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September 22, 2004

Dean Foods buys Parmalat USA subsidiary...Foremost closes Hawaii milk plant...Wendy's and McDonald's report dramatic milk sales increases...Global Marketwatch...Attorneys consider immunity for Ralphs workers who broke strike...California Food 4 Less workers reject offer, authorize strike...Groups protest Penn Traffic reorganization...Winn-Dixie, Safeway announce management changes...Odds-and-Ends...Stock Market Ticker...More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Milk Products of Alabama LLC, a subsidiary of Parmalat USA's Farmland Dairies LLC, will be sold to Dallas-based Dean Foods for $21.6 million. U.S. Bankruptcy Court for the Southern District of New York approved the sale. Parmalat USA, Wallington, N.J., the U.S. division of troubled Italian dairy giant Parmalat Finanziaria SPA, hopes to emerge from bankruptcy by focusing on its core milk business with Farmland.
      In other Parmalat news, the parent company is preparing a stock offering as its first step toward emerging from scandal as a new company. The share listing is expected in early 2005. Trading of Parmalat shares has been suspended since December...Parmalat's former chief financial officer, Fausto Tonna, who investigators believe helped push the dairy group toward insolvency, seeks $6 million in severance pay from the company. Enrico Bondi, the government-appointed bankruptcy administrator, threw out a similar claim from Calisto Tanzi, the company's former chairman, earlier this year...Meanwhile, Parmalat Australia plans to close its Warwick cottage cheese, Camembert, Brie and butter processing facility. (Company report; Associated Press; RWE Australian Business News)

Foremost Dairies-Hawaii will shut down completely in November, resulting in 120 employee layoffs. The closure will leave Meadow Gold Dairies as Hawaii's only major milk and dairy processor. Foremost's former owner, House Foods Corp. of Osaka, Japan, said this was a situation it hoped to avoid when it sold to a group of investors eight months ago. The investors, headed by Island Dairy owner Bahman Sadeghi, claimed they had to close the factory because House Foods failed to disclose problems with the facility and the needed upgrades were too expensive. House Foods disputes the claim. Foremost temporarily shut down the plant in August and processed milk through Meadow Gold after a Department of Health report found that two 5,000 gallon storage tanks needed exterior repairs. (Honolulu Advertiser)

Dublin, Ohio-based Wendy's International, Inc. reports that milk sales at its restaurants have risen fifteen-fold since July—to more than a million units a week up from 65,000. Similarly, McDonald's Corp., Oak Brook, Ill., reports that milk sales since May have doubled. The sales increases are mainly attributed to the introduction of new 8-ounce plastic milk bottles and the promotion of the beverage as a choice for kids' meals. NPD Group, a market research firm, reports that overall restaurant milk sales rose 10% for the quarter ending July 31, and clearly McDonald's and Wendy's did not solely account for the increase. (Wall Street Journal)

GLOBAL MARKETWATCH

The dairy industry in Germany is challenging a Swiss claim that "Emmental" cheese can only carry that name if made in Switzerland. A Swiss food agency ruled that the cheese, named after the Swiss valley where it was first produced, cannot be sold under the Emmental name if produced outside Switzerland. Germany urged the European Commission to strike down the ruling. The German dairy industry has the support of Emmental producers in France, Denmark and Austria. It claims international agreements from as far back as 1951 allow any cheese producer to use the name. The German association also claims Emmental has been made in Germany since 1820. (National Post)

Switzerland-based Nestlé will build a new milk base in Inner Mongolia in northern China to boost its fresh milk supply in the country. Nestle will buy the Meilu Dairy Products Co.'s milk products factory, upgrade it and then begin production. Nestle said it will also build a new factory in the area in the future. (Xinhua News Agency)

A Russian milk factory and local tap water were blamed for an outbreak of poisoning that occurred in the Sverdlovsk region. More than 100 people were hospitalized with an intestinal infection. Dysentery was diagnosed in more than half the cases. Russian health authorities closed the milk facility on Sept. 11, but infected products had already been shipped. Stores continued selling the products after authorities prohibited sale. (BBC Worldwide)

