Sharing the Pie: How Farmers Are Using Cooperatives to Stay Profitable and Grow Local Economies

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Yet, as Wallace astutely pointed out, many farmers today can tell you negative stories about cooperatives, just as the Organic Valley farmers did in 1988—stories about belonging to a group that sold seed and pesticides to members at a loss or about how the co-op couldn’t compete in the commodity market and went under. Others gripe that their co-op struggled with organizational issues and power dynamics or about the increasing costs that plagued the group.

“As they grow, cooperatives can lose focus,” Klein told me. “When you first start out, it’s great—you are supporting farmers, giving them a better price.” But as the cooperative grows, the business might start to lose money because it is trying to do too much or decided to hire expensive executives to run the show. “Dissension can easily slip in,” Klein added.

Beyond these standard disagreements are more extreme allegations of cooperatives that have engaged in nefarious activities. Farmer-members, for instance, accused the Dairy Farmers of America of cutting payments to farmers for their milk in order to make and sell cheese more cheaply. They also claimed the cooperative returned the bulk of the profits to investors rather than to its farmer-members.

On a more mundane level, perhaps the biggest issue is that cooperatives are notoriously slow-moving, unable to recalibrate or iterate quickly. The virtue of co-ops, their wide membership and emphasis on democratic processes, can also be their downfall. Presented with new opportunities or challenges in the marketplace, they tend to move like molasses as everyone meets, discusses, debates. Instead of taking risks, the group can take too defensive an approach, which, in today’s anything-can-happen-at-any-moment world, might feel like trying to steer a bulky freighter through uncharted waters when a sleek speedboat is needed.

Even in the 1980s, getting farmers to join yet another cooperative was difficult. “I can’t stress enough,” Klein warned me, “people over thirty years of age have heard from their parents and grandparents about how co-ops fail. Getting past the word ‘cooperative’ means defining and redefining what your co-op is and how different you all want it to be from the others.”

From its earliest days, Organic Valley tried to differentiate itself, beginning with strong leadership. “You need a really good leader,” Klein told me, “a person who is knowledgeable. But someone who is also well respected and respectful to all members.” Organic Valley also made sure to limit its activities. Initially the group decided to focus solely on marketing and selling products for a fair market price and left the rest to evolve over time.

Today, the Organic Valley cooperative is alive and well, even though just a few years ago (before COVID-19) the group weathered hard financial times when it couldn’t sell all the milk its members generated. Cheap organic milk is now plentiful in grocery stores, presenting tough competition for the cooperative. But the group “tinkered” and grew as a result, which, according to research, is essential for cooperatives that thrive long-term.

Klein contends the biggest indication of Organic Valley’s success has been its impact on individual farms and communities. Towns that house Organic Valley offices are doing far better, he told me, than neighboring communities, which often struggle with vacant shops and few jobs. The guarantee of fair prices has kept farms in business too. “We truly have kept farms running, and the local economies are some of the biggest winners,” remarked Klein. “There is no denying that.”

From Bet the Farm by Beth Hoffman. Copyright © 2021 Beth Hoffman. Reproduced by permission of Island Press, Washington, D.C.

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