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August 18, 2004

Antitrust allegations hit DFA... Hawaiian dairy to suspend milk processing... Grants for Wisconsin dairy processors... Nestle financials... Dairy Business Building... Supermarket/union updates... Seattle chain launches private label milk... Plan ahead for 2005 Dairy Forum ... Odds-and-Ends...Stock Market Ticker...More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Dairy Farmers of America (DFA) is the focus of an antitrust investigation by the U.S. Department of Justice (DOJ). The Kansas City, Mo.-based cooperative's exclusive supply agreements in eastern Louisiana and Florida are reportedly being examined as part of the probe. Earlier this month, DOJ investigators and representatives from the Louisiana and Florida attorney general offices met with Louisiana producers. DFA reports the DOJ has not yet been in touch regarding this investigation, and that over the years each of its numerous acquisitions, mergers and business ventures have passed DOJ scrutiny. Florida's Southeast Milk cooperative reports it has been requesting an investigation of DFA's exclusive supply agreements for 18 months, after DFA began requiring it to pay $3.5 million annually to continue to sell its milk to DFA-owned processing facilities. DFA has 13,445 member farms and markets 57 billion pounds of milk a year, roughly a third of the nation's milk production. (Chicago Tribune)

Equipment and environmental issues with fluid processing lines will halt milk production at Foremost Dairies-Hawaii on August 24 through at least the end of September. Company representatives and state health officials note that milk quality issues are not a factor in the decision. Foremost intends to maintain all of its other dairy business while the milk processing operation is closed and will continue to distribute milk, ice cream, yogurt, cottage cheese, sour cream and other cultured milk products. Bahman Sadeghi, Foremost's new owner, took over in January. Foremost's shutdown will give Meadow Gold Dairies a temporary milk processing monopoly in the state; Meadow Gold has agreed in principle to co-pack Foremost's milk at the Meadow Gold plant. (Associated Press)

State grants of up to $50,000 are being offered to Wisconsin dairy businesses that introduce new dairy products, enter new markets or implement supply-chain innovations. The state is offering $820,000 total in grants as part of the Wisconsin Value Added Dairy Initiative to re-energize the local dairy industry. Other program grants (ranging from $7,500 to $25,000) will go to organizations promoting dairy farmers and to producers for modernization efforts and for shifting to grazing operations. The initiative will also build a new dairy business innovation center to support specialty cheese businesses. The program was launched in July with the help of $2 million in federal funding; the rest of the $4 million budget is derived from state sources. (Associated Press; State of Wisconsin report)

Vevey, Switzerland-based Nestle reports first-half net profits this year of US$2.28 billion, up 0.02% when compared to the first half of 2003. Sales for the first six months of 2004 reached $34.22 billion, up from $30.22 billion for the same 2003 period. Nestle noted that its profits were affected by rising manufacturing costs, including those for milk, sugar, coffee and energy. Looking ahead, the company continues its plans to cut costs by $4.82 billion, with the savings coming primarily in 2005 and 2006. (Associated Press, Bloomberg)

DAIRY BUSINESS BUILDING

Gossner Foods Inc., Logan, Utah, plans to build a $40 million processing plant at a J.R. Simplot facility site in Heyburn, Idaho. The plant will primarily make Swiss cheese, with operations to open by October 2005 with a staff of 30 to 40 workers. J.R. Simplot Co. will continue to use its frozen food distribution center and ancillary buildings; it shut down processing facilities beginning in 2002. Gossner has signed a 40-year lease for the property. (Associated Press)

Swiss dairy giant Nestle will build a $10 million condensed milk plant in the central Chilean city of Los Angeles, to be operational next year. Given the plant's expected annual capacity of 40,000 tons, products will likely be exported to the United States, Bolivia, Peru, Ecuador, Colombia, Venezuela, Puerto Rico, Mexico and Japan. (Latin America News Digest)

Organic Valley, LaFarge, Wis., will move into its new and environmentally-friendly headquarters by September, and expects to expand its HQ staff to 180 employees. The 49,210 square-foot building's barn motif features several energy efficiencies including an energy recovery system that swaps cool and warm air within the building, day lighting that uses natural light to reduce the need for electric lighting, and solar-powered parking lot lights. Various recycled materials are incorporated into the structure, including recycled steel for the frame, fly ash (an aluminum casting byproduct) for the drywall and insulation made with recycled cloth. The $5.9 million project received significant financing from local and federal government sources. (Company report)

