Video Case Library ON THE JOB VIDEO CASE CHAPTER 5: ORGANIC VALLEY PLANTS THE SEEDS OF SOCIAL RESPONSIBILITY Many organizations treat social responsibility as if it were a separate divisionthe department of good deeds. They support volunteerism among employees, use environmentally friendly packaging and sponsor special programs in the community. All of these activi- ties are to be commended. But very few commercial organizations can actually claim to be based on the principles of social responsibility. The Organic Valley Cooperative is an exception. Based in Wisconsin, Organic Valley is a cooperative of small farmers whose products are certified to be produced without pesticides, synthetic hormones, or antibiotics, includ- ing organic milk, cheese, butter, spreads, creams, eggs. vegetables, juice, and meat. Nearly two decades ago, a few farmers who be lieved strongly in the value to society of practicing or ganic agriculture and saving family farms got together to form a cooperative. By acting together, these farm ers could better control their fate. They could control supply, negotiate with larger customers, and reach more consumers who wanted their products. And 734 they could set their own milk prices. Instead of being forced to accept prices subject to wild fluctuations in the open marketplace, these farmers began to set their own. This practice alone may be the single most im- portant factor in the ability of family farms to survive. In one recent year, the milk price paid to Organic Val- ley farmers was 60 percent higher than the price paid to conventional dairy farmers. Organic Valley has ac- tually received criticism for this practice, particularly from its creditors. But the cooperative holds firm. "Lowering the milk price would have been as easy as falling off a log." argues Organic Valley's CEO George Siemon. "But one of our objectives is to pay our farm- ers a good price.... We have a pay program the farm- ers expect us to deliver on. These relationships are the most important thing." Today, Organic Valley is being called the most successful organic cooperative in the world. The co- operative has 630 members farming 100,000 acres in 16 states, with a waiting list. Sales are hitting upwards of $200 million per year and growing. Member farm- ers are the cooperative's major stakeholders. With as- sistance from Organic Valley employees, the farmers govern the cooperative by serving on the board and executive committees. Organic Valley's structure is designed so it will be able to sustain itself from one generation to the next, ensuring the survival of family farms and sustainable, organic agriculture. Sweet Ridge Organic Dairy is one of the coopera tive's farms, operated by Paul Deutsch in Westby, Wisconsin Deutsch owns twenty-six cows that are milked twice a day and allowed to graze over pasture land the rest of the time-unlike cows in many larger, conventional dairy farms, which are kept in stalls 24 hours a day and may be given hormones or antibi- otics. It costs more to run an organic dairy farm, where in addition to grass the cows are fed organic comm, alfalfa, and other grains, and the cows need more grazing land. But Deutsch isn't spending money on chemicals or vet bills. He estimates that he makes about 30 percent profit each year because consumers are happy to pay more for products they know are more healthful for themselves and their families "Many parents have read the Consumer Reports studies and the National Academy of Science reports and know that organic for their kids is like seatbelts in a car," notes Theresa Marquez. Organic Valley's director of sales and marketing "The organic category has been growing steadily at 20 percent, and organic milk. with 27 percent annual growth, is driving the growth of the category. The implementation of the National Organic Program in the US....further established the organic market as one that is here to stay.Com sumers want organic." Organic Valley has helped the economies of ser- eral rural areas. When a large federal dam project in southwestern Wisconsin was cancelled after displac- ing more than 140 local farmers from their land, many lost their livelihoods. As Organic Valley became estab- lished, it created employment opportunities-both on the farms and in the cooperative offices for hun- dreds of residents in the area. "Going organic saved our farm," says cooperative farmer Mike Gehl, whose family has operated a Wisconsin farm for 154 years and five generations. Now Gehl and others like him can look forward to the next generation of farming Questions 1. In addition to the farmers, who are Organic Valley's other stakeholders? 2. Where does Organic Valley fit in the shades of green illustration in Exhibit 5.6? Give reasons for your answer. 