Issuu on Google+

Annual Report

One Organic Way | La Farge, WI 54639 | 1-888-444-MILK | www.farmers.coop

© Organic Valley 2013-55001 CMG-P02334 Printed on paper made from 100% post-consumer recycled fiber.

2012


CROPP Farmer

2012

Board of Directors

Petersen Family Farm

Lolita, CA

Mark Kruse

Pam Riesgraf

Dan Pearson

Vice President

Secretary

Treasurer

Kruse Family Farm Lansing, Iowa

Full Circle Dairy Edgar, Wisconsin

Pearson’s Mann Valley Farm River Falls, Wisconsin

Travis Forgues

Wayne Peters

Steve Pierson

Director

Director

Director

Forgues Family Farm Alburg, Vermont

Peters Farms, Inc. Chaseburg, Wisconsin

Sar-Ben Farms, Inc. St. Paul, Oregon

This annual report contains discussion of some of our expectations regarding CROPP Cooperative’s future performance. These forward-looking statements are based on our current views and assumptions. Actual results could differ materially from these current expectations and projections, and from historical performance. For example, our future results could be affected by factors including, but not limited to: the competitive dynamics in the markets for organic dairy products; the cost and supply of organic milk; the cost of organic farm products and organic feed; the mix of sales of our branded and non-branded products; the application of, and changes in, the United States Dairy Support and Federal Milk Marketing Order programs; and the adoption of regulations pursuant to the Food Safety Modernization Act. Discussions of these matters and other risks to which CROPP Cooperative is subject can be found in the Offering Circular(s) (and any associated supplements or amendments) we distribute from time to time in connection with the offer and sale of our Class E, Series 1 Preferred Stock. A copy of such Offering Circular and any current supplements or amendments can be obtained for informational purposes by contacting Diane Gloede, Investor Relations Manager, by mail at Cooperative Regions of Organic Producer Pools, One Organic Way, La Farge, WI 54639, or by telephone at (888) 444 6455 x3310.


President of the Board

Holy cow. Yes, those are the words that come to mind when I stop to consider everything we’ve accomplished over the first 25 years of CROPP Cooperative’s life. Who ever would have thought, back in the dark agricultural days of the 1980s, that a group of American family farmers in 2013 would look back at that era with such pride in achievement and look forward with such bold optimism. Even though I was early on the truck— CROPP’s 11th dairy farmer—I was more or less grasping at straws then, far from convinced I was making a significant move, or that this bunch of enthusiastic farmers could do much to create and sustain a better future. I only knew I was a farmer, I loved farming, and the conventional world was certainly not helping. Before CROPP, remember your queasy feeling during your monthly walk to the mailbox to open yet another variation of “pay” for all your hard work? Remember how you felt about your family, your farm’s future, your land, your cows? Then, remember how things began to change? Your cows’ health improved. Your vet started showing up out of the blue to see what was going on—hadn’t heard from you in a while. Gone was the burning worry over all of the poison. Your pastures and cropland found new vitality and rebounded. Your debt load shifted more in your favor. You noticed that your children noticed your smile. According to what I read on the membership list, this drama has played out in one version or another on no fewer than 1,834 family farms, thanks to what we share in the CROPP mission. If that’s not worth a “holy cow” or two, I don’t know what is. There has never been a guarantee—only a deep and growing faith in what can happen when we take steps together to cultivate goodness instead of just sitting back to take what we get.

And it wasn’t just us—we were helped along our way by many who believed: the National Farmers Organization, who risked much by guiding and funding our early years; our countless friends at many production plants and trucking firms who always kept a foot in the door for us as we learned; the bankers who saw our fire and pumped their feet steadily on the financial bellows; our employees, who are second to none and deserve equitable wages along with our respect. Today we embrace thousands of friends—true believers who invest deeply in our vision. You will read in this 2012 report of the challenges, of a widespread drought and high feed prices, of the shifting balance between branded and private label organic sales—of sales growing only 20%. It’s clear to me, after all the years, that this is business as usual, and we continue with serious focus to work toward resolutions that are true to our cooperative’s mission. You’ll also read of innovative solutions and incredible team efforts to find better ways, in true CROPP Cooperative fashion. I can’t tell you how inspired I feel, and how proud I am to serve as Board President of this organization, which is undeniably unique in America’s history. I would like to tell you I am keeping the faith, but this is more than faith, more than hope—it’s hard-won accomplishment, and each and every one of you should pat yourself on the back for your role in building what CROPP has become. It’s hard to know whom to thank first, so I thank you all at once, sincerely and humbly. On to the next 25!

Arnie Trussoni President CROPP Cooperative Board of Directors

President of the Board

Reflections on 25 Years

A r n i e Tr us so n i Elm Terrace Farm Genoa, Wisconsin

“I can't tell you how inspired I feel, and how proud I am to serve as Board President of this organization, which is undeniably unique in America's history..”

1


CEIEIO

Johnston Family Farm

Tillamook, OR

CEIEIO

25 Years and So Much More As we celebrate our 25th anniversary, we are awed by who our cooperative is today. The cooperative had a vision and values when we were born, and now we can see how important that clarity has been.

number of farmers who understand who we are and engage in leading our cooperative. Also very rewarding was the tour of our facilities and the positive impressions about the employees.

We held our first Regional Understanding Tour, which featured a whirlwind tour of parts of California, Oregon and Washington. We were very fortunate to have farm families from ten states on the tour, bringing the diversity of their farm styles into the conversation. At each stop, we had several farm tours and a picnic with our local members—a rare opportunity for farmers from all over the nation to visit. Many of the tour participants had not seen organic dairies of the west and had lots of questions about how organic At our Annual works for these Meeting this year, larger dairies. The “It is our charge to make we will be recogniztour was a great sure our business does ing the past leaders success and many whose shoulders not become self-serving or new friends were we stand on. New wander from our mission as made. We are planmembers and emning another tour ployees are always we move forward.˝ in late-September amazed at what we 2013 that will tour have accomplished, from Maine to Pennsylvania. Promoting and it is so rewarding to know that our sucunderstanding of the uniqueness of each cess is because we have all accomplished region is and will continue to be key, as a this together. It is also exciting to see those national cooperative. new stakeholders becoming the future leadAs we look forward, one of our concerns is ers of our cooperative. succession in our employee leadership. We Our foundation values are our cornerstone, have been very fortunate to have so many and celebrating our 25th year gives us the long-standing employees who have led the opportunity to focus on those values and business side. It is our intent to have future how we can carry them forward. We have started many processes to share and protect our values for the future leadership. In 2012, we held our second Farmer Leadership Symposium, which has been a great way to educate future leaders about our unique cooperative. We made sure to invite Generation Organic farmers, and they were a great addition. These meetings have expanded the Several years ago, we decided that we would write a book about our first 25 years. Writing the book gave us the opportunity to recover, remember and rejoice in the great experience that is our history. The best part was to recognize the many, many people who have provided leadership for the cooperative. Truly, our success is the result of a community that believed in our potential and gave their hard work, heart and soul to our shared dream. It is our hope that the book will be a guide for our future leaders.

3

CEIEIO

2

Chief Executive Officer

George Siemon

Koester Family Farm

Scales Mound, IL


4

CEIEIO

CEIEIO

5

FAFO supports • Anti-GMO Initiative Ultra pasteurized • (UP) milk introduced

• Incorporation papers March 10, 1988:

submitted to State of Wisconsin.

• March 2: First Egg Pool Meeting 3: First butter made • April by Westby Creamery.

• First milk carton design

CROPP's meat program begins with "Valley's" certified organic

produces • CROPP orange and

Valley SOY • Organic flavors are introduced

grapefruit juice

Cashton Distribution • Center opens

with employees and farmers marchig on Washington

New-look logo • 2013: and milk cartons

developed for Organic Valley brand

building • Headquarters built overlooking Kickapoo Valley.

employee leaders be homegrown from within. We are now working hard to educate and train our employees so that we have a “deep bench” of leaders in the future. We need not only business skill but also dedication to our mission, and that is best found in employees who have grown with the cooperative. Growing has advantages in the services we can offer our members. For instance, we were happy to add an agronomist to our staff in 2012. Soil fertility, or mineralization, has always been a foundation to organic farming, and we are glad to be advocating that. The Farmers Advocating for Organics (FAFO) committee has chosen soil as a major initiative and has dedicated some of their funds toward supporting soil testing to help encourage members to increase its mineralization. In the coming year, we will be adding a financial advisor to work with the Access to Farmland initiative and as a financial advisor to members on expansion and estate planning.

Our cooperative is a $1 billion business now, and that requires us to do more long-term planning. The responsibility we have is immense with more than 1,800 farm families dependent on us, almost 700 employees, the trust of millions of consumers and the financial benefit we represent to our partners. We need to safeguard the cooperative at the same time that we serve the farmer members. It is our charge to make sure our business does not become self-serving or wander from our mission as we move forward. At this time of celebrating our success, it is good to question if we should keep growing in the number of farmers we serve. This is a long-standing question for us and one that is answered not so much by size as much as by adherence to our mission. At this time, we are very pleased with our mission orientation and will continue to grow because we have family farms wanting to join and our customers want us to keep up with the market demand.

Our challenge now is to maintain our vision and clarity of values so that we can continue our success. This will require effort and commitment from all the farmer members and employees so that we can deliver on our mission of serving organic family farms, the communities of rural America and consumers by providing the best food possible. It is an honor for all of us to share in this cooperative, and it is very rewarding to see that duty being shared. As we look to the future, we know who we will be serving 25 years from now—your grandchildren. We are grateful for this mission. Together, we will stay true to our roots, continue to grow the organic movement and safeguard the cooperative for future generations.

