Interview with Mark Retzloff from Aurora Organic Dairy

With more than 70 years of collective experience in building successful dairy and organic companies, there isn’t too much Mark Retzloff, Chairman, Aurora Organic Dairy, and Mark Peperzak, CEO, Aurora Organic Dairy, don’t know about the organic dairy industry. Five years ago they co-founded Aurora Organic Dairy. Bringing knowledge and expertise, as well as an unwavering commitment to accessibility and affordability, they have managed to position Aurora Organic Dairy as one of the leading suppliers of high quality organic milk to average Americans. By focusing on organic stewardship, sustainable farming practices, innovative business models, and practical community involvement, Aurora Organic Dairy is well placed to bring organic milk into a growing number of fridges across the country. Mark Retzloff, Chairman, Aurora Organic Dairy recently took time out of his hectic schedule to speak with Organic Guide.

Q: How did you become involved in organic dairy farming?

A: When I was a student at the University of Michigan in the School of Natural Resources, I became interested in environmentalism and conservation. This was back in the 1960s and I was an environmental activist. I learned that, at the time, modern agriculture with its use of chemical fertilizers and pesticides was responsible for a large portion of the pollution in our environment. I became interested in organic agriculture as a better alternative for our planet. My friends and I started Eden Foods, a natural foods store co-op in Ann Arbor, Michigan. I was responsible for going out into the countryside looking for farmers who were willing to grow their crops without the use of synthetic pesticides or chemicals. That was the start of my 39-year career in the natural and organic foods industry. I went on to co-found Alfalfa’s Market, a regional chain of natural foods stores based in Boulder, Colorado.

When I was running natural and organic foods retail stores, we didn’t have any choices for organic dairy products. We were selling natural and organic foods throughout the rest of the store, but in an important category like dairy — particularly for families with young children — there were no options out there. That gave me and my partners the vision to start the first organic dairy company, which was Horizon Organic Dairy. We started Horizon right as the government was approving Monsanto’s synthetic growth hormone, rBGH, to be used to boost milk production in dairy cows. Since organic dairy products did not allow the use of synthetic growth hormones, this became a huge tailwind for our business. Retailers from across the country were clamoring for our organic milk because consumers did not want to buy milk that was produced with synthetic growth hormones, antibiotics or pesticides. Horizon soon became the number-one organic brand on the shelf, and it still holds that position today. My partner, Marc Peperzak, and I continued the vision of expanding the organic dairy market with the founding of Aurora Organic Dairy in 2003, which is the first organic dairy company dedicated exclusively to the private label market. We believe that organic dairy practices are simply better for animals, people and the planet.

Q: You played a very important role during the formative years of the national organic program. Since those early days back in 1990 what have been the biggest changes that have taken place within the organic dairy sector?

A: Back in 1990, the organic products industry wanted uniformity in regulations. We wanted everyone to be on a level playing field when it came to organic production practices, and - most of all - we wanted the organic label to be meaningful for consumers across the country. Between Alfalfa’s and starting Horizon Organic Dairy, I spent a lot of time on Capitol Hill helping to write the regulations and encouraging Congress to pass the Organic Foods Production Act (OFPA), establishing a set of regulations for the organic products industry. It wasn’t until more than 10 years later that OFPA would be enacted into law in 2002 when the National Organic Program was established. We viewed this as a huge victory for consumers and for the organic products industry.

Since those early days in 1990, the organic dairy market has experienced tremendous growth — between 20 and 25 percent annually. But, it is still only about 3 percent of total dairy production in the U.S. At Aurora Organic Dairy, it is our mission to make organic milk more affordable and accessible to more people. Through our private label strategy, we are reaching a broader market with a high-quality organic product and, as a result, demand will continue to increase and organic dairy producers of all sizes will benefit. Along the way, we have experienced growing pains in the organic dairy sector. We went from a several-year period of under-supply to a tough period in 2007 and early 2008 of over-supply, as more dairy farmers took advantage of a rule change in the NOP and converted to organic. The industry is just now recovering from that time period. But, the good news is, consumer demand has not slowed.

Q: Organic stewardship means a lot to you and your team at Aurora Organic Dairy. Can you please explain to our readers what organic stewardship means and why it’s so important?

A: Organic stewardship is one of our founding principles at Aurora Organic Dairy. It is at the core of everything we do and, personally, having worked so hard to create the organic standards and support the organic community throughout my career, makes organic stewardship part of my very being, my soul. To us, organic stewardship is our reason for being. It is our goal to not only meet the organic regulations, but to include aspects in our operations that aren’t included in the organic regulations, such as third-party animal welfare audits, sustainability initiatives on our farms and in our processing facility, and high standards for producing the best quality organic milk.

Q: With demand for organic dairy products rapidly increasing what steps is Aurora Organic Dairy taking to meet demand?

