© Organic Valley 2014-55019 CMG-P02431Printed on paper made from 100% post-consumer recycled fiber. One Organic Way | La Farge, WI 54639 | 1-888-444-MILK | www.ov.coop

ANNUAL REPORT 2014ANNUAL REPORT 2014

This annual report contains discussion of some of our expectations regarding CROPP Cooperative’s future performance. These forward-looking statements are based on our current views and assumptions. Actual results could differ materially from these current expectations and projections and from historical performance. For example, our future results could be affected by factors including but not limited to the competitive dynamics in the markets for organic dairy products; the cost and supply of organic milk; the cost of organic farm products and organic feed; the mix of sales of our branded and non-branded products; the application of, and changes in, the United States Dairy Support and Federal Milk Marketing Order programs; and the adoption of regulations pursuant to the Food Safety Modernization Act. Discussions of these matters and other risks to which CROPP Cooperative is subject can be found in the Offering Circular(s) (and any associated supplements or amendments) we distribute from time to time in connection with the offer and sale of our Class E, Series 1 Preferred Stock. A copy of such Offering Circular and any current supplements or amendments can be obtained for informational purposes by contacting Diane Gloede, investor relations

manager, by mail at CROPP Cooperative, ATTN: Diane Gloede, One Organic Way, La Farge, WI 54639, or by telephone at 888-444 6455 extension 3310.

HARTKOPF FAMILYNortheast Region

14-55019 AR2014_cvr.indd 1-2 3/25/15 9:35 AM

KEITH WILSONDirectorWilson FarmCuba City, Wisconsin

PAM RIESGRAFDirectorFull Circle Organic DairyEdgar, Wisconsin

ARNIE TRUSSONIPresidentElm Terrace FarmGenoa, Wisconsin

STEVE PIERSONTreasurerSar-Ben Farms, Inc.St. Paul, Oregon

DAN PEARSONSecretaryPearson’s Mann Valley FarmRiver Falls, Wisconsin

2014 ANNUAL REPORT

MANAGEMENT TEAM

BOARD OF DIRECTORSMARK KRUSEVice PresidentKruse Family FarmLansing, Iowa

GEORGE SIEMONChief Executive Officer

MIKE BEDESSEMChief Financial Officer

ERIC NEWMANVice President,

Sales

THERESA MARQUEZMission Executive

ROGER PETERSDirectorPeters Family FarmChaseburg, Wisconsin

LOUISE HEMSTEADChief Operations Officer

TRAVIS FORGUESVice President, Farmer Affairs

LEWIS GOLDSTEINVice President,

Brand Marketing

JIM WEDEBERGDairy Pool Director

MELISSA HUGHESGovernment Affairs Director

and General Counsel

Newly Elected in 2014Roger Peters, son of CROPP founding farmer and former president of the board Wayne Peters, joined the board this year for a three-year term. The Peters family has deep ties to CROPP and today is a member of the dairy, egg, pork and beef pools.

HARTKOPF FAMILY, Northeast Region

On the cover:HOFFNER FAMILYSoutheast Region

JERRY McGEORGEVice President, Cooperative Affairs

14-55019 AR2014_cvr.indd 3-4 3/25/15 9:35 AM

LETTERFROM THEPRESIDENT

As farmers, we’ve all been through enough unexpected ups and downs to know we should never make bold predictions. So I’ll just say things look very good right now, thanks to the dedication of everyone in this co-op. I think good is what happens when you put a lot of love into your work and a lot of work into the things you love.

I see this everywhere: on our farms, through the hard work of CROPP’s employees, and in the loyalty of our customers. It’s the kind of mutual support and caring interdependence I see in the closest families. This is by far the most rewarding part of my service as your president, and I thank you all.

Long ago in the early days of CROPP, our pio-neers worked long hours and invested all of their sweat and emotional equity into a dream that, one day, organic would be the gold standard for food in our country. Their dream has become our reality. Everyone is hungry, and getting hungrier, for the organic food you produce. Consumer demand continues to grow.

The past 18 months tell the story of CROPP’s resilience.

Late in 2013 we faced a looming glut of organic supply. Since then we have overcome a string of challenges, including a sudden turn-around from long supply to persistent short supply, and the resulting competitive pressure for the organic milk from our mem-bers’ farms. So pay prices are up for the “sweat equity” we’ve all invested in our shared vision.

Through the challenges, 2014 profits were strong, which speaks to the security and adapt-ability of this co-op. This year was another growth ring in the strong CROPP tree.

If there’s anything we’ve learned together it’s that we don’t have a crystal ball. But never be-fore in my experience has it been so clear that

demand for organic food has reached a level it will not fall below again. Americans are sick and tired of thoughtless food and won’t go back to it. We will need more organic farmers to meet the demand, and we will need to pro-tect our mission for the coming generations of producers and consumers. This will be a primary focus of the board and staff.

You will see in this report that the Organic Valley foods we are so proud of won a slew of top awards at this year’s World Dairy Expo in Madison and ten gold awards at the presti-gious International Dairy Competition in Los Angeles. Ten. I remember a time not long ago when Organic Valley didn’t even produce ten products, so to have that many win top honors from these meticulous judges, well, that is exciting.

