Before delivering the keynote address at the Ohio Ecological Food and Farm Association's 34th annual meeting last month in Granville, George Siemon, CEO of Organic Valley took time for an exclusive interview with Ohio Farmer. In 1988, Siemon joined a group of family farmers in Wisconsin to found the Cooperative Regions of Organic Producer Pools. More commonly known by its brands Organic Valley and Organic Prairie, CROPP has grown to become the largest organic farming cooperative in North America. The cooperative focuses on regional production and distribution, contracting with local production plants rather than building their own, which invests in local communities and farmers instead of "brick and mortar." Organic Valley producers farm without antibiotics, synthetic hormones, or pesticides.
Siemon also initiated Farmers Advocating for Organics, the largest organic-focused granting fund in the U.S., which is funded entirely by Organic Valley farmer-owners. He advised the USDA as part of the Livestock Standards Board; and currently participates on the boards of directors for The Organic Center and Global Animal Partnership. in 2012, George was awarded the Natural Resources Defense Council's Growing Green Award in the "Business Leader" category, and the Social Venture Network's Hall of Fame Impact Award in the "Environmental Evangelist" category.
OF: How did you become involved in organic dairy farming?
Siemon: I wasn't raised on a farm. I moved to the country in order to live close to the land. I milked cows for almost 20 years. I enjoyed farming, but I was increasingly frustrated by the marketing system. It wasn't rewarding or reasonable and commodity prices just didn't make sense, so the economics of it weren't satisfying. Then I discovered organic farming. I was very excited for something new.
OF How did you discover organic farming?
Siemon: Populist farm groups found the 1985 Farm Bill very disappointing and the Wisconsin Farm Unity had the idea of starting value-added co-ops to help[p themselves. It was very pioneering at that time. One of the board members was in our region and he wanted to start an organic produce co-op, vegetable co-op. So, it was really a political activist group that had the idea to start a co-op that would help do what the government was unwilling to do, which was trying to provide farmers with a viable market. We started our co-op in 1988 and had strong community support from the beginning.
OF: Do you miss the cows?
Siemon: I quit milking in about 1997 so it has been a long time. It is a wonderful way to raise a family but as the business leader of the co-op I am extremely busy. I am able to put my business background to use.
OF: How critical was it to create organic regulations?
Siemon: The organics movement is unique in that they actually asked for more regulations. Some states were starting to write laws defining organic, but they were conflicting. So in 1989 we began working to create a national bill. An organic labeling law was passed in 1990. It was clear that organic regulation was a fairly neutral political issue. It's a unique law in that it has the only Congressional advisory group in the United States called the National Organic Standards Board. It took a while -- between 1990 and 2002 to get the standard up and out. It was very challenging to have a program that covered all the commodities, but we now have the strictest standard in the world and we should be proud of that.
OF: What is Organic Valley's status here in Ohio.
Siemon: In the last 10 years we have expanded into Ohio. There is strong farmer leadership here. We have 139 farmers here now. Nationwide we are about one third Amish or Mennonite. In Ohio that number is even higher. We have enjoyed their leadership and impact. Most of our milk production at this point is on the West Coast, but we see an opportunity for steady growth in Ohio.
OF: Are you attracting young producers?
Siemon: We get calls from farmers who are interested all the time, especially from the younger generation. Times are pretty tough for all dairy farmers. Everyone is suffering from the drought. Organic producers tend to rely on less feed, but they still need to have organic feed. As a co-op we target family farms, but some of those have 300 cows or more.
OF: Are they attracted by your premiums?
Siemon: We were founded on the basis of providing a stable price versus big ups and downs. We've had some dips along the way, but basically we have done a good job of providing a stable price for our producers. It's a matter of very careful supply management over the years we have been very stubborn that organic milk should sell at a price that's sustainable and reasonable.
OF: What kind of production and prices are organic dairymen getting?
Siemon: On average we have about an $8 (per cwt.) premium for organic milk. Our average price now is about $31.Our farmers get state average production. Organic feed costs are higher, but our producers tend to use less feed. The margins are not as high as they have been in the past.
OF: Is the co-op model for business making a rebound?
Siemon: Co-ops are coming back to life, but they are still only 1% of the business. There are more co-ops being started. In the farm field they are a strong business model, but they are still not as well understood as they should be.
OF: What is ahead for Organic Valley?
Siemon: This is our 25th year and we are continuing to grow at a steady pace. We will soon be a $1 billion company. We have grown 15 to 20% a year for the last four years. That's been driven by educated female consumers, mainly young mothers who want a healthy product for their families. We have benefitted from a free market not subsidized by the government. We may have a 19% growth rate this year and if we continue to grow 10% starting in 2014, by 2020 we'll be a $2 billion company. We are looking forward to continued strong success.