CROPP Cooperative, owner of the Organic Valley organic food and beverage brand, on Friday reported an adjusted net loss of $4.5 million after tax for 2019 on total sales that surpassed $1.1 billion for the fourth consecutive year.
La Farge, Wis.-based Organic Valley, which incorporated in 1988 by seven farmers as Cooperative Regions of Organic Producer Pools, or CROPP, said its audited financial statements showed a net loss of $30 million after tax, but that included $25.5 million of non-cash and non-routine expenses incurred throughout the year.
The non-recurring expenses included:
- $5 million butterfat and skim inventory revaluation expense
- $15 million deferred tax asset reserve expense
“Both the inventory revaluation and the deferred tax asset reserve are non-cash expenses; in other words, no cash paid to make these adjustments. From an accounting perspective, we show them as costs on our profit and loss statement in order to remove them from our balance sheet,” said Jennifer Lilla, senior director of financial reporting.
CROPP also 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.”
“We operate in a market that has always been challenging,” said CEO Bob Kirchoff. “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.”
Meanwhile, the company said it has returned to profitability in the first three months of 2020, largely the result of pandemic-related retail purchases of its products by consumers.
The company also said among the “successful changes” it implemented in 2019 was selling “significantly less milk at conventional prices than in 2018.”
In 2019, Organic Valley dairy farmers’ national average pay price was more than $12 higher than conventional.