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Coalition for Organic Dairy Exemption (CODE)
Coalition for Organic Dairy Exemption (CODE)
The Coalition for Organic Dairy Exemption (CODE), comprised of Aurora Organic Dairy, Horizon Organic Dairy, and CROPP Cooperative | Organic Valley, is taking action because the current government dairy price regulations — the Federal Milk Marketing Orders (FMMO) — do not work for organic producers, processors, or consumers.
We’re taking action because our voice has not been heard. Federal regulators have repeatedly denied organic dairy a meaningful seat at the table, effectively leaving us out of decisions that impact our ability to do business.
Conventional and organic dairy are different and should be treated as such. The antiquated dairy pricing system does not reflect the modern marketplace — especially for organic. Organic dairy farmers and processors have filed administrative actions and federal court lawsuits because we have been met with resistance at every other available administrative option.
FMMOs and Organic Dairy
The Federal Milk Marketing Order (FMMO) program sets minimum prices farmers receive for their milk and ensures that bottled milk processors always have a sufficient supply. Because FMMO rules assume that all regulated milk and milk handlers are conventional, it disadvantages organic.
FMMOs today ignore that organic dairy production is not interchangeable with conventional. Unlike conventional dairy, organic operates entirely separate supply chains that require continuous investment — costs that the FMMO system compounds rather than offsets. Organic dairy farmers also face higher feed and other production costs, and organic processors face greater segregation costs as well as stricter federal regulations in the manufacturing of organic dairy. For organic, FMMO rules actually make it much harder to accomplish the FMMO’s intended outcomes.
FMMOs require fluid milk handlers to pay into a producer settlement fund (PSF) which redistributes funds based on product usage. While both organic and conventional dairy pay into the producer settlement funds, the benefits flow almost entirely to conventional producers — even though conventional milk can’t be used in organic production.
This is a one-way transfer from organic dairy to conventional, and it is legally and practically inequitable. Simply put, it means organic is locked out of the core benefits of the system: access to additional milk supply and supply chain stabilization.
Organic milk accounts for only ~3% of total U.S. milk production, yet it represents about 7% of fluid (Class I) milk — which is the most heavily impacted segment under the FMMO system.
Because of this disproportionate share, the organic dairy sector pays around $50 million annually into a system that actively disadvantages them — more than $400 million since 2006, with almost none of it returning to organic producers.
The current system drives up consumer prices and makes organic dairy harder to find — farmers and consumers are both losing.
FMMOs were built for a different era and a different industry. They were never designed with organic in mind and have never been updated to reflect that organic dairy is not the same industry. The result is a pricing structure that is harmful to innovation, organic dairy farmers, and consumers.
An Organic Dairy Exemption
There are 2,700 organic dairy farmers across the United States today. Organic farm milk sales increased from 1.9% in 2006 to 7.0% in 2025, underscoring consumer demand for organic milk and the need for FMMO reform. Consumers want to buy organic milk, but like other groceries, they want to be able to buy it at a reasonable price.
After more than a decade of pursuing every available administrative channel, we’re filing lawsuits now because every day we wait for a resolution, we lose more money. CODE is asking for USDA to exclude organic dairy from the FMMO system and certain organic dairy farmers are asking for compensation for the money they were forced to give up to the producer settlement fund.
Exempting organic dairy from the FMMO program will protect our ability to do business and better account for the sector’s unique challenges, most notably the higher costs of organic production and milk balancing. We’ll have better support for future industry innovation and more funds will go directly to organic family farmers.
Exempting organic dairy from the current system would mean these funds could be used to:
- Better support America’s organic dairy farmers
- Improve full and efficient utilization of producers’ milk
- Support farm transition programs, enhancing on-farm infrastructure and sustainability
- Expand domestic organic milk supply to meet consumer demand
This is not about picking winners or losers in the dairy industry. It’s about ensuring government systems support both organic and conventional dairy.
The Coalition for Organic Dairy Exemption (CODE), is comprised of;
Frequently Asked Questions
The Coalition for Organic Dairy Exemption (CODE) is a group comprised of Aurora Organic Dairy, Horizon Organic Dairy, and Organic Valley|CROPP Cooperative. For over 30 years, CODE companies have sold organic milk products from thousands of certified organic dairies across the country.
