Farmer-Owned CROPP Cooperative - Organic Valley
1st Quarter Newsletter
Farmer-Owned CROPP Cooperative
TAKE STOCK
Q1:2016
Our Mission The purpose of the Cooperative Regions of Organic Producer Pools is to create and operate a marketing cooperative that promotes regional farm diversity and economic stability by the means of organic agricultural methods and the sale of certified organic products. PHOTO: Organic Valley Farmer-Owners The McMahan Family Farm, Lewis County, WA
Financial Update
Sales are expected to stay at or above current growth levels for the remainder of the year. Because of this, we anticipate 2016 being another year of strong sales growth. Total projected sales are expected to be approximately $1.2 billion for the year.
$1.2B
2016e
$900
CROPP Cooperative reported revenue of $271,222,746 for the first quarter of 2016. This is a 7.25% increase over revenue of $252,880,537 the first quarter of 2015. This increase in revenue is attributable to timing of market price increases in 2015 which are favorably impacting 2016.
$800 $700 $600 MILLIONS
Net income for the first quarter of 2016 was $4,185,858, which was lower than the net income of $6,106,913 for the first quarter of 2015. This decrease can be attributed largely to the increase in inventory reserves related to the current powder market.
CROPP SALES
$1 BILLION
$500 $400 $300 $200 $100 1991
1996
2001
2006
2011
2016
SAVE THE DATE! INVESTOR RECEPTION JULY 30, 2016
this year at a new location. Cashton Office Building 509 Organic Drive Cashton, WI, 54619
The statements in this investor newsletter that are forward-looking involve numerous risks and uncertainties and are based on current expectations. The reader should not place undue reliance on these statements. Actual results could differ materially from those anticipated. ©CROPP Cooperativde 2016-55004
More than 1,800 Farmers Strong
THE FAMILY FARM COOPERATIVE
PAGE 2
TAKE STOCK
a message from: GEORGE SIEMON, CEO
Dear Shareholders, In April we held our 27th Annual Meeting which brought in more than 450 farmerowners from 26 states. The theme of this year’s annual meeting was “Purity of Purpose,” and we celebrated our unwavering commitment to keeping farm families on the land through organic agriculture. 2015 included a record high pay price to our members for their milk, distribution of a bonus 13th check, instituting a drought relief program, and successful new product launches. We also reached a remarkable milestone of $1.04 billion in sales. We are now the first billion dollar organic-only food company!
We are proud that Organic Valley delivers the highest quality organic food in the U.S. to millions of consumers. Our success means we can provide a lifeline to more than 1,800 family farms and meaningful employment to 847 staff members. We have been leaders in the organic movement and will continue to lead into the future. 2015 sales growth represents a seven percent increase over 2014 and a profit of $36.8 million. 2015 also saw a record increase in farmer pay price with an average price of $36.79/CWT for dairy and an organic premium of $19.29 per CWT over the conventional milk price. This is the highest organic premium over conventional dairy prices since the 2009 recession. Our drought relief program piloted in 2015 was extended to aid farm families who have suffered debilitating drought conditions. Those families will continue to
receive monthly relief payments through 2016, paying members based on length of time and severity of drought suffered. We also gave back to the larger community by supporting more than 1,000 non-profit organizations and schools with $6.2 million in total philanthropic donations and sponsorships. Another highlight of the year took place in December when our company was named one of Outside Magazine’s 100 best places to work in the United States. CROPP was ranked #38 in the overall list and #5 in the Health & Wellness category. We are extremely proud of the hard work and commitment that has gotten us to this point. We celebrate our “Purity of Purpose” with you! In Cooperation, George Siemon, CEO
CROPP in the news...
