Target in crosshairs of organic milk quandary

Target (NYSE: TGT) has a small thorn in its side due to a store brand it carries on its grocery shelves. Aurora Organic Dairy, which has been under fire this year for labeling milk products as "organic" when the cows providing that milk were treated in a commercial fashion. It supplies Target with its product under the 'Archer Farms' brand. Archer Farms, probably the most well-marketed store brand out of any major food retailer, is targeted to the upscale grocery shopper, which is smack dab in the middle of Target's intended demographic.

The Archer Farms packages are well made, look great and generally offer more interesting options than most other store brands like Wal-Mart's (NYSE: WMT) "Great Value" store brand. In this case, Target's Archer Farms organic milk is under the microscope since Aurora Organic is the supplier of that product to Target. The USDA has even said it will cancel the 'organic' status of Aurora unless the company stops representing non-organic product as organic -- something it has apparently been doing since 2003. This, in turn, would cause the Archer Farms milk product to be affected.

But, Target is not sitting still -- along with Aurora, the retailer is insisting that its Archer Farms organic milk is definitely organic, and that it should keep that certification. Aurora has already agreed to place its operations under 'organic probation' for one year among other changes.

Without giving any details, a spokeswoman from Target did say that Target "is confident that our Archer Farms Organic Milk is organic."

Well, let's see here: if Aurora agreed to changes in its operations without admitting guilt, just how should its milk be marketed? Which grocery companies does Aurora supply that could be mislabeling products? Target -- your customers are generally well-informed. Don't screw this one up.