January 7, 2004

Three Washington state herds quarantined due to BSE outbreak...New legislation could require processor contributions...WVU to stop manufacturing ice cream...Horizon-Dean deal finalized...McDonald's "The Real Life Choices" program could reduce cheese sales...Supermarket labor dispute update...Global Marketwatch...Odds-and-Ends...Stock Market Ticker...more news at www.idfa.org.

DAIRY BUSINESS BRIEFS

This week, the government slaughtered 450 bull calves from a Sunnyside, Wash., feedlot — including an offspring of the Holstein cow stricken with bovine spongiform encephalopathy (BSE or mad cow disease ). Officials said they could not identify with 100% accuracy the Holstein's offspring among the 450 calves, so the entire herd was sacrificed. After this slaughter, there will be about 4,000 cows still under quarantine in Washington state. The quarantined dairy farms are prohibited from removing or adding cattle, but can continue to sell milk, which does not contain or transmit BSE. Additional quarantined cows will likely be destroyed, either because of possible exposure to the infection or to quell public fear, according to a U.S. Department of Agriculture representative. The government typically pays up to market value for animals it condemns but has yet to formulate a payment plan. (Associated Press, Seattle Times)

Rep. Bernard Sanders (I-VT) has introduced a bill dubbed the National Dairy Equity Act, which would set up five regional marketing areas, each with a minimum price for Class I milk. The bill would require processors and USDA to pay into a national fund if milk prices fall below minimum standards. Funds would be distributed to the regions by the USDA. Essentially, the bill combines elements of the Northeast Interstate Dairy Compact and more traditional milk subsidies. Previously, Sanders helped pass the Milk Income Loss Contract subsidy after the Northeast dairy compact ended. The new bill would allow the different regions to set prices, with the bulk of money coming from processors. (Associated Press)

The cost of upgrading aging equipment and low profits will lead to the discontinuation of ice cream manufacturing at West Virginia University, Morganstown, W. Va. The school's Davis College dairy plant has offered ice cream for more than 50 years. Upgrades would cost $400,000. The college will continue to offer teaching labs, but will focus on products other than ice cream. The WVU brand featured 15 flavors sold at retail outlets, residence halls and the agricultural building; sales will stop Jan. 14. (Associated Press)

Dean Foods Co. has completed the acquisition of Horizon Organic Holding Corp. Dallas-based Dean acquired the remaining 87% equity interest in Colorado-based Horizon Organic it did not already own for approximately $216 million in cash ($24 per share) and assumed about $40 million in debt. (Associated Press)

CUSTOMER CLIPS

Cheese use at McDonald's could drop as a result of the "The Real Life Choices" program. The lowfat menu option educational program outlines a way to reduce fat, carbohydrates and calories in current menu items (for the same price). Posters and brochures offer information about how to modify current menu items to meet individual dietary needs — including suggestions to leave off the bun or the cheese. Developed by nutritionist Pam Smith, the author of "Eat Well, Live Well," the program started as a regional test this week in 650 McDonald's units in New York, New Jersey and Connecticut. McDonald's is also test-marketing "Go Active," an adult version of its Happy Meal. Instead of a burger and toy, the meal includes a salad and an exercise booklet. (Associated Press)

The United Food and Commercial Workers has filed two federal lawsuits against Ralphs markets, adding allegations of racketeering to claims that union members were urged by Ralphs store managers to work under false identities, in some cases using the Social Security numbers of the employees' minor children or relatives. The union seeks to stop Ralphs from allegedly continuing the illegal practice, and to force correction of allegedly falsified payroll records. Contract negotiations have not resumed to end a labor dispute that started Oct. 11 involving 70,000 California workers at Safeway Inc. (Vons and Pavilions), The Kroger Co. (Ralphs) and Albertsons Inc. (City News Service - Los Angeles)

GLOBAL MARKETWATCH

Dubbed "Europe's Enron," the potentially $16 billion Parmalat Finanziaria SpA scandal involves false documents, fictitious assets in offshore front companies to conceal debts, bankruptcy, and the arrest of ex-Chairman Calisto Tanzi and eight others; a total of about 20 people, many family members, are under criminal investigation. The investigation by Italian authorities of fraud at Milan-based Parmalat will delay any asset sales, including Parmalat's U.S. cookies and biscuits business, which includes Archway and Mother's brands that went on the sale block last month. The company's core dairy business in North America and Europe, aren't likely to be sold, but it is speculated that the company will sell a few other select businesses to raise cash in the Americas, among them are its Brazilian operations, which have fallen behind on payments to vendors. Australia's biggest dairy, National Foods Ltd., is seeking to buy its local milk-distribution unit, Pauls Ltd., recently renamed Parmalat Australia. (Daily Deal/The Deal; The Associated Press)