grand opening of cropp cashton office building CASHTON, WI — On April 26, 2016, CROPP Cooperative celebrated the grand opening of its new Cashton office building. While the rainy, cold weather didn’t approve, the community did—approximately 1,000 people attended and enjoyed tours, give-aways, brats, hot dogs and remarks from CEO George Siemon and other local dignitaries. The new building spans 106,000 sq. feet and provides work space for 400 employees. The cost of the project was $24 million, and it was completed in February of this year. Currently it houses more than 260 employees. The building is designed to maximize energy efficiency and make the most of renewable and sustainable resources and is in the process of becoming LEED Gold Certified. All of the building’s heating and cooling is provided by a geothermal system. More than 330 solar photo-voltaic panels on the roof supply a solar thermal hot water system, and the building’s lighting is 100 percent LED, making the it 55 percent more efficient than a conventional building of the same size. Perks for the employees include a workout room, a game room, and a cafeteria serving up organic breakfast and lunch. A retail store is also on-site selling Organic Valley and other organic products and is open to the public 10:00 a.m.–6:00 p.m., Monday through Saturday.
Top: Grand Opening Tour Right: New Organic Valley Retail Store
Organic Valley will break ground on another building at the Cashton site later this year. It will be a processing facility that will be used to cut cheese, package butter, and produce ghee (a clarified butter).
THE FAMILY FARM COOPERATIVE
Q1:2016
Cornerstones of CROPP...
PAGE 3
sam & sherry dobson
Iredell County, North Carolina
It’s not often a farmer thanks his lucky stars for a tractor breakdown, but Sam Dobson did one day in 2006. It meant he had to go into town for parts, which gave him an excuse to call a certain young lady he’d met and ask her to lunch. “I was a little nervous,” Sam says, “because she’s so good-looking. We went on a little picnic at the lake and we’ve been together ever since.” Sam’s ancestors emigrated from Pennsylvania to North Carolina in the 1790s, which makes Sam the seventh generation on the farm. He and Sherry are raising the eighth generation, their son, Chase, on the farm now, and what a paradise for a kid. Just an hour north of Charlotte, their 500-acre farm is situated where the foothills and the piedmont of the Appalachians come together. It’s gorgeous country. For 150 years the farm was a classic, southern farm growing cotton and tobacco. It wasn’t until 1939 that Sam’s great-grandfather started their dairy which was run conventionally until 2013. What changed? Sam laughs and says, “I think it was kind of like sitting under an oak tree and an acorn hit me on the head. When I got home from college in 2001, I started paying closer attention to how we were working on the farm. We’d always grazed a little bit, but not intensively. I noticed how well the cows did in the spring when we grazed them. Fuel skyrocketed after 9/11 and equipment costs were getting higher. Cows harvesting and fertilizing their own crop by grazing is a cheaper, more efficient way to go. We implemented intensive rotational grazing practices in 2002 and have been doing it ever since.” They milk around 90 Holstein cows with some Swedish Red and Jersey crossbreeds. The herd grazes roughly 160 acres divided into 42 paddocks. “Our grazing season runs from March through early December most years. They’re out in the pastures year round, but there’s just nothing to graze in deep winter. When pasture is prime in spring and fall, we rotate the cows twice a day to fresh grass.” By 2010, Sam realized they were so close to organic already that it didn’t make sense not to be. Organic management wasn’t much different from how his dad, Jim, and granddad farmed and how he grew up farming.
“It wasn’t until I was in high school that we sprayed chemicals. When the milk prices got really bad, you had to sign up for these payment programs that required you to use the more “efficient” methods advocated by big agriculture at that time, which meant ‘use chemicals.’ So we were kind of forced into that world, but we never liked it.”
the Hoffners. They let us into their lives and talked to us about how being organic had benefited their land, their lives and their cows. All the organic farmers we’ve met have really opened up the cupboard for us. That’s something we have especially loved about this change. Everybody’s pulling for everybody. It’s a team effort.
The Dobsons completed their organic certification in February of 2014. Sam says there was no question about going with Organic Valley.
