Here at P6, we are honored to welcome a new wholesale member: CROPP Cooperative. CROPP is a farmer co-op, owned by farmer members, and better known to the public as the successful brands they market under, Organic Valley and Organic Prairie. With CROPP’s membership, along with our longstanding policy of giving the P6 label to large co-ops like Organic Valley and Equal Exchange, we wanted to address a question that is often raised. Why do these big, successful businesses get the P6 label? Isn’t P6 all about supporting the small producer? The answer is yes!
P6 is about first and foremost supporting small producers, and in these cases we’re supporting small producers who have cooperatively and democratically organized together. Our organization, the Principle Six Cooperative Trade Movement, has support for cooperative businesses built into our structure. Cooperatives are democratic institutions, and we believe that self-governance is a key component of the food system we want to see. We know that a farmer co-op like Organic Valley, or a worker co-op buying exclusively from small farmer co-ops like Equal Exchange, puts the best interests of small farmers at the heart of their business model. Many types of businesses make claims that they support small farmers, but their top priority is still making a profit for shareholders, not the farmers themselves. In these business models, control and decision-making power is concentrated at the top of the organization rather than being shared through democratic governance. The large co-ops of small farmers that we label as P6 exist primarily to benefit those farmers. Not just by paying them a better price for their goods, but by giving them the opportunity to be a part of the decision-making process within the business. As a consumer, you can be confident that your food dollars are going to support small family farmers when you buy products from these co-ops.
Organic Valley has been a key supporter of P6 over the years, including funding our videos through their Farmers Advocating For Organics fund. They are an excellent example of cooperative economics in practice, and we are thrilled to have them on board as members. In order to tell the full story of our longtime supporter and newest member, I interviewed Jerry McGeorge, Vice President of Cooperative Affairs at Organic Valley, and his insights are throughout this article, which also draws from Organic Valley’s publications, particularly their farmer-facing co-op website.
In 1988, several small family farmers in Wisconsin started an organic vegetable marketing cooperative they dubbed Coulee Region Organic Produce Pool (CROPP). In July of 1988, they branched off into an organic dairy program with seven farmers who collectively produced 10,000 pounds (about 1,200 gallons) of milk every day. After a year and a half of disappointing sales, CROPP developed the Organic Valley brand and began marketing its own products directly. The cooperative has branched out several times since then with organic eggs in 1993, organic meats under the Organic Prairie label in 1999, and organic soy in 2004. Because the co-op has grown far beyond the Coulee Region, CROPP now stands for “Cooperative Regions of Organic Producer Pools.” These producer pools organize farmers by type of product (dairy, meat, soy, etc) and by region. You can read more about the pool structure here.
Organic Valley is owned by 1,800 farm families in 34 states, Canada, and Australia. Those farmers elect and make up the board. The organization doesn’t exist to make profits for corporate shareholders; it exists to provide a livelihood for the owners who do the work to produce the milk and other products while meeting consumers’ growing demand for organic food.
Organic Valley’s pioneering “Y In The Road” payment system pays the farmers first, before retaining profits for the business. Organic milk prices can be very volatile, and the crash and boom cycle leads to an unpredictable income for farmers, who may be raising children or planning for retirement. Organic Valley evens out this cycle by planning target prices for each coming year, and has never sold below their target price. This means Organic Valley farmers can predict how much money they will be making in the coming year, and plan for the growth of their business (because all family farmers are small business owners, too!). Organic Valley also supports farmers as they transition into organic farming, which provides a pathway to a higher sale price for farmers that are currently selling conventional products, and expands the number of cows raised organically.
This stable pricing model has pioneered a new way of doing business in the organic milk industry. Other brands working with organic dairy farmers have followed suit in terms of offering a consistent price, to keep up with the competitive pricing offered to farmers by Organic Valley. At this point, about 10% of the organic dairy farmers in the country are owners of Organic Valley, and they are still seeking out new owners to meet the demand for Organic Valley products. Organic Valley’s policies don’t only improve life for the farmers they work with directly; they ripple out to the whole industry.
