Letter from George Siemon

June 21, 2010

Dear CROPP Farmers

Things are happening at the Cooperative on many levels. Overall sales are slowly getting stronger. We remain concerned about the economy in the near term, but long term we still see the organic market as resilient due to growing consumer awareness. The combination of solid scientific evidence supporting organics grows, along with the blossoming green lifestyle. These factors assure a positive future for organics.

At the June 16th Board meeting there were several significant decisions reached by your Board.  These are communicated in this mailing.

1) Raw Milk - The toughest subject has been how to handle the farmers who have chosen to start a raw milk business while they also sell to the cooperative. Our member agreement clearly states that members are to ship all their production to the cooperative. Unfortunately, some of our members have taken advantage of us and in some cases are now shipping only 20% of their milk to the cooperative while they continue to develop their own raw milk business. This is not the case for other members who have advocated for allowing raw milk sales, as they are involved in some neighborly exchange for raw milk and don’t see that as engaging in the raw milk business.

It is a passionate subject and one that we did our best to open up for input to all members. This process was unable to yield a consensus to allow members to pursue raw milk businesses. The enclosed letters and policy address the Board’s final decision to uphold the existing member agreement and prohibit members from engaging in the raw milk business. Limited diversions for other products will be allowed.

Unfortunately, this decision became public before it was official and before we could inform the members, so there has been much misinformation. We have received both positive and negative feedback from members and the community. It is sad to see some of the criticism and theories around the motivations for this decision, but the truth is this has clearly been a farmer based decision. It is a very important part of who we are to have a farmer directed business and this decision represents that. I am sure this is something we can all respect. We can’t say on one side that we want farmers to have a say and then say that we don’t want to abide by the democratic process we set up. It is time to accept and support this decision and not do harm by further dividing the cooperative. Our primary role as a cooperative is to access the market and pay a sustainable price. This primary role means thousands of families are dependent on us, as well as our millions of consumers who are dependent on our high quality products.

As far as enforcing this standard, it will be focused on the members who are in the raw milk business, not on the neighborly exchanges that often happen on a family farm. We do not want to police farms, so it is critical that members honor this as policy and work with the cooperative to resolve any questions around this issue. As the enclosed letter states, we will have a phone call with the members on July 6th where we will discuss this policy and the implementation plan. Since we all know this is a non-consensus issue it will be critical in that call and beyond that we be respectful and cooperative.

2) Quota -The Board also elected to raise the Quota from 93% to 100% of Active base starting August 1. The SSG group is currently at 100% of active base. This is a great accomplishment as we have collectively gone on a learning journey to develop a Supply Program, which included 2 rounds of appeals to assure that your Active Base reflects our present agreement with you in relation to your current production plan. This means that since last July we have increased the cooperative quota by 13%, first by raising the overall active base by 6% through the January appeal process, and then by raising the quota on August 1 by 7%.  As of August 1 we will be pleased to have members at normal production, which equates to 100%.  We will remain at 100% for the time being as we will try to have controlled growth in steps. The only exception will be that we are going to allow the Southeast to grow their present Active Base up to 110% as part of the regional aspect of a Supply Program. The Board has not decided on a 2011 plan for the Quota, but the Supply Committee has recommended to remove Quota during the dry months for milk of January and February. We will still have a year end reconciliation for the over Quota milk. Through this process we will return any dollars deducted that are not over the total Quota amount for the Quota period.

It is our goal to finalize the full Supply Program for member review by August 1. The details to this are far more complicated than we thought when we started but we have made significant progress towards having a mature program.

3) SSG Pay Price -The Stonyfield Supply Group farmers will be getting a $1 increase starting August 1 as their overall utilization justifies. Those farmers elected to have a stable pay vs. having a pay based on the monthly projection. Monthly utilization of the SSG has ranged from 63-94%. We were cautious in the first half of the year to make sure the transition went well. We gave a $0.50 increase in March so this will mean an overall $1.50 increase since the SSG farmers joined the co-op. They are still getting paid under the dairy pool by around $2/cwt. The SSG farmers continue to be cooperative and appreciative. Several have elected to leave us for other markets and we are working with them to let them out of their member agreement as best we can.

4) Cooperation -We are a complex business inside a cooperative model. We have succeeded in developing a market for organic farmers and in creating a stable price that reflects an organic premium over $14/cwt. We have capable employees who are mission driven and a formula of policies and philosophies that assures our continued success. With this success comes criticism and for those of us on the inside it is amazing to see outside forces being our loudest critics. We have seen commentary in various communications about our actions, claiming that those decisions are anti-farmer, when the truth is these actions were developed and decided by the members and elected representatives. It is crucial that you the members continue to give us your input by participating in the many opportunities we give members to be caretakers of their cooperative.

We are a learning organization and our decisions come from 22 years of experience of developing our collective group mind to guide our precious cooperative into the future. We are all fortunate to be part of a cooperative that is having a significant affect on organic family farms throughout the US. Thanks for your part now and into the future.

As always if you have questions call your field rep or our office to clarify any of these issues.  Thanks,

George Siemon