I believe American families have raised the bar, too. They, like each of us, have seen (and tasted) the organic light. The nourishment we provide through better food and farming is now reaching beyond our neighbors, our friends and our families.

We should keep this in mind as we go through the next year on our farms and in our offices. This enterprise we share is about more than economics and prices; it’s about more than markets and awards. It is about raising the val-ue of our time working together so that people, animals and the earth are always able to grow in goodness.

In Cooperation,

Arnie TrussoniPresident

ARNIE TRUSSONI President of the Board

1President of the Board

RESILIENCE THROUGH COOPERATION

14-55019 AR2014_inside_3.17.indd 1 3/26/15 9:16 AM

Each of our 27 years as a cooperative has been different, and 2014 was anoth-er good year for us. We continued to mature and learn the lessons that we needed to learn. Our resiliency came through clearly in 2014 as we grew in our capabilities and focused on our future.

We have always had the goal of being a solid cooperative that could be there when farmers needed us. In 2013 and the start of 2014, the business needed to have the farmers be there for it: as we recovered from our headquar-ters fire, as demand for milk far outgrew the supply, as we were still absorbing our rapid growth from the previous years. By the middle of 2014, we were moved back into the headquarters building, we were able to in-crease our pay price for the members, and we were once again strong and able to be there for the members as a solid business.

A Focus on ProfitabilityA solid business model is profitable, and this year we focused on reviewing all aspects of our business to refine our capacity to attain our modest profit goal of 2.5 percent. We started an internal series of teams involving more than 40 employees that we called “Path-ways to Profitability.” These teams, while do-ing their regular jobs, each took on a specific

topic and did research resulting in final rec-ommendations that were insightful, helpful and challenging. The involved employees were so engaged and really appreciative that management had empowered them to chal-lenge our business by identifying problems and proposing solutions.

We took their recommendations and developed an implementation plan that we concluded by year-end. A highlight was the development of an internal team called the Strategic Profit Optimization Team (SPOT) that will be an ongoing fix-it team focused on addressing products that do not achieve profit goals. Based on the group’s recom-mendation, we discontinued more than 80 products that were not performing well. Redirecting this supply allowed for better uti-lization of milk to fulfill customer demand and support the products that are profitable for the co-op. It also allowed us to introduce two new Organic Valley dairy products—

FROM THECEO

GEORGE SIEMON CEIEIO of CROPP Cooperative

DONEGAN FAMILY, Northeast Region

2 CEO

14-55019 AR2014_inside_3.17.indd 2 3/26/15 9:16 AM

organic milk protein shakes (see p. 12)—so that we could continue to be innovative and a leader in the organic marketplace.

SPOT’s focused look really helped at budget time when we did our retail price increases at the end of the year. These adjustments will al-low for significant farmer pay price increases in 2015 and will bring us to full profitability. The big concern in 2015 will be our consum-ers’ reception of retail price increases coming at a time when conventional milk is nose-div-ing after a year of all-time-high prices. We’re preparing for the reaction to the price in-creases and exploring strategies for whatever fluctuations the market will bring in 2015.

Better Systems, More EfficienciesOne of our ongoing goals is to excel at distribu-tion while reducing hauling miles and costs. We are moving farm products from 1,800 farms to 100 production plants that make 600 products for 400 customers — one of the most complex supply chains in the world. Suffice it to say that we are constantly challenging our-selves and continually improving the move-ment of farm products through the supply chain to our customers.

An accomplishment in 2014 brought us closer to that goal: the completion of the Red Prairie system, new software implemented in our Cashton Distribution Center. We rolled it out in the fall of 2013 and struggled initially, but now that we have it fully in place, we are able to handle more product and interact electronically with our off-site warehouses for greater efficiencies. Also in transportation accomplishments, Organic Logistics had a number of customers return to us from competitors because of our organic values, on-time service, commitment to customer service, and better rates.

This year we also focused on our export business and built better systems to address the complex global market. We were able to smooth out our processes, expand our reporting ability and assign a managing team to exports. We’ve been shipping to multiple countries in Asia, the Caribbean and the Mid-dle East for 20 years, and export continues to be an investment program that is building more diverse markets for the Organic Valley brand and our farmer-members.

BENSON FAMILY, Northeast Region

McCLELLAND FAMILY, California

3CEO

14-55019 AR2014_inside_3.17.indd 3 3/26/15 9:16 AM

A Year of Short SupplyIn 2014, the overall organic market contin-ued to grow faster than the supply, and we sustained a state of undersupply for most of our pools. Demand surged for many reasons, but the major reason was that the big-box stores began embracing organic. That change brought an unexpected sales increase. As organic products became more convenient to purchase, customers expanded the breadth of items they bought, causing major volume growth. For example, organic fluid milk grew in single digits while organic cheese grew more than 20 percent. These surges are pre-dictable in the long-run but not in the short-term, so we were short of product throughout much of 2014.

