Organic Valley, a thriving farmer cooperative, is revolutionizing the food business.
Organic Valley is North America’s second-largest producer of organic dairy products. The sales of this $259-million cooperative jumped 25 percent last year, surpassing the growth rate of both the conventional and organic food industries. The cooperative’s milk, butter, cottage cheese and soy milk are on the shelves of more than 10,000 stores from coast to coast. But its chief executive officer, George Siemon, doesn’t talk like a corporate chieftain:
“We wouldn’t mind if the growth slowed down,” he says. “The most important thing to us is to keep our mission. Organic Valley’s not looking to conquer the world. We do things our own way, because we care about things other than business success.”
Despite this unorthodox approach, Organic Valley has helped revolutionize the food business over the past 18 years, and has changed the way Americans eat — for the better. Organic Valley is owned by a cooperative of 723 family farmers from 22 states.
Today, the cooperative’s size and reach have expanded far beyond its Midwest origins, but its roots are sunk deep in the soil of the Kickapoo Valley in southwest Wisconsin, and the tiny town of LaFarge (population 775). Organic Valley opened a new $6-million headquarters there in July 2004. Even the office buildings reflect Organic Valley’s mission — they all employ state-of-the-art renewable and energy-efficient technologies, and the building materials were either recycled or sourced from local businesses. The grounds surrounding the headquarters include nature trails for visitors and employees.
Siemon has been involved with Organic Valley from the beginning. He came to the cooperative as a farmer, and — with his farming partner, Kevin “Sparrowhawk” Lamb — he still raises chickens, cattle, grain and vegetables on 90 acres. But as time passed, he found his innate talent for business became increasingly valuable to the cooperative. So he, somewhat reluctantly, became a full-time executive.
“For the first five years, I was always on the verge of backing out. There was a time when I was very unhappy here,” Siemon says, looking out the big windows of his corner office in the cooperative’s new hilltop command center. “I wanted to be outside on the land. It was a hard adjustment, being a boss. But you have to wrestle with fate and destiny. The good news about business is that it’s much more intuitive than people realize. I love that relationships are so critical to this business. We’re a partnership-based business, and that agrees with me.”
Siemon says that at Organic Valley, “There’s quite a bit of doing what you think is right. Farmers apply common sense and fairness to business — no side deals; what’s fair is fair.”
Siemon attributes Organic Valley’s success to the organization’s deep commitment to its mission: marketing organic products cooperatively at fair prices and producing them in ways that are environmentally and economically sustainable. He compares the cooperative’s value system to the U.S. Constitution. In Siemon’s mind, Organic Valley’s system provides the framework for every management decision.
According to Siemon’s organic food philosophy (see “The Ideal Organic Food System” in the Image Gallery), people should grow much of their own food near their homes. The next best thing to homegrown food is food grown by trusted local farmers. Then come the organic foods distributed by conscientious organizations such as Organic Valley. The key element in this philosophy is consumers’ intimate knowledge of where their food comes from and the effects of its production.
Most food in the world today — even organic food — is grown far from those who consume it and is distributed by companies that only want profit. But Organic Valley’s commitment to its farmers and to the health of their communities puts the cooperative’s products a little closer to the ideal, according to Siemon. Organic Valley provides an alternative to multinational food giants such as Danone (owner of Stonyfield Farms) and Dean Foods (owner of Horizon Organics).
For inspiration, Organic Valley managers look to the Mondragon cooperatives of northern Spain, which were organized in the 1950s to provide opportunities to the impoverished residents of the Basque region. The Mondragon organization has grown to 160 employee-owned cooperatives, with 23,000 member-owners. The Mondragon cooperatives are twice as profitable as the average corporation in Spain, and their employee productivity surpasses any other Spanish business.
The essential difference between a cooperative and a traditional company is the distribution of wealth. All the members of the cooperative share in the organization’s success — not just a few shareholders.
In agriculture, the current way of doing business has been particularly hard on the producer. Even when the consumer is willing to pay a premium price, big distributors pay farmers as little as possible and pocket the difference. (For more on this trend, see “Where Our Food Dollar Goes” in the Image Gallery.) At Organic Valley, however, the farmers own the label, and they benefit directly when consumers appreciate the high quality of their organic products — and the conscientious way they farm.
