Farmers Working Together for a Fair Price

by Frances Willick

Most farmers know that many hands make light work. Whether it’s haying, hoeing, or harvesting, tasks are often made easier and more efficient with several helping hands. However, some organic farmers are extending this concept to other aspects of their farms, including processing, distribution, and marketing.

Ted Zettel is a grain producer who lives in Chepstow, Ontario and is one of the founders of OntarBio, an organic farmers’ co-op. He currently serves as the president of Organic Meadow, the brand name of organic products that are produced by OntarBio’s farmers.

OntarBio started in 1989 when a group of organic grain producers banded together to purchase a grain elevator that was going out of business. The group began to market their grains collectively, using their own pool of capital and product sales as funding. Governing the co-op was carried out on a volunteer basis, which Zettel acknowledges is a sacrifice of time and energy. It wasn’t until 1995 that OntarBio really began to grow and prosper. That’s when Organic Meadow expanded into dairy.

“That really changed the direction of the co-op,” says Zettel. “In grain, people only have to sell their products once per year, so they tend to shop around for buyers. But in dairy, where the milk goes out everyday or every other day, there’s a steady supply of committed production.”

Producer commitment is a vital component of a successful co-operative. Members must be willing to accept the challenges of working collectively in order to reap the rewards. This means co-operating with diverse personalities and maintaining a flexible vision of the co-op’s future. Zettel recalls that along the way, OntarBio lost some original members whose anti-business sentiment did not mesh with the co-op’s increasingly mainstream marketing strategies. “Eventually, we were faced with the option of not growing, or of continuing to expand using the corporate marketing model. We had already saturated the natural health foods market with only eight or nine dairy farms.”

The group decided to start selling its organic dairy products and eggs through Loblaws. With a national brand on shelves in supermarkets across the country, OntarBio’s producers gained more leverage and greater control over the prices they received. Prices are determined through the co-op’s process of negotiation, research, and analysis. “The farmers sit together and establish what we see as the price the producer requires in order to be profitable,” Zettel explains.

New members of OntarBio are required to pay an initial fee to the co-op and, in return, the co-op guarantees it will sell all the farmer’s product. Even today, with dozens of farms in the co-op, demand for Organic Meadow products outstrips supply.

One of the biggest advantages of marketing collectively is that it allows farmers to continue doing what they do best – farming. “90% or more of farmers don’t want to or don’t have the skills to do processing and marketing. They just want to farm,” says Zettel. “I just wanted to milk cows, and I was happy when the truck came to pick it up!” By forming a partnership, OntarBio’s farmers were able to hire the necessary processing and marketing expertise.

The other key benefit of co-operative marketing is that farmers share the marketplace. “Competition drives prices down – that’s a basic rule of markets. If we each develop a product and set them on a shelf beside each other, then who wins?” asks Zettel. “It’ll be some big corporate entity that has no loyalty to farmers. I’d like to see all farmers get together and say, ‘We’re not going to compete with each other.’ We’re going to work together and get a fair price.”

Zettel notes that careful planning is essential to building a profitable co-operative. “You have to have a business plan, follow business principles, balance the books, and have financial expertise.”

He also emphasizes that products must be premium in order to be successful. “The fundamentals of good marketing always apply – you have to identify clientele, produce what they want, package it well, and make a good product. We have to do everything as well as everyone else does. You're not going to be successful just because it's organic.”

Frances Willick is a Consultant for the Organic Agriculture Centre of Canada. Please send comments or questions by phone to 902-893-7256 or by email to oacc@nsac.ca.