Jan Shepel
Associate Editor
MADISON
The Wisconsin-based CROPP cooperative, originator of the Organic Valley brand of products announced last week that it would take over the dairy producer end and sales of the Stonyfield brand, which is strong in the Northeast.
In a letter to the cooperative’s 1,398 members, CROPP’s Chief Operating Officer George Siemon said Stonyfield had approached them about the opportunity to take over this end of the business after HP Hood, which had held the brand’s license since 2004, decided to focus more on its core business: dairy processing.
The deal brings 300 farmers supplying about $60 million in sales to the Wisconsin cooperative, according to the letter.
“We have looked at this opportunity from every angle with the following core goals – first to not endanger the cooperative and second to not enter any arrangement that threatens the members’ pay price, utilization or our ability to end the quota,” Siemon wrote to members.
The quota he referred to is a supply management program that had to be imposed on dairy producers in the cooperative as the economic downturn affected sales of organic dairy products.
CROPP has been a partner with Stonyfield for about 10 years, supplying milk for the Londonderry, New Hampshire-based company’s yogurt products.
Under the arrangement, which will take effect Jan. 1, 2010, Hood will continue to process the dairy products, Stonyfield will support the brand marketing, and CROPP will manage the farmers and the sales of Stonyfield products.
The deal will bring the Hood farmers that remain – some have already been terminated – on to the CROPP membership rolls if they choose. In his letter, Siemon said his management team and the board of directors have carefully reviewed the planned arrangement.
Discussions with members and with the dairy executive committee have been supportive, he said. But some have voiced concerns that CROPP may have to continue to “allow the former Hood farmers to be terminated and lose their organic dairy market due to ongoing underutilization,” he wrote.
The loss of more organic dairy farmers, Siemon said, is unfortunate but will be necessary for the pay price to be sustainable. “It is our hope to stop the loss of market for those farmers as soon as we can and yet still provide a pay price that allows the former Hood farmers to stay in business,” he wrote in the letter to members.”
Talks between the parties began this summer when Hood said it would end its licensing deal with Stonyfield. The CROPP cooperative is the largest producer of organic milk in the nation, with some of that production going into dairy products like cheese and yogurt.
The largest retailer of fluid organic milk is Dean Foods, with its Horizon brand.