A: In the five years that Aurora Organic Dairy has been in business, we have ramped up five organic dairy farms — the most recent of which was started about a year ago in Texas. It is our mission to grow the organic dairy market beyond the 2-3 percent where it sits today. We believe that by reaching new consumers of organic milk, we can grow the overall market for organic dairy products and all producers will benefit. We will continue to assess the market to determine whether we need to further expand our production to continue to meet demand. However, with the recent over-supply of organic milk on the market, we continue to be cautious about further expansion.

Q: Aurora Organic Dairy’s size and scale makes it large in comparison to many other companies within the organic sector. While this brings with it a number of obvious advantages, it must also give rise to a number of associated challenges. What are they and how do you deal with them?

A: Aurora Organic Dairy is not large compared to companies in the overall organic sector. In fact, if you look at the organic dairy sector alone, our sales are dwarfed by the total sales of the leading branded products. That said, we are firm believers that there is a place for larger scale operators in the organic sector. It goes back to my early days in Ann Arbor and my vision for a better way of doing agriculture in this country. If you can convert thousands of acres of American farmland to organic, saving thousands of tons of chemicals from going onto the land, in the water we drink and air we breathe, isn’t that a good thing? At Aurora Organic Dairy, we have converted more than 3,800 acres of pasture to organic. This is the pasture where our cows graze a minimum of 120 days during the growing season. With our support of more than 120 family farmers who provide us with feed, forages and farm services, we have participated in the conversion of more than 50,000 acres of American farmland to organic. We believe that to grow the organic dairy market to be larger than 2-3 percent of the overall dairy market in the U.S., we need producers who have scale. In addition to the benefits to the environment, animals are treated better with higher standards for animal welfare and more people benefit from the increased availability of organic milk in grocery stores — not to mention the farm workers who can live and work in a cleaner environment. So, for those who criticize and attack Aurora Organic Dairy for being larger scale, we can only point to the many benefits scale brings to animals, people and the planet, and say that organic is simply a better way than how the other 98 percent of dairy products are being produced in this country.

Q: Aurora Organic Dairy demonstrates an obvious commitment to humanity and the communities it serves. Why is this an important part of the way Aurora does business?

A: As a company that is committed to sustainability, we believe that sustainable communities are part of that commitment. We give back to our local communities as much as we can with job creation, providing competitive wages and benefits to local employees, supporting local farmers and farm service businesses, and by donating to local non-profit organizations. We donate to local food banks in the communities in which we operate so that we can share the fruits of our labors with the people who need it the most. We also support the future of organic agriculture with scholarships to students enrolled in the organic agriculture program at Colorado State University, through support of local 4-H chapters and other local agriculture education initiatives. We believe that it is our role to be an active member in our local communities.

Q: What do you see as being the greatest future challenges facing:

(a) Aurora Organic Dairy?

A: The biggest challenges Aurora Organic Dairy and the overall organic dairy sector will continue face are supply challenges. Not necessarily milk supply to meet consumer demand, as that appears to be coming back into balance. But, the availability and affordability of organic feed will continue to be a major challenge for us and other organic dairy producers - large and small. We need more farmers to continue to convert to organic to meet the unyielding demand growth we are experiencing. However, farmers are not converting at the same rate they had been because of the high cost of organic feed and rising fuel prices make organic dairy farming an unprofitable business.

(b) The organic sector as a whole?

A: Attacks on the National Organic Program and USDA, as well as attacks on companies like Aurora Organic Dairy and other larger scale producers are creating a lot of noise in the marketplace, which will ultimately cast doubts in consumers’ minds about whether the organic seal means anything. This is a serious problem for all organic producers — not just diary producers. Consumers are faced with a tough economic outlook and are waiting for convenient excuses to curb their spending on organic foods. When activists challenge the “organicness” of a certified organic product, and claim that the USDA National Organic Program or certifiers aren’t doing their jobs to ensure the integrity of organic products, the end result is consumer trust will erode and demand will decline. The organic community must work together to continue to bolster consumer trust in the organic label.

Q: If you were starting out again today, would you continue to be involved with organic dairy or is there some other opportunity that currently appears more attractive?

A: There are a lot of great, innovative products out there, but if I had it to do all over again, I wouldn’t change a thing. Organic milk is a gateway to new consumers of organic products. One of the key triggers for organic food shoppers who are new to the category is birth of a child. When people have a baby, they want the best for that baby and kids drink a lot of milk. So, as a founder of leading organic dairy companies, I have been in the fortunate position to introduce new consumers to the benefit of organic products — not just dairy, but dairy as a way to open the door to a broad range of organic products in their lives. It is amazing to talk to consumers and hear their stories of how organic products have enhanced their lives. Now, in the twilight of my career, I have the opportunity to serve on several boards and to be an advisor to new and exciting start-up organic products companies. I enjoy this level of involvement, as I can share my experiences with them and help them grow.

Organic Guide wishes to thank Mark Retzloff for generously sharing his time and insights. To find out more about Mark and his dedicated team, please visit Aurora Organic Dairy.