Farmer Pay Price CompetitionThese shortages happened all over the industry—not just at CROPP—and brought a lot of new folks into the hunt for organic production, causing an increase in pay prices from competitors. We saw a focused attempt to recruit our members, particularly in the dairy and egg pools, and some members did leave us for a higher pay price. Some CROPP farmers asked us to increase our pay price to keep up—even if we would have to decrease it when supply rebounds and the market price drops, whereas other farmers have said that our stable pay price has been a high point of their membership.

After much deliberation where the board weighed our mission of stable pay prices with the expressed needs of our farmer-members and the extreme competition in the market-place, we decided to raise the pay price signifi-cantly—to be implemented in 2015. We know that we may have to decrease it in the future, but now that we’ve made the price increase, we are going to do all we can to sustain it in order to uphold our founda-tional tenet of stable pricing. It is tempting to chase every new possibility when there are so many new offers, but our cooperative has been built on a mission to provide stable and

$14.30$15.81

$18.26

$19.83

$24.51$25.81

$26.70$29.59

$30.87

$24.30

Projected$34.66

2014:

2014:

$11.03$12.00

$13.18

$15.74

$19.05

$12.95

$20.07

$20.08

Projected$17.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

2004 2007 2011 2013 2015199919941988 2009

CONVENTIONALPAY PRICE

MAILB

OX M

ILK PR

ICE PE

R CWT

.

Organic ValleyPAY PRICE

25 Years of Sustainable Farmer PayMIDWEST MAILBOX DAIRY PAY PRICE

LAY FAMILY, Southeast Region

4 CEO

14-55019 AR2014_inside_3.17.indd 4 3/26/15 9:16 AM

climbing farmer pay prices, high integrity in farming and business, fair relationships and great tasting food. It is a strategy that has worked for 27 years, and while it is good to consider new options, we are not ready to abandon our cooperative strategy.

Agricultural commodities have a cyclical nature, and our cooperative strategy has always been to minimize the difficult parts of these cycles through supply management, stable pricing, sound financial condition, a top brand name, excellent customer service, a diverse customer base and diverse uses of our farmer-members’ raw products. Our strategy is one that delivers to many custom-ers and markets, which creates long-term sustainability.

Succession Planning for Farms and our Co-opThroughout the past year, we have been re-searching the trends and challenges in family farming culture to assess our role in these areas. The tremendous shift upward in land prices and land rents is a good example of the factors that raise costs. We are seeing farm succession become a major challenge through a shortage of young people willing to take over retiring members’ farms and fewer conven-tional farmers considering organic. Certainly, the foundational role of the cooperative is to provide a viable pay price, but we see a real need to address farm succession to preserve our co-op and its farms for future generations. This year, half the farms that left our dairy pool quit dairying altogether and wished they’d had someone to take over their farms. They often wished we had a way to help facili-

tate solutions to avoid the farms being lost from our cooperative. Every farmer wants to see their good work continued and to see the land stay under organic care.

This theme of succession was also one for the cooperative staff, both in addressing needs today and in planning for our future. This is a major focus inside the business as we see some of our original leaders nearing retire-ment. We are increasing our leadership development efforts and considering new ways to structure the business. The only way to have a successful, farm-er-owned, mission-based coop-erative is to have it be a well-run business. One of our greatest assets now is the capability of our employees and the strength of our collective efforts. It is re-warding to me to see employees growing from fresh-out-of-col-lege graduates into capable man-agers. The employees are deeply appreciative to have meaningful employment, and the farmer-members are fortunate to have the dedication and care that the employees give.

Consumer Education and ExpectationsFarmers and staff working together will best manage the upcoming and dramatic changes in the marketplace. Not only is the market- place changing quickly, it’s also sending

Cooperate with the Future: our challenge as producers and as a cooperative.

5CEO

In August 2014, redesign of all Organic Valley pack-ages was completed — a notable achievement for the nine internal teams and external vendors involved.

14-55019 AR2014_inside_3.17.indd 5 3/26/15 9:16 AM

mixed messages. With the deep shortages, it would seem that increasing sup-ply is all that matters. But right next to that concern is a growing list of expectations from the consumer. Livestock production continues to be under the spotlight, along with concerns for humane animal treatment and the energy, water and resources used to produce milk, meat and eggs. Or-ganic farming is in a great position to address these challenges as organic prac-tices are a solution to those concerns. Our society has widely-varying degrees of awareness on these issues, with most consumers fairly unfamiliar with the realities of farms—healthy and well-run or otherwise.

This is especially true for livestock produc-tion. We as a cooperative and as members are called to defend organic livestock systems. It is obvious that these concerns are here to stay and that they must be addressed. I have said in the past that we have to “cooperate with the future,” and that is our challenge as producers and as a cooperative.

The good news is that consumers have definitely connected their food with their health. This is obvious when you consider the success of our products in all markets. We in-creased sales in convenience stores that had never carried organic products before. Not so long ago, the idea of picking up organic milk

products at a convenience store was unheard of. Today it’s the reality across the country. Truly, organic has arrived and is the future.