Federal Milk Marketing Orders are a government pricing program established in the 1930s to stabilize the conventional dairy market. They set minimum prices handlers must pay farmers for milk and require processors to pay into a producer settlement fund, which redistributes money based on how milk is used across a region. The system was created more than fifty years before organic dairy existed and has never been updated to account for organic's distinct economics or legal status.
Organic dairy is fundamentally different from conventional dairy. Organic milk costs much more to produce, is not legally interchangeable with conventional milk – including being subject to distinct regulations – and does not respond to pricing signals intended by the FMMOs. Yet the existing FMMO system forces organic dairy to financially support a pool that does not offer them any benefits.
The FMMO system was created in the 1930s to ensure a stable milk supply and set minimum prices farmers receive for their milk. The system was created more than fifty years before organic production existed. Today’s FMMOs have failed to adapt to the modern market and treat organic milk as though it is conventional.
An exemption from the FMMO system for organic dairy would free up funds that could support organic farmers, expand domestic organic milk supply, support farm transition programs, enhance on-farm infrastructure and sustainability, and support additional organic milk production to meet consumer demand.
Since 2006, FMMOs have redistributed more than $400 million dollars from organic to conventional dairy. Organic dairy operates entirely separate supply chains from conventional, requiring continuous investment that drives up costs for producers and consumers alike. Rather than offsetting those pressures as it does for conventional dairy, the FMMO system compounds them.
The current system makes organic milk more expensive and harder to find. Organic dairy pays approximately $50 million annually into funds that return almost nothing to organic producers — a cost that ultimately flows through to the shelf price consumers pay. An exemption would free those resources to expand organic supply, support farm growth, and reduce the cost burden that the current system places on anyone who chooses organic.
At this point, we have run out of administrative road and legal action is the next, and only, step available to us after nearly 11 years of USDA inaction. Our industry deserves to have our voice heard.
- As far back as 2015, the organic industry submitted proposals requesting a hearing, which USDA refused to move forward
- In 2023, USDA refused to consider organic-specific proposals during the national FMMO pricing formula hearing.
- Organic handlers raised the issues again in post-hearing briefing in 2024 and, again, USDA issued its final rule for the national pricing formula hearing without addressing our submissions.
- We filed administrative petitions with USDA in May 2025 challenging both the constitutionality and the legal adequacy of the FMMO system as to organic.
- As of April 2026, the administrative claims remain pending before USDA, with the constitutional claims now pending before the federal courts.
We are asking the court to compel USDA to exclude organic dairy from the Federal Milk Marketing Order (FMMO) system, and to provide compensation for organic dairy farmers who have been unlawfully required to contribute to the producer settlement fund. Our ask is narrow and limited to organic. We are not asking the court to dismantle or restructure the FMMO system for conventional dairy.
The plaintiffs are Aurora Organic Dairy, Horizon Organic Dairy, and Organic Valley|CROPP Cooperative.
Seven organic dairy farmers from across the United States, all members of Cooperative Regions of Organic Producer Pools (CROPP), a farmer-owned agricultural cooperative.
Founding members of the Milk Innovation Group (Aurora Organic Dairy, Horizon Organic, Organic Valley) and 174 organic dairy farms from 24 states, as well as numerous other organic dairy brands.
Not at all. There is room for both organic and conventional dairy. This lawsuit is about a federal system that treats two legally and economically distinct products as identical. Our exit from the FMMO pool does not change the fundamental economics for conventional producers.
Organic producers represent approximately 3% of the milk in the pool. It is not surprising that conventional farmers voted to support an order that benefits them even as organic farmers voted no.
No. Organic milk is a small fraction of the total milk supply (~3%), and our ask is narrow — exclude only that industry segment from the system. The conventional market would be largely unaffected by organic's exit. In fact, the current system actively drives up costs for organic consumers by compounding the supply chain investments organic producers already bear independently. An exemption would reduce that burden, not add to it.
The reality is that dairy farming is already hard work and government programs fashioned as “one size fits all” shouldn’t make it harder. Farmers, processors, and consumers all suffer if the government makes organic production and purchasing a more expensive endeavor merely because of unnecessary regulatory obligations. The organic dairy industry has huge potential for future growth, but required payments into FMMOs are holding us back.