Aurora Organic Dairy, one of the largest private-label suppliers of organic milk, agreed to reduce the size of its -Platteville herd by 40 percent to comply with an agreement with federal regulators.

Cutting the number of milking cows at the northern Colorado farm is one of several measures the dairy agreed to take in order to retain its organic certification with the U.S. Department of Agriculture. The agency initiated a yearlong investigation after a farm policy group alleged that Aurora's dairy cows weren't allowed to graze on pasture.

Sales of organic milk have soared as consumer interest grows in farming that avoids synthetic hormones, antibiotics and genetic engineering. U.S. sales of organic dairy products totaled $2.14 billion in 2005, the most recent data available, up 24 percent from 2004, according to the Organic Trade Association.

"Because of this action, I can give people the assurance that milk labeled organic is truly organic," said Bruce Knight, undersecretary for marketing and regulatory programs at the USDA.

All of Aurora's cows and milk have "continuous and unbroken organic certification," said Clark Driftmier, vice president of marketing for the Boulder-based dairy.

Driftmier pointed out that the USDA's allegations aren't legal findings of fact, and the dairy "vigorously disagrees" with some of its assertions. The dairy had planned on making several changes before the complaint was filed.

During the course of the investigation, the USDA said it discovered that the number of Aurora cows exceeded the available pasture land and the dairy had used inconsistent policies in adding organic cows to its herd.

Aurora is culling the size of its Platte- ville farm to 1,250 milking cows, down from 2,100 now and 4,200 about 18 months ago. About 450 of those cows will be sold, and the rest will be transferred to other Aurora farms.

Under the law, organic dairy farmers can pick from several methods to attain organic cows, including raising them as organic calves or transitioning conventional adult cows. They must pick one method and stick with it.

Aurora Organic had been playing "fast and loose, picking and choosing among the various methods," Knight said.

The dairy's new policy requires that all cows will be organic from birth, Driftmier said. The company will also give its lactating cows access to pasture and is in the process of creating another 400 acres of pasture at its Platteville farm.

The USDA said it will monitor Aurora's operations, and a violation of the consent agreement could result in the loss of the dairy's organic certification.

Four-year-old Aurora is headed by Mark Retzloff, who co-founded dairy company Horizon Organic and Alfalfa's Markets.