Growing our PoolsThat reality is growing in CROPP’s other pools as well. Our soy business has rebounded and has been delivering above-target profitability. In the past few years, we expanded our pro-duce program to include medium-scale pro-ducers in new regions featuring year-round or extended-season supply. We grew our potato sales from the Klamath Basin in Oregon and formed a partnership with an Oregon potato cooperative. This, in particular, is a great ex-ample of the benefits of the organic model and our diverse cooperative—potatoes are part of a full-crop rotation that includes grains, which means stimulating more organic feed for our West Coast members. We also committed to a year-round program of diverse produce from Florida and Tennessee. This was an exciting development—we were able to use a co- packer to offer retail-packaged Organic Valley produce for the mass market.

We expanded our egg program to Colora-do this year, and we are committing to an egg program in Ohio next year. Eggs—our second-biggest pool—were also in short supply over the past year. We now have 92 egg members in seven states representing 550,000 hens.

Safeguarding our Production CapacityWe continue to explore investments in production facilities for all products. Our long-term strategy is to own a few corner-stone facilities that safeguard our production capacity. Even with those investments, we would continue to be a relatively virtual business, yet have the security of a home base in major supply regions and pools.

GOEDE FAMILY, Midwest Region

DOBSON FAMILY, Southeast Region

6 CEO

14-55019 AR2014_inside_3.17.indd 6 3/26/15 9:16 AM

One investment we made on that basis was in the Lorentz Meat facility in Minnesota. This has been a very successful investment that continues to have the family members (still part-owners) as lead managers. They formed a joint venture in Vermont, which enabled us to restart our cull cow program in the Northeast.

New Product InnovationOur most innovative product launch of the year came in the form of Organic Valley Milk Protein Shakes: Organic Fuel, a protein recovery shake, and Organic Balance, a light on-the-go meal or snack. Both products were the first and only organic protein shakes made with real organic milk. These products are low-fat products, which is an important addition to our product line because their production results in additional high-value butterfat that can be used in other profitable products such as butter and cream. We are making a highly profitable product while ex-panding our consumer base, moving with the changing times and listening to consumers who want high-quality, convenient products. (See our other 2014 new products on pg. 12)

Planning for a Bright FutureContinuing to meet a changing and growing market takes planning, and in 2014 we for-malized and reenergized our strategic plan-ning processes. We have doubled the number of employees and farmers in the past eight years, and a solid strategic plan will help keep the entire staff on the same page moving for-ward. The Strategic Planning Team developed a streamlined planning calendar, a uniform set of language and tools, and a strategy for training and implementation in 2015. The new process will align the whole cooperative and make the most of our future goals.

Part of our plan for the future is having enough

space for our continued growth. In August of 2014, we restarted construction of the Cashton Office Building, which was put on hold after the 2013 fire. We currently rent several outside office spaces, so this facility will be a welcome addition when it is completed in 2016.

We are planning for a bright future. The organic market was a $35.1 billion market in 2013, with growth of more than 11 percent. That overall market growth is expected to continue over the next five years.

CROPP’s farmers and staff are helping to build that future. CROPP has been a leader and pio-neer in establishing the organic marketplace, and we continue to lead as the demand for organic products explodes across the country. 2014 was about stretching to meet that enor-mous growth while continuing to be a steady, smart, and adaptable cooperative firmly rooted in its values. Our cooperative values have guided us through 27 years of successful growth, and we expect this resiliency to carry us through another quarter-century and beyond.

Consumers have definitely connected their food with their health.

CASLER FAMILY, Northeast Region

7CEO

14-55019 AR2014_inside_3.17.indd 7 3/26/15 9:16 AM

98 2014 Awards & RecognitionFinancial Report

What a difference a year makes! Our cooperative experienced record sales, record profits and record farmer pay prices during 2014. This was quite a contrast from the challenges of 2013 and a welcome change for all of us.

2014 sales increased to $972 million from $930 million in 2013, a 4.57 percent increase. The increase was primarily due to a 12 per-cent increase in Organic Valley branded sales matched with a planned decline in private label and manufacturing bulk sales.

Certainly the biggest story of 2014 was the record profit of approximately $14.5 million. This was quite an improvement from the $5 million profit achieved in 2013. The profit was driven by improving gross profit margins on our products, high organic milk utilization, improved operating efficien-cies, reduced marketing expenses and high conventional milk prices. The yearlong shortage of milk coupled with high con-sumer demand allowed us to have very high organic utilization and reduce our planned marketing expenses by $7 million dollars. The shortage, however, also caused us to spend an additional $3 million transporting bulk milk and finished goods to meet dy-namic customer demands because customer demand and milk supply are not always in exactly the same places at the same time.

CROPP’s farmer pay prices continued to increase during 2014, with the average dairy

farmer pay price reaching $32.34 per hun-dredweight (cwt) compared to $31.02 in 2013. In keeping with our mission to provide fair and stable pay prices to all farmer-members, prices paid to all other pools also increased.

Record profits and declining inventories generated cash that was used to pay down our bank line of credit with JP Morgan and Rabo-bank. At the end of 2014, we were borrowing at our lowest levels in three years. Strong profits help lead to a strong balance sheet.

Our equity program continues to be a strength of the cooperative. Farmers invest-ing in their Class B Capital Base program combined with supporters of the cooperative investing in Class E Preferred Stock create a strong foundation from which to maintain and grow the cooperative.