CUSTOMER CLIPS

Supermarket Labor Update: Federal investigators are considering immunity from prosecution for Ralphs grocery clerks who crossed picket lines last year and worked under false names. Ralphs, a unit of Kroger Co., said it would not discipline hourly employees who supplied false names and Social Security numbers if they informed its legal department. The U.S. Attorney's office in Los Angeles also informed employees it would not prosecute any locked-out workers as long as they cooperated with attorneys. The chain could be liable for back pay to 20,000 employees if it is found to have violated federal labor, tax or Social Security laws. (Orange County Register)...Employees at Kroger's Food 4 Less stores in southern California authorized a strike after rejecting the company's latest offer. Both sides are still negotiating. The grocery chain's contract with employees expired in February. At issue are employee insurance contributions and different rules for new hires. Food 4 Less has roughly 20 stores in Riverside and San Bernardino counties. (Press-Enterprise, Riverside, Calif.)

Three groups are protesting the reorganization plan of Syracuse, N.Y.-based Penn Traffic Co., saying the plan has insufficient information on how it will impact creditors. The groups, an insurance group and two pension plans, are asking the bankruptcy judge to reject Penn Traffic's proposal. The proposed reorganization plan has Penn Traffic repaying roughly $26 million to post-petition secured creditors. It would also cancel its existing 20 million shares of common stock and then issue new stock to unsecured creditors after a reorganization. Penn Traffic filed for bankruptcy in May 2003. (Wilkes-Barre Times-Leader)

Retail People: Winn-Dixie Stores Inc. chairman A. Dano Davis announced his retirement from the Jacksonville, Fla.-based chain citing personal reasons. He spent 35 years with the company started by his father and grandfather. Jay Skelton, president and chief executive officer of DDI Inc., will serve as the new chairman. Separately, Safeway Inc., Pleasanton, Calif., announced the resignation of R. Randall Onstead Jr. as president of at its Oak Brook, Ill.-based Dominick's Finer Foods subsidiary; Bruce Everette, an executive vice president at Safeway, will assume Onstead's responsibilities. (Florida Times-Union; Company report)

IDFA NEWS

Last Chance to Send in Nominations for the Innovative Farmer Award
Don't miss a great opportunity to recognize a progressive dairy farmer: nominations are due this Friday, September 24, for the seventh annual Innovative Dairy Farmer of the Year title! Co-sponsored by IDFA and Dairy Today magazine, this prestigious award will be presented to the winner at the 2005 Dairy Forum, January 9-12, in Orlando, Fla. There is no fee to submit a nomination, so be sure to send in your candidates this week! For complete criteria and an entry form, click here.

ODDS-AND-ENDS

U.S. Sen. Bill Nelson, R-Fla., and 20 other Congressmen representing Florida requested increased federal hurricane disaster relief funds to aid Florida's damaged agriculture industry. Nelson cited $12 million in losses to dairy producers in his request. (Sun Herald, Port Charlotte, Fla.)...In Passing: Edwin S. "Ed" Gustafson Sr., owner of Gustafson's Dairy, Green Cove Springs, Fla., died Sept. 14. He was 88. His parents started the dairy in 1908. Gustafson, along with his brothers Noel and Pete, grew the dairy into one of the largest family owned and operated dairy and milk processing businesses in the Southeast. At one time, Gustafson's had 10,000 acres, 5,000 cows and contracts with more than 2,500 retail outlets. (Florida Times-Union)...A rancher in Cuba has bred miniature dairy cows as a way for Cuban families to provide their households with milk. Hernandez started with a tiny bull and began breeding it with the smallest cows he could find. Five years (and several generations of cows) later he has a herd of cows that are no bigger than large dogs. Hernandez says they produce four or five liters of milk per day on limited fodder. (Associated Press)

STOCK MARKET TICKER

As of 9/21/04, 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		25.81 30.76 79.80 45.35 15.96 47.23 12.23 32.00 15.60 19.55 19.90 32.49 27.65 34.11 34.88 13.88 03.79		-0.52 -0.61 +0.03 -0.98 +0.51 -0.53 +0.03 -0.40 -0.04 +0.06 -0.04 +0.04 +0.05 +0.89 +0.62 +0.63 -0.01		-1.24 -0.24 +0.12 -1.50 -0.05 -1.08 +0.59 +0.18 -0.38 -0.27 -0.63 +0.26 +0.36 -1.39 -0.59 +0.84 -0.49
Source: Yahoo! Finance

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