December 31, 2003

Happy New Year from D-Brief!...BSE cow traced to Canada…. Oakhurst, Monsanto settle on label dispute…. Horizon-Dean deal approved…. Braum's introduces new line of low carb, superpremium ice cream…. Five grocery chains named to FORTUNE magazine’s “100 Best” list….Supermarket labor dispute update…. Global Marketwatch…. Odds-and-Ends.... Stock Market Ticker.... more news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Confirmation of the first case of bovine spongiform encephalopathy (BSE), or mad cow disease, in the United States was made on December 25 on a Holstein cow from a Washington dairy farm. The animal was one of a herd of 74 cattle that were shipped from Alberta, Canada, into Idaho in 2001, according to the U.S. Department of Agriculture. Out of what USDA called an abundance of caution, meat processed from the single cow has been recalled from eight western states and the U.S. territory of Guam. The recall involves 10,000 pounds of meat, mostly hamburger ground at Interstate Meat Distributors in Clackamas, Ore. The meat came from the BSE-positive cow as well as from 19 other dairy cows culled from a herd of 4,000. The dairy farm is under quarantine. USDA has enacted a series of safeguards against BSE, including: high priority on a national animal identification system, a ban on meat from “downer” (sick or disabled cattle) in the food supply chain; a ban on use of the small intestine from cattle in human food; no sale of meat from suspect animals before a BSE test is complete; and a planned adaptation of regulations for handling brain and nervous-system tissue similar to the system enacted in Canada following its discovery of a cow with BSE last May. Numerous countries have imposed a ban on U.S. beef. The Food and Drug Administration has reaffirmed the safety of milk and dairy products. (The Washington Post; Financial Times-London, England)

Portland, Maine’s Oakhurst Dairy and Monsanto Corp. have reached a settlement in which Oakhurst will change the language of its dairy labels. St. Louis-based Monsanto brought suit against Oakhurst in July for labels that it claimed deceptively suggest Oakhurst's milk is safer because it doesn't contain “artificial growth hormones.” Oakhurst will continue to publicize that its farmers don’t use bovine somatotropin (BST), but it will follow Food and Drug Administration (FDA) guidelines on the issue by adding: “FDA states: No significant difference in milk from cows treated with artificial growth hormones.” The suit had been scheduled to go to trial Jan. 5 in federal court. Monsanto reached similar out-of-court agreements with dairies in Illinois and Texas in 1994. (Bangor Daily News-Maine; The Boston Globe)

Horizon Organic Holding Corp. shareholders approved the company's pending acquisition by Dean Foods Co. first floated in June. Boulder, Colo.-based Horizon reports the transaction is expected to close in January. Dallas-based Dean will buy the 87 percent of Horizon it does not already own for about $216 million and will assume about $40 million of Horizon debt. (Reuters)

Oklahoma City-based Braum's Ice Cream and Dairy Stores has introduced superpremium CarbWatch Ice Cream. The Splenda-sweetened ice cream line contains 2 to 3 grams of net carbohydrates per serving. It is available by the scoop and in hand-packed pints. Pints will later appear in the store's grocery departments. Flavors include vanilla, chocolate, chocolate chip, chocolate pecan, butter pecan and chocolate almond. Braum's operates 281 stores in Oklahoma, Kansas, Texas, Missouri and Arkansas. Braum’s is also gaining publicity with the announcement of the Oklahoma quarterback Jason White's winning the Heisman Trophy; Braum’s operates a 10,000-cow dairy in the winner’s hometown of Tuttle, Okla. (The Journal Record-Oklahoma City, Okla.; Sun-Sentinel-Fort Lauderdale, Fla.)

CUSTOMER CLIPS

Five grocery store chains made the 2004 FORTUNE magazine’s “100 Best Companies to Work For,” to be published in the magazine’s Jan. 12, 2004 issue: Wegmans (No. 9), Stew Leonard's (No. 30), Whole Foods Market (No. 47), Ukrop's Super Markets (No. 75) and Publix Super Markets (No. 98). (Stew Leonard’s press release)