2014 was an extraordinary year and puts your cooperative in the strongest financial posi-tion in its history. We look ahead to the chal-lenges of 2015 as we significantly increase farmer pay prices and manage customer expectations in the marketplace. The organic industry is always evolving, and CROPP has proven itself to be adaptable and strong.

Media RecognitionThis year, the Media Relations Team’s efforts generated results that stacked up in both quan-tity and quality. High-quality coverage included The Wall Street Journal, the TODAY Show, Prevention, Epicurious and so many more, earning more than 1 billion total views for Organic Valley and Organic Prairie in 2014. Here are just a few of the team’s many achievements for the co-op this year:

Building upon the December 2013 fatty acid profile study of Organic Valley Whole Milk published in the scientific journal PLOS ONE, Organic Valley in August 2014 provided me-dia relations support of the Newcastle Univer-sity study, which found that organic produce contains higher levels of antioxidants, is less likely to contain pesticide residues, and has lower levels of bone-softening cadmium. The outreach earned more than 609 million views through notable features in NPR,

The New York Times, and Women’s Health, among others. This demonstration of Organ-ic Valley’s industry leadership opened doors to new media relationships.

The team also generated more than 16.3 million views specifically for the launch of the new Organic Valley products Organic Balance and Organic Fuel, including coverage in top consumer and trade media. Notably, Organic Valley Grassmilk was featured in The Wall Street Journal on July 29, 2014.

FINANCIAL SUMMARY

World Dairy ExpoGOLD: Organic Fuel - ChocolateGOLD: Organic Fuel - Vanilla

Los Angeles International Dairy CompetitionGOLD: Organic Balance - Vanilla BeanGOLD: Organic Balance - Dark ChocolateGOLD: Organic Fuel - VanillaGOLD: Organic Fuel - ChocolateGOLD: Pasture-Raised Whole MilkGOLD: Half & HalfGOLD: Cream CheeseGOLD: Pepper Jack CheeseGOLD: European Style Butter GOLD: Pasture ButterSILVER: Sharp Cheddar

American Cheese SocietyBRONZE: Salted Butter

World Cheese ChampionshipBRONZE: Mild Cheddar

2014 AWARDS & RECOGNITIONProduct AwardsOrganic Valley products once again earned numerous awards in recognition of their superior quality and taste!

BRONZE: European Style Butter - Cultured & UnsaltedBRONZE: Organic Balance - Vanilla Bean

2010 2011 2012 2013 2014

5-YEAR SALES GROWTH

$500 MILLION

$1 BILLION

4.57%

SALE

S INC

REAS

E

$ 972

MILL

ION $32.34

$14.5$14.5AVG.DAIRYPAYPRICE

MILLION PROFIT

92014 Awards & Recognition

Media RecognitionThis year, the Media Relations Team’s efforts generated results that stacked up in both quan-tity and quality. High-quality coverage included The Wall Street Journal, the TODAY Show, Prevention, Epicurious and so many more, earning more than 1 billion total views for Organic Valley and Organic Prairie in 2014. Here are just a few of the team’s many achievements for the co-op this year:

Building upon the December 2013 fatty acid profile study of Organic Valley Whole Milk published in the scientific journal PLOS ONE, Organic Valley in August 2014 provided me-dia relations support of the Newcastle Univer-sity study, which found that organic produce contains higher levels of antioxidants, is less likely to contain pesticide residues, and has lower levels of bone-softening cadmium. The outreach earned more than 609 million views through notable features in NPR,

The New York Times, and Women’s Health, among others. This demonstration of Organ-ic Valley’s industry leadership opened doors to new media relationships.

The team also generated more than 16.3 million views specifically for the launch of the new Organic Valley products Organic Balance and Organic Fuel, including coverage in top consumer and trade media. Notably, Organic Valley Grassmilk was featured in The Wall Street Journal on July 29, 2014.

World Dairy ExpoGOLD: Organic Fuel - ChocolateGOLD: Organic Fuel - Vanilla

Los Angeles International Dairy CompetitionGOLD: Organic Balance - Vanilla BeanGOLD: Organic Balance - Dark ChocolateGOLD: Organic Fuel - VanillaGOLD: Organic Fuel - ChocolateGOLD: Pasture-Raised Whole MilkGOLD: Half & HalfGOLD: Cream CheeseGOLD: Pepper Jack CheeseGOLD: European Style Butter GOLD: Pasture ButterSILVER: Sharp Cheddar

American Cheese SocietyBRONZE: Salted Butter

World Cheese ChampionshipBRONZE: Mild Cheddar

2014 AWARDS & RECOGNITIONProduct AwardsOrganic Valley products once again earned numerous awards in recognition of their superior quality and taste!

