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May 18, 2007

US: Dean Foods faces flak over organic ops

A group of investors in Dean Foods has slammed the company’s management over the US dairy giant’s organic operations.

A group of investors in Dean Foods has slammed the company’s management over the US dairy giant’s organic operations.


At the company’s annual meeting of stockholders yesterday (17 May), Dean Foods faced criticism over the image of its Horizon Organic brand, which investors claimed is diluting shareholder value.


“We warned the company’s management that their corporate-owned factory-scale organic dairies are harming public perception of their Horizon Organic brand,” said Steven Heim, director of social research of US investment firm Boston Common Asset Management and a representative of institutional shareholders in Dean Foods’ stock. 


Heim added: “Organic consumers feel violated when they discover that the premium prices they are paying is for milk that is coming not from family farms but from huge confinement operations with little to no pasture for their dairy herds.”


Earlier this month, Dean Foods warned that excess supply in the organic dairy market and an expected rise in commodity costs would hit profits.


Dean Foods said its WhiteWave Foods subsidiary is likely to see growing price competition as the industry faces an excess supply of organic milk.


However, shareholders blamed the company for helping to create the imbalance between supply and demand.


“Dean’s management has to shoulder the blame for helping create the supply imbalance,” said Mark Kastel, senior farm policy analyst for The Cornucopia Institute, which is also a shareholder in Dean Foods.


“They have turned a deaf ear to repeated calls to shed their two factory-farms—a move that would have won them consumer praise and support. Instead, they have helped legitimise organic factory dairies – some milking as many as 10,000 cows – and now other competitors are using this same approach and flooding the market with private-label organic milk, cheaper than what Dean can sell.”


Officials at Dean Foods could not be reached as just-food went to press.

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