Organic Valley:
Celebrating 20 years of Doing Good and Doing Well

By Kathryn Schuett


People, planet and profits—for businesses that follow the triple bottom line philosophy, these are the elements that drive their company and define success. With over 37 percent growth in 2006 alone and more than $500 million in sales predicted for 2008, Organic Valley Family of Farms, the nation’s largest cooperative of organic dairy, meat, egg, soy, juice and vegetable producers, has more than proven they can run a profitable business. However, it’s their continued commitment to their farmers, employees and the environment throughout this growth that makes them a triple bottom line role model.

Organic Valley’s efforts to care for the planet and their people have earned them accolades that include Fast Company magazine’s Social Capitalist Award, Co-op America’s Green Business Leadership Award, Business Ethics magazine’s Living Economy Award, as well as the Sustie Award for Leadership in Sustainable Agriculture from the Ecological Farming Association. As the cooperative celebrates its 20-year anniversary, their commitment to environmental sustainability and social responsibility is stronger than ever. Some of their most current initiatives include spearheading renewable energy projects with their farmer-owners, helping establish a non-profit group to ensure fair treatment of U.S. farmers and farm workers, creating new sources of biofuels and alternative energy to power their company and the surrounding community, as well as leading efforts to further sustainable agriculture and develop the next generation of organic family farmers.

“Our co-op was founded with the mission to save family farming through organic agriculture and a commitment to social and environmental responsibility,” said George Siemon, CEO for Organic Valley. “Today, we still base each leadership decision we make on what impact it will have on our farmers, the community and the environment.”

Green From the Ground Up
At the HQ. At Organic Valley’s headquarters in La Farge, Wisconsin, sustainability permeates every part of the company culture. Their building was built to LEED silver specificatons with eco-friendly features like a water collection and reuse system, recycled denim insulation instead of toxic fiberglass and windows positioned to take full advantage of the daylight which dramatically cuts down on the need for electric lighting. Many features were built using recycled or sustainably harvested materials and they have a compost system, an organic cafe and even organic gardens for the employees to grow their own produce. Many office supplies, from binders to pens (with veggie ink), are made from recycled material and serving utensils and dishes are all biodegradable. They have carpooling reward programs and are even looking at creating a shuttle system for their employees.

The key green addition at the HQ that brings this—and all Organic Valley’s other impressive environmental and social efforts—together is their Department of Sustainability led by Cecil Wright, VP of Sustainability. In order to implement sustainability into all aspects of the business he formed a Sustainability Taskforce including a renewable and energy program manager and biodiesel specialist. He also plans to add a sustainability program manager later this year

“You can talk about intention as much as you want, but once you realize how large some of these initiatives are and what needs to be done to implement these changes, you really need to have a department and process in place,” Wright said.

On the farm. With over 1200 farmer-owners and 280,000 acres of organic farmland nationwide, Organic Valley saw an opportunity to create change on a wide scale.

To help farmers take their sustainability efforts to the next level, they developed the Farmer Renewable and Energy Program (FREP), which offers farmers everything from energy audits and renewable energy consultations, to workshops on solar, wind and biodiesel as well as information (and possibly workshops in the future) on biodiversity, permaculture and prairie restoration.

The energy audits, performed by Midwest Renewable Energy Association and Seventh Generation, provide farmers with a 20-page report on how they can be more energy efficient including providing information on best use of solar or wind energy and more. In some cases just by incorporating solar water heating systems alone, farmers could reduce energy usage in their milking operations by up to 75 percent.

A major part of this program is working with farmers to develop pilot crops to use for biodiesel, allowing farmers to grow their own organic fuel. Plus, the meal left over after oil pressing is being tested as an organic livestock feed. Instead of monocropped genetically modified systems like corn or soy, Organic Valley is focusing on other alternatives such as sunflower and camelina seeds, which actually have a higher yield than soybeans and could be used to increase the protein content in feed. “We are trying to approach biofuels from a full circle perspective,” said Erin Ford, renewable and energy program manager. “From cradle to cradle, that’s the dream.”

Organic Valley also helps farmers secure funding and/or grants for renewable energy and has even hired a part-time grant writer to help with this initiative. So far over a third of their farmer-owners have taken the first step to get involved in this program and several will break ground this spring to install renewable energy systems.