Azevedo Family Farm

Stevinson, CA


Pools

Pools

As always, continual improvement across all CROPP teams has resulted in a year of challenges faced and overcome, with outstanding results for the cooperative. As we roll into 2013, we celebrate 25 years of cultivating goodness with excitement and confidence infused with the common sense that comes from our foundations on the family farm. Themes weaving 2012 together include supply and demand (as always), brand building, innovation, efficiencies, and as we look to the future and our next generation of leadership, legacy.

Pools Drought and skyrocketing feed prices affected all pools. More than a thousand counties and countless farms across the country were affected. Record high temperatures were recorded nearly everywhere throughout the summer months. Feed-producing areas were hardest hit. JEMPS Pool Director, David Bruce, said, “Something that worked against us along with the drought was a jump in conventional commodity prices, which took some organic acres out of production. The cost of production overall went way up.” Bruce and Dairy Pool Director Jim Wedeberg agree that Pools teams had to hustle to accommodate the late 2011 influx of California membership. “We went from 17 producers in California to 52,” Wedeberg said. “2012 is the first year we absorbed all that milk. The west coast suddenly became a much higher percentage of our overall dairy supply. With production and utilization spaced across the country, well, you see the logistical challenge of that.”

Dairy Region California

51

Colorado

4

Great Lakes

185

Kentucky

24

Mid East

170

Midwest

801

Palmer Family Farm

Waukon, IA

Total Members

OBE, Australia

1

Mountain

15

181

New England

Northeast

309

Northwest

65

Southeast

23

Texas

4

Total voting members at end-of-year 2012

1,834

Pools

6

So why did we take on that milk? It’s all about safeguarding the organic pay price to ensure CROPP members a fair return for their work. As Wedeberg explains, “Our quota program in 2008 and 2009 was designed to stabilize the organic pay price so it wouldn’t decline. But there were still outlying forces trying to lower the pay price to organic farmers and undercut the market in the east and west. When those California farmers joined CROPP, we reinforced our collective bargaining power for farmers and stabilized their pay price.” Overall, Pools teams are working hard to assist farmers who want to increase productivity of their farms, spurring the creation of CROPP’s new Farm Resources Department. Along with feed stabilization programs and expanding our cull cow program into the Northeast and Northwest, the Farm Resources Department combines the technical support services of three staff veterinarians, a nutritionist, an animal care specialist and an agronomist under one roof. “The formation of this team is part of our effort to support those farmers who want to do more with what they have when they can’t buy more land. In some cases, farmers have been able to increase their productivity by 10%,” Wedeberg said. CROPP farmers from across the country gathered out west for the 2012 Regional Understanding Tour, where they toured farms in California, Oregon and Washington. The primary goal was to inspire a sense of regional unity. “One thing I’ve been privileged to see and understand that a lot of our farmers haven’t been able to see is that no matter where you go on this earth, when you put your feet under another farmer’s table, you see that the issues we face are very similar,” said Wedeberg. “For this cooperative to be successful in the future, we have to maintain our mission as one and our focus as one, because we cannot succeed divided.” It’s important for farmers from other regions to understand the differences in and challenges of agriculture from region to region. A farmer milking 12 cows in the east may not understand why a farmer in the west needs to milk 500 cows. When that eastern farmer

Jim Wedeberg

Kitchen-Table Conversations…Evolved By Dairy Pool Director Jim Wedeberg Twenty-five years ago, CROPP stood for Coulee Region Organic Produce Pool and members were all located in southwestern Wisconsin. When we needed to talk through decisions that would impact membership we simply got together in La Farge. Since then, the cooperative and our membership have grown to include farm families in seven different producer pools across 34 states. With this kind of spread, getting together is much more challenging but no less important. In the early days as the co-op expanded out of the Coulee Region and beyond produce, we changed the meaning of CROPP to Cooperative Regions of Organic Producer Pools. After Iowa and Minnesota, our next dairy members were in New England and the Pacific Northwest. This meant gathering together had to become a more formal—and wellplanned out—process. While the Annual Meeting is a great forum for our members to discuss co-op business, traveling to Wisconsin isn’t always an option. The Annual Report and other communications from staff helped, but we still didn’t have the opportunity to hear what the members were saying. There’s nothing like a kitchen table conversation with farmers to really get to the heart of the matter. It became clear we needed to go out into the countryside and meet with our farmers face-to-face. Regional Meetings began in 1993 and have been continually evolving, but the goal is always the same—to gather, listen and share. We hold meetings twice a year in each of CROPP’s 48 subregions. The spring meeting is our opportunity to review the previous year’s business (like a mini Annual Meeting), and the fall meeting features a report from the Sales and Marketing departments. But the most valuable part of these regional meetings is the open conversation. It’s our time to sit around the table and talk about farming and our cooperative. It’s during these moments when important conversations about the future of CROPP Cooperative begin.

7


8

Pools

OMC

2012 Pools Highlights: Our new Hillsboro Consolidation Center near Hillsboro, Wis., was completed. This Produce Pool center meets strict food safety standards, and allows families to work together when washing and boxing their produce, respecting the culture of the

goes on one of these tours, he or she learns about the cost of land, regulatory issues and irrigation issues—to name but a few of the challenges—that western farmers face. “Finally,” Wedeberg added, “we have to gear up for the impact of climate change on agriculture and how and where we produce. Part of that is realizing the importance of network-

Organic Meat Company “2012 was the Organic Meat Company’s (OMC’s) most successful year in revenue growth,” said Pete Bassett, global sales and business development manager for Organic Prairie.

Amish members who use the building.

“The regional expansion of the cull cow utilization program was a big win for OMC in 2012,” said Heather Christianson, OMC operations manager. “Thanks to a program expansion, there was a record utilization of cull cows. We moved the program into the Mideast [Ohio/Indiana] and into the Northeast this year, and started into the Northwest [Idaho and Utah] late in the year. Cull cow utilization links a farmer economic need to a consumer demand.”

The Egg Pool adopted the FDA salmonella prevention rule, which resulted in additional record keeping for farmerowners, but which will ensure the continued high food safety record of our egg program.

ing with the worldwide marketplace. That’s going to be more important as we move forward, because in 2015, all the European dairy quotas will be lifted. Nobody knows what impact unlimited milk production will have on the world market. We need to understand that and know how to protect our pay price. We can’t build a wall around the U.S. or around CROPP. It’s going to take a huge effort.”

uct price increases to the market made it a challenging year,” Bassett said. “But we rolled with it and performed well.” Part of what bounced OMC’s sales upward, was its growing consumer direct (CD), or online sales, business. Sales and Marketing Operations Director Joel Mellor reported that CD accounted for 7% of OMC sales in 2012. OMC products are now available online through QVC, Samsclub.com and Costco.com (and in Costco retail stores), as well as through our own online store at OrganicPrairie.com.

Speaking to the consumer side, Bassett said, “Sales for fresh ground beef are up a record 50%. As a result of proper planning by the OMC management team to expand the cull cow program, we were able to take advantage of this market opportunity.” OMC added another ground beef product, 93% lean, to its high-demand ground beef category.

To support this growing brand recognition, OMC brought on its first category manager. Jay Winter was hired in October to manage Organic Prairie product development and marketing. “We’d had two consecutive years of successful management of OMC, producing positive financial results in 2010 and 2011,” Bassett said. “It was time in 2012 to bring in someone to focus exclusively on marketing. Jay will help us respond to consumer trends that point to a growing desire for value-added meat products.”

As was true in every corner of the Cooperative, OMC’s balance sheet was affected by the drought. “Soaring grain prices and two prod-

“For a company whose branded business is 85% of all sales, there are tremendous opportunities for Organic Prairie,” Winter

Total Organic Prairie Sales 2012

Total OMC Sales 2012

said. “We will create products that match our farmers’ utilization needs with consumer demands, which are all about ready-to-eat and ready-to-cook. People who buy organic meat have high expectations. We have to deliver the right packaging, appeal, taste and availability in both fresh and frozen formats.” Also in 2012, OMC doubled their efforts to sell to global markets. “We made adjustments to products and packaging to accommodate certain markets,” Bassett said. “For instance, we changed our Italian chicken sausages from pork casings to skinless so we could sell into Muslim countries where the culture doesn’t allow pork. We also ship products to Malaysia, Korea, Singapore and Hong Kong. Our export sales are up 70% over last year.”

Another big boost for OMC was the purchase of majority ownership in Cannon Falls, Minnesota-based Lorentz Meats in late 2011. Lorentz began a plant expansion in 2012 (expected completion in mid-2013) that will increase storage, production space and processing speeds to match OMC’s sales volumes, which will increase OMC’s ability to develop new products. “Overall, this has been our most successful year ever,” Bassett said. “We’re firing on all cylinders.”

