Organic Valley announced it has distributed a bonus 13th check – traditionally, a cash distribution paid out when annual profits exceed sales goals – to its farmer-owners.
“We were very pleased we are able to distribute a 13th check to the members of our cooperative this year, allocating funds right back to the farming families who work the land,” said George Siemon, C-E-I-E-I-O and founding farmer of Organic Valley. “It’s taken a few years of conservative supply management, but we’ve moved past recent economic and supply challenges and got to where we need to be, thanks to everyone’s cooperation, in the true sense of the word.”
The annual sales growth goal set by the Board of Directors for 2010 was 2.38 percent of sales. Upon exceeding those goals, the Board authorized a total payment of $5,345,000 to the membership, which is currently being distributed to farmers-owners across 35 states.
By way of background, in August 2010, Organic Valley lifted its supply quota to allow its farmer-owners to grow from 93 percent to 100 percent of their active base. That move occurred just over one year after the cooperative pioneered a supply management system to safeguard the farmers’ pay price during a period of slowed growth coupled with near historic lows in farmer pay prices for conventional milk.
In lieu of cutting their own sustainable-based pay prices, Organic Valley dairy farmer-owners collectively decided to require all dairy members to reduce their organic milk supply by 7 percent beginning July 2009. Honoring their unique cooperative business structure, they chose this option rather than cut a fellow member from the cooperative or reduce the pay price. This strategic supply management accomplished its goal of safeguarding the farmer membership and sustainable pay price through tough economic times; and in addition, Organic Valley was able to not only exceed sales goals but also bring more farmers into the cooperative. Just last month, Organic Valley brought on 53 organic farmers from Lancaster County Organic Farmers Cooperative (LOFCO) to join the cooperative.
In 2008, the cooperative experienced 22 percent growth, while in 2009, sales remained flat. As a result of strategic supply management, Organic Valley enjoyed growth at $619 million in 2010, 18 percent growth from 2009. PD
—From Organic Valley news release
