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Price Stability and Economic Sustainability-Achievable Goals? A Case Study of Organic Valley®

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  • Ye Su
  • Michael L. Cook

Abstract

Organic Valley is the largest organic cooperative in North America, one of two national buyers of organic milk, and one of two national organic dairy manufacturers. The cooperative's official name is Cooperative of Regional Organic Producers, and it is organized as a new generation cooperative, owned and controlled by patron-members who also transact with the business. Organic Valley has a unique policy of sustainable and stable producer pay-pricing for organic milk in the emerging organic dairy industry. This case presents challenges faced by the leadership of Organic Valley cooperative to maintain a stable and economically sustainable pay price for its farmer members. This case also introduces students to a new organizational form of cooperative, including its governance, the industry, and the market structure in which the cooperative operates. The objective of this case study is to improve student understanding of economic concepts such as theories of the imperfect market, demand and supply, and organizational design. The case also aims to help students improve their critical thinking and analytical skills by exploring the possibility of maintaining a unique sustainable and stable pricing method through the data provided. Additionally, the story introduces the economic role that organic dairy operation might play for small and medium-size dairy farmers as they attempt to maintain an economically sustainable family farm lifestyle.

Suggested Citation

  • Ye Su & Michael L. Cook, 2015. "Price Stability and Economic Sustainability-Achievable Goals? A Case Study of Organic Valley®," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(2), pages 635-651.
    • Handle: RePEc:oup:ajagec:v:97:y:2015:i:2:p:635-651.
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    File URL: http://hdl.handle.net/10.1093/ajae/aau114
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    Citations

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    Cited by:

    1. Jasper Grashuis, 2018. "An Exploratory Study of Cooperative Survival: Strategic Adaptation to External Developments," Sustainability, MDPI, vol. 10(3), pages 1-15, February.
    2. Constantine Iliopoulos & Vladislav Valentinov, 2018. "Member Heterogeneity in Agricultural Cooperatives: A Systems-Theoretic Perspective," Sustainability, MDPI, vol. 10(4), pages 1-22, April.
    3. Nath, Sanchayan & Arrawatia, Rakesh, 2022. "Trade-offs or synergies? Hybridity and sustainable performance of dairy cooperatives in India," World Development, Elsevier, vol. 154(C).
    4. Michael L. Cook, 2018. "A Life Cycle Explanation of Cooperative Longevity," Sustainability, MDPI, vol. 10(5), pages 1-20, May.
    5. Isaac Zúniga Aguilar, 2021. "Neuroeconomic Decisions in Cocoa Producers: Impact of Cooperative Innovation Methodology on Prospecting for Fair Trade Organic Niche as an Incentive for Agricultural Sustainability," Sustainability, MDPI, vol. 13(15), pages 1-25, July.
    6. Jiali Wang & Yujia Huo & Xiangyu Guo & Yang Xu, 2022. "The Pricing Strategy of the Agricultural Product Supply Chain with Farmer Cooperatives as the Core Enterprise," Agriculture, MDPI, vol. 12(5), pages 1-17, May.
    7. Ahrendsen, Bruce L. & Bielik, Peter & Horská, Elena, 2016. "Organic Food Sourcing, Processing and Distribution: A Case of Satisfying a Growing Market," APSTRACT: Applied Studies in Agribusiness and Commerce, AGRIMBA, vol. 10(1), pages 1-6, March.
    8. Gian Nicola FRANCESCONI & Fleur WOUTERSE, 2019. "Building The Managerial Capital Of Agricultural Cooperatives In Africa," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 90(1), pages 141-159, March.
    9. Iliopoulos, Constantine & Valentinov, Vladislav, 2018. "Member heterogeneity in agricultural cooperatives: A systems-theoretic perspective," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 10(4), pages 1-22.
    10. Gian Nicola Francesconi & Fleur Wouterse, 2022. "The potential of land shareholding cooperatives for inclusive agribusiness development in Africa," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 93(1), pages 161-176, March.
    11. Francisco Scott, 2023. "An Experimental Analysis of Quality Misperception in Food Labels," Research Working Paper RWP 23-11, Federal Reserve Bank of Kansas City.

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