$1,400,000

$25,000,000

$1,200,000

$20,000,000

$1,000,000

$0 2005

$600,000 $400,000 $200,000

2006

2007

2008

2009

2010

2011

2012

2013

Branded

Consumer Direct Foodservice

Export

Live Animal Cattle Pack

Ingredient

By The Organic Meat Company Team After years of cooperative investment and improvement, CROPP’s organic meat business had a solidly profitable year in 2010 and has continued to report a strong financial position ever since. This is a terrific and seminal accomplishment, rewarding the steadfast support from our co-op membership over the first decade, plus. Marketing organic meat had its regulatory handicaps in the early days— chiefly that the USDA only allowed the toothless “natural” on meat labels and strictly disallowed the word “organic.” During this difficult time, the CROPP meat program relentlessly paved the way by pioneering strict livestock standards, clear labeling requirements and edgy marketing. In 1999, CROPP’s ingenious Gagged American Gothic campaign was a catchy catalyst toward gaining the right to use the “O” word. The year 2000 marked the passage of the USDA’s final Organic Rule, implementing nationwide organic standards, and beginning with the Organic Rule’s implementation in 2002, things moved quickly for the newly created Organic Meat Company (in 2003). We began to label with the USDA Organic seal and bid farewell to our unavoidably ambiguous brand, “Valley’s Family of Farms,” in favor of “Organic Valley,” then finally settling on “Organic Prairie” in 2004. In 2009, OMC adopted a team management structure and culled and re-prioritized its product line. Finally in 2010, the company achieved long-awaited profits to secure the future of CROPP family farms and their meat products. Today, ground beef is the cornerstone product of a line that supplies the growing branded retail, ingredient, foodservice and export marketplace. Although a series of operational and strategic adjustments clearly figured into OMC’s growth, there’s nothing like stacking up some years of positive business accomplishments to really switch on the sun in OMC’s future. We’ll always look back to 2002 and 2010 as years in which we brought OMC over two significant thresholds—gaining the “organic” label, and achieving a formula for economic success.

Mike and Rob Lorentz have been making delicious meat products since they were in their early teens. They began by helping their parents, Mary and Ed Lorentz, make sausage according to old-country recipes. The Lorentz family entered the meat production business big time in 1968 when Mary and Ed bought the meat locker in Cannon Falls, Minnesota. Mike and Rob built a new plant in 2000 to accommodate growth in their business, which is when OMC started their co-packer relationship with Lorentz Meats. By 2012, an expansion to their existing plant was needed, and CROPP stepped in as a grateful partner in this family business. Lorentz Meat Company processes all of OMC’s Midwest cull cows, as well as pork and poultry finished goods. The new expansion will increase the plant’s capacity to bring organic, value-added meat products to the industry. (Lorentz Meats received glowing mention as an example of a meatprocessing facility that’s doing things the right way in Michael Pollan’s 2006 book, The Omnivore's Dilemma: A Natural History of Four Meals.)

$800,000

$5,000,000

Achieving the “O” Word

A New Partnership

$30,000,000

$10,000,000

Heather Christianson, Pete Bassett

OMC’s grassfed product lineup has been exceedingly successful. For the past decade, OMC grassfed beef has been supplied by a cooperative of organic ranchers in Queensland, Australia, which became a full member of CROPP in 2011. In the future, OMC hopes to develop domestic grassfed beef sources.

Total Consumer Direct Sales

$15,000,000

Core OMC Team (l to r): Pam Saunders, Jay Winter, Jeremy Matthes, Matt Muellenberg,

$0 2008

2009

2010

2011

2012

9


Operations

Operations

Operations

10

Lo u i s e H e m st e a d

Stepping Out of Our Comfort Zone By Chief Operations Officer Louise Hemstead In early 1994, CROPP was 6 years old and still financed through the National Farmers Organization (NFO). Produce, cheese and butter represented the bulk of our business; we had tried meat and failed; we were just starting the egg program. Our fluid dairy program was struggling, with 50% of our skim milk being sold conventionally. We were shipping milk to Des Moines, Iowa, for Horizon’s fluid milk and could see they would soon be starting their own large dairy farm. We knew it was time to launch Organic Valley milk. We found a plant friendly to our project in St. Paul, Minnesota; however, to produce fluid milk, we would need to take a risk and take on more dairy farmerowners. This happened to coincide with a few farmers calling us from Goodhue, Minnesota, wanting to join the cooperative. We had to make two decisions: First, should we cross the Mississippi River and leave the Coulee Region? And second, would we accept a Minnesota farmer who milked 200 cows (a large farm, by our standards), or should we procure more milk in Wisconsin and haul it to the plant in St. Paul? The discussion was a philosophical one. We were less worried about logistics than we were about staying true to our roots—small farms in the Coulee Region. A farm visit quickly cleared up the second question—we arrived to meet two brothers farming together along with their children. Clearly this was a family farm. Next, discussing the question of geography, we turned to our mission statement for guidance, as we have for every major decision over the years: “The mission of the Coulee Region Organic Produce Pool (CROPP) is to create and operate a marketing cooperative that promotes regional farm diversity and economic stability by the means of organic agricultural methods and the sale of certified organic products.” The discussion made us look more closely at our business name, revolving around the word “Coulee.” Would expanding into Minnesota be an abandonment of our Coulee Region roots? We decided that since the “Coulees” run on both sides of the Mississippi River Basin, we were no farther from them in Minnesota than we were in Wisconsin. That single decision set us on the path to become the national cooperative we are today. In time, we agreed that “regional farm diversity” was central to our mission and meant much more than just Wisconsin and Minnesota, and we soon replaced the words “Coulee Region” with “Cooperative Regions.” Today, in another time of exhilarating growth, we pause as we did back then to take stock of the decisions we must make as we grow the cooperative. What new philosophical discussions will we encounter in the next 25 years? What exciting developments will help us provide more organic foods to more people and secure the futures of ever more organic family farmers?

Burroughs Family Farm

Denair, CA

Operations In managing the most volatile aspect of CROPP’s business—supply and demand— and all the teams that deal with the process from farm gate to finished product, Chief Operating Officer Louise Hemstead and her Supply Management Team, led by Master Planner Mary Ewing, enjoy knocking a few out of the park every year. Homeruns in 2012 were even more dramatic than usual for three reasons: 1. Significant increase of fluid milk supply from California late in 2011 2. Early and prolonged spring flush 3. Severe drought across the Midwest

Managing Production & Supply: A Yearly Challenge “Historically CROPP grows in peaks and valleys; 2012 was a peak year riding on milk growth from the Western states,” Hemstead said. “We poured supply into greatly needed inventory when the region flourished. “We’re really happy those farmers joined us,” she continued, “because when we talk about ‘cultivating goodness,’ that includes developing a higher standard of what farmers should be paid across the country. There were inequities with the organic pay price in the Western regions; by working together as part of the cooperative, we were able to bring them to our higher pay price for their hard work.” CROPP realized savings in milk hauling by bringing on more milk in California. “In the past, CROPP didn’t have enough milk supply in the state to meet plant minimums to keep production in California. This meant hauling the fluid milk out of the state for processing. When more farmers came on, there was enough milk to process in-state. When we can take our milk to the nearest manufacturer, we reduce the miles we have to haul the milk, fulfilling our vision to create a local and regional model,” Hemstead said. The Western milk also affected the proportion of milk sold under the Organic Valley brand. Much of this milk came with its own existing bulk sales markets, which had the effect of increasing the proportion of our bulk sales compared to brand sales. “The

2012 Awards: wisdom of our 3-legged stool strategy (bulk, brand, ingredient), is that it allows CROPP to maintain stability through these growth events,” Hemstead said. Supply jumped again because of an early spring flush in 2012, which meant building inventory earlier than usual. “As we adjusted our inventory plan to compensate for this increase in supply, we ran into the drought and warmer weather, which naturally led to reductions in supply,” Hemstead said. “This had a roller-coaster impact on our planning.” “In the end, milk supply over the course of 2012 came in very close to our planned volume – just not in the months we had anticipated. We manage this volatility through our dynamic sales base, and the expansion and contraction of inventory,” said Hemstead. The execution of product manufacturing and inventory is led by Jeff Kragt and his team captain Angela Swenson. They are responsible for scheduling milk loads to more than 85 manufacturing facilities across the nation, producing more than 800 unique products for diverse markets. In addition to the swell of milk on the west coast, this team responded effectively to two significant shifts affecting the operations of the cooperative: 1. The cooperative’s largest single bulk and ingredient customer had a challenging year and decreased their purchases to 2010 levels. 2. CROPP committed significant effort and resources toward our export business. CROPP’s largest bulk customer experienced slowed growth. “The production team did an outstanding job in placing the milk that had been slated for this customer,” Hemstead said. Even so, bulk milk sales increased over 2011, and CROPP realized 98.2% utilization overall in 2012. Export has been part of our business strategy since our first shipments of cheese to Japan in 1994. In 2012, we placed even more focus on East Asian opportunities for our organic products. This undertaking was a cooperative-wide effort, engaging co-processors, packaging, certification, quality assurance

1st Place, Organic Valley European Style Butter (Cultured & Unsalted) World Dairy Expo 2012 Gold Award, European Style Butter (Cultured & Unsalted) Los Angeles International Dairy Competition 2012 Gold Award, Organic Valley Pasture Butter Los Angeles International Dairy Competition 2012 Gold Award, Organic Valley Cream Cheese Los Angeles International Dairy Competition 2012 Gold Award, Organic Valley Heavy Whipping Cream – Pasteurized Los Angeles International Dairy Competition 2012 Winner, Organic Valley Shredded Mild Cheddar Cheese Vegetarian Times Readers’ Choice 2012 Silver Award, Half & Half Los Angeles International Dairy Competition 2012 Bronze Award, Raw Sharp Cheddar Cheese Los Angeles International Dairy Competition 2012 Runner Up, Organic Valley Grassmilk Vegetarian Times Readers’ Choice 2012 2nd Place, Organic Valley UHT Whole Milk World Dairy Expo 2012 2nd Place, Organic Valley Pasture Butter American Cheese Society 2012 2nd Place, Organic Valley Salted Butter American Cheese Society 2012 3rd Place, Organic Valley European Style Butter (Cultured & Unsalted) American Cheese Society 2012 3rd Place, Blue Cheese American Cheese Society 2012

11


Operations

Organic Logistics and logistics. New Organic Valley exportspecific products were developed. “Ways to innovate and promote the brand keeps me up at night,” Hemstead said. “We must continue to invest in promoting the Organic Valley brand. It is through the brand that we grow the critical 3rd leg on the stool.”