Organic Valley’s philosophical foundation was built from a combination of political idealism, economic necessity and Midwestern common sense. In 1988, a small group of Wisconsin produce farmers founded the Coulee Region Organic Produce Pool (CROPP) and began discussing strategies for marketing their products. Seven of those farmers were specifically interested in the organic dairy segment; they recognized its potential for success given that a network of milk-handlers was already in place in Wisconsin. These seven farmers then drew the attention of one of the region’s milk-handlers, the National Farmers Organization (NFO). Because consumer demand for organics was expanding and the NFO was committed to paying farmers fair prices, the founding farmers of Organic Valley were able to earn premium prices for their products.
Today, CROPP stands for Cooperative Regions of Organic Producer Pools, and most of its products are marketed under the Organic Valley label. Organic meat from CROPP farmers is marketed under the Organic Prairie label. CROPP also sells products directly to other companies, such as milk to Stonyfield Farm for its yogurt.
Two complementary trends have supported Organic Valley’s growth — consumer demand for healthier, sustainably produced foods and farmers’ desire for markets where better products are rewarded with better prices.
Those two factors continue to drive Organic Valley’s significant growth. As organic dairy products have become more popular over the last few years, the cooperative has added about 25 to 50 new dairy farmers each year. The Organic Valley Farmer Cooperative also has expanded to sell eggs, meat, orange juice and soy products. But the more important criterion for growth has been the desire of committed farmers to join forces. “Every expansion we’ve done has been driven by farmers,” Siemon says.
The cooperative proudly showcases the contributions of its member farmers. Organic Valley’s advertisements, brochures and Web site are galleries of farmer profiles. Examples include Rosalie Williams of Bakersfield, Vt., who revived her family’s abandoned dairy farm; Harry Lewis, whose Texas dairy farm was built using money from a federal grant to provide food for American soldiers; and 21-year-old Matt Fendry, who led his parents out of their urban lifestyles and onto a hilly farm in southeastern Minnesota stocked with Jersey milk cows. As Siemon likes to say, “Farmers are our heroes.”
Organic Valley’s insistence on higher prices for its farmers led to the removal of the cooperative’s products from Wal-Mart in 2004. Many praised Organic Valley for taking a stand against the controversial retailer, but Siemon explains it was purely business, and it was not Organic Valley’s intent to make a political statement.
“We’re a business,” he says. “We’re not a political organization. We have to do what’s best for the business. Is it our mission to tell consumers where to shop? We don’t think so. We were in the worst under-supply situation we had seen, so we had plenty of markets and we didn’t need to sell at the Wal-Mart price. Somehow, that’s made us famous.”
Wayne Peters of Chaseburg, Wis., is a founding member-farmer of Organic Valley and, Siemon says, a driving force behind the cooperative’s success. When the young executives of the organization were intimidated by the scale of what they were attempting — taking on marketing giants such as Danone and Dean Foods — Peters pressed them forward.
“If you don’t ever play out of your league,” Peters says, “you don’t ever get out of your league.” Organic Valley is, without a doubt, playing in the big leagues now.
Siemon was not born on the farm. His family ran an office-supply business in Florida. “The conversation around the table was about business,” he says. “That probably helps, in some way, with what I do now.”
To follow his dream of becoming a forest ranger, Siemon left Florida to study at Colorado State University. But he didn’t particularly like what he learned about the job. “I was determined to work outdoors, but I didn’t like the idea of counting picnic tables for a living.”
When he and some friends rented a rural house, Siemon started gardening. Then he took a job on a nearby farm. Eventually, he worked at several farms in Colorado and Iowa and “fell in love with farming.” After his wife finished her graduate studies in nutrition, they moved to their own farm in western Wisconsin, where they raised three children.
In effect, Siemon says he has served an apprenticeship that continues to the present day. He considers the farmers of the Organic Valley farmer cooperative to be the teachers from whom he learns the art of farming and from whom he receives the instruction he needs to set the direction of Organic Valley.
Siemon criticizes society for leaving farmers out of the process that decides agricultural policy. In his opinion, consulting with farmers will make the organic movement stronger. “Farmers are very smart people,” he says. “They just need to be brought into the discussion. They haven’t been included often enough.”
Read more: Learn about farmers behind the brand in Organic Valley Farmers: Heroes in the Fields.
To learn more about how your farm can join the Organic Valley cooperative, call (888) 809-9297 or visit the Organic Valley website.
Bryan Welch and his family raise grass-fed cattle, sheep and goats on their small farm near Lawrence, Kan. In his spare time, he runs Ogden Publications, which owns MOTHER EARTH NEWS, Natural Home and several related magazines and businesses.