Late last month, Organic Valley announced that they'll be raising their supply quota in a move to get farmer-owners from 93% to 100% of their active base by August 1, 2010. Very good news for this successful organic company.
Organic Valley represents 1,631 farmers in 33 states and four Canadian provinces, and achieved $520 million in 2009 sales. However, as good as $520 sounds, that number is based on flat-lining sales, as compared to their 2009 sales which had a 22% growth rate.
To combat flat-lining sales, the farmer-owners of Organic Valley organized a unique supply management system. The system was created to safeguard the cooperative during low or flat sales, and required all dairy farmer-owners to reduce their organic milk supply by 7% by July 2009.
Rather then cut off a member of the cooperative to reduce costs, the Organic Valley cooperative voted unanimously to reduce supply under the new system, and it payed off.
This week, Organic Valley announced that the quota will be lifted August 1. Founding farmer and "C-I-E-I-O," George Siemon, delivered the farmer-owners the good news and notes:
"Raising the quota is a great accomplishment for our farmer-owned cooperative. One year ago, we committed to create a sustainable solution through a supply management program to avoid farmer pay cuts or dropping the farmer off the truck entirely."
Currently, Organic Valley is projecting sales growth at $603 million for 2010. This is a big deal considering that some news reports have recently declared that organic farming is on the decline. Organic Valley on the other hand seems to be holding steady, even growing.
The Organic Valley supply management system is a great idea during this sluggish economy. What other ways do you think organic companies can meet consumer demand for decent prices while still supporting their producers and suppliers?
Organic Valley Milk Photo ©2010 Organic Valley
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