Certification Cultivating goodness through higher standards is apparent in our certification program. “We are the only dairy company in the United States that is certified to Chinese organic standards,” said Certification Manager Beth Unger, “and it was a massive undertaking for our certification team. China requires the entire supply chain be certified to their standards, and they were impressed by the depth of detail in our quality assurance (QA) program.” Certification costs money, Unger said, but “our exports are growing. Export sales to our major Chinese customers grew 257% from 2011 to 2012 YTD.”

In 2012, CROPP’s Chaseburg Creamery made approximately 8 million pounds of butter. To keep up with annual production growth of 20%, some of the Creamery’s equipment was upgraded in 2012. “We expanded our raw milk storage capacity from 700,000 pounds to about 1.2 million pounds,” said Jeff Kragt, director of dairy production and manufacturing. They’ll need all the storage they can get when spring flush comes around!

Presently, Organic Valley exports shelf-stable milk to China. “The business has been growing quite nicely,” Unger said. “In 2013, we’ll begin exporting new products that the R&D team developed specifically for the Chinese market.”

Quality Assurance CROPP’s Quality Assurance (QA) Manager Gloria Joseph and her team posted record quality improvements in 2012. Unlike other areas of the business where record highs are desirable, QA success is all about posting record lows. By focusing on proactive, preventive measures they bettered their 2011 record low complaint rate related to branded retail milk from 0.55 down to 0.43 in 2012 – a 29% improvement. And from 2011 to 2012, there was a 37% improvement in raw material quality. These improvements are reflected in increased quality premium payments to farmers. When high-quality raw material is passed on to production facilities, their quality scores improve, as well. “Another thing we focus on is packaging integrity and quality,” Joseph said. “Mitch Spry and his team improved the paperboard quality of our milk cartons to eliminate issues. Better quality paperboard costs more, but we make up the difference when we see less spoilage.”

Milk by Region Milk by Region Over 4 Years

2012 Milk Milk by by StateState 2012 180

CA WI OR MN VT OH PA NY WA IN IA ME ID MI KY VA TX NM NC IL NH SD WV TN WY MA UT CT MD MO CO

160 140

Supply in loads/week

120 100 80 60 40 20

-

20

40

60

80

Average Membership Milk per Week by Loads

100

120

New England Northeast Mid Atlantic Appalachia 2009

Mideast

Midwest 2010

Southwest 2011

Rockies East

Rockies West 2012

Northwest

California

Research & Development Exceptional quality and higher efficiencies are the result of Research and Development’s new R&D center in the headquarters expansion, which consists of four laboratories: pilot, product development, sensory, and packaging labs. “We can now develop a product from idea to packaging and production,” said Director of R&D and Quality Maged Latif. With these capabilities at our fingertips, “we are able to roll out products quickly, efficiently and at

lower cost. We’re also able to address problems with current products more quickly.” These professional, state-of-the-art facilities are not only a good recruiting tool, but they help retain our current knowledgeable staff. “Having the right tools minimizes frustration. The labs will benefit us for years to come as we develop new products. When CROPP farmer-owners recently toured the new facilities, they understood right away what a huge difference the labs make in our productivity.”

Organic Logistics

12

J o h n Ko la r

Organic Logistics

From Humble Beginning to Strong Performer

The challenges that CROPP faced as a whole What service does this wholly-owned subsidaffected Kolar’s team, as well—drought, iary provide the cooperative? “We’re responincreased supply, changing sales trends. sible for moving all of the cooperative’s finStill, they not only managed the challenges ished products to its customers in the most but simultaneously cost effective manmaintained a level ner possible,” said cost profile, increased Organic Logistics “If you create the best service to key marCEO John Kolar. “We products in the world, kets, and improved also sell our logisoverall service levels. tics services to other then you should have the businesses in the best service to bring them “Operationally, our natural and organic role has two very imto market.” food channels.” portant elements: >> John Kolar << c o s t- c o n t a i n m e n t Organic Logistics and service. If you (OL) posted a phecreate the best prodnomenal contribuuct in the world, then you should have the tion to the Cooperative in 2012. Based on best service,” Kolar said. Backing up these topline sales, OL had projected revenue of words, the OL team improved service levels $10 million, but ended up bringing in over to a record 98.82% on-time deliveries in $12 million. OL also increased quantities of 2012, exceeding the industry standard of product shipped from 1.3 billion pounds in 96% for exceptional service. 2011 to more than 1.5 billion pounds in 2012. The growth has been exciting, chalKolar added, “Usually, delivering better serlenging and rewarding. vice costs more money. But by managing our relationships with all of our partners

Since it was founded in 2003, Organic Logistics has sought to bring value to CROPP Cooperative through innovation, efficiencies and continual improvement. What is now a top-notch logistics company began with the ambition to strengthen CROPP’s distribution capabilities and serve the needs of the organic industry by offering logistics services to preferred partners.

By Organic Logistics CEO John Kolar

Over the years, we’ve built quite a success story. Our logistics sales have grown an average of 34% per year. We’ve refined our technology to improve our on-time delivery performance from 60% to nearly 99% while reducing our distribution costs and our carbon footprint. We’ve attracted dozens of clients over the years, nurturing some to independence, and retaining others as committed partners. As we look forward to 2013 and beyond, we are excited to introduce a new, more powerful Warehouse Management System which will improve our already strong performance. This powerful tool will allow us to better meet the individual needs of our growing customer base, making Organic Valley products even more attractive in an increasingly demanding marketplace. We are thankful to our logistics clients who share our values, and look forward to serving them, along with CROPP Cooperative, as we build a stronger, brighter future.

13


Organic Logistics

Marketing & Sales (warehouses, trucking companies, etc.) and controlling our efficiencies by leveraging our technology to get the most out of what we have, we have not raised our base cost in three years.” Another 2012 benchmark OL set out to achieve was to increase service frequency to the east coast, which is CROPP’s highest growth market. “About 80% of that market was served only once a week, and we wanted to get product to those customers at least twice a week,” Kolar said, pointing out that the potential to increase costs were huge. By making delivery routes more efficient and taking advantage of technology it already owned, Organic Logistics met its goal to increase delivery frequency from onceto twice-weekly, without any additional cost to the co-op. A third element of Organic Logistics’ remarkable 2012 accomplishments has to do with CROPP’s Cashton Distribution Center (DC). “CROPP farmers invested significanlty in the DC, and we’ve delivered a return on that investment in only 5 years,” Kolar said. It’s expected that a multimillion dollar facility like the DC will carry a cost burden for

Corse Family Farm

Whitingham, VT

some time. Yet as a result of our continuous improvements in efficiency, the DC already operates in the black. In 2012, nearly 14 million cases shipped from Cashton, an increase of over 1.5 million cases from the prior year. “Even with the considerable performance gains we’ve made, growing at this rate, we realized early in the year that we needed to increase our capacity and made the decision to expand our Distribution Center,” Kolar said. The design of the expansion not only increases the overall capacity of the facility, but deliberately incorporates elements that enhance the already efficient Automated Storage and Retrieval System and further optimizes the facility’s capabilities. The expanded DC is a sophisticated platform strategically designed to deliver a strong competitive advantage for years to come. “Our purpose is to serve the members of our cooperative and to make things sustainable for them,” he continued. “Sustainable means we have to do our jobs in such a way that we deliver value by meeting the needs of the cooperative affordably so we can keep doing it tomorrow.”

Marketing 2012 marked our new Executive Marketing Director Lewis Goldstein’s, first full year at CROPP—a year full of new initiatives, new product roll-outs, new team organization, improved development and added efficiencies, not to mention a lot of great fun along the way. Building on the powerful foundation Theresa Marquez built over the last 16 years as chief marketing executive was no easy task, but one the team embraced. Something both Marquez and now Goldstein have preached from the beginning is the true value of our farmers in marketing efforts. “Consumers are wary of big food companies,” says Goldstein. “They want to know where their food really comes from. When we bring retail buyers and consumers to the farm, they see firsthand the transparency, commitment and authenticity that differentiates us from our competition.” “Though we bring hundreds of people on farm tours every year, we can’t bring everyone in the country,” Goldstein continues. “So the marketing team is tasked with instilling that authenticity into everything we do on behalf of our farmers. As much as possible, we use Organic Valley and Organic Prairie farmers in our communications. The farmer connection brings our authenticity to life.”

New Integrated Marketing Campaigns CROPP’s marketing team worked together in 2012 to showcase our products in an ever more crowded and competitive marketplace, bringing to life our brands’ superior taste and quality. This teamwork created success in 2012 when the Cooperative launched three integrated marketing campaigns that were designed,

Marketing & Sales

14

organized and managed by Kelly Gibson’s Relationship Marketing group. “Integrated marketing campaigns are incredibly effective,” Gibson said. “The idea is to reach the right people multiples times through different vehicles. We used social media, advertising, websites, consumer events, in-store signage, and more.” “The first time we introduced American Singles to our fans on Facebook, more than 77 thousand people saw the post, largely because so many of our fans were sharing and commenting about it,” said Leslie Kruempel, interactive marketing manager, which manages CROPP’s website and social media presence. “It was a great way to get the message out to a large number of people in a short period of time.” Integrated campaigns in 2012 supported two new products, Grassmilk™ and American Singles™, with very successful mobile tours (taking the message and product directly to consumers at grocery stores and events), as well as our first national holiday advertising program supporting the Pasture Perfect Holidays campaign. “The mobile tours are a new iteration of the grassroots marketing efforts that CROPP’s marketing grew up on,” said Category Management director Tripp Hughes. The Grassmilk product launch featured training sessions for employees of Whole Foods Markets, where Grassmilk was launched exclusively on the west coast. Training included staff tours of Grassmilk farms. “We found a formula for success,” Gibson said. “Feedback from Whole Foods and the resulting sales increases at those stores where we trained told us it was a successful program and that it should be repeated.”