On the highway and in the town of Cashton, Wisconsin. With the introduction of their “Pastures” brands a few years back, Organic Valley developed regional distribution, where milk is sold in the same area where it’s produced and processed. This model not only supports the local community, but also decreases their transportation carbon footprint in these regions. However, with many other distribution sites throughout the country, Organic Valley wanted to do more to reduce their dependence on fossil fuels. To do this they are working with Best Energies’ new biodiesel plant and filling station to provide biofuel for their distribution center in the town of Cashton. Located in a business park named “Cashton Greens,” this more sustainable fuel source will not only be available to Organic Valley vendors, but also to the community and other trucking companies. But that is not enough—Organic Valley is also working to educate and convince their contract vendors to use biodiesel when delivering their product nationwide. In order to do this they are partnering with other sustainable providers of biofuel throughout the country.

Through the Cashton Greens Partnership, Organic Valley is also planning to develop a biomass conversion plant that can take everything from manure, waste wood and other biomass and convert it into yet another alternative energy source. Plans are also in the making to create a wind energy site at this location, which they believe could provide enough energy to power a significant portion of the Cashton community.

Going Beyond the Carbon Footprint
While the focus these days seems to be on the carbon footprint, there are many other factors in maintaining a healthy planet. In order to get a better idea of not only their carbon footprint, but their entire environmental impact, Organic Valley has begun work on what is called an “ecological footprint” which takes an in-depth look at five major areas: air, water, land, biodiversity and toxins. The project requires a complete audit of all aspects of the cooperative including facilities, production and transportation.

“We wanted to make sure that we were doing this as holistically as possible,” Ford said. “We could have gone the quick and easy route—calculated our carbon footprint, bought carbon offsets and moved on, but that’s not how we do things at Organic Valley. We make sure we take our time and do things right. Only then can we truly address any shortcomings and make real progress.”

To develop the matrix, Ford joined forces with a colleague and fellow sustainability expert from the produce company Organically Grown. It has been about a year now since they started and they are excited to soon be able to report some of their findings. They also want to share what they have learned through this process with the rest of the organic community and others interested in sustainability.

Setting the Bar on Social Responsibility
Back in 1988, Organic Valley’s founders were the first to commit to setting a fair and stable pay-price to its farmer-owners for organic milk. At the time, this pay-price was almost 50 percent more than conventional milk. Today they are still holding standards high as one of the leaders in the domestic fair trade movement.

Domestic fair trade. Three years ago, Organic Valley, along with about 15 others, got together to work on ways to ensure fair treatment of farmers and farm workers in the United States. Today, the group, now called the Domestic Fair Trade Association, includes close to 75 organizations and companies including everyone from Dr. Bronner’s and Wholesome Harvest to the American Association of Family Farms. Ford is a member of the board, which has an equal representation of farm workers, farmers, retail groups and NGOs, as well as a diverse group of men, women and ethnicities. The group, which just had its first official meeting in December 2007, has created draft principles focused on supporting small family farmers and strengthening their ability to engage with the marketplace through democratic ownership and control (e.g., cooperatives), labor rights, direct trade between producer and consumer, fair and stable pricing, shared risk and affordable credit, sustainable agriculture, accountability and transparency. For more information on how to get involved, contact the Domestic Fair Trade Association at dftinfo@yahoo.com.

Farmer empowerment. Within Organic Valley, one of the many ways they remain socially responsible to their farmers is by having them involved with or leading important aspects of the business. Farmers actually invest 5.5 percent of their estimated annual sales into the cooperative, and therefore they are all owners. The cooperative is governed by a Farmer Board of Directors who are responsible for hiring and firing the CEO. The Farmer Board works directly with the management team on many aspects of running the business—even setting prices. “They decide what is a fair price and hand it over to marketing sales and say, “Can you get this for us in the market?,” said Theresa Marquez, chief marketing officer. “Unlike many farming operations these days, it’s not the management driving the price to the farmers; it’s the farmers driving the price to us. This ensures a fair price for the farmers.”

Employee democracy. To ensure that their 250 employees have a say in issues as well, Organic Valley also set up what they call the “Cultural Council.” Employees are divided up into small groups which each elect a representative, who get together to discuss everything from benefit changes to their winter party.

The group also coordinates efforts for employees to help the local community, making decisions on community giving both financially and through volunteer efforts. “The Cultural Council empowers our staff to become active participants in creating and maintaining the best workplace possible,” Ford said.

The employee wellness program is yet another important part of the organization that the council is involved in. This includes everything from yoga, kickboxing and Zumba dance aerobic classes every week to smoking cessation, chiropractic and massage services offered onsite. And their organic café and employee gardens ensure that they eat healthy too.

Profit sharing. Organic Valley also shows their respect and gratefulness to their farmers and employees by sharing the profits with them.

