Organic Growth: A Food Business Success Story

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We've all been unsuspecting subjects in a vast scientific experiment, and the results are beginning to come in. They are not good.

Addressing attendees at the Monterey Bay Aquarium's annual Cooking for Solutions symposium last month, Gary Hirshberg, the head of the organic yogurt maker Stonyfield Farm, said that until the mid-1930s, humanity ate a strictly organic diet. Recent studies linking attention-deficit hyperactivity disorder and increasing cancer rates to agricultural fertilizers and pesticides are proof that modern food-production methods have been "an evolutionary misstep," he said. "It is a very profound change that has taken place in a short period of time." But there is a silver lining, according to Hirshberg. "When we're pained enough, then we change. This pain threshold is going to get us going in the right direction."

Business got us into the current situation, Hershberg said, and it will take business--the bigger then better—to get us out.

His company provides one template for what that change may look like. Launched as a seven-cow rural education project in 1983, Stonyfield's annual revenues now top $330 million. The company has achieved that growth without spending a cent on chemical fertilizers or pesticides. Organic production methods have benefited all parties involved.

Hirshberg said that even now, at a time of severely depressed milk prices, the farmers who supply the company earn from 60 to 100 percent more than conventional producers. Not only that—the amount of milk each of their cows produces is going steadily upward even as the costs of inputs the farmers have to buy drops. The cows themselves also win under organic stewardship. With no artificial hormones and antibiotic regimens, Stonyfield cows produce milk for 10 or even 20 years versus four to six years for a conventional bovine.

Like the dairy farmers, the growers of Stonyfield's organic sugarcane have seen their yields increase by 10 percent over the last decade. Nearby chemical-dependent farms have seen yields drop while costs continue to rise.

Hirshberg said Stonyfield has succeeded by turning the accepted business formula of a food-products company on its head. "Traditionally, you use the cheapest possible ingredients and then spend money on advertising to build customer loyalty," he said. "We got customer loyalty by being open and transparent about how our products are made. You can go on our website and see exactly what we're doing."

In the end, he said, everyone wins: "the farmers, the cows, the consumers, the employees, and our shareholders." He also said that the Stonyfield model is one that any corporation can replicate, no matter how large.

If all goes to according to plan, he'll have an opportunity to prove that point. Since 2001, Stonyfield has been 85-percent owned by the multinational yogurt conglomerate Groupe Danone. Hirshberg's mandate is to have Stonyfield triple in size to a billion-dollar company—naturally.