Global Dairy Markets:The Foremost Farms Experience

Doug WilkeForemost Farms USA

Vice President-Marketing & Technology

A Snapshot of Foremost Farms

Established: 1995

Member Milk Volume: 5.7 billion pounds

Member-Owners: 1,900

FY 2011 Revenues: $1.7 billion

Employees: 1,100

Rankings: No. 8 in milk volumeamong U.S. dairy cooperativesNo. 20 (Dairy Foods magazine)

in annual sales among Top 100 U.S. dairy processors

Our Locations

Our Products

Major Manufacturer & Domestic Marketer of Cheese

• 9 cheese plants

• Over 500 million lb. Cheese

• One of the largest Mozzarella cheese producer in U.S.

• Over 25 varietieso 75% Italiano 25% Americano Industrial (30%); foodservice 30%) and retail (40%)

Our Ingredient Business is Global

Produce approximately300 million pounds ofdairy ingredients for these target markets:

infant formula bakery/pizza pharmaceutical food feed

Butter – 35 million pounds

Primary Products Exported

• Whey protein products• Pharmaceutical lactose• Demineralized whey• Permeate• Some cheese and butter

Our Customers are Global Players

• Three of the five largest infant formula providers

• Kerry Bio Science Global food and pharmaceutical company Long-term agreement on pharmaceutical

lactose

• James Farrell & Co. International trading company Our marketing partner for ingredient exports

Ingredient & PharmaIngredient & PharmaPharmaPharmaIngredientIngredient

Exports as a % of ingredient sales2011: 31.9%2010: 29.9%2009: 26.5%

Exports as a % of ingredient sales2011: 31.9%2010: 29.9%2009: 26.5%

Ingredient Export Map

There’s Opportunity for “US”

• Globalization is here to stay• World dairy demand will outpace supply• Imbalances will drive volatility• U.S. has finite window of opportunity before

other suppliers emerge• Some structural constraints keep the U.S. from

being a consistent supplier• Maintaining status quo will weaken U.S. industry

The Keys to Success• Work more closely with buyers to better

understand their needs• Make the commitment to be a consistent seller

to global markets Adjust underlying policy and regulatory influences Build partnerships to market dairy ingredients to

global buyers Develop the products that better meet buyers’

specifications and quality requirements Help buyers manage price volatility Serve global buyers in good years and in bad

Thank You!