Profits earned over operating costs are split 45 percent to farmers, 45 percent to employees and 10 percent to the community fund. Last year, farmers alone were rewarded $7.1 million in profit sharing, production bonuses, dividends and retained earnings.

Supporting the Growth of Organic
Before getting involved with biodiesel or domestic fair trade—the foundation of all Organic Valley’s environmental and social efforts was, and always will be, organic farming. Organic Valley has many programs set up to further the organic movement—and, once again, everyone from farmers and employees to management, is involved.

Farmers Advocating for Organic (FAFO). Through this program, farmers have a chance to direct funding toward issues that matter to them including everything from scientific research on organic to outreach programs to recruit and support new organic farmers.

What makes this program really extraordinary is the fact that these efforts are voluntarily funded by the farmers themselves. The funding for FASO comes from the money that used to be allocated for something called the “promotion board,” a national program which funds national conventional dairy programs such as the “Got Milk” campaign and research on hormones which are not even used in organic. This program required all dairy farmers to contribute 15 cents per hundred pounds of milk. “We thought about this and said wait a second, this isn’t promoting organic. This is promoting a lot of things that we don’t necessarily agree with. Can we get our 15 cents back?” said Marquez.

Organic Valley finally got them to give back 5 of the 15 cents. Rather than just pocketing this nickel, the Organic Valley farmers decided to put in a fund that they could use to safeguard the organic marketplace. That fund now totals close to $300,000 a year.

“FAFO is truly the farmers’ voice,” said Dan Pearson, Organic Valley farmer-owner and chair of the all-farmer FAFO committee. “It has been an exciting process for the committee to think about how we can use the funds to support the organic movement.”

Growing the next generation of farmers. One of the biggest issues that Organic Valley and other companies may face in the future is lack of organic family farmers. To help support budding farmers, FAFO helped fund “Farm Beginnings.” Developed by the Land Stewardship Project, this 10-week course provides training to help run a successful farming business.

Another project supported by farmers and management is Generation O, which reaches out to recruit young farmers. As part of this project, Organic Valley supported the launch of the first Organic Future Farmers of America chapter. They are also reaching out to colleges, purchasing milk and recruiting interns from Chico State University, University of New Hampshire and others. “Family farmers are dropping like flies,” said Marquez. “How many kids do you know in your class that say ‘gee, I think I’ll be a farmer?’ We need to change that. We need to make farming, a viable, attractive career.”

Employee organic training. Organic Valley also has several Organic 101 workshops to help educate employees on the value of organic. This was inspired by a question that a staff member asked Marquez one day. The employee said, “You know, I was in church the other day and one of my fellow churchgoers said, ‘Wow, I know you’re into organic and I’ve got to ask you this question: what the heck do you see in a $18 chicken? Why is it better?’” Although the employee knew it was better, she found it difficult to give specific reasons why. This made Marquez realize that organic education had to start with their own staff.

Marquez also noted that the industry as a whole needs to understand how to communicate the benefits of organic more effectively. To help other communication professionals do this, she has collaborated with the Organic Trade Association, the Organic Center and the Organic Materials Review Institute, to lead a discussion group called “Managing the Organic Message.”

Closing Thought: What Every Business Can Learn from a Co-op
Although co-ops operate by different rules than most typical corporate businesses, (i.e., their main responsibility is to farmers not stockholders), there are many business principles that companies of any size or type can learn from a cooperative model.

According to Marquez, the most key management practice is, fittingly, “cooperation,” defined as “working together for a common purpose or benefit.” Part of this is making sure that all those who are tied to your business are able to collaborate on issues and have a say. “Who do you involve in decisions?” Marquez said. “People who feel they’re part of the business have a better morale and this creates a better workplace. The days of top-down management are gone. People want to be involved. They don’t want someone just telling them what to do.”

Transparency is another important aspect of a cooperative—everything has to be an open book. “If you’re going to be a green business, you’d better be ready to do some audits and be prepared to share those audits. Sometimes the scorecard isn’t as good as we want it to be, but it’s important to have a scorecard so that you know what you should improve. We owe it to those who buy our products to be transparent about how our food is grown and the way we run our businesses.”

Looking closely at the way Organic Valley runs its business, it’s easy to see that their dedication to people and the planet is not only part of what they say, but everything they do. That’s the greatest lesson anyone can learn from this company and what makes them a true triple bottom line role model.

Kathryn Schuett is the editorial director of Organic Processing Magazine. You can reach her at kat@organicprocessing.com.