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Interview: George Siemon, CEO of Organic Valley
by Green Money Journal
George Siemon is an organic farmer, but also Chief Executive Officer of Organic Valley, the $400 million organic products coop. This interview was conducted by Cliff Feigenbaum, founder of GreenMoney Journal
GMJ: Organic Valley is the largest organic products co-op in the US. Tell us more about the 20-year history of Organic Valley.
GEORGE: I always like to say that Organic Valley is "a social experiment disguised as a business." Our business has always been to serve and work for organic family farmers first and foremost while bringing the best food possible to the consumer. Initially, we were just a small group of produce farmers looking for other produce farmers to collectively market our vegetables. There was a small but growing demand for organic produce in the late 1980's and we were trying to tap into that market. Our first flyer said that our goal was "to be an efficient, economically and environmentally sound, nutritious, self-sustaining marketing system." We believed that we could return a higher price to the grower because we had a tastier and healthier product, and that is what we focused on.
It was after the idea had been formulated for a produce pool that a few of us farmers thought the concept might work for dairy farmers too. Then and now, conventional farmers do not know how much they are going to get paid from week to week as the price of conventional milk fluctuates greatly. Could you imagine running a business if you had no idea how much money you had coming in? So, we thought we would do something different, we would set the price for our organic milk, and if we could not get that price we would sell the surplus as conventional so as not to flood the market. This approach has allowed us to pay farmers a fair price for their product.
GMJ: What got you started and kept you involved in creating a farmer cooperative?
GEORGE: Frustration with the way the system was and a real determination to do something different for farmers. Organic agriculture was giving us permission to try something different. It made us hopeful that there was a better way to operate a successful, profitable farm and it worked.
GMJ: What do you think is the most remarkable thing about Organic Valley's history?
GEORGE: I guess the word history is a funny word. The fact that we came upon a formula, and that formula has been amazingly successful as we have grown. We have been following the same philosophical and business mission for the past twenty years, to bring a stable pay price to our producers while bringing the finest quality products to our consumers through a system of farming that is healthy for the land. This formula worked for us when we were a $2 million cooperative and still works for us as a $400 million cooperative, it has been amazingly adaptable for our growth. It is important to have diversity of people...farmers and employees. To me, diversity is people from different walks of life who come at organics from different perspectives. Because we are a national co-op we have many different types of farmers; some of our smallest farms have 15 cows while some of our other farms are bigger. We have some Amish and Mennonite producers who farm without mechanized equipment and farmers in Vermont who have an automatic back scratching brush for their cows. It is this diversity that helps give our cooperative strength.
We are past the honeymoon stage in our farmer leadership, some of our pioneering farmers are still involved at our executive committee meetings and we have proven to ourselves that we can survive leadership changes. We have revolving leadership, in our farmer committees, which proves we have set up a governance structure here that survives growth.
GMJ: Your product line is consistently expanding. What are the best selling items for the company and what can organic shoppers expect next from Organic Valley?
GEORGE: Very simply the best selling product for Organic Valley is our white milk; everyone loves our milk. Recently, we have had a great response with our pasture butter, butter made from cream while the cows are in pasture. Bakers and chefs are fond of our butter, cream and half and half.
For Organic Prairie our best selling meat products are our sliced meats, roast beef, turkey and ham. And you can be on the lookout for Organic Prairie Pepperoni and two pound bag of ready frozen skinless, boneless, chicken breasts.
GMJ: The challenges seem numerous for family farmers these days from the price of fuel to the price of feed. What are you hearing the most about (good and bad) from your co-op farmers?
GEORGE: The cost of feed everywhere is high and especially for organic farmers. Essentially, the organic livestock market has outgrown the ability to produce an adequate amount of feed to support the organic livestock. Because the price of conventional corn is at an all time high, farmers are less inclined to take the time to convert their grain to organics to receive the higher price.
We are taking steps to stabilize our feed supply. We worked to support any legislation in the farm bill that supported organic agriculture and were disappointed at the lack of federal funds to support transitioning farmers. We are looking for funding to support transitional farming. We are trying, with others, to set up a fund for securing organic acres. Not just dairy farms. This would supplement our existing transitioning program.
GMJ: Food safety issues are ubiquitous. How is Organic Valley and Organic Prairie insuring that products are safe for the public?
GEORGE: This is a major, major requirement to be in the food business. Food safety is the first and foremost priority for all of our products. Taste and integrity come next and I truly believe that when you produce a product naturally, with an eye toward giving back to the land as much as you take out, you get a great tasting product. As far as our organic integrity, every farm is third party certified and checked annually. Beyond that, if one farmer is not keeping up to standard you can be sure that his neighbors are watching and are eager to report any slip in practices. Farmers can be a gossipy group and we keep each other honest.
GMJ: What advice would you give to a fledgling company that also wanted to be "green and profitable?"
GEORGE: Embrace good business practices and stick to them.
People start businesses because they feel they will succeed because their philosophy is 'right.' Being right is not enough, it is timing in combination with the right idea and the right business practices. It is important as a business gets bigger to remember what your values are and keep making decisions in line with your values.
GMJ: What are your favorite aspects of farming?
GEORGE: My favorite part of farming is knowing the seasons and knowing what there is to do on each day. When you are on a farm there is a day to do everything, - a day when planting is right, a day when harvesting is right and so on. Living with the seasons is a routine way to know what everyday is for and you get to hone your sense of timing.
GMJ: Where do you see the growth in the Organic marketplace, - coming from in the future, large chain stores or small locally owned stores and co-ops?
GEORGE: Organic food is growing in popularity mostly among large chain stores. Mainstream Americans are voting with their money and they are choosing to go organic.
GMJ: Tell us more about the Organic Valley preferred stock investment that is being offered.
GEORGE: We began selling Class E, Series 1 preferred stock in May of 2004 and it has worked out really well for us as well as for our investors. The stock is currently sold in 23 states and the District of Columbia and we expect to open many more states later this year. To date, strong support of our stock has brought in almost $16 million. This non-voting stock allows supporters of our cooperative to receive a fair return on investment (6%) while supporting a company and mission they believe in.
GMJ: What are the latest issue(s) on your radar, inside and outside the world of organics?
GEORGE: Organics is just the base point for standards that can represent a different system of production. To me, the whole "beyond organic" concept is a totally valid issue that our co-op's are really dedicated to, but I'm not thrilled to have the USDA be the judge of what goes beyond organics. That is where the consumers have to come in and vote with their dollars. Some of the areas which are becoming hot topics include food miles, animal husbandry standards, sustainability standards and on and on.
Outside of organics, I think the world's ability to feed itself in a sustainable manner is going to gain prominence as the world's biggest issue. The world population is increasing exponentially and with India and China's growing middle class there is an increased demand for milk and meat. Big agriculture demands a lot from the earth and unless we make our practices more sustainable and water efficient we will pass a point of resource depletion. Organics and family farming are our best options for feeding the world.
For more information go to http://www.organicvalley.coop
Article originally published in the GreenMoney Journal (Summer 2008 issue.) Reprinted with ermission. More information at greenmoney.com
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