Lessons From COVID-19: A More Resilient Dairy Market Starts With Stakeholder Capitalism Framework

Strong Relationships with Organic Farms Help B Corp Stonyfield Avoid Dairy Market’s Troubles

When COVID-19 emerged, the stay-at-home orders that closed most schools and many workplaces meant more of us were eating at home, ordering less at restaurants and buying more at local grocery stores. In the wake of this sudden change, many farmers who supply restaurants and schools faced a halt in orders and scrambled to find new outlets for their products. So even as shoppers flocked to grocery stores, the existing supply chain structure posed a distribution challenge and led to increasing food waste as some farmers had to destroy their crops, dump milk and throw out perishable items that couldn’t be stored or moved to new outlets in time.

At the same time, record unemployment rates due to business shutdowns had more people worried about income and paying for food, utilities, and other everyday costs. A new study based on U.S. Census Bureau data found that 40% of Black households, 36% of Hispanic households, and 23% of white households report they struggled to afford food from mid-April to mid-June. The situation is similar in Canada, where a recent survey found that almost one in seven Canadians are in a food-insecure household, with that number likely to climb in the fall. The health consequences of food insecurity go beyond hunger: Children are more likely to suffer from anemia, asthma, and cognitive, behavioral, and mental health problems, while adults may delay medical care or prescription purchases, further jeopardizing their health.

The ripple effects of these agricultural supply chain issues put a spotlight on the value of resilient and adaptive supply chains and close communication with business partners — among the stakeholders that Certified B Corporations value in their business decisions. New Hampshire-based Stonyfield Farm, which became a B Corp in 2016, serves as one example of a business able to step up to the challenges of COVID-19 and maintain its distribution systems — thanks to a focus on local organic farming and sustainable practices — while many others in the dairy business could not.

From its roots in 1983 as a nonprofit organic farming school, Stonyfield has prioritized family farms, healthy food production, and environmental protections. Its product line has expanded from its flagship yogurt made without the use of toxic persistent pesticides or chemical fertilizers to include smoothies, soy yogurts, frozen yogurts, milk and cream sold in grocery stores and other retail outlets across the United States.

Stonyfield’s business is built on the stakeholder capitalism model, where those impacted by the business are considered and prioritized in the business. For example, the B Corp buys from a network of hundreds of organic family farms, operates a direct milk supply program, and supports an organic dairy farmer training program in Maine.

“By definition, as a B Corp, we care about stakeholders in addition to shareholders, and this is the way we’ve always done business: by working in partnership with farmers, by valuing our workforce, and by treating consumers, retailers, suppliers and other partners with respect and cooperation,” says Britt Lundgren, Director of Organic and Sustainable Agriculture at Stonyfield.

B The Change reached out to Lundgren for insight on the company’s COVID-19 adaptations and how its sustainable supply chain and partner relationships provided stability for the B Corp during a tumultuous time.

How and when did Stonyfield establish its direct milk-supply program? What benefits does the business see from having closer relationships with suppliers?

Stonyfield established its direct milk supply program six years ago out of a desire to support organic dairy in the Northeast U.S. As a business based in New Hampshire, Stonyfield was aware of the disappearing dairy industry in New England and felt the need to further the company’s mission — and sustain its supply chain for the long term — by sourcing organic milk used in its yogurt production directly from local family farms. The program has been extremely successful, providing farmers in New England a direct relationship to a processor with a mission much aligned with their own: of sustainability, both financial and environmental; a mode of generational transfer, superior animal welfare, and the preservation of family farms that employ organic practices.

The relationship has been a win-win for Stonyfield and producers: Stonyfield has given producers stability, helped to further sustainability, organic, and local food initiatives through technical assistance funds aimed to improve milk quality, organic compliance, generational transfers, and energy efficiency as well as alternative, sustainable energy sources.

Maybe as important has been the ability to connect buyers and customers directly to the farm through on-farm visits, blogs, and social media engagement with the actual farms supplying Stonyfield milk. Farmers sharing the daily activities on their farms with customers is a powerful and reassuring link in the local food movement. The value of having a “stop by anytime, great to see you” relationship with producers is second to none.

How did COVID-19 affect operations at Stonyfield and at its supplier farms? What worker protections/supports have been added or enhanced?

Farmers in general spend a lot of time alone, so social distancing is not so much an issue, except for the adaptations made for any farm visitors or deliveries. On-farm technical support from nutritionists and other support professionals has moved to online platforms such as Zoom. (Yes, farm meetings from the tractor seat via Zoom are a reality.) Milk pickups don’t require interaction between individuals, and haulers have put in place extra precautions.

Also, Stonyfield field staff have been actively connecting farmers with COVID-19 resources provided through state and federal agencies. The demand for organic dairy has not seen the drastic decline that conventional milk has, and this has been reassuring to organic dairy producers. Demand for our large containers of organic yogurt and multipack kids yogurts have increased throughout the pandemic. With consumers purchasing pantry staples in bulk at their local grocery stores, these large formats have seen a sizable uptick in demand. Many families are now home for three meals a day plus snacks, and parents are looking for healthy and nutritious options for their whole family. Because of our existing supplier models and relationships with farmers, we were able to meet this moment well and support our farmers, distributors and customers.

How has Stonyfield adapted its community programs to address issues that COVID-19 created?

In April 2020, we invited the public to nominate groups that have inspired them during the fight against COVID-19. Then we sent their heroes Stonyfield Organic yogurt. Since then we’ve donated more than 525,000 cups of yogurt to 35 different organizations throughout seven states. The donations have spanned everything from local YMCAs, food banks and hospitals to daycares, nursing homes and more. Supporting our communities with healthy organic food has long been a part of our good-on-purpose mission, and we’re honored to continue this program. Donation requests can be made on our website.

How does B Corp certification influence Stonyfield’s business practices?

B Corp certification raises the bar as an on-going process of inspiration, evaluation, and continuous improvement. At the core, our certification gives us a baseline and measurement system to evaluate progress on our journey. And at its best, it motivates us to think bigger and inspire us to go further. And always, it is a resource for best practices and a community of like-minded businesses and people.