IDFA NEWS

Dairy Forum Begins in Ten Days- Register Now!
The 2004 Dairy Forum is just ten days away - January 18-21 at the Boca Raton Resort & Spa, in Boca Raton, Florida. IDFA's premier annual meeting gathers players from all facets of the dairy industry - producers, processors and suppliers -to discuss and debate significant policy issues facing the industry. Highlights include sessions on: strategies for driving dairy market growth and profitability; the outlook for dairy markets; milk vs. soymilk in schools; the debate over casein, caseinates and MPCs; promoting the farm business environment; new research on milk price elasticity; leveraging research on dairy and weight loss; a conversation about upcoming industry issues with Jerry Kozak, president and CEO of the National Milk Producers Federation and Connie Tipton, president and CEO of IDFA; and much more. To register, click here. http://www.idfa.org/meetings/2004dairyforum.cfm

ODDS-AND-ENDS

The Hardin County, Kentucky, public school system has eliminated ice cream sales in elementary school cafeterias out of concern about childhood obesity. Kentucky ranks second nationally for the percentage of obese students. (Associated Press)...In appreciation of the Arizona Cardinals' win over the Minnesota Vikings, allowing the Green Bay Packers to win the National Football Conference North Division title and advance to the National Football League playoffs, Sargento Foods Inc. sent a gift of football-shaped Wisconsin cheeses to the Cardinals players. Plymouth, Wis.-based Sargento makes the "Official Cheese of Lambeau Field," where the Packers play. Sargento has also extended its Touchdowns for Charity program through the playoffs. The program started this football season and donates $1,000 for each Packers touchdown to the Milwaukee food bank Hunger Task Force ($54,000 so far). During the playoffs, the company will contribute $2,000 for each Packers touchdown. Sargento made an additional $1,000 donation to the food bank as a thank you to the Cardinals, and has offered to make a comparable donation to a charity of the Cardinals' choice. (Milwaukee Journal Sentinel-Wisconsin; Associated Press)...In a sort of bizarre-world reflection of the popular "Seinfeld" sitcom, the city of New York has accused frozen dessert chain CremaLita's of false diet claims. An investigation found the 4- to 6-oz. products, that claimed to be a low-calorie frozen snack with a typical calorie count of 60, may actually contain up to 271 calories. The eight-store CremaLita's chain says the 60-calorie example is based on a serving of vanilla. The chain plans to fight 61 counts of deceptive and misleading trade practices and a fine of up to $30,000. In the "Seinfeld" episode, fat-free frozen yogurt becomes suspect as Jerry and his friends gain weight. When the product is tested and found to be full of fat, it is criticized by the city. (Daily News-New York)...D-brief celebrates its one-year anniversary this week. Thanks for reading!

STOCK MARKET TICKER

As of 1/6/04, market close.

Company/Symbol		Last Trade		Change over Previous Close		Change over Last Week's D-brief
ConAgra Foods/CAG Dean Foods/DF Dreyer's/DRYR General Mills/GIS Groupe Danone/DA Hershey Foods/HSY Horizon Organic/HCOW Ingles Markets/IMKTA Kraft Foods/KFT Kroger/KR Ruddick Corp./RDK Safeway/SWY Saputo/SAP.TO SuperValu/SVU Unilever PLC/UL Weis Markets/WMK Wimm Bill Dann/WBD Winn-Dixie/WIN		26.31 33.18 77.70 45.50 33.47 77.17 24.00 10.29 32.49 18.48 17.84 22.08 29.94 28.43 38.25 36.03 17.20 09.77		-0.14 -0.01 +0.15 -0.25 +0.34 +0.27 +0.05 +0.08 +0.33 -0.12 -0.26 +0.09 -0.80 -0.27 +0.33 -0.57 +0.13 -0.26		+0.09 -0.07 -0.04 -0.06 +1.14 +0.09 +0.05 +0.03 +0.24 +0.07 -0.43 +0.75 -2.01 -0.22 +0.78 -1.36 +0.39 -0.02

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