Richard Cotta, CEO of California Dairies Inc., the nation’s second-largest dairy cooperative, is guided by a simple business philosophy: “If you want milk with little blue dots, you’ll have it, as long as you are willing to pay for it.”

So, when a string of major customers, including supermarket giant Safeway, came to his co-op saying they would no longer accept milk from cows treated with a genetically engineered growth hormone, the co-op bowed to the inevitable.

In January, California Dairies’ board voted to ask its members not to inject synthetic bovine growth hormone into their cows. If they do, their milk will have to be segregated and they’ll pay a surcharge.

“Consumer demand is obvious,” Cotta said.

The action by a co-op that ships 50 million pounds of milk every day is part of a sweeping, consumer-driven agricultural makeover, in which suppliers are forced to adapt to a changing marketplace. Demand for natural foods is rising, while increasing numbers of consumers are avoiding products that rely on antibiotics or growth hormones. And food retailers are listening…

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