BRONZE: European Style Butter - Cultured & UnsaltedBRONZE: Organic Balance - Vanilla Bean

14-55019 AR2014_inside_3.17.indd 9 3/26/15 9:16 AM

10 2014 Awards & Recognition

Sustainability Award WinnerGary Mosgaller

Gary Mosgaller is a third-generation farmer and became a member of the CROPP Dairy Pool in 1995. In 2011, he installed a 19.6 kW solar electric system, Door County’s largest at the time. Two years into his ten-year contract, Gary’s utility attempted to reduce the reimbursement rate he receives for excess energy generated by his system. The case made its way to court, and eventually Gary won. The utility even admitted that they had no right to dissolve his con-tract. The case set a precedent in Wisconsin and the nation. Gary was awarded CROPP’s 2014 Sustainability Award for going above and beyond to protect the viability of his farm and the viability of the renewable energy industry in Wisconsin.

Farmer AwardsRay Hass Organic Pioneer AwardDoug and Sharon Sinko

The Ray Hass Organic Pioneer Award was established in 2002—the year after Ray, one of the co-op’s founding farmers, passed away—to recognize the pioneers and visionaries who have made CROPP what it is today. The 2014 award winners were Doug and Sharon Sinko, from Coos County, Oregon.

In 1994, the Sinkos became the first certified organic dairy in the Pacific Northwest. By 1999, Doug and Sharon had convinced five other farmers in the area to go organic. “Today there are 14 dairy farms in our county and 12 are organic.” says Sharon. “We feel good about that.”

The Sinkos are tireless advocates for organic agriculture. Sharon was an integral part of the Western Organic Dairy Producers Alliance (WODPA) for seven years, and Doug was Organic Valley’s western region farmer-member coordinator for six years. Doug and Sharon’s motto has always been, “You can’t be stupid and be a dairy farmer, but being crazy really helps.”

Generation Organic AwardsThe Generation Organic (Gen-O) Award recognizes young CROPP farmers between 16 and 35 years old who have demonstrated their commitment to organic farming and preserving fam-ily farming culture and rural communities through leadership, stewardship and innovation. These young farmer-members are a promising part of the next generation of leaders in the organic movement and CROPP Cooperative.

WEST REGION: Melissa Collman

Oregon

CENTRAL REGION: Adam Lange

Wisconsin

EAST REGION: Sarah Hardy

New York

GARY MOSGALLER Egg Harbor, Wisconsin

DOUG & SHARON SINKO Oregon

14-55019 AR2014_inside_3.17.indd 10 3/26/15 9:17 AM

112014 Awards & Recognition

EAST REGION: Sarah Hardy

New York

Top Quality AwardsThere are more than 100 quality award winners in the cooperative each year, ranging from Recognition Awards up to Gold. The following farmers received Top Quality Awards for hav-ing the very best product quality in their pools.

Dairy PoolWisconsin region: Kevin & Mary JahnkeNortheast region: Allan & Karen Bathalon,

VermontMideast region: David Vander Zanden,

MichiganNorth Central region: Nevin & Ammon Ray

Martin, Missouri

West region: Randy & Kimberly Peterson, Washington

South region: Christian & Lydia Beery, Virginia

Organic Meat CompanyTurkeys: Bob Jewell,

Jewell Enterprises, Inc., IowaBroilers: Welsh Family Farm, Iowa

Finished cattle: Dan Kaiser, WisconsinCull cows: Dennis Lutteke,

Lutteke Organics, Inc., Minnesota

Produce Pool Samuel A. Slaubaugh, Wisconsin

Grower Pool Ray Yokiel, Minnesota

Other National Farmer AwardsWe celebrate our farmer-members who have received national, non-CROPP awards! Their hard work benefits the quality of our products and is a wonderful reflection on the cooperative.

National Mastitis Council’s National Dairy Quality Award WinnersGold Award: David Vander Zanden, Michigan

Silver Award: Mallonee Farms, Washington

Business & Staff AwardsRodale Institute Organic Pioneer AwardGeorge Siemon

CROPP CEIEIO George Siemon received the Rodale Institute’s 2014 Organic Pioneer Award for his influential work in the organic movement throughout his career and his work to educate the world on the connection between healthy soil, healthy plants and healthy people.

Penny Pincher AwardThis award is given annually to employees or departments that went above and beyond to save or gain money for the co-op, whether through frugal spending or bringing it in the door.

2014 Winner: Information Resources (IR) Department

Above-and-Beyond Customer Service Excellence AwardsAwarded quarterly, one winner is selected from the four to receive the Annual Award in recognition of their exceptional customer service activities throughout the year.

2014 Annual Award winner: Lisa Hass, Dairy Pool Administrative Specialist

Egg Pool Midwest pool (regular eggs):

Francis Blake, IowaMidwest pool (omega-3 eggs):

Ryan Wangsness, Iowa

Kalona pool: S. Duane Miller, Iowa Pennsylvania pool: Aaron Lapp Colorado pool: David Toews

ABOVE: George Siemon, on left, with Coach Mark Smallwood, Rodale Institute executive director.

14-55019 AR2014_inside_3.17.indd 11 3/26/15 9:17 AM

12 New Products

Extra Lean Ground Turkey

POWER OF WEDid you know 44 percent of consumers are willing to spend more on products from compa-nies that give back to society? In 2014, CROPP gave back to more than 1,000 mission-aligned organizations located in the communities that sustain us nationwide. That’s one of the reasons we began telling the story of our philanthropy and partnerships in 2014—a story dubbed “Power of We.” Examples of co-op partners are celebrated on CROPP’s blog, Root-stock.coop, each story highlighting an organization that has inspired us with their work to improve this country’s food and farming system. Small actions add up to great change!

