Wednesday, October 1, 2003

Natural Collaboration: Organic Valley's George Siemon

An unconventional business, Organic Valley Family of Farms has grown into a national leader in the organic movement.

By Vesna Vuynovich Kovach

In Corporate Report Wisconsin, October 2003
Profile: George Siemon, Organic Valley's CEO

Needle-tart, refreshing, sweet: a delicate, complex play of juicy flavors bursts onto my tongue with startling directness, as if I’d pierced the skin of a just-picked fruit. My eyes widen. It’s organic grapefruit juice, freshly squeezed and packed into 1/2 gallon paperboard cartons, then shipped, carefully chilled, thousands of miles to Wisconsin.

Across a polished wooden conference table sits George Siemon, the CEO of Organic Valley, the fourth biggest organics brand in America. “Isn’t that stuff just incredible?” says the lanky 50-year-old, his gleaming blond hair draping to his shoulders. “We just started making juice two years ago. I drink the grapefruit juice myself.”

The juice comes from a farmer-owned cooperative of 14 members, all organic growers of citrus in Florida. That co-op is, in turn, a member of CROPP Cooperative, whose 550 farmer-members make it the largest organic farmer-owned cooperative in North America. The La Farge, Wis.-based CROPP (Cooperative Regions of Organic Producer Pools) is better known by its brand name, Organic Valley Family of Farms.

A producer of organic dairy and eggs, produce, meats, and, lately, juice, it’s also known in the natural foods world as one of the remaining independent holdouts in a growth industry in which many of the successful pioneers have been bought up by giant corporations in recent years. At Organic Valley, where each of the seven directors on the board is a farmer-member who is elected by the other farmer-members, where members own the company directly and each member gets precisely one vote, selling out is not on the agenda.

Siemon arrived at work today dressed in jeans, sandals, and a blue denim shirt embroidered above the breast pocket with the Organic Valley logo: a gambrel-roofed, red barn amid a green field of crops. He’s usually less formal, he explains, but today he’s gussied up for the CRW photo shoot.

The photos, by the way, had been delayed for a bit while Siemon pushed a dollyful of Cryovac packaging wrap through the grounds of Organic Valley’s full-to-bursting headquarters, to the cheese-packing facility somehow jammed among the offices stuffed inside the main building, an old, converted dairy. Office space spills over into a row of trailers out back.

After the photos, Siemon headed upstairs and into his office and immediately slipped out of the sandals. That’s where I am now, sipping grapefruit juice and talking with a barefooted, nature-loving, vegetable farmer who, despite having no formal business education, shepherded the rise of an association of seven Wisconsin farmers into a national company with 2003 sales expected to top $150 million.

Siemon is doubtless one of the most important figures in organics today, and not just because of his work at Organic Valley. He’s also serving the first of five years on U.S. Department of Agriculture’s National Organic Standards Board.

He’s also, arguably, one of the most important figures for the future of rural America. For decades, small farms across the nation have been going out of business, thousands and sometimes tens of thousands each year. Organics, the fastest-growing agricultural sector, is seen as a rare ray of hope for farming families. In 2002 alone, Organic Valley brought 94 farmers – 44 in Wis. – into its fold, saving many from extinction.

Siemon, who also serves on the USDA’s Small Farm Advisory Committee, uses all of his muscle to advocate for rural communities and small-scale family farming, defend the environment, and champion the ethical, humane treatment of farm animals – which generally requires practices that are possible only on small farms.

Note that the championing of small farms is an Organic Valley value, not necessarily an organic one. Half of California’s $400 million organic produce market comes from just five big farms. Washington’s Cascadian Farms, the ninth biggest organics brand in the U.S., buys the ingredients for its organic microwavable dinners, frozen veggies, jams, and more from large farms in California and abroad. Colorado-based Horizon Organic, Organic Valley’s most formidable dairy competitor, fences thousands of cows inside grassless lots. Organic to the letter of federal law, these mega-farms use no pesticides and the cows are fed grain grown without synthetic pesticides, herbicides or fungicides. (Horizon was purchased by Dean Foods, America’s largest dairy concern, in August, 2003.) Organic Valley, on the other hand, requires its livestock farmers to provide access to the outdoors, shade, shelter, exercise areas, fresh air, direct sunlight and natural pasture. Herds of 70-80 cows are ideal for such treatment.

Protecting rural communities and the environment is written into Organic Valley’s mission statement, and it shows in the company’s actions. Consider the site of the $4 million headquarters now under construction: a couple of hillsides away from its present Main Street address in La Farge (pop. 775), about two-thirds of the way from Madison to La Crosse. The nearest Interstate is 20 twisting miles north; the closest U.S. Highway several miles south along steep terrain.

“The expectation was that we’d move to be near a big city. Probably Chicago,” Siemon says. “We looked into it. But we decided it was right to stay in La Farge. This is where we grew up. It’s where we bank.” So instead of pulling 206 jobs out of the rural area, Organic Valley is staying put, with plans to add another 105 jobs. Local workers and, as much as possible, local contractors and locally sourced materials are being used to build the structure.

The facility will boast green goodies including cotton insulation, recycled steel siding, sheet rock made from recycled coke-ash, sustainable water-free plumbing and solar-powered parking lot lights. Windows will be specially glazed to let in a maximum of light with little glare, saving energy and providing workers with beautiful views.

