Turning Capitalism on Its Head by Cooperating for Sustainable Food

This post first appeared on EcoSalon.

Innovative new ways of doing business are blossoming on both coasts. MOO Milk and Bob’s Red Mill show how food companies that serve eaters, workers, and farmers can be the wave of the future.

Late last winter, when dairy giant HP Hood informed 10 Maine dairy farmers that it would no longer buy their milk, things looked pretty bleak. These farmers had invested in going organic to supply the burgeoning organic milk market, but now, with the price of organic milk lower than the cost of production, the farmers were left with two choices: sell their cows, or dump their organic milk on the conventional market for even less money.

Just a little over a year later, those same farmers are surviving (with the hope of thriving) in the future, thanks to an innovative new business structure called an L3C, a new form of incorporation for low-profit, limited liability corporations, that gives them eligibility to receive grants and endowments in the same way as a cooperative or non-profit. Besides being low profit, one requirement of an L3C is that it “have a social purpose.”

Grocery shelves across Maine are now stocking MOO (Maine’s Own Organic), consumers have access to high quality organic milk produced by family farmers, farmers get to keep their land, and radically, both consumers and farmers have wrested control from the market forces that usually rule us, and together are building an alternative food system that serves them.

David Bright, Secretary of Maine’s Own Organic Milk Company and member of the Maine Farm Bureau and Maine Organic Farmers and Gardeners Association took some time out from planting his spring peas to talk with me about how the business came together.

With a mission to “keep farmland and make farming profitable for farmers,” The Maine Farm Bureau teamed up with the Maine Organic Farmers and Gardeners Association and the idea of operating as an L3C was born. As Bright tells me, the founders have a social purpose of “providing an environment in which diary farmers can make money farming.”

Still, the problem of getting the milk processed, packaged, and to market remained. After all, Hood once paid for distribution. These farmers, some with as few as 15 cows, are located in remote rural areas far from processing plants or markets and don’t have tankers to transport their milk.

But a funny thing happened on the way to the farm. Putting aside any concerns about competition, two Maine dairies agreed to help. Smiling Hill Dairy agreed to become re-certified as an organic milk processor, purchase a new tank and process the milk. Another dairy, Oakhurst Dairy, donated the machine that packages the milk into cartons. Oakhurst also washes the MOO Milk tanker and does the lab work.

Says Bright, “We were fortunate in that we had some good Maine businesses that saw the importance of keeping these farms going.”

Sounds like socialism to me.

“We don’t plan to make a lot of money as a company,” explains Bright. “For example, if we were a co-op, sometimes decisions get made that are good for the company but not so good for the farmers. Basically, we’ll buy your milk and sell it and you’ll get 90% of the profits.”

Bright says the farmer gets about $1 for every half gallon of milk sold. That’s twice what conventional farmers under the federal order get. The farmers get the $1 no matter what and they also get 90% of any profit left after trucking, processing, marketing, fees and taxes.

The retail price of the milk is high – much higher than out-of-state organic milk from ($4.29/half in most grocery stores compared to $3.39-$3.99/half for other brands). But consumers, incredibly, are willing to pay it.