NEW PRODUCTS

for on-the-go nutritionfor post-workout

recoveryTHE FIRST ORGANIC MILK PROTEIN SHAKES!

100% Grassfed Ground Beef Patties

Classic American Pork & Beef Hot Dogs

Pasture-Raised Organic Beef Hot Dogs

14-55019 AR2014_inside_3.17.indd 12 3/26/15 9:17 AM

“About a year ago we were ready to say the heck with all this. I contacted Organic Valley [Vermont] farmers Brent and Regina Beidler. They drove down here the next day to help us figure out what we could do. That’s what we love about Organic Valley. There’s this network of farmers and professionals we can call who will help us or tell us who to call to get our questions answered. That keeps us going—knowing we have a strong support system.”Christian and Holly GowdyCheshire County, New Hampshire

GOWDY FAMILY, Northeast Region

13Farm Resources

Farm Resources Brings Valuable Services to Co-op MembersCROPP’s Farm Resources Department combines the technical support services of three staff veterinarians, a nutritionist, an animal care specialist and an agronomist under one roof. CROPP farmer-owners put these resources to good use in 2014.

“Dr. Paul Dettloff played an influential role in us becoming organic. He had us using or-ganic practices before we even went organic. When he would present something to us, it didn’t sound like voodoo; it just made a lot of sense. I think this made it easier for us to transition and to believe in it.”

Arden Hardie and Judt Haase-HardieTrempealeau County, Wisconsin

“We used CROPP’s Farm Resources program because we want-ed to get an unbiased opinion. It was easy to use. The Farm Resources staff was very helpful in filling out the paperwork, and we got staff agronomist Mark Kopecky’s recommendations really fast. We were really pleased that Mark made the recom-mendations easy to understand. They helped us decide what was most critical to start with.”

Roger & Lisa GarlandVevay, Indiana

MEMBERSHIP HAS ITS BENEFITS

14-55019 AR2014_inside_3.17.indd 13 3/26/15 9:17 AM

WESTABY FAMILY, Illinois, in 2004, shortly after joining the co-op.

14 A Farmer’s Voice

A FARMER’SVOICETHERESA WESTABY Illinois Farmer-MemberDairy

We received our organic certification from Oregon Tilth Certified Organic (OTCO) in March 2002. At the time, CROPP only took on farmers in April and August, and we missed the April deadline by a day. We had to wait four months to get on the truck. Our processor at the time was a small cheese plant and didn’t want us to leave, so they planted the first seed of doubt by telling me the pay price for organic was only at $16, the conventional price was $13, and that the conventional price was going up.

They said cooperatives generally are risky to begin with and generally aren’t farmer- friendly. They heard of times in the past when CROPP couldn’t pay its bills and the farmers didn’t get a milk check. This last one bothered us because we lived check to check, and losing even one could set us back to the point of no recovery since we had just started buying our farm…that’s when the worrying began.

Nevertheless, we joined in August 2002, and the first day our milk truck came, Dan Wag-ner jumped down from the truck and said,

with a big smile, “How does it feel to be the highest paid dairy farmers in the nation?”

This was new! Our previous milk truck drivers usually weren’t so friendly or positive. I was so happy they showed up that I cried and took pictures. When we got our first milk check, it was more than $17 per hundred-weight (cwt). I ran to the barn to show my husband because by that time the conven-tional price hadn’t gone up—it was down to $9. As for the other worry that really plagued us in the beginning, in the 12 years we’ve been

OUR ORGANIC VALLEY VENTURE

14-55019 AR2014_inside_3.17.indd 14 3/26/15 9:17 AM

“The milk truck driver’s enthusiasm was just the beginning of a relationship where we feel valued, respected and part of a bigger entity than just our farm.”

First Organic Valley truck to the Westaby farm.Theresa and daughter Ceara on Capitol Hill.

15A Farmer’s Voice

with Organic Valley, we’ve always received a paycheck—even a couple of extras—and I can’t think of a more farmer-friendly place! The milk truck driver’s enthusiasm was just the beginning of a relationship where we feel valued, respected and part of a bigger entity than just our farm.

My family became part of Farmers in Mar-keting in 2003, which really opened our eyes. Consumers were actually excited about farming. Last summer, I helped at the Farm Discovery Tour on the Lynch farm in Iowa. Talking with consumers face-to-face while on a farm was so familiar and comfortable that I felt like I was talking with friends. Hearing them say how much they loved our products, how happy they were to support organic farming, and how they wanted their children to know what a farm was made me proud to be with CROPP.

Thirteen years ago, I was in a store and saw the Organic Valley milk carton with my son on it (he’s now 20!). I thought, “Wow, what kind of company uses farmers to advertise? Will consumers really like this?” Now, on Facebook, people are begging to know more about the Organic Valley farmers. They want to feel like they are a part of our daily lives, like they are connected to us. And we want to be connected to them, too.

