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Doing Well by Doing Good by Bryan Welch


The Organic Valley Philosophy

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.

Organic Valley headquartersAccording to Siemon's organic food philosophy (see The Ideal Organic Food System), 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.

Organic kid

 

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 the graphic above.) 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.

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