Lewis Goldstein

More Beautiful Stories, More Loyal Consumers By Executive Marketing Director Lewis Goldstein As a fairly new person at CROPP—and based on what I am hearing I will be “new” for at least ten years—my reaction to CROPP’s marketing is awe and wonder at what the team has accomplished over the past 25 years. As a marketer, you dream of joining an organization that has pioneered an industry and new ways of communicating with a consumer. Theresa Marquez and the Marketing Department played a huge role in developing the organic dairy industry by reaching out to consumers in an honest, heartfelt way that clearly resonated with early adopters. What Theresa built has worked for years, so to steal a quote from a former boss of mine: Part of my job when I wake up every day is to not screw things up! Our job as marketers is simply to be good storytellers, to understand which stories and presentation methods resonate with consumers. I like to say (and everyone here probably is sick of hearing it), if we could get every consumer onto an Organic Valley farm and let them see first-hand the great love and care that goes into making their dairy products, we would have customers for life. But even though I am new, I do understand that we can’t get 10 million people to our farms. Our role as a marketing team for the next 25 years is to build on the wonderful skills and knowledge that got us to this fantastic place. We will develop new tools for our toolbox that enable us to create strong connections with the millions of new consumers who are interested in who we are and what we do. Marketing’s focus is on bringing the heart and soul of CROPP to life in everything we do. The stories of our real farm families—owners, not just employees—who rise every day (365 days a year) well before dawn to milk their cows and honor the noble life of organic farming, will continue to set us apart in the marketplace and make consumers feel good about purchasing Organic Valley. Our brand strength is the guarantee that consumers will get the very best organic dairy. The stronger our brand is, the harder it will be for a competitor to challenge the consumer loyalty we have earned. Wow…. I am the luckiest guy in the world.

15


16

Marketing & Sales

Marketing & Sales

Recognizing the importance of safeguarding CROPP’s future, in 2012 the co-op’s board of directors and management team approved the formation of the Generation Organic Executive Committee (GOEC). Like other CROPP executive committees, the GOEC serves as an advisory committee for the board, providing recommendations on important issues affecting the Gen-O Program and network members. The seven representatives currently serving on the GOEC have been active in CROPP and the organic agriculture movement for many years, some since they were children. These passionate young farmers are our next generation of leaders—both for our cooperative and for the nation’s organic future.

Organic Valley American Cheese:

Above (l to r): Emily Zweber Laura Boere Abbie Corse James Frantzen

contacts

CROPP’s Consumer Relations teams handled a whopping

37,046 contacts from consumers.

21,960 of those related specifically to Organic Valley and Organic Prairie products.

Kids love it."

Right (l to r): Jake Wedeberg Kelly Mahaffy Sarah Holm

Thanks to Grassmilk, Organic Valley entered into new Whole Foods stores in Northern California where we had no fluid milk distribution. Most notably, “we exceeded our sales goals in the first two months after launch and grew our existing fluid milk half gallon business by 71% in the four regions where we launched Grassmilk,” said Eric Snowdeal, fluid milk category manager.

37,046

"My ABSOLUTE favorite! Only cheese I buy for my household! Hughes. “We put enormous effort into advertising, new packaging and new products, and they will continue to be the drivers in 2013 as we introduce innovative new products and advertising campaigns to support them,” Hughes said.

Farmers In Marketing

Since farmers are the cooperative’s most authentic spokespeople, Farmers In MarketThe American Singles rollout wrapped a ing (FIM) programs, van with American under FIM Manager Singles graphics Michelle Pedretti, to provide inten“If we could bring every have evolved over sive product expoconsumer to the farm, they the past nine years sure at each of the would be customers for life.” to meet the needs 65 stops made on of various marketthe coast-to-coast >> Lewis Goldstein << ing teams. After tour. The most sucstarting with only a cessful part of the handful of farmertour? Grilled cheese owners in 2004, FIM ended 2012 with sandwiches hot off the press. The results? more than 650 CROPP farmer-owners American Singles are now Organic Valparticipating in programs, from farm tours ley’s #1 selling sliced cheese, and in just to in-store activities. In cooperation with six months they became the #2 selling CROPP’s Farmer Ambassadors, the FIM organic sliced cheese in the mainstream team organized and conducted 33 retail channel. and consumer farm tours in 2012. The Pasture Perfect Holidays campaign, “This is such a powerful program, because developed all year long, culminated in our retail buyers and consumers get to be inbiggest consumer promotion yet, which inspired by the farmer who actually creates cluded advertising, on-pack coupons featurthe product,” said Pedretti. “Our farmers ing butter, in-store merchandising, sweepprovide personal, heartfelt connections stakes, giveaways, coupons, and an online to our brands.” experience for consumers that included recipes and cooking videos featuring Organic Valley farmers and Organic Valley’s Executive Chef Alex Brevik. “In 2012, we focused on cohesive, impactful initiatives,” said

Marketing’s Forward Focus “We put tremendous effort into building effective plans for 2013 to cover our new product launches,” said Goldstein. “We have the year’s product launches planned.” This ensures all marketing sub-departments are working in harmony toward the same goals. Product innovation is a key marketing initiative. “This cooperative started with a dream to innovate the way farmers are paid and the way America eats—and find harmony between those goals. Innovation is about dreaming what the next 25 years will bring and developing a process to bring those dreams to life. We have the knowledge, people, resources, mission and authenticity that positions us as the organic organization that brings consumers the newest and healthiest organic products to meet all their dairy needs, all the time.” Goldstein aims to raise CROPP’s competitive advantage by creating products that satisfy consumer needs for dairy-based organic products. “Two new products we

Shannon from Facebook

launched in 2012—Organic Valley American Singles and Grassmilk—are great examples of what we want to do more of. In the U.S. market, there were no unprocessed American cheese slices available nationally, nor was there 100% grass-fed organic milk from a national brand. Initial strong sales of these products tells us that we successfully identified the need, and filled it.” With success comes challenges: The growth of private label in the marketplace is a challenge. “Private label has an established place in our society and will continue to prosper, but not all consumers want private label products,” said Goldstein. “Collectively, organic companies need to build a stronger bond with consumers so they will choose a brand over private label. Some people would never buy any battery other than Duracell®, because that company has done such a good job of convincing people that private label batteries are not as good. We have to build that kind of bond so people won’t even consider private label or our competitors.”

17


Sales

Finance

Sales

Over the years, this decision has allowed so many more consumers to have access to Organic Valley milk: people who don’t drink milk quickly, or who don’t live near our regional production areas. It was an exhilarating result—perhaps our greatest win/win yet for consumers and CROPP’s sustainable economic vision.

“We were fortunate that, while our branded sales grew at lower than expected rates, volume increases in bulk and private label sales grew to make up for it. However, some private label contracts did not allow price movement when we raised our farmer pay price in March of 2012, which meant we had to absorb more of that cost. In addition we did not increase prices on our Organic Valley branded products—other than our

Sales’ highest priority remains growing the branded business through product innovation, innovative sales and pricing strategies, and customer service. “We continue to emphasize a sales team structure that meets the ever changing needs of our marketplace, with strong customer service supporting mainstream, natural grocers, foodservice and other channels.” 2013 will bring its share of challenges and opportunities, as does every year. Sales is looking at a highly competitive year ahead as we celebrate our 25th anniversary. The diversity of our markets—including an accelerating our global export program—new product launches and our strong brands will keep us growing at a robust pace.

CROPP also sacrificed market share in the bargain. Sales growth slowed in the spring of 2012 when the Co-op pushed $40 million worth of price increases through to the marketplace. Bedessem said we didn’t grow as fast as we had planned, but we still grew significantly over 2011. “We had projected a 23% sales increase,” Bedessem said, “but sales only went up 20%. Still, in an economy with a growth rate between 1 and 2%, a business that grows sales 20% is remarkable and shows once again that organic food is a market that consumers embrace.”

Sales Sales Growth ininthe Last1010 Years Growth the Last Years $160,000,000 $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $0 -$20,000,000

2012

Back then, as we were considering the logistics of our move to UP, I was in a meeting with Cecil Wright and Mary Shird when a light went off in Cecil’s head. He said, “Wow, this is huge. It’s going to change everything.” And it did. From that point on, we quickly grew into a national organic milk brand, able to support the creation of local farmer pools in many regions of the United States. Organic Valley milk was readily available coast to coast and as far away as Hawaii.

Another challenge for Sales was increasing the farmer pay price in 2012. “The farmers needed it,” Newman said. “It had been 2-1/2 years since our farmers had a significant farmgate increase.” But pushing higher prices through to the marketplace slowed sales in an already strained organic market.

Also, the trend on butterfat is fairly flat. “There’s so much interest in high protein, low fat products, like Greek yogurt, which spin off a lot of butterfat,” said Newman. “This means we will continue to focus on our creamer and butter lines to utilize the excess butterfat.”

