Organic wool yarn
That's an idiosyncratic thing to put up - and reflects my interest in knitting! Also, it turns out that sheep farming frequently involves highly polluting animal cruelty, from fertilizer use, to dousing animals with pesticides, using harsh chemicals to process the wool, and toxic dyes to enhance it.
My search for local yarn has turned up, so far"
1. Cherry Creek farm, near Evergreen, CO - they raise Icelandic sheep organically. I am presently experimenting with a skein of Moorit yarn, a delightful brown flecked color. I think it may be best used knitting items to be fulled, or felted, such as bags, pillows, maybe a vest.
2. Switzerland Alpaca, in Estes Park, CO - I just received three skeins today, in natural colors, and I am ecstatic. The yarn is outrageously soft and indulgent and the colors are just beautiful - just give me a few days to upload a photo and to whip up a scarf or hat, or the most amazing blanket!!! At $6.25 for 2oz/150 yards I think I may not be able to ever go back to working with any other yarn!!
3. Green Mountain Spinnery sells "New Mexico Organic" yarn, which I am waiting to receive
4. A non-local source of affordable organic wool is Full Belly Farm in California. Their yarn is a mixture of Merino and other types of sheep. It is soft and beautiful, but, well, smelly. I don't know whether the smell goes away with hand washing (I'll let you know when I try), but fulling/felting this wool yields a wonderful product, and would make a nice vest, or hat.
5. New Zealand, of course, sells organic wool. I really was hoping to find what I need on this continent.

Reader Comments (2)
I want to suggest that you visit the Estes Park Wool Market and talk directly to growers there. There are many people involved in producing for the thriving fiber trade up here in Colorado and neighboring states and I would think that certainly there must be options! Also, consult with Maggie Cassie at Shuttles, Spindles and Skeins for ideas. She knows a number of people in the business and may be able to direct you.
Yes I went to the Estes Park Wool Market, and the best alpaca there was Chris Switzer's from Estes Park. I am presently knitting the most sinfully buttery soft shawl, in anticipation of the rising cost of natural gas...