Immediately upon walking into Land O’Lakes Inc.’s headquarters, the first thing one might notice is the family-friendly atmosphere. Right as we walked past the security gate, a daycare center and fitness center are easily noticeable. What followed that walk was a visit to a conference room where there was plenty of wonderful Midwestern hospitality at the facility, located in the Arden Hills section of St. Paul, Minn., which Dairy Foods visited in mid-April.

Land O’Lakes, a cooperative that earned more than $16 billion in revenues last year, including more than $5 billion specifically from dairy product sales, takes tremendous pride in taking care of its 1,100 farmer-owners. 

“We are really focused on the vitality of the farmers’ operations. We take the milk and provide value to it that meets consumer and customer needs,” says Heather Anfang, president, Dairy Foods and executive vice president of Land O’Lakes Inc. “We make profit from that, which goes directly back to those farmers, who are the owners. They are very critical in the world market and the money helps them to build out their operations.”

Anfang stresses each of the 1,100 farmer owners are large contributors to their local community. They are often employers who sponsor Little League teams and support the local agricultural industry. “They are a critical part of keeping their communities vibrant wherever they live,” she states.

The farmers are located throughout the U.S. The company has three milk sheds located in the Pennsylvania/New York, upper Midwest and the Central Valley of California regions.

“We have all sorts of size and scale among those farmers. We have smaller Amish farmers in Pennsylvania that might have 40 cows, all the way up to a large 10,000-cow operation in California,” Anfang relays. “Farmers are paid via an annual patronage, similar to a dividend. They also build equity over time, so that when farmers reach retirement age, they can pull out equity. And of course, we are paying them every day for their milk.”

Butter is Everything

Land O’Lakes primarily focuses on butter and cheese products. Known for its “Butter is Everything” slogan, its product offerings include tub butter, stick butter, whipped butter, butter spreads, butter balls, cheese in the dairy aisle as well as behind the deli, and more. It also owns Kozy Shack, known for its rice and tapioca puddings, as well as the Vermont Creamery brand, which specializes in goat cheese and specialty aged cheese. 

The co-op began in 1921 when a group of Minnesota and Wisconsin farmers, who wanted more leverage in the dairy channel, came together to join forces as a co-op. Even at that time some 100 years ago, the co-op had plenty of forward thinkers, who thought entrepreneurially and created quality standards. This included a quality standard for butter, which was unheard of in the United States. Most importantly, these farmers established the Land O’Lakes brand, known worldwide today. 

Over time, the co-op gained buying power on the feed side of animal nutrition, as well as the feed and crop input side. That now serves as the supply side of the co-op. 

Today, 104 years after its founding, the co-op’s foundation remains the same. “The farmers knew they would be better together. That thread of DNA carried us all the way through to today,” Anfang states. “We think of ourselves as a collaborative company that works well together.”

Dairy’s renaissance

Land O’Lakes has seen consumer interest dramatically increase for its dairy products. “People are eating dairy products every day. Per-capita consumption is rising, mainly in categories we compete in: cheese and butter,” the co-op’s president of dairy foods notes. “Of course, it is growing in cultured dairy as well. But in the categories in which we compete, consumers are continuing to seek out our products.”

A main focus today of Land O’Lakes’ innovation pipeline is directly addressing consumer needs. Consumers today seek clean-label, health and wellness foods, a trend likely to be on their minds for the foreseeable future. 

“Consumers want to know more and more where their food comes from. There has been lots of media and press regarding what’s in our food. When you look at a dairy ingredient label, it is very clean,” Anfang asserts. “When you look at butter, it is made of cream and salt. That’s it.”

Consumers are getting savvier about the foods they eat, Anfang adds. When they do, they see dairy in a whole new light. “Dairy is a clean label, natural, wholesome product. That is a huge driver for us. A second driver for us is protein,” Anfang relays. “Dairy is a perfect nature’s food that provides plenty of protein. Dairy is a wholesome, natural, wellness source with plenty of micronutrients. We need to get that message out even more as an industry and as an individual company.”

Consumers are making buying decisions every day, Anfang continues. “Dairy stands out for them for a couple of reasons. Health and wellness is huge. There is so much nutrition consumers get from dairy,” Anfang maintains. “For Land O’Lakes specifically, we tell the story of the money going back to farmers, who invest it in their local communities. The more consumers we tell that story to, the more interested they are in our brand. It is about buying based on values. Consumers want to spend their money knowing they are supporting a local American farmer. We hear about that again and again from consumers.”

Hence, Land O’Lakes can talk about its brand differently to consumers than some other companies perhaps. “Consumers are really connecting that when they buy products. They are supporting an American family farm that is trying to itself raise a family, feed a family, and support a family,” Anfang notes. “Every time we tell that story, consumers are more interested in our brand.”

Sustainability efforts

Each of Land O’Lakes’ farmer owners has their own set of guiding principles. Many have chosen sustainability as a mission, while others set forth other goals. No matter the farmer, Land O’Lakes is there to provide assistance, using tools to assess their footprint. 

“We look at emissions at the farms and work on a plan and recommend changes the farmer can make to reduce their carbon footprint,” Anfang reveals. “We have a whole department called Member Relations, which is out in the fields working with our farmers on things such as the quality of their milk, animal welfare, questions they may have about the co-op, and sustainability.”

Land O’Lakes also works to secure government funding for farms to make intervention changes. “It is about market access for their milk, helping farmers find interventions and helping them obtain funding to support that,” Anfang says. “We work with many different farmers in many different ways, including how they manage manure, or an energy audit, including transitioning to LED lighting. We are working across the gamut with our farmers.”

Overall, when speaking to Land O’Lakes employees, it is clear they are passionate about what they do.

“Working for a 100-year-old cooperative is just awesome. Farmers are on our board of directors,” Anfang concludes. “Having their input provides for such a great business model.” DF