Contract negotiations have once again broken off between representatives of Safeway Inc. (Vons and Pavilions), The Kroger Co. (Ralphs) and Albertsons Inc. and United Food and Commercial Workers. Supermarkets rejected UFCW’s first broad proposal to end a labor dispute involving 70,000 California workers that started Oct. 11. The union proposed a cut of employer funding of worker benefits by between $350 million and $500 million over a three-year contract. The supermarkets are looking for about $1 billion in cuts. The union announced it would begin removing pickets from southern California distribution centers last week as a show of good faith. Also last week, California's attorney general began reviewing a controversial mutual aid pact profit-sharing plan between the grocery chains for antitrust violations. (Associated Press, Reuters)

GLOBAL MARKETWATCH

A multi-billion-dollar scandal is underway for Italian milk company Parmalat Finanziaria SpA. Parmalat’s ex-Chairman Calisto Tanzi is in police custody facing charges of fraudulent bankruptcy and false accounting after improperly diverting at least $1 billion in company funds. Warrants on the same charges have been issued for eight more top Parmalat officials and auditors, and another dozen officials are under investigation. In addition, the U.S. Securities and Exchange Commission (SEC) filed suit against Parmalat Monday for “grossly overstating its assets” to U.S. investors holding about $1.5 billion in its bonds and notes. The SEC said Parmalat acknowledged earlier this month that it overstated assets in its 2002 audited financial statements by about $4.9 billion. Tanzi’s attorneys have additionally admitted that hundreds of millions of dollars were improperly shifted from the company, primarily to travel businesses controlled by the Tanzi family. Tanzi, 65, has also been accused of market-rigging and making false statements to auditors. He has admitted to knowing $10 billion in losses were falsely reported.

Italian courts declared the company insolvent Saturday; shares were suspended indefinitely by the Italian Exchange Tuesday after plunging 90 percent (to 13 cents) since the scandal broke. Parmalat reports its businesses are operating normally, that the company intends to preserve its brands, and that its main business unit, Parmalat SpA, will pay milk producers. The multi-national company sells milk products, desserts and fruit juices in 30 countries and has more than 200 subsidiaries. About a quarter of its $7 billion in sales last year came from U.S. holdings, including more than 20 food plants and dairies. (Associated Press, The Washington Post, The New York Post)

IDFA NEWS

The 2004 Dairy Forum is less than three week 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; “Just the Facts Ma'am” – casein, caseinates & 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.

ODDS-AND-ENDS

An early morning boiler explosion at the Reedsburg, Wis., Foremost Farms butter plant shook the city on Dec. 23. Ammonia leaks forced the evacuation of a small group of nearby residents. No one was seriously injured. The Reedsburg facility produces butter and condensed skim milk, and is owned by dairy cooperative Baraboo, Wis.-based Foremost Farms. (Reedsburg Times Press-Reedsburg, Wis.)… Colorado-based Leprino Foods will pay $100,000 in a settlement reached last week between the cheese processor, the Nebraska Department of Environmental Quality and the attorney general’s office. Leprino’s plant in Ravenna, Neb., apparently pumped wastewater into a creek without a permit earlier this year. Leprino Foods did not admit violating any laws or regulations, but paid an $85,000 fine and an additional $15,000 to the City of Ravenna for wastewater treatment plant upgrades. The Leprino facility has a treatment pond and storage pond system; treated wastewater then is applied to farmland through two center pivots. (Omaha World Herald)… Foremost Dairies-Hawaii was purchased by FH Acquisition LLC from House Foods Hawaii Corp. for an undisclosed price on Monday. The deal is set to close Jan. 30, with the new owners keeping the full line dairy’s Kalihi headquarters as well as 146 employees on Oahu and Maui. (Associated Press)

STOCK MARKET TICKER

As of 12/30/03, 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		26.22 33.25 77.74 45.56 32.33 77.08 23.95 10.26 32.25 18.41 18.27 21.33 31.95 28.65 37.47 37.39 16.81 09.79		-0.03 +0.05 -0.09 +0.14 +0.23 -0.07 +0.03 +0.01 +0.53 +0.02 -0.03 +0.03 +0.05 +0.00 +0.52 -0.06 -0.04 -0.03		+0.30 +0.35 +0.29 -1.52 +0.55 -0.12 +0.00 +0.31 +0.66 +1.08 +1.29 +1.35 +3.30 +3.19 +1.46 +1.11 +0.91 +0.65
Source: Yahoo! Finance **D-brief was not published last week in observance of the Christmas holiday; comparisons are therefore to the Dec. 17 issue.

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