I have high hopes for 2015. We have the greatest farmers, the most committed and hardworking employees and an amazing co-op. The seeds of doubt placed all those years ago were quickly dispelled and replaced with a renewed sense of excitement about farming and our farm’s future. We are thankful to be part of a thriving, dynamic co-op like the CROPP Cooperative family.

14-55019 AR2014_inside_3.17.indd 15 3/26/15 9:17 AM

Passion for the CROPP MissionThis year, the co-op launched the CROPP Ambassador Program with multi-ple gatherings of staff, farmers and friends of the co-op. These individuals were specifically chosen for their passion and desire to be ambassadors for CROPP, its brands and the organic community.

At the gatherings, participants learned that weaving personal stories into a message is a great way to engage others while also sharing important information. They practiced sharing why the Newcastle University study on organic food nutrition, choosing organic, and working for CROPP are meaningful to them. The exercise was so successful that it was presented to all staff. Here are some of the stories received from inspired CROPPies:

WHY WE DO WHAT WE DO

16 Our Passion

My work at Organic Valley supports farmers who strive to build healthy soil, filters for pristine water, and foster thriving eco-systems on every organic farm. Pristine water and thriving eco-systems are the legacy I most want to leave from my time here on Earth. Thank you to Organic Valley for this opportunity.

Jennifer SchmitzProject manager

I had never made the connection between the pesticides that were sprayed on our neighbors’ fields and the impact it could have on my family. I educate my children about eating organic food because a study this year showed it is four times less likely to have pesticide residue. I cannot control everything in their environment but I can help them make good choices where they can.

Bobbie SuhrBusiness engagement manager

I found out that I was pregnant with Joey just a few months after I started working at Organic Valley. In the short time I had been working here, my knowledge about the benefits of eating organic foods grew tremendously. I’m so glad I started to learn more about organic foods at such an important time for my family, and I can’t wait to teach Joey the many reasons why our family chooses to eat organic.

Alie HubingFarmer outreach & events coordinator, east division

14-55019 AR2014_inside_3.17.indd 16 3/26/15 9:17 AM

KEITH WILSONDirectorWilson FarmCuba City, Wisconsin

PAM RIESGRAFDirectorFull Circle Organic DairyEdgar, Wisconsin

ARNIE TRUSSONIPresidentElm Terrace FarmGenoa, Wisconsin

STEVE PIERSONTreasurerSar-Ben Farms, Inc.St. Paul, Oregon

DAN PEARSONSecretaryPearson’s Mann Valley FarmRiver Falls, Wisconsin

2014 ANNUAL REPORT

MANAGEMENT TEAM

BOARD OF DIRECTORSMARK KRUSEVice PresidentKruse Family FarmLansing, Iowa

GEORGE SIEMONChief Executive Officer

MIKE BEDESSEMChief Financial Officer

ERIC NEWMANVice President,

Sales

THERESA MARQUEZMission Executive

ROGER PETERSDirectorPeters Family FarmChaseburg, Wisconsin

LOUISE HEMSTEADChief Operations Officer

TRAVIS FORGUESVice President, Farmer Affairs

LEWIS GOLDSTEINVice President,

Brand Marketing

JIM WEDEBERGDairy Pool Director

MELISSA HUGHESGovernment Affairs Director

and General Counsel

Newly Elected in 2014Roger Peters, son of CROPP founding farmer and former president of the board Wayne Peters, joined the board this year for a three-year term. The Peters family has deep ties to CROPP and today is a member of the dairy, egg, pork and beef pools.

HARTKOPF FAMILY, Northeast Region

On the cover:HOFFNER FAMILYSoutheast Region

JERRY McGEORGEVice President, Cooperative Affairs

14-55019 AR2014_cvr.indd 3-4 3/25/15 9:35 AM

© Organic Valley 2014-55019 CMG-P02431Printed on paper made from 100% post-consumer recycled fiber. One Organic Way | La Farge, WI 54639 | 1-888-444-MILK | www.ov.coop

ANNUAL REPORT 2014ANNUAL REPORT 2014

This annual report contains discussion of some of our expectations regarding CROPP Cooperative’s future performance. These forward-looking statements are based on our current views and assumptions. Actual results could differ materially from these current expectations and projections and from historical performance. For example, our future results could be affected by factors including but not limited to the competitive dynamics in the markets for organic dairy products; the cost and supply of organic milk; the cost of organic farm products and organic feed; the mix of sales of our branded and non-branded products; the application of, and changes in, the United States Dairy Support and Federal Milk Marketing Order programs; and the adoption of regulations pursuant to the Food Safety Modernization Act. Discussions of these matters and other risks to which CROPP Cooperative is subject can be found in the Offering Circular(s) (and any associated supplements or amendments) we distribute from time to time in connection with the offer and sale of our Class E, Series 1 Preferred Stock. A copy of such Offering Circular and any current supplements or amendments can be obtained for informational purposes by contacting Diane Gloede, investor relations

manager, by mail at CROPP Cooperative, ATTN: Diane Gloede, One Organic Way, La Farge, WI 54639, or by telephone at 888-444 6455 extension 3310.

HARTKOPF FAMILYNortheast Region

14-55019 AR2014_cvr.indd 1-2 3/25/15 9:35 AM