3. Describe at least one ethical challenge that Organic Valley may face during turbulent times SOURCES Company Website www.cri.com acceed August 2.2004 Judy nenhoitet. Organic a big Success The Times July 22, 2004. "Organic Posts Record Lovely Photos OFARM December 30, 203.o.org Organic lepressit Video Case Library ON THE JOB VIDEO CASE CHAPTER 5: ORGANIC VALLEY PLANTS THE SEEDS OF SOCIAL RESPONSIBILITY Many organizations treat social responsibility as if it were a separate division-the department of good deeds. They support volunteerism among employees, use environmentally friendly packaging, and sponsor special programs in the community. All of these activi- ties are to be commended. But very few commercial organizations can actually claim to be based on the principles of social responsibility. The Organic Valley Cooperative is an exception. Based in Wisconsin, Organic Valley is a cooperative of small farmers whose products are certified to be produced without pesticides, synthetic hormones, or antibiotics, includ- ing organic milk, cheese, butter, spreads, creams, eggs, vegetables, juice, and meat. Nearly two decades ago, a few farmers who be lieved strongly in the value to society of practicing or ganic agriculture and saving family farms got together to form a cooperative. By acting together, these farm ers could better control their fate. They could control supply, negotiate with larger customers, and reach more consumers who wanted their products. And they could set their own milk prices. Instead of being forced to accept prices subject to wild fluctuations in the open marketplace, these farmers began to set their own. This practice alone may be the single most im portant factor in the ability of family farms to survive. in one recent year, the milk price paid to Organic Val- ley farmers was 60 percent higher than the price paid to conventional dairy farmers. Organic Valley has ac- tually received criticism for this practice, particularly from its creditors. But the cooperative holds firm. "Lowering the milk price would have been as easy as falling off a log." argues Organic Valley's CEO George Siemon "But one of our objectives is to pay our farm- ers a good price.... We have a pay program the farm- ers expect us to deliver on. These relationships are the most important thing." Today, Organic Valley is being called the most successful organic cooperative in the world. The co- operative has 630 members farming 100,000 acres in 16 states, with a waiting list. Sales are hitting upwards of S200 million per year and growing, Member farm- ers are the cooperative's major stakeholders. With as- sistance from Organic Valley employees, the farmers govern the cooperative by serving on the board and executive committees. Organic Valley's structure is designed so it will be able to sustain itself from one generation to the next, ensuring the survival of family farms and sustainable, organic agriculture. Sweet Ridge Organic Dairy is one of the coopera- tive's farms, operated by Paul Deutsch in Westby, Wisconsin. Deutsch owns twenty-six cows that are milked twice a day and allowed to graze over pasture- Land the rest of the time--unlike cows in many larger, conventional dairy farms, which are kept in stalls 24 hours a day and may be given hormones or antibi- oties. It costs more to run an organic dairy farm, where in addition to grass the cows are fed organic corn, alfalfa, and other grains, and the cows need more grazing land. But Deutsch isn't spending money on chemicals or vet bills. He estimates that he makes about 30 percent profit each year because consumers are happy to pay more for products they know are more healthful for themselves and their families. "Many parents have read the Consumer Reports studies and the National Academy of Science reports and know that organic for their kids is like seatbelts in a car," notes Theresa Marquez, Organic Valley's director of sales and marketing The organic category has been growing steadily at 20 percent, and organic milk, with 27+ percent annual growth, is driving the growth of the category. The implementation of the National Organic Program in the US....further established the organic market as one that is here to stay. Con sumers want organic." Organic Valley has helped the economies of sev. eral rural areas. When a large federal dam project in southwestern Wisconsin was cancelled after displac- ing more than 140 local farmers from their land, many lost their livelihoods. As Organic Valley became estab- lished, it created employment opportunities-both on the farms and in the cooperative offices--for hun- dreds of residents in the area. "Going organic saved our farm," says cooperative farmer Mike Gehl, whose family has operated a Wisconsin farm for 154 years and five generations. Now Gehl and others like him can look forward to the next generation of farming, Questions 1. In addition to the farmers, who are Organic Valley's other stakeholders? 2. Where does Organic Valley fit in the shades of green illustration in Exhibit 5.6? Give reasons for your answer. 3. Describe at least one ethical challenge that Organic Valley may face during turbulent times. SOURCES Company Website, ww.organically.coop.com accessed August 2.2004 Judy Ettenhobet"Organic Volley Big Success. The Capital Times, July 22, 2004.made.com Organise Record Lavelly Price to Farmers. "OFARM December 30, 2003 ...on Organic Valley press kit