“We really like the co-op structure, too. Dad goes way back in terms of experience with agricultural companies, and he feels the way Organic Valley works is the way it’s supposed to be. We never trusted the big companies. You always feel like you’re a hamster running on a wheel. Being an Organic Valley farmer allows us to farm the way we feel is best for us.”
“Organic Valley is one of the reasons we decided to go organic. We went to the meetings and learned about the co-op through the other families in our area who are with Organic Valley. We visited the Teagues and
ORGANIC VALLEY HALF & HALF As the world’s biggest organic dairy coop, most people know us for our milk. But we also make the best rich and creamy organic Half and Half, which makes great coffee even better. Technically speaking, you could say we’re really the worlds’ best coffee company, we just don’t make coffee.
www.organicvalley.coop/worlds-best-coffee
THE FAMILY FARM COOPERATIVE
PAGE 4
VIETNAMESE ICED COFFEE
TAKE STOCK Q1:2016
Servings: 4
An exotic blend of spices and a touch of sweetness from coconut sugar make this iced coffee the star of your morning! PREP TIME: 2 minutes
COOK TIME: 10 minutes
TOTAL TIME: 12 minutes
2 cups water
10 cardamom pods
11⁄2 cup coconut sugar
2 cups cold brew concentrate
4 cinnamon sticks
1 cup Organic Valley Half & Half
4 cloves
Ice
5 black peppercorns
1. Start with the syrup. Place water, sugar, cinnamon, cloves, peppercorns and cardamom in a saucepan and bring to a boil. 2. Let the mixture simmer for 5 minutes. 3. Cool and strain. 4. Place coffee, Organic Valley Half & Half and 1⁄2 cup of the syrup in a cocktail shaker. Add ice and shake well. 5. Pour into glasses and enjoy.
Recipe by Sweet Paul.
our cows are socialand so are we!
One Organic Way | La Farge, WI | 54639 www.organicvalley.coop | 1-888-444-MILK 54601 PERMIT #6455
PAID
PRSRT STD U.S. POSTAGE
Farmer-Owned CROPP Cooperative
TAKE STOCK
Q1:2016
Our Mission The purpose of the Cooperative Regions of Organic Producer Pools is to create and operate a marketing cooperative that promotes regional farm diversity and economic stability by the means of organic agricultural methods and the sale of certified organic products. PHOTO: Organic Valley Farmer-Owners The McMahan Family Farm, Lewis County, WA
Financial Update
Sales are expected to stay at or above current growth levels for the remainder of the year. Because of this, we anticipate 2016 being another year of strong sales growth. Total projected sales are expected to be approximately $1.2 billion for the year.
$1.2B
2016e
$900
CROPP Cooperative reported revenue of $271,222,746 for the first quarter of 2016. This is a 7.25% increase over revenue of $252,880,537 the first quarter of 2015. This increase in revenue is attributable to timing of market price increases in 2015 which are favorably impacting 2016.
$800 $700 $600 MILLIONS
Net income for the first quarter of 2016 was $4,185,858, which was lower than the net income of $6,106,913 for the first quarter of 2015. This decrease can be attributed largely to the increase in inventory reserves related to the current powder market.
CROPP SALES
$1 BILLION
$500 $400 $300 $200 $100 1991
1996
2001
2006
2011
2016
SAVE THE DATE! INVESTOR RECEPTION JULY 30, 2016
this year at a new location. Cashton Office Building 509 Organic Drive Cashton, WI, 54619
The statements in this investor newsletter that are forward-looking involve numerous risks and uncertainties and are based on current expectations. The reader should not place undue reliance on these statements. Actual results could differ materially from those anticipated. ©CROPP Cooperativde 2016-55004
More than 1,800 Farmers Strong
THE FAMILY FARM COOPERATIVE
PAGE 2
TAKE STOCK
a message from: GEORGE SIEMON, CEO
Dear Shareholders, In April we held our 27th Annual Meeting which brought in more than 450 farmerowners from 26 states. The theme of this year’s annual meeting was “Purity of Purpose,” and we celebrated our unwavering commitment to keeping farm families on the land through organic agriculture. 2015 included a record high pay price to our members for their milk, distribution of a bonus 13th check, instituting a drought relief program, and successful new product launches. We also reached a remarkable milestone of $1.04 billion in sales. We are now the first billion dollar organic-only food company!
