cows in field

From the NODPA Desk May/June 2020

By Ed Maltby, NODPA Executive Director

In these days of COVID 19 it’s inevitable that everyone is feeling the stress of dealing with a variety of new regulations, both deliberately temporary and semi–permanent, and the threats to family and friends from a virus that appears to be able to move quickly through communities. From the frustrations of wearing masks in public and working environments (I’ve yet to experience wearing them in 80 to 90 degree days) which will probably be with us for a while, to delays in dealing with vendors and regulators.

Those of you that do direct marketing, and have employees, there is the moral and regulatory requirement to protect both staff and consumers, especially with the extra workload due to consumers searching for new options for purchasing fresh food. Unfortunately, we can’t quickly turn a spigot on for fresh vegetables, locally packaged milk, and meat. Increasing the food supply take time, money, space, and a consistent market. Recognize your own stress and deal kindly with others that are experiencing whole new ways of operating with no preparation and training .Perhaps you will not be able to capture that extra market because your slaughterhouse can’t process your meat quicker or your supplier can not double their supply of seed. Both of you are going to be working together as the situation stabilizes and market opportunities become clearer. Right now, many don’t want to hear your views on restriction of freedoms as you march into stores with no mask. You do not know how many in that store have lost friends and family to a virus that nobody really understands.

CROPP Cooperative announced on May 15th its fourth consecutive year of total sales exceeding $1.1 billion and, after consideration of non-cash and non-routine expenses, a net loss of $4.5 million. The non-recurring expenses included $5 million butterfat and skim inventory revaluation expense and $15 million deferred tax asset reserve expense. Sustainable Food News reports that CROPP recorded $5.5 million in restructuring expenses, which are “generous severance packages and early membership termination agreements” due to the elimination of 62 staff positions, “and the departure of 54 employees, along with the departure of 14 farmer-members.” Arnie Trussoni, president of CROPP Cooperative board of directors, is reported as saying in the La Crosse Tribune, “We weathered a changing organic food industry landscape, introduced innovative products to delight our consumers, and experienced transitions in leadership and restructuring. Through it all, we are proud that our cooperative upheld its mission of promoting economic stability for its farmer-members by maintaining a stable pay price with a $12 premium over conventional prices–a notable achievement during a challenging year.” CROPP has recruited top-level talent from across the country including Ty Brannen, executive vice president of Supply Chain, and Staci Kring, chief revenue officer. According to CEO Bob Kirchoff, the cooperative is continuing its 2019 focus on maximizing the value of its members’ products, optimizing the supply chain, and realigning structures and processes to support continuing success. “We operate in a market that has always been challenging,” Kirchoff said. “As the organic industry has matured, competition has grown fierce, vertical integration has driven down prices, and more industrial methods of farming have made their way into organic. The shelf space we compete for is crowded by alternatives such as plant-based, pasture-raised, non-GMO, and cage- free. We know that in order to protect the foundation on which this cooperative is built, we must adapt to the changing marketplace while upholding our values.” In the first three months of 2020, the cooperative reported a return to profitability that exceeded both planned goals and the net loss it reported for the comparable period of 2019. CROPP has benefited from reducing its supply which has meant less milk sold into the low price conventional market matching supply to demand. Unfortunately, CROPP is still measuring the benefits of organic dairy against a conventional pay price; misleading both for consumers and future producers of organic dairy. If the conventional pay price is $17 per hundred and it costs $22 per hundred to produce, this means the producer is making a loss. An organic pay price averaging $29 ($12 higher than conventional) for a product that has organic expense of $35 does not mean that organic dairy production is, “supporting the cooperative’s mission of ensuring its members’ economic stability through a higher and stable pay price.” (La Crosse Tribune from CROPP PR). Ben and Jerry’s and Stonyfield Farm both stopped using similar arguments for their products when threatened by lawsuits and consumer complaints.

The NOSB went virtual for their spring meeting. From those who were able to tune into the meeting, it was technically successful and many more farmers had the opportunity to listen in when it was convenient for them. This was not a particularly active or controversial meeting, and the committed members of the NOSB went about their work with care and thought. The NOSB was deliberately created to be different from other advisory boards under the Federal Advisory Committee Act (FACA). Over the last two decades, it has functioned very publicly and reflected the intent of the Organic Foods Production Act of 1990 (OFPA) despite repeated attempts by the USDA to undermine its independence. The practice of having public meetings of the NOSB at different locations is very important to maintain the impact of Board decisions on the USDA NOP and continue the necessary transparency which is so important to the integrity of the program. While having in-person public meeting is more expensive and does restrict those that can afford to attend, they do create media impact which, while usually frustrating for the USDA, does ensure that public scrutiny holds the regulators to account. And, in-person public meetings do create relationships that have long term benefits in working together to solve problems and building trust in working together in the future. In a choice of in-person meetings and virtual meeting, I come down in favor of in-person meetings even though large portions of them can be boring. In an ideal world, we should have an in-person meeting that is available on the internet in real time.

As I write this column, the Origin of Livestock Final Rule is going through ‘agency review’, where the different Federal agencies review the Rule to ensure that it does not have an adverse effect on their constituencies. From there it goes to the Office of Management and Budget (OMB) for a final review. We will continue our advocacy to ensure we have a Final Rule in effect this year.