Land O’ Lakes: The Big Cheese of Dairy Co-Ops

BROWERVILLE, Minn. â€”  Scores of silver-bellied trucks painted with the familiar Indian maiden logo roll in from dawn to dusk, from Sobieski, Flensburg, Swanville, Sauk Center and other dairy communities, delivering milk to the Land O’ Lakes processing plant on Creamery Drive.

There, at one of the co-op’s eight butter processing plants, the milk from 28,000 cows is converted into butter and milk powder.

Other Land O’ Lakes trucks transport milk from farmer members to the co-op’s 24 other processing plants throughout the Midwest and transport grain to 20 Land O’ Lakes fertilizer manufacturing plants. The finished Land O’ Lakes products are then shipped across the nation and to 12 foreign countries.

Land O’ Lakes Co-op, with $2.215 billion in revenue last year and owned by 325,000 farmers, is the largest co-operative headquartered in Minnesota, which has more co-ops than any other state. Dairy products accounted for more than one-half of the co-op’s sales in 1986--$1.2 billion.

The co-op also is the biggest producer of butter in the United States, and more Land O’ Lakes cheese is sold in delis from coast to coast than any other brand. The co-op also makes and sell1931503971processed turkey, sausage and other specialty meat products and farm supplies such as seed, feed and fertilizer.

As in many small towns in Minnesota and other Midwest states, the Land O’ Lakes co-op is the lifeblood of Browerville. More than 100 of the 600 townspeople in Browerville work at the Land O’ Lakes butter processing plant.

“Co-ops started in Minnesota in 1889 in dairying,� noted Allen Gerber, 42, executive director of the St. Paul-based Minnesota Assn. of Cooperatives. “The cooperative system grew like wildfire. By 1918, every township in the state had a creamery co-op.�

Dairy farmers who are members of the co-op operate small family farms with herds ranging from 35 to 150 cows. Barney Dryniarski, 73, of Cushing, Minn.; his son Kenny, 51, and grandson Bob, 20, run 80 dairy cows on their 181 acres along the shores of Pine Island Lake, where they also grow alfalfa and corn as feed for their livestock.

“I have been one of the owners of the co-op for 50 years,� Barney Dryniarski said. “The co-op is farmers working together, farmers running it. We farmers decide what we’re going to do by voting on various issues. We could sell our milk to a company, but being the company works out much better for the farmers in the long run. Whatever profit is earned is returned to the farmer.�

In a co-op, members share in earnings based on individual product output.

At its peak in the late 1970s, Land O’ Lakes had 375,000 farmer members. Eight years ago, there were 26,000 dairy farmers in Minnesota. Now there are 19,000.

“The farm crisis has reduced the number of farms. Member co-ops have gone out of business, and some have merged with others. We have a much tighter credit policy now,� said Verne Moore, 59, senior vice president for the co-op’s corporate relations.

In 1980, Land O’ Lakes reported its highest profit ever, $43 million. The following year it suffered a $4-million loss, and in 1982 it posted a $19-million loss, reflecting tough times on the farm. Each year since then, however, profits have been recorded: $10 million in 1983, $11 million in 1984, $12 million in 1985 and $11 million in 1986.

Land O’ Lakes was founded June 7, 1921, by 350 Minnesota farmers who organized a statewide dairy co-op called Minnesota Cooperative Creameries Assn. with a working capital of $1,375. John Brandt, a Litchfield, Minn., farmer, played the lead role in forming the co-op and served as president and general manager until his death in 1952.

Three years after its formation, the association sponsored a contest to find a brand name for its butter. More than 100,000 entries were submitted. Judges included the governor of Minnesota and the mayors of St. Paul and Minneapolis. Winners with the identical name Land O’ Lakes were Ida Foss of Hopkins, Minn., and George Swift of Minneapolis. Each received $250 in gold.

Right from the start, the Eastern Seaboard became a prime marketing area for the Minnesota co-op’s butter, and the first sales office opened in New York in 1923. The Indian maiden logo followed shortly after the selection of the name Land O’ Lakes. (A confusing sidelight is that the corporate name uses an apostrophe after the “O,� while the brand name does not.)

Today, 9,200 farmer members of the co-op ship direct to co-op processing plants, and the remainder of the farmer members ship to 1,150 member co-ops that form the huge Land O’ Lakes umbrella. Farmer members of Land O’ Lakes are now in seven other Midwestern states, as well as Minnesota.

The co-op’s corporate headquarters--known as “the house that 325,000 farmers built�--is in a new ultramodern complex at Arden Hills, Minn., a suburb of the Twin Cities.

Last year, Cenex, the Farmers Union Central Exchange Co-op Inc. (sales of $1.2 billion in 1986), a farm supply co-op in 15 states along the nation’s northern tier from Lake Michigan to the Pacific Northwest, joined with Land O’ Lakes in a joint venture. Cenex is headquartered in the Twin Cities suburb Inver Grove Heights.

“It isn’t a merger,� Moore said. “The two giant co-ops continue as separate entities, two separate corporations, each with its own officers selling products under combined management.�

The venture consolidates distribution, transportation and warehousing in certain areas to reduce costs and staffing with a substantial savings to farmer members.

The co-op has programs overseas in places like Indonesia and Central and South America, where it is helping develop dairy industries by selling surplus cows and providing the latest technology in training farmers to become more self-sufficient.