Organic Valley bounces back from creamery fire to report $25m income

The US dairy co-op says it kept its profit margin below 2.5% so as to increase farm payments and build capacity

US dairy co-op Organic Valley‘s annual report celebrates the continuation of “back-to-back years of net income” despite complex supply chain challenges.

The Wisconson-based co-op, which has nearly 1,800 farmer owners in 34 US states, Canada, Australia, and the UK, reported net income of US$25m but limited profit to make investments and maintain farmer income.

It says it used positive cash flows from operations to pay down $21m of the co-operative’s debt and continued to operate at “a slim profit margin, below 2.5%, as it pursued its mission of supporting family farms by focusing on increasing average pay prices” to farmers.

Investment has also gone into “building capacity to bring on more small organic family farms in the future”. In March, it invited 80 New England family farms to join after they lost their supply contracts.

The co-op said it had faced “headwinds from unexpected challenges”, including a fire at its creamery in McMinnville, Oregon, which “created barriers to fulfilling product demand in 2021”. Rebuilding work is under way at the creamery, “with stage one for loading and processing completed and active just one year after the fire”.

Many workers have been rehired, it added, and it is “building vital local dairy processing capabilities in the Pacific Northwest”.

CEO Bob Kirchoff said: “People across the country continue to seek out Organic Valley products. They want to spend their milk money on something they believe in, and they are helping us save more organic family farms that would otherwise be abandoned by industrial dairy and big ag.

“2021 helped set us up to offer membership in our co-operative to small, organic family farms that need a home for their milk, and that is huge. By optimising our workflow, realigning our structures, and maximising the value of our farmer-members’ products, we were able to improve our net income once again.”

Other work in 2021 included “building the foundation for thought leadership programmes in sustainability and animal care,” said the co-op. “With an expanded set of animal care standards, a new carbon insetting programme launching in 2022, and new products hitting the shelves across the country, the independent co-operative of small family farms is focused on the future of organic food and farming in the US.”

Looking ahead, the co-op faces similar challenges to the rest of the farming sector, which is at “a critical juncture,” said board president Steve Pierson. “Inflation is affecting farmers across the country. And now, more than ever, maintaining a stable pay price for organic family farms is essential to keep our farmers doing what they love: raising animals in harmony with nature to provide nutritious organic food.”