Rural renewal
Although its products are sold nationwide and it has farmer-members in 20 states from California to Vermont, the economic and social impacts of the Organic Valley cooperative are felt most strongly in its home territory of southwestern Wisconsin

By Laura Sayre
June 2, 2005

As you come over the hill into La Farge, Wisc., population 766, you might not think you had arrived in the hometown of a company that posted more than $200 million in sales in 2004. There's a wide main street, an IGA, a lumberyard—a typical small town in the Upper Midwest, you think. Then you correct yourself: a prosperous small town in the Upper Midwest. Not so typical.

Since 1988, La Farge has been home to the Cooperative Regions of Organic Producer Pools—better known to locals as CROPP; better known to the general public by its retail label, Organic Valley. Today the cooperative is one of the shining stars of the organic movement—a farmer-owned and –directed company whose growth has kept pace with the bigger, corporate-organic food labels and whose founders have managed to balance that growth with adherence to their originating principles.

The cooperative currently includes 689 farmers in 20 states, and has diversified from vegetables (the acronym CROPP originally stood for Coulee Region Organic Produce Pool) to dairy, juice, eggs, meat and soy products. Sales have exploded, from $28 million in 1998 to $156 million in 2003 to $206 million in 2004, while pay prices to farmer-members, particularly for milk, have stayed well above conventional prices and have also showed greater stability from month to month and year to year.

No doubt in part because this is a traditional dairy region, Organic Valley's dairy segment has seen the most dramatic growth and dominates the coop's public image. In addition to fluid milk, it markets a wide range of organic dairy products including buttermilk, whipping cream and a dozen kinds of cheese. One method by which the coop has sought to distinguish itself from its competitors is by creating regional production and marketing linkages, so that milk from New England dairies is marketed under a New England Pastures label, Rocky Mountain milk under a Rocky Mountain Pastures label, and so on (other regional labels include Northeast Pastures, Northwest Pastures, Texas Pastures and California Pastures).

Missing from that list, you'll notice, is Midwestern Pastures, but if you live in the Midwest you can be confident you're drinking milk from your own region. Demand for organic milk is highest on the Coasts, CROPP representatives explain, whereas supply is concentrated in the Upper Midwest--a situation created as much by demographics as by consumer preferences. Just as Wisconsin's conventional dairy sector has survived by specializing in cheese, CROPP makes most of its nationally distributed organic butter and cheeses from Midwestern organic milk--thereby creating a concentrated, higher-value product for shipping and helping to even out the continental dairy imbalance. As a result, not only Wisconsin farmers, but also Wisconsin dairy processors--and in turn whole communities--have benefited from CROPP's success.

Organic butter junction

Organic Valley's positive economic influence is clearly visible 30 miles to the west of La Farge, in the hamlet of Chaseburg. When Organic Valley acquired the Chaseburg Creamery six years ago it had been closed for 28 months—"a long time for a small town like this," as the current creamery manager, Dave Larson, notes, drawing a deep breath.

Today, with a population of just 302, Chaseburg supports a church, a bank, a taxidermist, and a café, in addition to the creamery. Just as important as the jobs the creamery represents, Larson emphasizes, are the plant's contributions to the local tax base. "I'd say we provide about 80 percent of the payments for the water supply and septic facilities here," he estimates.

Nearly all of the plant's 30-or-so jobs are held by people local to the area. Larson himself lives six miles away. In addition to being the Chaseburg plant manager, he's also a farmer and an Organic Valley producer-member, milking 32 cows and maintaining 3,200 laying hens.

Larson's job involves a good deal of traffic coordination. The plant's central location "serves as a tipping point for Organic Valley operations" in the United States, he explains. "We operate very much as an on-demand facility, making up shortfalls in the East and the West" as needed. The facility produces about 22,000 pounds of butter a day, packing under the Organic Valley label as well as store-brand organic butter labels like Trader Joe's, one of the creamery's bigger customers. With just one, modest-sized storage cooler at the end of the packing line, Larson relies on a steady stream of trucks shipping butter out, as well as bringing milk in, to keep the process moving smoothly. "It really requires a lot of teamwork," he emphasizes.

Like CROPP as a whole, the creamery has had to cope with constant growth. "I don't remember a single month in which we haven't been involved in some kind of expansion or renovation," says Larson. When New Farm visited, construction was underway to create a truckers' lounge (so drivers have a place to wait while their milk is being unloaded) and to install a bulk cleaning-solution system, with large fixed tanks taking the place of removable 55-gallon drums.

You can track the plant's expansion by looking at the milk-storage silos rising from the back of the creamery, Larson points out. Initially, they installed a 20,000-gallon silo; next to that stands a 30,000-gallon silo, installed sometime later; next to that, the most recent addition, a 40,000-gallon silo. Today the creamery has a total storage capacity of 750,000 pounds and is processing between 280,000 and 600,000 pounds of milk a day. With no room for more silos, there's talk of replacing the original, 20,000-gallon silo with a 50,000-gallon model.