2011

This process would allow for a significantly longer shelf life, reduce spoilage, and allow us to expand our national distribution to complement our core regional circles of HTST production and distribution. Our new extended code-dated milk was accepted readily by supermarkets, and Albertson’s began to sell Organic Valley UP milk nationally.

In 2012, the competitive landscape intensified as local and regional brands expanded distribution, and private label challenged branded sales. In mainstream supermarkets, organic private label milk volume grew 6.3% compared to a 3.7% decline on branded organic milk. (Note, however, that CROPP’s branded milk sales still grew 14%.)

In just seven months, we increased the pay price to dairy farmers by three dollars. In order to achieve that, two things had to happen: the Board had to agree to lower the profit goal, and staff created efficiencies that supported the adjustment. Everyone was on board to get farmers the money they needed to operate effectively and keep the business going.

2010

Ultra-pasteurization became available to us in the mid-‘90s, thanks to our long-term retail partner known as “Wakefern” with the “Shoprite” banner, which is a retail cooperative in the NY Metro market. With their commitment to bring our UP milk into their stores, and with the help of Pete Stigi, Sr. V.P. of Marketing and Sales for Tuscan Dairy (which owned Morningstar), we took the risk to be the first organic milk company to ultra-pasteurize milk.

Overall dairy production is increasing, though, as yogurt and cheese segments continue to show strong growth.

2009

At the time, organic milk was not doing well in supermarkets. Horizon’s HTST (“traditional”) pasteurized milk was spoiling at rates over 20% due to its short shelf life of 18-21 days, resulting in retailer charge backs and consumer disappointment.

The butter market was fairly volatile in 2012. Conventional butter prices rose briefly, making for smaller price gaps between conventional and organic butters, which incentivized consumers to buy organic. But conventional butter prices then fell again and remained steadily low, which lured many consumers away from branded organic butter once again.

2008

CROPP Production and Sales made a game-changing decision in 1998, when we started bottling ultra-pasteurized (UP) milk at Morningstar’s Ultra Dairy in Frazer, New York.

“Sales of plant-based beverages, like almond milk and coconut milk, are taking away market share from dairy milk, and are growing rapidly,” Newman said. “Families are shifting away from dairy beverages to plant-based beverages. Marketers of these beverages are advertising heavily, influencing consumers’ purchase decisions.”

2007

By Vice President of Sales Eric Newman

While the Cooperative had solid profit of $9.6 million for 2012, it was less than the 2011 profit of $12.5 million. The cooperative operated on a thinner margin than normal during 2012. For the first time in many years CROPP operated on a Board-approved profit goal of 1.5%, which is less than the standard 2.35%. Why? “We had to get more money to farmers,” said Mike Bedessem, CROPP’s chief financial officer.

2006

“Ultra” Important Decision

“Even so, under this variety of pressures, the Organic Valley brand grew at levels other companies would love to see,” Newman said. “I view this as the very best kind of evidence that our sales team has built the strongest relationships in the industry, and our brand has reached an unmatched level of authenticity and trust with consumers everywhere in the U.S.”

The areas in which we grew at rates under our projected budget were in branded sales and bulk milk sales. Branded milk sales grew 14%, which is substantial growth, especially in a dairy industry that has declining fluid milk sales. Even though overall sales were under projections, real growth in branded sales is simply an excellent performance. Bulk milk sales were affected when a major bulk milk customer purchased at levels below expectations. “Still, it’s important to understand that the most profitable parts of our business are branded sales and private label sales,” Bedessem said. “As grateful as we are for our bulk sales, the brand pays for our ability to talk to consumers about organic. That’s why we’ve made such a commitment to the brand and why we must continue to invest in the brand. It’s critical to our commitment to provide a sustainable pay price to farmers.” One of CROPP’s most significant accomplishments during the year was its ability to increase farmer pay to record levels for all farmer programs. Unfortunately the record pay prices did not translate into record profitability for members, as high feed prices continued to challenge farmer profitability. The 2012 CROPP national average mailbox dairy price was $30.71/cwt. up from $28.22/ cwt. in 2011. 2012 produced some changes in our Balance Sheet. For the first time in three years the Co-op started to borrow on its Line of Credit with JP Morgan, borrowing $12.1 million on the line by year end. The two primary uses of cash during the year were inventory and capital investments. When CROPP began 2012, inventory levels were at historically low levels which created customer service problems. By the end of 2012 inventory had increased $31.4 million to $81.6 million, the high end of our goal. In addition CROPP made $18.4 million in capital investments, including the Cashton Greens Community Wind project, a new produce consolidation plant in Hillsboro, the Cashton Distribution Center expansion, and the Lorenz Meats production expansion. At the end of 2012 CROPP’s overall debt was $20.5 million or a very manageable 2.4% of sales. We are

19

Finance

CROPP cooperative had another good year setting sales and farmer pay price records. 2012 sales increased to $856.7 million from $715.6 million in 2011. The $141.3 million increase in sales was an outstanding accomplishment for the cooperative. Higher sales meant more farmers were able to ship their organic farm products to the cooperative.

2005

E r i c N e wm a n

In 2012, fluid milk consumption in America continued its gradual, decade-long decline, with conventional milk sales declining 4% as consumers looked for alternatives to dairy milk.

annual increase in January—so we also absorbed the March increase without passing this on to the marketplace.”

2004

We’ve seen a big shift in the dairy industry,” said Eric Newman, CROPP’s vice president of sales. “Consumers are changing the way they consume milk, so it’s important for us to stay focused.”

Financials

2003

Sales

18

Mike Bedessem

Creative—and Stable—Financing By Chief Finance Officer Mike Bedessem When banks thought that financing a start-up cooperative was too risky and that putting faith in a market they believed non-existent was laughable, CROPP got creative. We borrowed money from the National Farmers Organization (“our financial angel,” to quote Jerome McGeorge); had a customer post a CD as collateral; and allowed farmers to buy CDs in a bank and pledge those CDs as collateral. Those CDs eventually became a Capitol Base program that we now know as Class B stock. From CROPP’s inception, non-farming friends of the cooperative wanted to help with its mission. Some people bought Class C stock way back in 1988; some pledged $500 to $1000 as collateral for a bank loan. Over the years, hundreds of people called asking if they could invest in the cooperative. We would patiently explain that CROPP was owned by the farmers and that to “invest” they would have to be a farmer who shipped products to the cooperative. Over time, we saw that our fast growth and modest profits were constantly giving banks heartburn. We needed a financing source other than our memberowners and banks. So with the help of David Lathrop, who was (and is still today) one of our board advisors, and Ron McFall, an expert in cooperative securities, our farmer board of directors searched for a solution. After a Ron-guided tour through the myriad of federal and state securities laws, many sessions with David on how outside investors could provide stable funding for the co-op, and a membership-approved change to the cooperative’s bylaws, we finally turned to those supporters who had been calling us for years and introduced publicly-available Class E stock, paying a 6% dividend. When we started marketing the Class E stock in 2004, we felt that raising $5 million would be a success; but wow, did we underestimate people’s desire to support the CROPP mission. People were seeking to invest money in companies that shared their organic and family farming values but found they had few or no choices. Over the years, 1,800 people have invested $50 million in CROPP through the purchase of Class E shares. It is humbling to the CROPP staff and farmers to see the amazing financial support of our mission by our friends and neighbors. Class E stock, in combination with our members’ investments, business profits and banking relationships, have all created a strong foundation supporting the cooperative’s growth.


Finance

"The brand pays for our ability to talk to consumers about organic. That’s why we’ve made such a commitment to the brand and why we must continue to invest in the brand." >> Mike Bedessem <<

Sustainability working with JP Morgan to increase our current $50 million loan facility to $100 million during 2013. Reflecting on our 25th Anniversary, Bedessem is thankful for the vision of the farmers, staff and community members who were involved with the cooperative during those early years. “With few assets other than gut, gumption and vision they built the foundation of one of the true success stories in American business today. Most businesses fail in the first 5 years, but those pioneers refused to let that happen to CROPP Cooperative. Current farmers, staff and consumers owe that group a deep debt of gratitude for their hard work, passion, patience and belief in the mission.” While it is nice to reflect on past successes, challenges lie ahead in 2013 and beyond. Bedessem said CROPP needs to run a good business with stable profits in order to fulfill our missions of a sustainable and stable pay price for farmers and organic food for consumers; working together, cooperatively, we will secure and protect the future of this cooperative.

IR Management Team (l to r): Cindy Schmitz, Curt Parr, Denise Paus (Enterprise Project and Porfolio Director), Wiley Walker, George Neil, Gary Jones, Bobbie Haakenson. In just one year, the Information Resources (IR) Management Team has reduced risk, increased capacity and gained flexibility in CROPP’s technology that will make the business money and protect it into the future. “In 2012 alone, IR brought the cooperative’s technology from barely meeting current operating needs, to preparing the infrastructure to scale-up to 200 locations and billions of dollars in business in terms of computing power, data storage and network capabilities,” said Curt Parr, IT tech services manager. “We designed it to support our growing business,” said George Neil, system architect. “The amount of data we have to store and manage doubles every year.” The system will now be able to grow with the business—both in terms of data and personnel—and is more reliable with higher performance. Parr continues, “It meets the needs of today and down the road for four to seven years. Some components of it could last 10 years.” The improvements will prepare CROPP to effectively build global business capabilities. IR completed the huge project quickly and effectively because of CROPP’s Enterprise Project Management team, which worked side by side with IR to organize and execute the improvements.