Jerry McGeorge explained that Organic Valley is a national co-op with a regional focus. Dairy is a product with a short shelf-life, so supply-chain concerns are particularly pressing in this industry. The Organic Valley brand is recognizable across the country, but the milk you buy likely came from the region you live in. The national scope of the co-op also allows farmers to support each other’s variations in production. This is especially important in cases of severe weather conditions. When tornadoes come through the Midwest, or California faces a drought, consumers still want milk. Farmers in different regions are less likely to be impacted by the same environmental factors, so a functional, farmer-owned distribution network builds resiliency.
Speaking of the environment, Organic Valley is committed to environmental sustainability. They are one of the only food companies in the US that sells only certified organic products, which has huge impacts on the ecosystems surrounding the member farms. Organic means that Organic Valley member farms never use antibiotics, toxic pesticides, synthetic hormones, or synthetic fertilizers. The cows raised by Organic Valley farmers are pastured, which produces healthier milk and nourishes the soil. In addition, Organic Valley has installed enough wind power to cover 63% of the energy use at their headquarters, including their 10-story cold storage facility, as well as investing in solar and biodiesel. More information about their sustainability commitment here.
The democratic process at a cooperative isn’t always easy. There can be real differences of opinion between the farmers as they work together to govern their business. In one example, the co-op faced a challenge when some farms started selling raw milk. While some farmers were in favor, due to the possible health benefits and different flavor of raw milk that drive consumer interest, others were concerned about the impacts on the entire brand if one or two people got sick from raw milk sold by an Organic Valley farmer. Ultimately, the farmers made a decision to not allow raw milk sales from any of their farms. As Jerry put it, whether or not you agree with that decision, the farmers were able to make it democratically, in a way that ultimately reflected their mutual self-interest.
Organic Valley is a strategic partner for P6 because of their dedication to and experience in cooperative business growth and supply chain development. The logistics of transporting that milk around the country takes thoughtful planning and a tremendous amount of work. Organic Valley has started a subsidiary business called Organic Logistics. They saw that their costs for shipping product were higher than necessary because they were sending out less than full loads, or shipping product in one direction and paying for the truck to come back empty. Organic Logistics uses Organic Valley’s shipments as an anchor, while providing distribution services for other small, organic businesses. This maximizes the value of the shipments and builds a P6 and organic economy. Jerry emphasized the challenge that distribution poses for small producers who are trying to expand. He highlighted Walmart’s success at figuring out distribution challenges as one reason for their financial success. If we want to build an alternative food system, we need to develop efficient systems for getting healthy, fresh food to people.
The ability to aggregate or “pool” the farm products of several small producers is a key concern for large-scale cooperative businesses. Organic Valley attributes part of its success to its ability to aggregate — that is, bring together the products of many small farmers to a shared product stream, like a milk packager, and to market them collectively. As Jerry put it, there is strength in numbers. Reaching a certain economy of scale allows the co-op to offer farmers the kind of stabilized sale prices mentioned above. Bringing the product together — aggregation — so it can be sent out to a wide range of retailers — distribution — while allowing farmers to retain democratic control of the business is what makes Organic Valley an exemplar of P6’s values.
Jerry said that Organic Valley hopes to offer a similar stabilizing effect as a member of P6. Jerry, along with Organic Valley’s VP of Sales, Eric Newman, who sits on the P6 board, got interested in P6 through the Viroqua Food Co-op. Viroqua Food Co-op is the closest food co-op for most of the staff at Organic Valley’s La Farge, WI headquarters. At the time VFC was joining P6, Jerry sat on the VFC board. Many people worked to develop a way for farmer co-ops like Organic Valley to plug into P6. As Jerry put it, natural food co-ops are Organic Valley’s oldest and most loyal customers. Finding a way to strengthen the connection between grocery co-ops and all farmer co-ops, including Organic Valley, aligns well with Organic Valley’s commitment to the sixth cooperative principle.
Organic Valley is a leader in the field of cooperative agriculture. We enthusiastically welcome them into the P6 cooperative and look forward to working with them for many years to come.