Good as gold

After we suit up in long white coats and hair nets and walk through the shoe sanitizer, our tour proceeds backwards through the plant, from finished to raw product, to ensure that we don't track contaminants from the beginning of the line to the end.

The main production floor is a large square room with a terracotta floor and big banks of glassblock windows. In the center of the room stands an enormous stainless steel churn, a giant horizontal spatula on wheels to remove the butter from the churn, and a boat, or trough, into which the spatula unloads its haul. To one side are five upright tanks in which the cream is held prior to entering the churn; to the other is the packing line, where the butter is squeezed and pressed into waxed-paper-covered sticks and the sticks in turn are packed into one-pound paperboard boxes.

Most of the people at work in the room are tending the packing line, but the area in front of the churn is the domain of Chaseburg's buttermaker, Tom Tollackson. Each churn-load uses 7,000 pounds of cream and yields about 3,500 pounds of butter. "Batch churns [like this one] are a rarity nowadays," Larson yells above the din of the machinery. "Most plants now operate continuous-production churns. These were originally made in Québec. Now you'd probably have to go to Mexico to find one." When the coop went shopping for equipment for the creamery six years ago, he notes, they bought two so they'd have a spare. Even so, they've had to have replacement parts custom-fabricated.

It takes about an hour and a half to make a batch of butter in the churn. First the cream thickens into whipped cream; then, after the 30 or 40 minutes the butter starts to 'break' or separate out from the residual liquid. The buttermaker then drains the buttermilk off and continues churning the butter until it reaches the right texture and firmness.

"It's much like cooking," Larson comments. "Anybody can follow a recipe, but that doesn't mean it's going to come out right." "Our producers do a really good job of ensuring consistent quality milk," he goes on. Even so, when pastures get lush in the spring and fall the cows produce larger volumes of lower-fat milk, "and the butter acts differently. That's where Tom's skill comes in."

The Chaseburg Creamery makes two types of butter: a salted, uncultured butter and a cultured, unsalted butter. Salted, uncultured butter is what most people are used to eating. The salt—in this case an approved-for-organic flake salt at a rate of 1 ½ percent—brings out the butter's flavors while also acting as natural preservative.

Cultured butter has active bacterial cultures added to it, just like yogurt. Traditionally, Larson explains, cultured butter is unsalted, since the culture acts as a preservative agent in place of the salt. "It's a live product," he points out, opening a stick of each type, fresh off the line, for us to try. Sampled side by side, the cultured butter tastes intensely fresh and sweet; the salted butter just as fresh but salty-tart.

Identity and integrity

To begin its transformation into butter, the milk must travel from the truck tanker to the creamery's storage silos, and then from the storage silos to the separation and pasteurization room. The creamery has two, fully enclosed truck bays, which form an integral stage in the sanitation protocol for milk handling. Each day, organic milk arrives here from small dairy farms in Minnesota, Iowa, Wisconsin, and Illinois—around five hundred farms in all. The trucks roll in, the doors close, and the whole room and its contents are washed down before the milk is unloaded, one truck at a time.

After the trucks leave, the room is washed down again and heated to dry it out before the process starts over. It takes an hour and a half to unload a truck of milk. Strict regulations govern the sealing and unsealing of the truck tank valves in order to maintain the cleanliness and organic integrity of the milk within.

After being separated, the cream goes to the adjacent butter room while the skim milk ships back out to be bottled, or to be made into powdered milk or cheese. (Cream is also sold to a local organic ice cream maker.) in They run 31,000 pounds of milk an hour through the pasteurizer, Larson explains; some milk is shipped back out unpasteurized for raw cheese production.

Back in the butter room, the end result is a highly developed, classic example of identity-retained marketing: Each individual stick of butter is identified on its label as "organic cultured unsalted sweet cream pasteurized Wisconsin Grade AA."

The creamery is certified by Oregon Tilth. The single biggest issue separating organic from non-organic milk handling, Larson says, relates to sanitation materials. There's a fundamental conflict between organic regulations, which seek to ensure that no cleaning product residues remain in the pipelines to contaminate the milk, and USDA dairy regulations, which consider that if you rinse the lines after sanitizing, you're no longer sanitized. The answer? Vinegar-based sanitizing products that evaporate rapidly and completely.

"There's a little more record keeping," Larson says of the certification process as a whole, but not much more since all milk handlers are subject to regular inspections by state and federal agencies anyway. "We're very fortunate in that we're all organic here," he notes. "It saves us a lot of time not having to worry about organic and non-organic product getting mixed up."

Building a bigger barn

A legacy of cooperation

Historically, Wisconsin has been known for its progressive politics, strong cooperative tradition and flourishing dairy sector. In 1887, the state passed one of the first U.S. laws protecting cooperatives, and in 1922 that legislation helped form the basis for the Capper-Volstead Act, the landmark federal law establishing the rights of producers to band together for marketing purposes.