Sustainability

20

C e c i l Wr i ght

Fundamentally Sustainable By Director of Sustainability and Local Operations Cecil Wright

Sustainability and Local Operations Sustainability is a foundational value of our mission and a key factor in safeguarding the co-op for future generations, so we are continually looking for ways to be a leader in the renewable energy arena. After three years of intense planning and development, in partnership with Gundersen Lutheran Health Systems of La Crosse, Wisconsin, the tireless efforts of CROPP’s sustainability team were rewarded when two 2.5 megawatt wind turbines officially came online in May, 2012. Cashton Greens Wind Farm, Wisconsin’s first community wind farm, is sited at CROPP’s Cashton Distribution Center. The gigantic, elegant turbines produce 89% of the electricity used by CROPP facilities in Cashton and La Farge. But, as Jonathan Reinbold, sustainability program manager, notes, “Our renewable energy sources [wind and solar] now provide enough to offset 48% of total energy needs for all our local facilities, but we are dependent on other markets for our propane, fuel oil and diesel needs. That means we’re nearly halfway to our overall goal of fully controlling our energy costs in our facilities by 2020.” Continual improvement, in other words, is what gets this team up in the morning. In 2012, 32% of the diesel used in CROPPowned vehicles was bio-based. The goals are to achieve 45% in 2013, and the team is determined to reach 60% by 2015. So the team has been working hard to incorporate

biofuels into every facet of the cooperative’s operations. “Most important, it’s an initiative that benefits CROPP farmers and CROPP operations,” said Director of Sustainability and Local Operations Cecil Wright.

ture, and 100 acres of organically-farmed land including hay fields and oil seed test plots for biodiesel use. All told, it’s a huge job that does not lend itself to eye-popping sales figures or growth percentages; yet it is vital to keeping the co-op running smoothly and outwardly demonstrating our values as a leader in the organic industry.

Reinbold added, “Growing and using biofuels on-farm is where it really makes the most sense. Farmers can grow the oil seeds, press them using CROPP’s mobile The completion of the new addition to seed press, and burn the veggie oil straight headquarters in La Farge was most welif they’ve converted their vehicles, or procome to everyone who works tirelessly for cess it into biodiesel and use it in any of CROPP. 2012 was the big move-in year, and their diesel powered vehicles without any most areas are filled already. The Milky modi f icat ions. Way Café expanThe by-product is sion has provided “Our goal is to achieve a nutritious meal staff with more energy neutrality by 2020. that can be fed meeting space to livestock as along with more We’re up to the challenge.” high protein feed efficient delivery >> Jonathan Reinbold << supplement. We of the café’s orprovide technical ganic cuisine. assistance to any farmer interested in tryThe co-op also hired its first executive chef, ing it, from sourcing seeds to conversion Alex Brevik, who not only raises the bar on kits that allow a vehicle to run on Straight the café’s daily meals and special occasion Vegetable Oil (SVO).” dinners, but provides much-needed expertise to support marketing endeavors, like Local Operations is humming with life, as recipe development and cooking videos always. The unsung story of this team is the that can be showcased at marketing events daily management of 12 locally-owned faand shared on our websites and social mecilities, 760,000 square feet of organicaldia vehicles. ly-maintained landscaped areas including native prairie restoration and permacul-

In 2003, CROPP offices occupied every available rental space in the village of La Farge, Wisconsin: multiple trailers, a feed mill, a converted apartment, a garage, and above the cheese room in our old building on Main Street. On any given day, you would see employees bustling from building to building for meetings, work and lunch. When we finally built our new, green “headquarters on the hill” in 2004 and all came together under one roof, a real desire for continued sustainability began to permeate our culture. The headquarters was built to the LEED Silver green building standards, which was an educational process for the engineers and architects as well as for us. This coincided with a burgeoning interest from our farmers and ourselves around renewable energy. All this, combined with the practicality of being more efficient with resources, birthed our Sustainability Department. We focused first on creating an On Farm Sustainability program to help our farmer-owners and the business reduce energy costs and lower our carbon footprint. This had the effect of helping our entire business operations become more environmentally and socially responsible. These are still our goals in 2013, ten years later. The On Farm Sustainability program continues to support hundreds of farmer-owners with energy projects from efficiency audits to renewable energy, including solar, wind and biofuels. We partner with our customers and industry allies to better understand and quantify the benefits of organic agriculture to the environment and climate. While CROPP out-performs the crowd when it comes to exemplary, sustainable organic farming practices, the overall sustainability of our business practices is a question of greater complexity. To address that question, we have had two wind turbines installed at our distribution center in Cashton, generating carbon-free electricity. We’ve led the charge toward greener packaging, encouraged employees to rideshare to work, and replaced outdated equipment with more energy efficient alternatives. Sustainability has always been part of our mission and is a foundation of who we are. Everything we do is meant to grow an economically sustainable business, which will secure the futures of our farmer-owners for many more generations with fair and stable pay prices, healthy food, and great care for the planet on which we depend.

21


Cooperative Affairs

Cooperative Affairs

Cooperative Affairs

Cooperative Affairs

22

Preparing the Next Generation of Leaders

J e r ry M c G e o r g e

Who We Are Where We Are By Cooperative Affairs Director Jerry McGeorge Outsiders may look at CROPP’s buildings, surrounded by farm fields and wooded “coulees” (a local term for our steep valleys), and ask, “How can such a thriving, sophisticated business manage from a home base so far out in the sticks?” It’s a question we’ve asked ourselves, and the answer reveals it really never was a question to begin with. Consider CROPP’s longstanding definition of organic: A philosophy and system of production that mirrors the natural laws of living organisms with an emphasis on the interdependence of all life. Our very definition of the concept of organic is planted in belief that a holistic approach is necessary, and that all things are connected. This idea is directly, and not accidentally, reflected in the interdependent communities we choose to call home. CROPP’s nearly 2,000 farmers are indispensable threads in the fabric of rural communities all across this country. The same is true of our business operations and CROPP employees. Located in communities like La Farge, Wis. (population 746), Chaseburg, Wis. (population 284) and Cashton, Wis. (population 1,105), our business is firmly rooted in rural communities, too, and our co-op remains committed to nurturing those rural ties. These values were put to the test in 2003 when we needed to create a home for our rapidly expanding number of employees. There were voices that advocated for relocation to a larger community (such as La Crosse, Madison, or even Minneapolis), where we’d have better access to the apparent advantages of infrastructure and wider pools of talent. However, we returned to our foundation values, firm in the knowledge that we had already created relationships and ties to these smaller communities. To abandon them would create hardship for many families and would ignore the countless interdependencies that CROPP’s business and community involvement had set in motion. And so, via a landslide staff vote, we confirmed and strengthened our ties to the rural communities we call home. We built our headquarters in La Farge, and as we look forward to further expansions, we remain certain that we will continue to sink our roots deeper into the rural landscapes of southwestern Wisconsin.

A huge piece of the Cooperative Affairs 2012 story addresses the theme of legacy headon. “A few years ago, we realized that 50% of our employees and 60% of our farmers have been with the cooperative for three years or less,” said Jerry McGeorge, director of cooperative affairs. As CROPP celebrates 25 years of doing business, we have come to recognize that a large part of our success is tied to the culture it has created. “CROPP culture is very mission driven,” said McGeorge. “It is a culture invested in the idea of supporting the organic food movement and supporting family farms. These are powerful messages and ideas that unite people. It’s important to make sure that we are aligned and that the passion continues. “We employ 700 people. Two hundred and forty of those jobs were created in the last three years. How do you take advantage of every chance to incorporate mission education? It’s the foundation that supports everyone who works here.” One way CROPP discovered, is to simply tell the amazing story of the origins of CROPP’s mission. Over the past two years a CROPP team has taken on this task with great dedication, and the resulting book, CROPP Cooperative Roots, was recently provided for the membership and staff to help everyone celebrate our birthday. "We hope you enjoy it and

share it with your family and friends," said McGeorge. "It truly is the story of our roots, and we look forward to growing them deeper together with you for the next 25 and well beyond." As a farmer-owned business, leadership by CROPP farmer-owners keeps the cooperative focused and effective. How do we keep this good thing going? Pools answered this question by creating CROPP’s Farmer Leadership Symposium, an educational and networking summit for potential leaders in all areas of the cooperative. Attendees learned about CROPP’s history, business operations, mission and culture, and were trained on leadership skills important to the cooperative. They also toured CROPP facilities to get a better sense of both the scope and the intricacies of their business.

“Because we’re farmerowned and operated, we can continue being the amazing organization for family farms CROPP has grown to be.” >> Melissa Hughes <<

Advocating for a Brighter Future Cooperative Affairs is also home to legal and government affairs. As the cooperative counsel and director of government affairs, Melissa Hughes works with multiple outside organizations, including the Organic Trade Association and the National

Ihm Family Farm

Lancaster, WI

23


Cooperative Counsel

Mission & Messaging

Sustainable Agriculture Coalition, advocating to protect the USDA Organic Seal and critical funding for the National Organic Program and other organic programs.

