Going 'All Natural' Gets Old: Organics Faltering

In this photo taken Tuesday, June 9, 2009, organic farmer Allen Moody is seen on his farm in Westby,...

In this photo taken Tuesday, June 9, 2009, organic farmer Allen Moody is seen on his farm in Westby, Wis. A growing number of farmers who went all-natural in the years when organic food sales were growing at a double-digit pace are giving up their organic certifications.

(Morry Gash/AP Photo)

The organic dairy industry was thriving when Allen and Jean Moody bought a 200-acre Wisconsin dairy farm in 2006 and joined the ranks of farmers churning out milk raised without growth hormones, pesticides or other chemicals.

Three years later, the good days are gone and the Moodys aren't alone in wanting out.

A growing number of farmers who went all-natural in the years when organic food sales were growing at a double-digit pace are giving up their organic certifications. Organic farming is costly and labor-intensive, and many consumers are no longer willing to pay the price in a recession.

Sales in the U.S. of organic foods sold mostly at supermarkets are expected to drop 1.1 percent to $5.07 billion this year, according to the Chicago-based research firm Mintel. While the drop is small, it is the first in an industry that has seen annual growth of 12 percent to 23 percent since 2003.

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Farming in the Concrete Jungle

The organic dairy industry has been the hardest hit, with farmers squeezed by soaring feed costs and plummeting milk prices.

The soured market has been particularly bad news for Moody, 53, and his 51-year-old wife, who put their farm in La Farge, Wis., up for sale last summer after deciding that running a dairy was too much work at their age. The credit crunch has left a string of would-be buyers unable to seal the deal even as the Moodys' milk buyer has cut his rate roughly 10 percent.

"We're kind of in limbo land right now. It's just really tough — I told my wife we may be here another two or three more years before things turn around and the money supply loosens up," Moody said.

The recession and credit crisis also have made times uncertain for George Mears, who raises organic corn, buckwheat, wheat and soybeans on 140 acres near Delphi, Ind. Much of it becomes feed for livestock that produce organic eggs, milk and beef.

Some buyers are no longer willing to purchase grain on contract because of uncertainty about the economy. And one company that buys Mears' grain has been slow to pay — Mears suspects because it can't get credit to buy grain up front.