Farmer-Owned CROPP Cooperative

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THIRD Quarter Newsletter

Farmer-Owned CROPP Cooperative

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3Q:2015

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-Members, The Ranck Family Farm, Mifflin, PA

CROPP Cooperative reported revenues of $765,009,858 for the first three quarters ending September 30, 2015. This is a 6% increase in revenue from the $718,923,542 reported for the first three quarters of 2014. This increase in revenue is attributable to solid OV sales and lower private label, bulk, and conventional sales. Net income for the first three quarters of 2015 was $34,211,933.37 which was higher than the $16,236,646 reported for the first three quarters of 2014. Strong profits have been driven by low fuel prices, favorability in the cost of goods area, and a beneficial sales mix. The cooperative expects revenues to continue to increase for the remainder of the year. We expect total sales to be approximately $1.05 billion for 2015.

$1.05B

$1 BILLION

2015e

CROPP REvenue

$900 $800 $700 $600 MILLIONS

Financial Update

$500 $400 $300 $200 $100 1990

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WILL CROPP BE SELLING MORE CLASS E STOCK IN THE FUTURE? The cooperative currently does not have plans to sell more preferred stock; however, we will notify our existing shareholders FIRST if we do offer more shares. Thanks to all our shareholders for the continued support!

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 Cooperative 2015-55010 INV-P02407

More than 1800 Farmers Strong

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Guest Writer: diane gloede, investor relations manager “ORGANIC VALLEY PRINCIPLE SIX FUND” IS LAUNCHED WITH SHARED CAPITAL COOPERATIVE New funding program lets CROPP support its best and most loyal partners – co-op grocery stores. Dear Shareholders, CROPP cooperative has long benefited from its relationship with co-op grocery stores throughout the nation. Placing our product in these stores was key to our early success, and food cooperatives continue to be our most loyal retail customers. CROPP cooperative has a history of giving back to these key partners in the good food movement. In October of this year, we formalized a new program of financial support for food co-ops by partnering with Shared Capital Cooperative (formerly Northcountry Cooperative Development

Fund, located in Minneapolis, MN) to create the “Organic Valley Principle Six Fund”. We feel privileged to be in a position to help support the growth of food cooperatives that have helped grow our Organic Valley brand for many years. The $1 million fund will be used to help finance food co-ops that need funding assistance as they expand their businesses. It is an expression of the sixth principle of cooperative values: Cooperation among Cooperatives (see insert for more information on these international cooperative principles.

With almost 40 years of experience in financial assistance and business expertise specific to cooperatives, including early funding assistance to CROPP to help secure refrigeration equipment in 1989, Shared Capital Cooperative will administer this lending program. The fund is expected to grow as loans are repaid and more co-ops participate. We are excited to announce this new program and look forward to being part of the continuing growth of food cooperatives around the nation! In cooperation, Diane Gloede Investor Relations Manager

CROPP in the news...

organic valley farmer honored at the white house GIBBON, MN — Martin Jaus said he was pretty busy farming Monday afternoon, but he did take some time to watch part of the live stream coverage of his wife at the White House. Loretta was in the nation’s capital to represent her family as a Champion of Change for Sustainable and Climate-Smart Agriculture in recognition of their dairy operation’s efforts in preventing global warming. The Jauses, who have a 410-acre organic farm six miles north and two miles west of Gibbon, are among the 12 recipients who were selected from throughout the country. “We found out about two weeks ago. Former deputy secretary for the Department of Agriculture Kathleen A. Merrigan put our names in for the nomination,” Martin said. U.S. Secretary of Agriculture Tom Vilsack introduced the champions, who were singled out by the Obama administration for exemplary leadership and innovation in agricul-

tural production and education. Also noted were their efforts to implement agricultural practices that promote soil health and energy efficiency, improve water quality and reduce greenhouse gas emissions. Daughter Heather Kieger and other members of the Jaus family were in the audience in Washington, D.C., when Loretta participated in a six-member panel discussion about the impact climate change has on agriculture.

