A More Benevolent Mousetrap

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The bucolic farm scene on Organic Valley's milk cartons is more than a branding scheme. As the largest organic farmer-owned cooperative in North America and the second-largest producer of organic dairy products, Organic Valley is doing its best to save the last of the family farmers from extinction.

The co-op, based in LaFarge, Wisconsin, has long faced mean odds. Since the 1960s, some 600,000 family farms have been swallowed up by large companies. For instance, one of Organic Valley's major competitors, Horizon Organics, was purchased by the multinational corporation Dean Foods in 2003.

So far, though, corporate competitors have only made Organic Valley more resolute. What began in 1988 as a group of seven Midwestern organic dairy and vegetable farmers has mushroomed into more than 730 farmers producing juice, eggs, meat, and soy products sold in more than 10,000 stores. High market prices for these products in the past few years have translated into unheard-of growth for the $245 million cooperative: 25 percent annually, a rate faster than both the conventional and organic food industries.

Demand for organic dairy products has been so steep that the co-op is currently recruiting 25 to 50 new dairy farmers each year. To compete against corporate buyers who lure farmers with signing bonuses and the promise of higher prices, Organic Valley offers ownership and has a track record for consistent, satisfactory prices for farmers and commitment to the values behind family farming. Recently the co-op launched Generation Organic, an organization that provides education and support for young farmers who may otherwise abandon family farming.

Because it is owned by members, Organic Valley is able to thoughtfully debate every decision, from pasture standards to whether or not to sell at Wal-Mart. An elected board of directors sets a sustainable annual price paid to farmers. Profits are shared: 45 percent to farmers, 45 percent to employees, and 10 percent to the community. To raise equity, a challenge that has troubled other co-ops, Organic Valley started a well-supported preferred stock program, selling to individuals and local communities; they are granted limited influence but favorable returns. "Cooperatives represent an alternative to what's wrong with corporations," says CEO George Siemon, who is at the vanguard of proponents of stricter organic standards and sustainability.

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