We are proud that Organic Valley delivers the highest quality organic food in the U.S. to millions of consumers. Our success means we can provide a lifeline to more than 1,800 family farms and meaningful employment to 847 staff members. We have been leaders in the organic movement and will continue to lead into the future. 2015 sales growth represents a seven percent increase over 2014 and a profit of $36.8 million. 2015 also saw a record increase in farmer pay price with an average price of $36.79/CWT for dairy and an organic premium of $19.29 per CWT over the conventional milk price. This is the highest organic premium over conventional dairy prices since the 2009 recession. Our drought relief program piloted in 2015 was extended to aid farm families who have suffered debilitating drought conditions. Those families will continue to
receive monthly relief payments through 2016, paying members based on length of time and severity of drought suffered. We also gave back to the larger community by supporting more than 1,000 non-profit organizations and schools with $6.2 million in total philanthropic donations and sponsorships. Another highlight of the year took place in December when our company was named one of Outside Magazine’s 100 best places to work in the United States. CROPP was ranked #38 in the overall list and #5 in the Health & Wellness category. We are extremely proud of the hard work and commitment that has gotten us to this point. We celebrate our “Purity of Purpose” with you! In Cooperation, George Siemon, CEO
CROPP in the news...
grand opening of cropp cashton office building CASHTON, WI — On April 26, 2016, CROPP Cooperative celebrated the grand opening of its new Cashton office building. While the rainy, cold weather didn’t approve, the community did—approximately 1,000 people attended and enjoyed tours, give-aways, brats, hot dogs and remarks from CEO George Siemon and other local dignitaries. The new building spans 106,000 sq. feet and provides work space for 400 employees. The cost of the project was $24 million, and it was completed in February of this year. Currently it houses more than 260 employees. The building is designed to maximize energy efficiency and make the most of renewable and sustainable resources and is in the process of becoming LEED Gold Certified. All of the building’s heating and cooling is provided by a geothermal system. More than 330 solar photo-voltaic panels on the roof supply a solar thermal hot water system, and the building’s lighting is 100 percent LED, making the it 55 percent more efficient than a conventional building of the same size. Perks for the employees include a workout room, a game room, and a cafeteria serving up organic breakfast and lunch. A retail store is also on-site selling Organic Valley and other organic products and is open to the public 10:00 a.m.–6:00 p.m., Monday through Saturday.
Top: Grand Opening Tour Right: New Organic Valley Retail Store
Organic Valley will break ground on another building at the Cashton site later this year. It will be a processing facility that will be used to cut cheese, package butter, and produce ghee (a clarified butter).
THE FAMILY FARM COOPERATIVE
Q1:2016
Cornerstones of CROPP...