LORETTA JAUS

“Here in the Land of 10,000 Lakes, we have water issues,” Loretta said, describing one of her environmental concerns for Minnesota.

They got their first U.S. Department of Agriculture certification for some land in 1990. Approval for the rest of the land and their dairy herd soon followed, according to an MPR story in 2014.

The Jauses operate a rotationally grazed farm with a 60-cow dairy herd. In 1980, the couple settled in as the fourth generation on Martin’s family place. The couple’s college degrees in biology and wildlife management created a solid foundation for the farm’s conservation focus and subsequent transition to certified-organic production.

Loretta serves on the boards of the Land Stewardship Project and Minnesota Institute for Sustainable Agriculture, has functioned as organic representative in Environmental Initiative’s Agricultural Leadership Dialogue project, and as an educator for CROPP Cooperative/Organic Valley’s Outreach and Education Program.

Reprinted from the Mankato Free Press | By Edie Schmierbach [email protected] | Posted: Monday, October 26, 2015 5:30 p.m.

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international coopertive principles In 1844, 28 weavers and other artisans joined together to cooperatively purchase food they could not otherwise afford. The Rochdale Pioneers weren’t the first group to try forming a co-op, but they were the first to make their co-op succeed and endure. To avoid the mistakes made by earlier co-op societies and to help others, they developed a list of operating principles governing their organization. This list formed the basis for what are now known as the cooperative principles. Rochdale is considered the birthplace of the modern cooperative movement. The Rochdale Principles are based on values not unlike those we subscribe to individually, including self-responsibility, democracy, equality, honesty and social responsibility. Co-ops worldwide still adhere to the spirit of the Rochdale Principles. Those principles are outlined by the International Cooperative Alliance. 1. Voluntary and Open Membership Cooperatives are voluntary organizations, open to all people able to use its services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.

so based on terms that ensure democratic control by the members and maintains the cooperative’s autonomy.

2. Democratic Member Control Cooperatives are democratic organizations controlled by their members—those who buy the goods or use the services of the cooperative—who actively participate in setting policies and making decisions.

Cooperatives provide education and training for members, elected representatives, managers and employees so they can contribute effectively to the development of their cooperative. Members also inform the general public about the nature and benefits of cooperatives.

3. Members’ Economic Participation

6. Cooperation Among Cooperatives

Members contribute equally to, and democratically control, the capital of the cooperative. This benefits members in proportion to the business they conduct with the cooperative rather than on the capital invested.

Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.

4. Autonomy and Independence

While focusing on member needs, cooperatives work for the sustainable development of communities through policies and programs accepted by the members.

Cooperatives are autonomous, self-help organizations controlled by their members. If the co-op enters into agreements with other organizations or raises capital from external sources, it is done

It’s

5. Education, Training and Information

7. Concern for Community

#ButterSeason

Get ready to put all those pinned recipes to the test. It’s Butter Season and it’s your time to shine. You know that quality starts at the source, and Organic Valley butter is second to none. Made with milk from pasture-raised cows, it’s your secret ingredient for the most delicious time of year.

For delicious holiday recipes, please visit www.organicvalley.coop.

