Cooperative Regions of Organic Producer Pools

CROPP’s pioneering effort to bring a producer cooperative of small farmers to scale has been a learning opportunity not only for the company but for similar CFEs worldwide. Among the lessons were the value of leading with a high- quality product (in this case, organic milk) available for the local market on a year-round basis, developing innovative capital-raising strategies, and patiently cultivating producer pools and networks. These successes, however, also underscore the principal challenges CROPP has faced:

• Raising and Maintaining Capital: CROPP sees the need to continue to experiment with new ways to raise capital. Although sales and members’ investments are strong, the company knows it needs to diversify and expand its capital sources. “Cooperatives traditionally lack access to capital,” Jerry notes. “We’ve had to be very creative there, and that’s why we came up with Class E shares.”
  
  
• Staying Focused: As CROPP emerged as a leader in the organic sector, it took on more political responsibilities including sitting on the USDA’s Organic Standards Board, taking a stand against rBGH, and publicly representing the largest group of organic producers in the United States. This led to a conflict on the CROPP board. After a difficult time, CROPP refocused and recommitted to running its business strictly as a business.
  
  
• Balancing Stakeholders: Now that CROPP is taking outside capital, it needs to be responsive to its private investors as well as to its members. Still, remaining dedicated to its members’ needs is one of CROPP’s operational imperatives. As Jerry says, “Our job as managers is easier than it is for a lot of businesses, because we know what our owners want.” Yet, as a $527 million company, CROPP also continually needs to make tough business choices.

A model as successful as CROPP invites competitors, and one can imagine the emergence of other organic farmer networks. But CROPP doesn’t plan to stand still. As Jerry says, “We will be ‘wildly successful’ because we have created a sustainable business model that allows farmers to stay on their farms, make a living, and raise their families—a living that is sustainable both financially and environmentally.”