PAGE 3
sam & sherry dobson
Iredell County, North Carolina
It’s not often a farmer thanks his lucky stars for a tractor breakdown, but Sam Dobson did one day in 2006. It meant he had to go into town for parts, which gave him an excuse to call a certain young lady he’d met and ask her to lunch. “I was a little nervous,” Sam says, “because she’s so good-looking. We went on a little picnic at the lake and we’ve been together ever since.” Sam’s ancestors emigrated from Pennsylvania to North Carolina in the 1790s, which makes Sam the seventh generation on the farm. He and Sherry are raising the eighth generation, their son, Chase, on the farm now, and what a paradise for a kid. Just an hour north of Charlotte, their 500-acre farm is situated where the foothills and the piedmont of the Appalachians come together. It’s gorgeous country. For 150 years the farm was a classic, southern farm growing cotton and tobacco. It wasn’t until 1939 that Sam’s great-grandfather started their dairy which was run conventionally until 2013. What changed? Sam laughs and says, “I think it was kind of like sitting under an oak tree and an acorn hit me on the head. When I got home from college in 2001, I started paying closer attention to how we were working on the farm. We’d always grazed a little bit, but not intensively. I noticed how well the cows did in the spring when we grazed them. Fuel skyrocketed after 9/11 and equipment costs were getting higher. Cows harvesting and fertilizing their own crop by grazing is a cheaper, more efficient way to go. We implemented intensive rotational grazing practices in 2002 and have been doing it ever since.” They milk around 90 Holstein cows with some Swedish Red and Jersey crossbreeds. The herd grazes roughly 160 acres divided into 42 paddocks. “Our grazing season runs from March through early December most years. They’re out in the pastures year round, but there’s just nothing to graze in deep winter. When pasture is prime in spring and fall, we rotate the cows twice a day to fresh grass.” By 2010, Sam realized they were so close to organic already that it didn’t make sense not to be. Organic management wasn’t much different from how his dad, Jim, and granddad farmed and how he grew up farming.
“It wasn’t until I was in high school that we sprayed chemicals. When the milk prices got really bad, you had to sign up for these payment programs that required you to use the more “efficient” methods advocated by big agriculture at that time, which meant ‘use chemicals.’ So we were kind of forced into that world, but we never liked it.”
the Hoffners. They let us into their lives and talked to us about how being organic had benefited their land, their lives and their cows. All the organic farmers we’ve met have really opened up the cupboard for us. That’s something we have especially loved about this change. Everybody’s pulling for everybody. It’s a team effort.
The Dobsons completed their organic certification in February of 2014. Sam says there was no question about going with Organic Valley.
“We really like the co-op structure, too. Dad goes way back in terms of experience with agricultural companies, and he feels the way Organic Valley works is the way it’s supposed to be. We never trusted the big companies. You always feel like you’re a hamster running on a wheel. Being an Organic Valley farmer allows us to farm the way we feel is best for us.”
“Organic Valley is one of the reasons we decided to go organic. We went to the meetings and learned about the co-op through the other families in our area who are with Organic Valley. We visited the Teagues and
ORGANIC VALLEY HALF & HALF As the world’s biggest organic dairy coop, most people know us for our milk. But we also make the best rich and creamy organic Half and Half, which makes great coffee even better. Technically speaking, you could say we’re really the worlds’ best coffee company, we just don’t make coffee.
www.organicvalley.coop/worlds-best-coffee
THE FAMILY FARM COOPERATIVE
PAGE 4
VIETNAMESE ICED COFFEE
TAKE STOCK Q1:2016
Servings: 4
An exotic blend of spices and a touch of sweetness from coconut sugar make this iced coffee the star of your morning! PREP TIME: 2 minutes
COOK TIME: 10 minutes
TOTAL TIME: 12 minutes
2 cups water
10 cardamom pods
11⁄2 cup coconut sugar
2 cups cold brew concentrate
4 cinnamon sticks
1 cup Organic Valley Half & Half
4 cloves
Ice
5 black peppercorns
1. Start with the syrup. Place water, sugar, cinnamon, cloves, peppercorns and cardamom in a saucepan and bring to a boil. 2. Let the mixture simmer for 5 minutes. 3. Cool and strain. 4. Place coffee, Organic Valley Half & Half and 1⁄2 cup of the syrup in a cocktail shaker. Add ice and shake well. 5. Pour into glasses and enjoy.
Recipe by Sweet Paul.
our cows are socialand so are we!
One Organic Way | La Farge, WI | 54639 www.organicvalley.coop | 1-888-444-MILK 54601 PERMIT #6455
PAID
PRSRT STD U.S. POSTAGE