CUSTOMER CLIPS

The Kroger Co. and the United Food and Commercial Workers union struck a four-year deal covering 10,000 Kroger employees in parts of Kentucky and southern Indiana. Meanwhile, another Kroger union contract -- covering about 8,500 employees and 70 stores in parts of Ohio, Kentucky and Indiana -- is under negotiation. The current contract expires October 9. (Company report; Associated Press)

Seattle-area United Food and Commercial Workers approved a three-year contract on August 15 with Safeway, Albertsons, and Kroger-owned QFC and Fred Meyer stores. Employees agreed to pay more for health care, and a two-tier pay plan sought by employers was rejected. The contract is for 11,000 union members, and is expected to be used as a model for contracts with another 11,000 grocery workers elsewhere in Washington state. (Associated Press)

In its chain of six Seattle-area stores this week, Larry's Markets introduces a variety of Larry's-branded products made from milk from cows not treated with rBST. The fat-free, 1%, 2% and whole milks will be available under the private label banner in both half-gallon and gallon sizes. Introductory pricing for half-gallon units will be $0.97 through the end of the month. (Company report)

IDFA NEWS

Mark Your Calendar: Dairy Forum Set for January 9-12, 2005
Be sure to save the dates of January 9-12, 2005, to attend the Dairy Forum, which will be held at the Disney Yacht and Beach Club in Orlando, Fla. IDFA's annual meeting has become widely recognized as the most important processor-producer meeting of the dairy industry's year! The 2005 program will include keynote addresses from Tom Donahue, President and CEO, U.S. Chamber of Commerce and from IDFA President and CEO Connie Tipton. In addition, Andrew Ferrier, CEO, Fonterra Cooperative Group, will give his perspective on global dairy markets, and Washington, D.C., insider Stu Rothenberg will be back to talk about the outcome of the U.S. elections and what's in store for the next four years. Watch www.idfa.org for coming details about the full agenda and registration information. ###

ODDS-AND-ENDS

Operating plans for the Cooperatives Working Together (CWT) milk supply management program have been announced for the initiative's second year. Funds will be allocated in an 80/20 split between herd retirement and export assistance, respectively. Details on bids for herd retirement will become available in mid-September, while the export program will continue to receive target price level bids for both cheese ($1.40 per pound) and butter ($1.30 per pound). (National Milk Producers Federation).... The Cheese Importers Association of America is organizing a travel package to attend the 2004 SIAL show in Paris, October 15-22. The package includes such sightseeing plans as a dinner cruise in Paris, a half-day excursion to Auvers and a full-day trip to Normandy. Airfare and hotel included. For more information, contact Virginia Sheahan at CIAA at 212-753-7500. (CIAA).... Summer brings state fairs, and state fairs mean butter sculptures. The 150th Iowa State Fair features 1,000 pounds worth of the sculptures, including a cow, a barn and a 300-pound birthday cake. The Illinois State Fair's traditional butter cow has a new spin -- it's surrounded by an entire barnyard scene, complete with a butter cowpie, butter milk, butter kittens, butter barn mice and even butter flies. The 158th New York State Fair butter cow sculpture will be joined by a smaller version made of fired clay for the enjoyment of the visually impaired. (Iowa State Fair report; Associated Press; The Post-Standard, Syracuse, N.Y.).... World-renowned French cooking expert Julia Child died in her California home on the eve of her 92nd birthday, August 14. A champion of butter use, her Baking with Julia TV series alone used 700 pounds during its run. (Newsday)

STOCK MARKET TICKER

As of 8/17/04, 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 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		26.05 36.28 79.47 45.95 16.27 47.99 11.16 30.48 15.74 18.80 20.66 31.60 28.19 34.93 34.05 13.21 06.08		-0.01 +0.06 +0.05 +0.24 +0.18 -0.21 -0.10 +0.05 +0.32 -0.11 +0.43 +0.35 +0.24 +0.01 +0.48 +0.11 +0.09		+0.15 +0.72 +0.07 +0.71 +0.07 +0.75 -0.09 +0.92 +0.43 -0.76 -0.31 +0.15 +0.08 +0.13 +1.48 -0.05 +0.08
Source: Yahoo! Finance

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ABOUT D-BRIEF

D-brief is written by Dairy Field magazine, a Stagnito Communications Inc. publication, www.dairyfield.com. It is provided for the benefit of the industry by the International Dairy Foods Association (IDFA), www.idfa.org.

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