WisBiz In-Depth: CROPP's Organic Valley of La Farge
By Gregg Hoffmann
LA FARGE - What started with a handful of farmers looking for markets for their crops and dairy products in 1987 has grown into the largest organic cooperative in the country.
Cooperative Regions of Organic Producer Pools, or CROPP, which does business under the Organic Valley label, officially did more than $156 million in business in 2003, and could approach or eclipse the $200 million mark this year. CROPP includes around 600 organic farmers as members, from states all over the country, and employs about 300 people. It has grown at rates of 25 percent and more for several years. Last year, 118 new family farms joined CROPP.
The co-op makes butter at a plant in Chaseburg and cuts and packages cheese, much of which actually is produced by partners in eastern Wisconsin, at its old facility in La Farge. Its influence is spread even father because CROPP contracts with more than 60 co-packers around the country to turn its milk into products like yogurt, cheese, and others.
In 1998, Gov. Tommy Thompson recognized CROPP as the state's No. 1 rural initiative. The University of Wisconsin-Madison report, Organic Agriculture in Wisconsin, cited CROPP as its main case study.
This year, CROPP moved into a new $5.9 million, 49,000 square-foot headquarters in La Farge and is selling Class E shares in the co-op.
"When I first got together with six or seven other farmers, I never thought it would grow into something like this," said Jim Wedeberg, the dairy pool director for CROPP and one of the original dairy farmers to get involved with the co-op in 1987.
"We were flying by the seats of our pants because we were in a new industry at the time. There weren't even standards for what qualified as organic milk products, so we had to come up with them."
Wedeberg said the organization was built on the concept of a three-legged stool.
"The legs are brand, private family farm sales and ingredients. We wanted to maintain a balance between them," he said. "We wanted to make sure we developed true partnerships with our farmers and companies we worked with. That was our mission."
George Siemon, one of the CROPP founders and current CEO, said sticking with the mission has been a key to the co-op's success. "We have built a culture here to keep thinking about the farmers and the mission," Siemon recently told the Associated Press.
Siemon said in the co-op's 2003 annual report that the slogan "We the farmers" is key to CROPP's business approach.
"We see that this represents our business and our beliefs," he said. "This message is good for brand positioning. It enables us to share our mission and focuses on the farmer/owners of CROPP.
"We hope this will become a rallying cry not only for CROPP farmers, but for family farmers all across this land. We must continue to advocate for a return to a place of dignity, respect, and honor for all family farmers, communities and the laws of nature."
Renegades by Necessity
If that last statement sounds a little like that of a renegade, it probably is because the founders of CROPP were indeed that. In fact, the co-op has been at the leading edge of what has been called the "Organic Revolution."
"I didn't begin my association with CROPP thinking I would be a revolutionary," said co-op president Wayne Peters in the 2003 annual report. "I was looking for a way of farming and marketing that would make more sense, something that would allow my children to follow in my footsteps if they choose to."
Wedeberg said, "We were renegades because we had to be. There really wasn't a precedent for us to follow at the time.
"Organic farming was very small at the time. It primarily was vegetable and crop growers. Some didn't see the need for it. Others doubted if it could survive.
"We started selling primarily just cheese. We thought all we had to do was put it on the dock and it would fly off the shelves. It didn't.
"We worked with the NFO (National Farmers Organization), and they helped us move into the milk business, with partners turning some of the milk into other products."
That model has worked, especially with the needed increased professionalism of the operation as CROPP grew. "It was a big day for me when I could hire an attorney," said Jerry McGeorge, cooperative coordinator. "Before that, I handled a lot of the contract work and other legal things, with the help of contracts lawyers from outside.
"We recruit people from all over the country now, for jobs ranging from marketing and sales to distribution and production."
Loyalty a Key
According to the 2003 annual report, CROPP had only a 9 percent employee turnover rate. CROPP instituted an Employee Growth Incentive program, designed to reward employees for actively participating in professional development opportunities. Employee loyalty in the co-op is high.
So is the loyalty of the farmer members. That's in part is because they are compensated fairly, about $6 more per unit for their milk than the national average.
"At CROPP, farmers don't get paid the minimum by the middle man," said Cathy Pierce of the production and quality division in the annual report. "They set their own price and earn an honest dollar. Our farmers are free to perform the sacred act of growing and providing food for others with dignity and hope for the future of their families and land."
Because of the growing interest nationwide in organic products, CROPP has attracted the interest of some of the major food industry corporations. A couple of them approached the co-op about forming business alliances a few years ago, but the CROPP board, after careful deliberations, rejected the offers, saying that they felt the "integrity of the Organic Valley brand would have been compromised" by the alliances.
Nevertheless, CROPP managers understand they will continue to face competition in the dairy business, which has been the co-op's "bread and butter."
"That's why our other pools (juice, eggs, meat and produce) are important," McGeorge said. "At this point, they make up relatively small percentages of our overall business, but they have growth potential."
In fact, those other pools have been growing at a higher rate than dairy in recent years. Meat has seen the biggest growth, in part because of concerns about mad cow disease.
"We try to keep our marketing and entire approach positive," McGeorge said. "We don't criticize other food producers, but when news events happen like that there is no doubt it has a positive impact on the organic business."
The move to the new headquarters – by a co-op known as a place that did not invest in "bricks and mortar" – also was considered a necessity to remain competitive. CROPP had moved into six or seven different buildings and trailers around the La Farge area as it grew. That led to certain inefficiencies. Under one roof, the various departments of the co-op can operate more in unison.
La Farge created a special tax district to give the co-op $1.5 million for the new headquarters, which included a $750,000 grant from the Department of Commerce. The U.S. Department of Agriculture gave it a $2.8 million loan.
The headquarters fits in with the co-op's commitment to farming and nature. The barn-like building atop a hill at One Organic Way offers clear vistas of the Kickapoo Valley Reserve. CROPP even helps sponsor a festival that benefits the reserve.
Recycled materials were used whenever possible in the building. The walls are stuffed with environmentally friendly cotton insulation made from used jeans. Air is recycled to recover heat and cooling, as well as provide a healthy environment for employees.
The cafeteria serves all organic meals. You won't find many corporate-style suits anywhere in the building. In fact, you won't find any.
CROPP managers also want to make sure they remain at the cutting edge of the organic industry in other ways. Some of the co-op's members have been appointed to Gov. Jim Doyle's special task force on organic farming.
"We need more research in areas of organic farming and processing," McGeorge said. "It will be exciting to work with others from around the state who are involved in the industry, and with researchers from the university and state."
CROPP is given credit, in part, for playing a role in Wisconsin becoming a leader in organic food production. Wisconsin ranks only behind California and Washington in the number of organic farms. State dairy producers raise 22 percent of the nation's organic milk cows.