The history of Organic Valley's butter plant illustrates in miniature the overall trajectory of dairy production and processing in Wisconsin: Originally founded in the 1920s as the Chaseburg Cooperative Creamery, it was bought out by a larger company called Tri-State in the 1980s and then by Swiss Valley in 1997. According to the University of Wisconsin Center for Cooperatives (UWCC), in 1917 there were 835 creameries in Wisconsin, of which 380 were farmer-owned, and 1,929 cheese factories, of which 718 were farmer-owned. Coops received strong government support during the Depression, and numbers rose until about the 1950s.

In the 1960s, the number of traditional farmers' cooperatives began to dwindle. Some folded, others merged. More recently, however, the first of what researchers at the UWCC call "new generation cooperatives" began to appear. New generation coops are characterized by greater capital investment on the part of farmer-members and greater attention to meeting the specific demands of the market, both in quantity and quality of product. These traits are critical to survival in today's highly competitive agricultural sector.

There are two dominant trends in the Wisconsin dairy industry today, says the UWCC's Robert Cropp: While some existing dairy coops and cheese plants have survived by consolidating and cutting costs to compete with the big dairies out west, others have stayed small and found niche markets like specialty, organic and grassfed products.

"In recent years we have seen an increase in the number of small coops, and frequently it's a group of farmers wanting to do something to add value to their products," Cropp observes. "Most milk in Wisconsin is made into cheese, and 80 percent of Wisconsin cheese is commodity cheese," meaning it's produced in large blocks that are then sold on to another company to be cut and packed.

Today there are 175 cheese plants in Wisconsin—again with a slight recent increase in small-scale plants. "[For] some of the cheese plants that Organic Valley's using, [the coop's] business amounts to a whole day's production in a weekly schedule," says the Center's Greg Lawless. "So they're definitely having an impact."

Our tour guide for Organic Valley's new headquarters is Curt Parr, manager of IT services and another local boy. A native of the nearby town of Sand Hill (population 744), he attended La Farge High School, then went off to college and worked in Chicago for a few years before returning home and taking his present job in 2003. His wife also works for the coop, and his family's farm—managed today by his father, siblings and nieces and nephews—has transitioned to organic and sells milk, meat and produce through Organic Valley.

Parr has vivid memories of growing up during the 1980s Farm Crisis and watching neighboring farms go under one by one. His father accepted the federal Dairy Buyout of 1985, then returned to dairying in 1991. In 1997, his dad "got on the truck" with Organic Valley. "One of the things Organic Valley really emphasizes is diversity on the farm," Parr explains, adding that it was in response to that encouragement that his family's farm diversified into beef and vegetables. The promise of organic markets in general, and Organic Valley as a way of reaching those markets, means that "now there's an opportunity to be successful in farming again," he says.

The new headquarters building sits on a 34-acre site at the top of a rise above the town of La Farge. Before relocating here in August 2004, the co-op's offices were spread across seven La Farge locations. Needless to say, the IT staff's jobs have been vastly improved by the move. "The goal was to get everyone from seven buildings into one building and use 25 percent of the energy," says Parr.

The building itself is essentially a long metal pole barn—it was, in fact, constructed by Morton Buildings, Inc., of Dodgeville, Wis.—with half of a post-and-beam barn tacked on to the middle of one side and an uncommon amount of thought put into the interior. The timber-frame transept forms a two-storied, sun-filled main entrance; the kitchens, restrooms, and stairwells are concentrated in the crossing; workstations, offices, and conference rooms spread to each end of the main barn.

The headquarters was designed to be not just a model of energy efficiency but also an exercise in "building local." The structure joins just three others in Wisconsin to meet LEED standards (Leadership in Energy and Environmental Design) for energy conservation and environmental impact, and all materials were sourced within a 500-mile radius of La Farge. All of the timber, including the window frames, was obtained locally. The building is oriented to optimize natural light and heat; most of the grounds are seeded to prairie grasses and forbs. Even the workspace dividers were obtained second-hand from another company.

The new headquarters currently houses around 180 employees; maximum capacity in its current configuration is 225. The cooperative expected to have space to grow here until 2008, Parr says, but it's already apparent that the building will fill up well before then. "We're really good at dealing with change," says our guide cheerfully, showing us a training room filled with computer workstations. "We hired new 73 people last year. Training is one of the most important things we do."

Organic Valley's former headquarters (still known as the 'Main Building,' because it sits on Main Street) is now home to a small retail shop for OV food products, some remaining office space, and a cheese cutting and packing facility. The coop's cheeses are custom-made by a number of different processors in the region, but they all come back here to be graded and packed. Like the rest of Organic Valley's business, cheese sales have grown steadily: The cutting and packing facility currently handles 150,000 pounds of cheese a month, running two shifts a day; and there's talk of rounding out the schedule with a third. "We could contract out some of the packing and labeling," says one facility employee, "but then we wouldn't have our arms around it."

Such are the ingredients in CROPP's recipe for success. By hiring locally, encouraging farmer-members to diversify, renovating a small-town creamery for butter production and relying on the state's strong dairy processing sector for their cheeses, the organic coop has managed to draw on its native territory's strengths in order to stay competitive in an increasingly challenging marketplace. All in all, you could say they fit right in.

Laura Sayre is senior writer for NewFarm.org.