The scandal surrounding organic milk giant Aurora Organic’s certification continues to grow with near-daily announcements of alleged wrong-doing by the dairy producer, its certifiers and the U.S. Department of Agriculture’s (USDA) National Organic Program (NOP). But so far, the financial pages have yet to take note.

USDA has been investigating Aurora since legal complaints were filed against the company in 2005 by Wisconsin-based farm policy watchdog The Cornucopia Institute. The agency announced in early September 2007 it was, essentially, placing Aurora on probation — though not stripping the company of its certification — after finding several instances in which the dairy had “willfully violated” NOP rules, including adding conventional cattle into its organic operations, and selling milk as organic when it did not meet federal standards [see “New problems dawn for Aurora Organic,” SI, October 2007]. While Aurora paid no fine, penalties could have been as high as $10,000 per violation.

Shortly after the announcement, Cornucopia also filed legal complaints against Aurora’s certifier, Quality Assurance International (QAI) and the State of Colorado, alleging that the certifiers had played a role in the dairy’s poor performance. Both agencies vehemently and publicly denied allegations. Cornucopia supported its filing in late September by disseminating a letter from USDA to Colorado’s Department of Agriculture (DOA), one of Aurora’s certifiers, stating that DOA had “willfully failed to legally perform their oversight responsibilities under the federal regulations,” and notifying the department of a proposed suspension of its accreditation. Colorado’s DOA refuted USDA’s claims, and the state certifier kept its accreditation.

Cornucopia publicly pointed to both exchanges as sweetheart deals between USDA and so-called “big organic.”

Cornucopia’s position has been adopted by the Organic Consumers Association as well as the Washington, D.C.-based Center for Food Safety. Aurora has since sent letters to all three groups demanding they retract statements made about the company and drop a proposed lawsuit against Aurora alleging consumer fraud, or be faced with a suit from Aurora.

Despite the controversy, the changes seem to have had little impact on Aurora’s business. Strong demand for organic milk and strong consumer acceptance of private label brands has continued to drive the market for store-brand organic milk.

The company provides milk to numerous retailers’ private-label milk brands, including Target (NYSE: TGT), Wal-Mart (NYSE: WMT), Safeway (NYSE: SWY) and Kroger (NYSE: KR). Whole Foods (Nasdaq: WFMI) rejected Aurora as the provider for its successful 365 Organic line because the farm didn’t meet the company’s standards, according to a September 2006 article in the New York Times. So far, none of the mainstream retailers has announced plans to end its relationship with Aurora. In August, Aurora began producing organic milk at its Coldwater West dairy farm near Stratford, Texas.