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THE FAMILY FARM COOPERATIVE

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mississippi valley conservancy can be sold (or donated) separately from the land itself. But a conservation easement grants the right of land development to an organization or trust legally bound to protect the land from environmental threats. Owners can still live on and, in some cases, farm the property. Conservation easements can be structured to transfer to subsequent buyers, permanently protecting the land, At the same time, owners get tax benefits through donations to the trust and lower property taxes. Mississippi Valley Conservancy (MVC), based in La Crosse, Wis., is a leading advocate of conservation easements. In its home turf along the Mississippi, Kickapoo, Wisconsin and Bad Axe rivers of Southwestern Wisconsin, the group has preserved more than 16,000 acres of land. In addition to easements, the group uses more temporary, voluntary agreements, as well as direct purchases of nature areas to protect the land. At CROPP, we show our commitment to Cooperative Principle #7: Concern for Community by giving back to the communities that support us. Just like organic farming, when we give back more than we take out, we all reap the benefits. Through various departments and programs, CROPP donates cash, product and other in-kind support to non-profit organizations across the nation that share in our mission each year. These organizations—our “change the world” partners—collectively reach millions of people. By working together, we strengthen our ability to further the organic food and farming movement, all while raising consumer awareness about CROPP’s mission and brands, building brand loyalty and driving sales. Here you’ll read about one of the many change-makers we’ve had the pleasure of supporting this year. Together, there’s no limit to the change we can create. We call it the Power of We. Drive through the fringe of virtually any American town or city and you’re likely to see it: A shrinking patchwork of farms and parks breaking against the hard edge of development. The last old farmer on the edge of town retires and sells his land, and before you know it, the former farm’s wetlands, windbreaks and cropland are filled,

bulldozed and flattened to make room for new strip malls, parking lots and suburbs. Our loss is more than aesthetic. We also lose biodiversity—sometimes entire species—as well as environmental protection from floods and droughts, and see an overall reduction in the natural processes that keep the planet in balance. More than a decade ago, the North American Commission for Environmental Cooperation, a group of scientists from Canada, Mexico and the U.S., warned that the continent faces a “widespread crisis” due to shrinking biodiversity. Half of North America’s most bio-diverse lands, the researchers cautioned, face significant threat. But there is hope, and processes in place to address the threat today. In addition to public policies, from local planning and zoning to the federal Endangered Species Act individual landowners can preserve biodiversity through a legal tool called a “conservation easement.” Conservation easements are similar to mining or timber cutting rights, where the right to extract land resources

Founded in 1997, the organization recently launched new initiatives tailored for female land-owners. MVC recently partnered with local organizations to sponsor workshops in land management for female owners. One of the unique qualities of conservation easements is that the process empowers individual landowners to protect the biodiversity of their holdings rather than wait for a government agency to step in. For Laura Coglan, one of the MVC participants, personal experience informed her choice to put her 63-acre farm into conservancy: She grew up on a farm that was later turned into a subdivision. “It seems like living space for animals, birds and plants will always be pushed aside to make more room for people,” Coglan says. “I couldn’t let that happen to this beautiful and unique little corner of Wisconsin, and you never can know what may happen years down the line.” Organic Valley Cooperative is committed to promoting environmental sustainability and is proud to support the Mississippi Valley Conservancy in its work as good stewards of the land.

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Cornerstones of CROPP...

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vaughn & laura chase

Aroostook County, Maine

Chase’s Organic Dairy is situated on 600 gorgeous acres in what Mainers call “The County” since Aroostook is one of the biggest counties east of the Mississippi. It is home to an outdoor paradise, including the famed Allagash Wilderness Waterway that people come to from all over the world to paddle. Since 1935, The County has been home to the Chase family and their milking herd of 60 beautiful Holstein cows. It started out as a classic, diversified farm where Vaughn’s dad grew potatoes and grains and raised livestock. In 1955, the year Vaughn was born, his dad added dairy cows to the mix. When his dad retired in ’75, Vaughn’s older brother, Donald, took over the farm, and Vaughn worked the dairy with Donald until he retired. Vaughn and Laura bought the farm entirely then, and in 2007, they began the transition to organic.

What was that like for them? Vaughn laughs. “Most folks up here said it couldn’t be done, but we’d been looking into it for years and realized it would be pretty simple for us. We hadn’t used pesticides or chemicals on our farm in 26 years prior to transitioning, so our land was already organic. We rarely used antibiotics on our animals because we considered caring for the cows to be the most important thing. When you feed and treat them well, you have very few problems.” Another thing they had going for them was that they’d always put their cows on pasture during the growing season. “When we first started looking into organic, I found it amazing that people talked about grazing as if it was a whole new concept. We never knew anything else but grazing cows.” While their pastures were always good, Vaughn knew they could be better. The layout of the pastures was inefficient, for one

