Regina-based Farmer Direct Co-operative Ltd. has joined the largest U.S. organic farmer-owned co-op, gaining a secure market and stable price for its members’ feed grain.
General manager Jason Freeman said Jan. 13 the membership agreement includes $400,000 in annual feed sales to Organic Valley Family of Farms’ dairy members.
That represents about 10 percent of Farmer Direct’s yearly business.
“It’s worth $400,000 a year now and hopefully it will grow.”
The two co-ops have done business for the past five years and Freeman expects the relationship to strengthen through their membership ties.
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Organic Valley is based in Wisconsin and has about 1,400 members. Its 2009 sales totalled $520 million.
Farmer Direct formed in 2002 and now has about 70 farmer members. Those members represent one vote in Organic Valley.
The agreement lessens the risk for both parties in a volatile sector.
“We’re actually attaching the pay price of milk to the price of organic feed,” Freeman explained, adding that instability in feed prices has been a problem. “The last two years have been total havoc.”
Feed prices fluctuated to a low of $6 per bushel from a high of $30, he said. The highs put pressure on organic dairy producers who couldn’t afford feed and some went broke.
Conventional dairy farmers were similarly stressed after locking in high feed and input prices, fearing they would go even higher. The financial crisis hit instead and the price of milk dropped by half.
Cheap milk and expensive inputs saw conventional dairy farmers look to organic to make money.
A factor on the Canadian feed supply side is the possibility of a large crop that causes prices to crash.
“We wanted to create a pricing strategy that guarantees a profit at the same time as it stabilizes the market,” Freeman said.
Luke Zigovits, Organic Valley’s feed program co-ordinator, said strategic partnerships can strengthen co-ops.
“Through mutual integrity and co-operation, we help bring stability to family farmers in an always changing and challenging marketplace,” he said.
Organic Valley controls more than 50 percent of the organic fluid milk market in the U.S. Its branded Organic Valley Family of Farms products are sold in supermarkets, natural food stores and other retail outlets.
It also sells meat under the Organic Prairie label.
In Western Canada, Freeman said there are a handful of organic dairies in Manitoba and Alberta but none in Saskatchewan. British Columbia’s industry is better developed.
The success of supply management on this side of the border means dairy farmers do well and have no incentive to go organic, he said.
