Land O'Lakes, Inc.

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LAND O'LAKES, INC.

On June 7, 1921, hundreds of farmers from all over Minnesota gathered in St. Paul to vote on the organization of a statewide dairy cooperative. With a unanimous vote, the Minnesota Cooperative Creamery Association, Inc., forerunner to Land O'Lakes, Inc., was born.

Unlike investor-owned corporations, cooperatives work for and answer to their member-patrons, who benefit in direct proportion to the amount of business they do each year with the cooperative—how many products they supply for sale to the general public, or how many they buy from the cooperative. Because each member-patron has one vote, cooperatives are democratic enough to have appealed to the independent U.S. farmers who first joined.

Beginning with a meager financial stake of $1,375, the directors of the Minnesota Cooperative Creamery Association, Inc. launched a statewide membership campaign. Their project was given a boost when in 1922, after a long fight, the U.S. Senate passed the Capper-Volstead bill, which legalized the marketing of farm products through cooperative agencies. The first year's returns showed a slender profit.

John Brandt, one of the original 15 directors elected to run the organization, became president of the association in 1923. He believed that by working together, competing creameries could raise their profits and offer a better product to their patrons. He urged cooperation among farmers, engineered joint shipments of butter, and proposed a common standard of quality. Most importantly, he and the other directors of the cooperative decided to concentrate on the quality production and aggressive marketing of "sweet cream" butter, butter made from cream before it soured. Although more costly to make and not as familiar to the public, sweet butter tasted better and kept longer.

In February 1924, the cooperative announced a contest to capture the public's attention: its high-quality product needed a catchier name than "Minnesota Cooperative Creamery Butter." First prize was $500 in gold. An overwhelming response brought in over 100,000 entries; the contest was tied between two winners who both thought of "Land O'Lakes." Soon thereafter an Indian maiden appeared on the butter's packages, completing a now familiar image. The origins of this Indian maiden, however, remain a mystery.

In April 1924, the cooperative won a contract with the U.S. Navy for 30,000 pounds of the new sweet cream butter, and soon thereafter met with a growing demand from U.S. housewives for its conveniently packaged quarter-pound sticks. Because Land O'Lakes was already becoming a household name, only two years after the contest, the cooperative changed its name to Land O'Lakes Creameries, Inc. in 1926.

Land O'Lakes first ventured outside of the dairy business two years later, in 1928, when it organized egg and poultry divisions. This step toward diversification proved crucial during the Great Depression (1929–1939), when dairy businesses throughout the nation suffered enormous losses. In 1930 dairy production was the lowest it had been in two decades, and by December 1933, butter prices had declined to 15 cents a pound, the lowest figures for that month in 25 years. Excess production and surplus holdings were making it almost impossible for U.S. farmers to get back their cost of production, and dozens of creameries held meetings to decide whether they should continue operating. Although Land O'Lakes suffered setbacks due to these market forces between 1929 and 1940, highly imaginative management and a willingness to fight economic trends cut the cooperative's losses considerably.

Before the Depression Land O'Lakes had dealt mostly with large store chains and other nationwide distributors. But with many of these large accounts cutting back their operations or vanishing altogether, Land O'Lakes began to set up smaller sales branches that could sell directly to groceries and other small outlets. Partly as a result of this marketing strategy, and partly because Land O'Lakes Sweet Cream Butter was being advertised nationally for the first time, Land O'Lakes was able to sell a record 100 million pounds of butter in 1930.

Another Depression era strategy was to diversify the products the cooperative offered both to its member farmers and to the public. Land O'Lakes began an Agricultural Services Division in 1929 to try to reduce member costs for feed, seed, and other farming supplies. In 1934 the cooperative joined three large cheese cooperatives in the operation of 95 cheese factories, and in 1937 Land O'Lakes opened its first milk drying plant, completing a decade of experimentation which pioneered the production of powdered milk. When World War II (1939–1945) called for milk in a form that didn't require refrigeration and had a fraction of its normal bulk, Land O'Lakes was prepared. All of these changes were ultimately successful expansions and contributed to Land O'Lakes' relative prosperity in difficult times.

Following World War II Land O'Lakes diversified further, entering the ice cream and fluid milk markets for the first time. In 1970 the cooperative merged with the Farmers Regional Cooperative, which increased Land O'Lakes capacity to produce and market agricultural production goods (including fertilizers and insecticides) for its member-patrons. That same year, Land O'Lakes Creameries, Inc. changed its name to simply Land O'Lakes, Inc. to better reflect its diverse business. Over the next decade, as Land O'Lakes' butter sales were hurt by the expanding market for margarine, the cooperative diversified further, entering the red meat business in 1978 and launching a soybean processing venture in 1980. But concern about industry overproduction, fluctuating market prices, and increasing operating costs led Land O'Lakes to exit from the poultry and red meat sectors in the late 1980s.

By the late 1990s, through mergers and acquisitions, Land O'Lakes served 300,000 farmers and ranchers in 27 states. In the last years of the twentieth century Land O'Lakes increasingly sought out growth opportunities outside the United States, and included among its foreign operations feed mills in Taiwan and Poland and marketing functions in Mexico, East Asia, and the Pacific Rim.