“We wanted to build a green building. To provide a healthy environment for the employees, plus keep the electric bill down,” says Siemon. He firmly believes it’s good business to do good for everyone involved. “I think there’s a real positive value to creating a work environment that’s healthy and pleasant to be in. Employees react to that, don’t they? They feel, ‘Somebody cares for me.’ They’re going to work a little harder.”

He believes his approach to be the wave of the future in business: “The penny-pinching school of thought that says that all that counts is my profits, being greedy, taking advantage of your position to further yourself – it’s an attitude that’s short lived. Good business is sustainable and environmental. Really, it’s the golden rule. You can’t have a sustainable business based on another’s unsustainability.”

If this sounds like a hippie-era flower child at heart, that’s not too far off. Being a business executive was never his intention.

Growing up, Siemon yearned to get as far from his family’s office supply business as possible. “I swore I’d never be a business person,” he recalls. “I wanted to work outdoors in nature. I did outdoor bird photography when I was a kid, joined the Audubon Society. I spent my summers at farms, with family in Alabama. I was Nature Boy.”

In 1970, Siemon fled his West Palm Beach upbringing for the free-spirited atmosphere of Colorado State University. He worked his way through college as a hired hand at local farms. At first he majored in forestry, planning to become a naturalist, but he switched to animal science. “I got disillusioned with forestry,” he says. “I used to say, ‘I’m just going to count picnic tables for the government for the rest of my life.’”

After graduating in 1974, Siemon moved to Iowa with his wife, Jane, for her graduate work. Later they migrated east of the Mississippi and began farming vegetables in the rugged Kickapoo Valley region of southwest Wisconsin. (Jane continues to run the farm today.)

In 1988, they banded together with a few other farm families to form a cooperative to sell their produce. Siemon was tapped to run the business end of things. “I was the only one in the group who wasn’t raised on a farm,” he says. He was surprised to find how much useful knowledge he’d gleaned from his business family background: “You learn more sitting around the family table than you realize.”

The business gig was supposed to be temporary, Siemon says. “I kept saying, ‘I’ll get this thing going, and then I’ll quit. One more year, and then I’ll quit.” But the growth of CROPP led to an unexpected personal transformation.

“I resisted who I am today,” he says. “For the first half of this, I thought I would be quitting any time. My objective was to work my way out of a job. Then I realized that was self-centered. My whole mission in life had been to sit at home and watch the birds fly by. But it became obvious that CROPP has an important role as a farmer leader in the nation, and that I was part of that. And that I should accept that. Around 1995, we started hiring professional people. They were helpful in mentoring me and encouraging me. They said, ‘We need you.’”

“Becoming a boss was my biggest challenge,” he remembers. “You’re no longer one of the gang. You don’t know how friendly to be. How much conversation to have in the hall. You make a comment in the break room and it turns into some weird mandate.” Siemon had to accept that his former peers were no longer peers, exactly. “I had to learn how to fire friends. It’s just part of growing up. You can be mission oriented, but in order to have the luxury to serve your mission, you have to have good business.

“This place is very uncorporate, but not everyone sees that. ‘Oh, back in the old days,’ they say. Yeah, in the old days it was very tough and stressful. CROPP is changing. It’s got it’s own life. We can’t hold it back.”

That growth has not been without controversy. Over the past few years, Organic Valley squeaked by with a 1.5% profit margin, despite rocketing growth. Facing criticism from all around, not least from the bank, the co-op stubbornly refused to lower the price it paid farmers for their milk.

“Lowering the milk price would have been as easy as falling off a log,” says Siemon. “But one of our objectives is to pay farmers a good price. It’s an easy, easy path that, every time we hit a bump, oh, we’ll just lower the farmers’ pay price. That’s what happens in America. But we have a pay program the farmers expect us to deliver on. These relationships are the most important thing.”

He admits, “Quite honestly, we did take the co-op to the point of risk by growing so fast. That was the time when the mass market started to explode in organic milk. We went for that market. We grew fast, so we weren’t able to make money. The other side of it is, now we’re much bigger, serving more farmers, with a national brand well placed in the mass market. Sixty percent of our business is in the mainstream supermarkets now. We’re in chains with 900 stores. We couldn’t get in like that today. Do I regret taking that risk? No. We had to go into that world or we wouldn’t be in the position we are now: strong enough to influence the overall pricing structure.”

Ultimately, he says, he protected organic dairy’s price premium nationwide – the very thing that makes organic the hope for the future of family farming.

“My biggest dream,” says Siemon, “is that the organic marketplace will grow, that it will just explode, as individual people start taking responsibility as consumers.”
If that happens, Organic Valley farmers will be well placed, thanks to Siemon’s deft steering through the recent organic dairy boom. “We are a market leader in the industry now,” he says. “We are the number one dairy brand in natural foods markets, and number two in the mass market. We’re growing up to twice as fast as our competitor. We’re on the fast track. It’s incredibly exciting.”

George Siemon: An Inside Look
Favorite Musician:
John Trudell, known as much for his fusion of political poetry and rock and roll with Indian tribal chants and drums as for his chairmanship of the controversial American Indian Movement (AIM) through much of the 1970s.

On His Magazine Rack:
Harvard Business Review
Meat and Poultry
Rural Cooperatives

Favorite Vacation:
Tent camping, horse packing or car camping in the Kickapoo Valley. “I like to hike. I like to use my feet.”

Best Way to Zone Out:
Western novels.

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