 2005 sales, Organic Valley represents about 10 percent of the organic farming community in America. It’s also comprised entirely of farms under about 500 cows.

Organic Valley came in at No. 20 in a recent ranking of recognized organic brands conducted by the Hartman Group, a Seattle-based market research firm. That’s four spots ahead of Dean Foods, Organic Valley’s largest rival in the organic milk market.

Source: Sustainable Industries Journal