July 21, 2008

20 Years for Organic Valley; Cooperative Marks Anniversary

By Samantha Marcus, La Crosse Tribune, Wis.

Jul. 21--LA FARGE, Wis. -- Organic Valley, the nation's largest organic dairy cooperative and pioneer in the organic industry, is celebrating its 20th anniversary. When Organic Valley "CEIEIO" George Siemon talks about the coming milestone, he describes it not as a self-congratulatory blowout but as a chance to give thanks to the employees and member farmers.

"We're really not making the biggest, biggest deal about our anniversary," the founding member said. "We've never been ones to toot our own horn."

But the numbers might do it for them.

The cooperative reached $432.5 million in sales in 2007, up nearly $1 million over 2006. Siemon said the company anticipates another $100 million in growth for 2008.

Last year the company added about 250 new farmers, bringing its member base to more than 1,200 farmers in 34 states.

Siemon said the majority of farmers recruited to organic from conventional farming are deeply philosophical about organic product.

"Farmers are very, very engaged in integrity," he said. "They push us to have high standards. It's not just a market to them. It's something they really believe in." Still, some are wooed by the economics of a premium marketplace that will help them be sustainable.

Often for farmers, survival means going big or going organic, Siemon said.

And just a few years after the organic brand built a green headquarters in La Farge, it opened a $17.5 million green distribution warehouse in Cashton, Wis.

Siemon said Organic Valley is exploring expansion opportunities at both facilities, including an organic milk processing plant in Cashton.

But there's less and less of a demand on a central location, he said, and instead increased emphasis on local and regional distribution facilities.

"Hauling milk long distance isn't a long-term solution," Siemon said.

Earlier this year, Organic Valley drew fire for tapping a Delhart, Texas, factory farm for organic dairy after two small operations went out of business. Organic Valley leaders opted to purchase temporarily from the mega-farm rather than ship from the Midwest.

Twenty years ago, the cooperative struggled with availability of feed and building infrastructure from the ground up.

Now, it's tempering growth and risk with concerns about inflation, the price of commodities and feed shortage.

About $5 worth of feed three years ago now has a $12 pricetag, Siemon said.

About half the cooperative's farmers grow their own feed. But the balance, Siemon said, "are suffering and losing money."

The cooperative is in a bind, Siemon said, resulting in significant price increases on shelves.

"We've never raised prices just because we could," he noted. "We've never been one to try and gouge the customer."

Once primarily produce, dairy now makes up 85 percent of production.

The business future, Siemon added, looks to existing customers dipping into more organic products.

People will buy organic milk, but not organic cheese, he said.

That said, Siemon is proud of the leaps the brand and the industry have made since the cooperative's inception in 1988.

Once confined mostly to natural food stores, organic products broke into some of the more progressive grocery stores in the late 1990s, he said.

Now, as mainstream food giants such as Kraft and General Mills step into the market and big-house stores such as Costco and Wal-Mart start picking them up, there's a flood of new customers.

"We want organic to be as big as possible," Siemon said, even if it means more business for the other guy.

Samantha Marcus can be reached at (608) 791-8220 or [email protected]

business of the week

What: Organic Valley dairy cooperative

Where: One Organic Way, La Farge, Wis

Phone: (608) 625-2602

Web site: www. organicvalley.coop


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