M e li s sa H u gh e s

Advocating for Our Food By Cooperative Counsel Melissa Hughes At the Annual Meeting in 2011, our farmer-members, led by the Farmers Advocating for Organics (FAFO) committee, put a stake in the ground. Following the USDA’s decision to deregulate Round-Up Ready Alfalfa® with no restrictions, CROPP took a public stand against genetically modified organisms (GMOs) in our seeds and in our food. Dedicating more than $250,000 to the cause, FAFO and the membership announced that it was time to bring all of agriculture to the table—farmers, industry and consumers—to have a say in what goes into our food. In only two years’ time, more than 1.2 million people signed a petition to the Food and Drug Administration demanding labeling of GMO foods; 6 million Californians voted in favor of a ballot initiative requiring labeling of foods containing GMOs; and today, more than 20 states have potential legislation or initiatives requiring GMO labeling. The GMO Initiative, as FAFO called it, was a spark that started many of these fires. Our public and united stand allowed us to tell Congress, the White House and the USDA that 1,800 CROPP farmer-members wanted a change. Often it is not easy to speak with one voice, but in this instance, our unified message against GMOs and for the right of organic farmers to be protected from GMO contamination came through loud and clear. The conversation about GMOs in our food also sparks awareness in consumers—it causes them to really look at their food. We can educate them that organic foods represent the best option for avoiding GMOs, pesticides and herbicides. There will no doubt be much more happening on GMO labeling and on the regulation of GMOs and their adjacent pesticides; CROPP will be at the table for these conversations, advocating for the right to know what’s in our food and for honest regulation of biotech. We will always take a public stand for the critical role that organic agriculture provides for farmers and consumers alike.

Furthermore, CROPP is becoming a solid voice for organic as successful alternative to conventional agriculture. Working with agricultural organizations like National Farmers Union, and its state affiliates, CROPP is bringing organic into the conversation about the future of agriculture. By demonstrating the success and viability of organic as a business model and industry, CROPP can be at the table and advocate for reduced pesticide and herbicide use, for better regulation of GMOs, and for better on-farm research for all aspects of agriculture. Melissa serves on the boards of several organizations connecting with consumers on alternative agriculture, including the Non-GMO Project, the Environmental Working Group, and Organic Voices Action Fund.

Mission and Messaging “We want to be at the table when the future of American Agriculture is on the menu. As one of the most successful farmer-owned cooperatives, we can represent a unique, respected, reasonable voice.” >> Melissa Hughes <<

A successful business is much more than a business. It’s a member of communities, near and far. A successful businessperson not only gives excellent service, but supports his/her community. You give to your community on a social and personal level, you help your elderly neighbor mow her yard, and you flip pancakes at community suppers. The role of Mission and Messaging (M&M) is to be CROPP’s good citizen to the industry we are a member of, as well as to the wider world. As the cooperative’s mission executive and mother of M&M, Theresa Marquez explains it: “M&M is really a classic Public Affairs department that contains both Public Affairs and Media Relations. But M&M goes a couple of steps further. We manage the cooperative’s positive reputation to the outside world by harmonizing our message from the inside out. Our relationship with marketing is symbiotic because a good reputation creates a positive halo for our brands.”

The goal of Mission & Messaging is to generate awareness of Organic Valley as a farmer-owned cooperative with a mission-driven business model and to further establish Organic Valley as a credible leading industry activist, giving voice to farmers and strategic causes that support our mission. The new department’s first year has been busy, with a significant portion of the team’s work involving laying the foundation for two big initiatives that will launch in spring 2013: the co-op’s first-ever public blog called Rootstock, which will be a way

Mission & Messaging

Government Affairs

24

for us to communicate about issues and engage our followers in CROPP’s unique culture; and WomenShare, a long-term, grassroots movement to connect women of all ages and races around creating solutions for our food system.

Communication and Partnership: Keys to Success “Two amazing mission-oriented accomplishments for our first year included the formation of the CROPP Affairs Team and the Strategic Philanthropy and Partnerships Program,” said Public Affairs Director Jamie Lamonde. “As a cooperative, we communicate with many different audiences, and communicators are dispersed across many departments,” she continued. “The CROPP Affairs Team facilitates their needs and harmonizes the many, disparate messages we send out to the world daily, and we stand ready to create rapid response communications to correct misinformation or defend our reputation in any way necessary.” The Strategic Philanthropy and Partnership Program organizes and coordinates the cooperative’s many philanthropic endeavors that touch more than 1,000 organizations each year. With that kind of impact, communication is vital. In another example of cross-departmental cooperation, a team meets regularly to align each department’s strategic philanthropy plans, eliminate duplication and leverage our many valuable partner relationships.

Media Relations Media Relations Director Elizabeth Horton and her team were more productive than ever as they communicated CROPP’s mission and promoted the Organic Valley and Organic Prairie brands to the media, not to mention garnering some well-deserved recognition for CEIEIO George Siemon and CROPP. “Something we’re really proud of was seeing George recognized by the Natural Resources Defense Council with the 2012 Growing Green Award in the Business Leader category on top of being inducted into the Social Venture Network Hall of Fame in the Environmental Evangelist category,” said Horton.

Th e r e sa Ma r Q u e z

A New Department is Born By Mission Executive Theresa Marquez When you have an almost billion dollar cooperative owned by more than 1,800 farmers, run by 700 staff members, and devoted to a high level of principles beyond profit, well, it then makes sense to have a Mission Executive. When George proposed this to me two years ago as I, at age 64, finally faced the inevitable and began to seriously think about a graceful transition into a less stressful work load, I first scratched my head. Mission Executive? And of course where you have a mission you have a message, so the idea of a “Mission and Messaging” department was born. Upon agreeing to this exciting journey, I asked George what he had in mind: “As the CEO of a fast paced, high-growth business, what keeps me up at night is a fear that our growth demands will overshadow our mission. We can’t let that happen. I want to assign a person in the business to be accountable for holding the mission as most important and assuring it is reflected in how we present our cooperative, both inside the co-op and out.” The new position was supposed to be part-time, but my friends keep asking me, “Are you really working part time?” And I say, “Yes…some weeks.” But when you are on a mission and love what you do, who watches the time? I am so grateful to have such meaningful work and to share it with such devoted staff and farmers. The past year has been a blur, but also a blast. Let our mission prevail!

25


26

Mission & Messaging

Vision

2012 Media Coverage Highlights • Media circulation and unique online visitors topped out at nearly 1.3 billion. • Sept, 2012: A beautiful op-ed piece by journalist Nicholas D. Kristof appeared in The New York Times, centered on Kristof’s childhood friend and Organic Valley farmer Bob Bansen’s farm. • Feb, 2012: George Siemon, is named by Gourmet Magazine as one of the top 25 American Food Entrepreneurs. • Nov, 2012: Organic Valley Whipped Butter gets a “best whipped butter” call-out in Every Day with Rachel Ray. • May, 2012: Huffington Post guest blogger Alberto Gonzalez, founder and CEO of GustOrganics restaurant, posted an amazing piece called “The Future of Agriculture: Triple-Bottom-Line Beauty,” after attending CROPP’s 2012 Annual Meeting as a media guest.

“For this cooperative to be successful in the future, we have to maintain our mission as one and our focus as one, because we cannot succeed divided.” >> Jim Wedeberg <<

Our Long-Term Mission Requires Long-Term Vision Marquez’s bigger vision for M&M—and the co-op and food industry as a whole—is not about activism or policy or advocacy, it’s about a culture shift. “Our culture is dominated by greed, selfcenteredness and materialism,” Marquez said. “How do you change that? How do you shift culture? When the Japanese decided they were going to change a 2,000-year-old

27

cultural tradition of vegetarianism, where only the lowest of the low tended animals and ate animals, to a new norm of eating meat, they accomplished it by shifting their culture. They revised books. They used ads, soap operas, and testimonials. Their most revered heroes ate meat in movies and at public events. “What I hope M&M can help do is shift our culture. We don’t have to shift hugely to make a change. We just have to move.”

Pearson Family Farm

Trout Lake, WA


28

Grauwen Family Farm Nehalem, OR


CROPP Farmer

2012

Board of Directors

Petersen Family Farm

Lolita, CA

Mark Kruse

Pam Riesgraf

Dan Pearson

Vice President

Secretary

Treasurer

Kruse Family Farm Lansing, Iowa

Full Circle Dairy Edgar, Wisconsin

Pearsonâ&#x20AC;&#x2122;s Mann Valley Farm River Falls, Wisconsin

Travis Forgues

Wayne Peters

Steve Pierson

Director

Director

Director

Forgues Family Farm Alburg, Vermont

Peters Farms, Inc. Chaseburg, Wisconsin

Sar-Ben Farms, Inc. St. Paul, Oregon

This annual report contains discussion of some of our expectations regarding CROPP Cooperativeâ&#x20AC;&#x2122;s future performance. These forward-looking statements are based on our current views and assumptions. Actual results could differ materially from these current expectations and projections, and from historical performance. For example, our future results could be affected by factors including, but not limited to: the competitive dynamics in the markets for organic dairy products; the cost and supply of organic milk; the cost of organic farm products and organic feed; the mix of sales of our branded and non-branded products; the application of, and changes in, the United States Dairy Support and Federal Milk Marketing Order programs; and the adoption of regulations pursuant to the Food Safety Modernization Act. Discussions of these matters and other risks to which CROPP Cooperative is subject can be found in the Offering Circular(s) (and any associated supplements or amendments) we distribute from time to time in connection with the offer and sale of our Class E, Series 1 Preferred Stock. A copy of such Offering Circular and any current supplements or amendments can be obtained for informational purposes by contacting Diane Gloede, Investor Relations Manager, by mail at Cooperative Regions of Organic Producer Pools, One Organic Way, La Farge, WI 54639, or by telephone at (888) 444 6455 x3310.


Annual Report

One Organic Way | La Farge, WI 54639 | 1-888-444-MILK | www.farmers.coop

© Organic Valley 2013-55001 CMG-P02334 Printed on paper made from 100% post-consumer recycled fiber.

2012


Cropp Cooperative 2012 Annual Report