thing, and getting the cows to the separate grazing areas was difficult. “We got in touch with the Natural Resources Conservation Service (NRCS) and they consulted with us about how to make our system better. I cannot thank them enough for their advice. We reorganized our pastures into more paddocks and installed almost a mile of laneways that enabled the cows to move comfortably between them to fresh grass. It really made a difference in our cow comfort and cleanliness. Our cows never have to walk through mud to get to fresh grass. When the cows are healthy and clean and relaxed, they give more milk. It took about ten years to get all the work done, but it has made our lives and the lives of our cows so much better.” And you know that’s true when you visit Chase’s Organic Dairy. “Anybody who’s interested in learning about what we do, we want to accommodate them,” Vaughn says. “People love to come out and see our cows because they are calm and friendly and they’ll come right up to you.

“When the organic milk company we used to sell our milk to went out of business in 2014, there was no doubt about going with Organic Valley. The fact that it is farmer-owned is

very important to us, and the co-op provides strong farmer support and resources.” The whole family works hard to make Chase’s Organic Dairy the human and cow paradise it is today. “All our kids work with us on the farm. Our oldest son, Lewis, works with me

full time. Our daughter, April, has a full-time job off-farm, but she always helps me milk on Sunday morning. Our third oldest, Brooke, has been in the barn since she was five. She’s going to college to be a veterinarian. Our youngest, Cole, is learning a lot about the farm as he helps family members in their day-to-day activities. Of course, I don’t know what I’d do without my wife, Laura, who is always here doing whatever needs to be done, whether that’s paperwork, driving trucks or tractors or cleaning the barn after chores. Family involvement is a crucial component of our farm’s success. We work long hours, but that allows us to spend a lot of time with each other, and that’s important to us.” The Chases hope that the demand for organic food continues to grow so that small family farms like theirs have a strong and stable market that allows them to continue to produce healthy food the organic way.

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FROSTED HOLIDAY SHORTBREAD COOKIES PREP TIME: 30 minutes

TOTAL TIME: 82 minutes (includes chilling and backing time)

13⁄4 c. All-Purpose Flour 1⁄3 c. Ground Almond Flour 3 tbsp. Whole Wheat Flour 1 tsp. Salt 1 c. Organic Valley Unsalted Butter 1⁄3 c. Brown Sugar (packed)

1⁄3 c. Granulated Sugar 1 tsp. Pure Vanilla Extract 1 c. Powdered Sugar 1 tbsp. Organic Valley Heavy Whipping Cream, (plus more as needed) Gel or Paste Food Coloring (if desired)

FOR DOUGH: Combine the three flours and salt in a medium bowl; whisk to combine. In separate large bowl of electric mixer, beat butter on medium speed until creamy. Add brown and granulated sugars and vanilla; beat until smooth, lighter in color and fluffy. Add dry ingredients; mix on low speed until well-blended. Form dough into two disks; wrap in plastic wrap and chill at least 30 minutes or up to one week. Heat oven to 350°F. On a lightly floured surface, roll out dough to 1/4 inch thickness. Using cookie cutters dipped in flour, cut out cookies; place on a large cookie sheet(s) lined with parchment paper. Chill 10 minutes before baking. Bake chilled cookies 10 to 12 minutes or until edges of the cookies begin to brown slightly. The centers should remain light in color. Place cookie sheets on wire racks; cool completely.

FOR FROSTING: In a small bowl, whisk 1 tablespoon cream into powdered sugar until sugar dissolves and thickens. Continue adding cream 1 teaspoon at a time to achieve desired spreading consistency. If desired, add food coloring (or divide the icing into several bowls for more than one color). Frost cookies. Recipe Created by Regional Chef Piper Davis of Grand Central Bakery, Portland, OR. ©Organic Valley

our cows are socialand so are we!

One Organic Way  |  La Farge, WI  | 54639 www.organicvalley.coop  | 1-888-444-MILK 54601 PERMIT #6455

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