2023 December Board Book

CALIFORNIA MILK ADVISORY BOARD

Board of Directors Meeting

December 6 – December 7, 2023

CALIFORNIA MILK ADVISORY BOARD 2156 W Grant Line Road, Suite 100 Tracy, California 95377 (209) 883-6455 RealCaliforniaMilk.com BOARD MEETING AGENDA Wednesday, December 6, 2023 at 7:30 am and Thursday, December 7, 2023 at 8:00 am Hilton Santa Barbara Beachfront Resort 633 E Cabrillo Boulevard Santa Barbara, CA 93103 (805) 564-4333

All matters noticed on this agenda may be considered for action. Items listed on the agenda may be considered in any order at the discretion of the Board Chair. Any item not so noticed will not be considered or discussed. All meeting agendas and notices are available on the California Department of Food and Agricultural website at: https://www.cdfa.ca.gov/mkt/mkt/. (select meeting notices) Each of the agenda items below will include discussion and possible action by the Board. Time will be allowed for members of the public to make comments on each agenda item. Comment time may be limited based on the number of agenda items and/or number of commenters.

1. Call to Order – Chairman Tony Louters

2. Roll Call – Secretary John Vander Poel

3. Introduction of Guests – Chairman Tony Louters

4. Financial Report – Treasurer André Brasil

5. Individual District Reports

6. Marketing Branch Report

7. Report from Chairman – Tony Louters

8. Report from Chief Executive Officer – John Talbot

9. Guest Speaker – Phil Plourd, Ever.Ag

10. Food Service Review – Mike Gallagher, Katie Cameron

11. 2023 Program Review and 2024 Tactical Plan/Budget a. Set up b. Advertising c. Communications

d. Business Development e. Processor Partnerships f. Producer Relations g. CDIC

12. California Dairy Research Foundation 2024 Program and Budget Review

13. First Reading of Proposed 2024 Budget

14. Committee/Industry Meetings Update

15. National Dairy Board Update

16. Consideration of Administrative and Procedural Policy for 2024

17. Consideration of Operations Resolutions for 2024

18. Ratification of Assessment Rate for 2024

19. Second Reading and Adoption of 2024 Budget

20. Minutes of Last Board and Executive Committee Meetings – Secretary John Vander Poel

21. Other Business a. Items to be discussed at next board meeting

22. Public comment on non-agenda items

23. Closed Session Pursuant to Government Code section 11126, the Board is authorized to meet in Closed Session for the purpose of considering matters involving: a. Personnel Matters – Employee Performance Evaluation [Government Code 11126(a)(1)] b. Personnel Matters – CEO Performance Evaluation/Employment Agreement [Government Code 11126(a)(1)]

24. Reconvene Open Session

25. Adjournment

Americans With Disabilities Act Persons with disabilities needing special accommodation or modification in order to attend or participate in any Board or Committee meeting or other Board activity may request assistance by contacting John Talbot, C.E.O., California Milk Advisory Board at 209-883-6455.

B AGLEY -K EENE O PEN M EETING A CT S ECTIONS 11120 THROUGH 11132 OF THE C ALIFORNIA G OVERNMENT C ODE

Objective of the Act

When the Legislature enacted the Bagley-Keene Open Meeting Act (Act), it imposed a “ value judgment ” on the Governmental process. In effect, the Legislature said that when a State body sits down to develop its consensus, there needs to be a seat at the table reserved for the public. By reserving this place for the public, the Legislature provided the public with the ability to monitor and participate in the decision-making process. If the State body were permitted to meet in secret, the public’s role in the decision-making process would be negated. Therefore, absent a specific reason to keep the public out of the meeting the public should be allowed to monitor and participate in the decision-making process. If one accepts the philosophy behind the reservation of a seat at the table for the public, many of the particular rules that exist in the Act become much easier to accept and understand. Simply put, some efficiency is sacrificed for the benefit of greater public participation in government. A State body is every state board, council, commission or similar multimember body that is created by statute or by executive order including committees appointed by a State body (if the committee consists of three or more members). A meeting occurs when a majority of a body convenes, either serially (not permitted) or, together in one place, to address issues under the body’s jurisdiction. This includes meetings solely for the purpose of presenting information to a body. Even if no actions or decisions are contemplated, a gathering of a majority of a body to discuss issues under the body’s jurisdiction is considered a meeting under the Act. Serial Meetings occur when a member or staff of a State body communicates by telephone or email individually with a sufficient number of other members to constitute a quorum in order to discuss issues to come before the body. Such serial communications are prohibited by the Act. Social gatherings of a State body are not considered meetings covered by the Act so long as official business is not discussed. Teleconference meetings are permitted provided that information necessary to access the teleconference electronically and a primary physical location are included on the meeting notice, the location is accessible to the public and at least one member is present. Members planning to participate electronically must notify the Board office at least 24 hours in advance. The meeting minutes must reflect those members participating electronically. A Meeting Notice must be published at least ten (10) days prior to the date of the meeting. To avoid issues, issue notice 11 days before meeting at the latest. Meeting Notice must be mailed (or emailed) to anyone requesting a copy and must be posted on the Board’s website. The Meeting Notice must also be posted on CDFA’s website.

What is a State Body?

What Constitutes a Meeting?

What are Serial Meetings?

Social Gatherings

Teleconference Calls

Regular Meeting Notice Requirements

Required Posting

Special Meetings

In order to provide State bodies with a means of holding a meeting on short notice because of the occurrence of an unforeseen event, the Act allows for “Special Meetings” with a 48 -hour notice with copies to all national wire services. The purposes for which a body can call a special meeting are quite limited. Examples include pending litigation, legislation and certain personnel actions.

Notice Content

The Meeting Notice must include: ▪ Date, time and place meeting is to be held ▪ A specific agenda for the meeting ▪

If there will be a Closed Session, must be on the agenda and must cite Code Section and Subsection providing legal authority for Close Session. ▪ Notice that for every agenda item there will be discussion including public comment, and that board action may occur. ▪ Must list a contact person for questions concerning the agenda or for needed special accommodations. ▪ See example notice and agenda attached. The Agenda should allow opportunity for public comment on each agenda item . Members of the Public should also have opportunity to offer comments on subjects not listed on the agenda (reasonable time limits can be applied) A state body must record in the meeting minutes any action taken by the body and the vote or abstention of each member present for the action. In most cases, there are only two authorized reasons for Closed Sessions for our programs: ▪ Personnel Issues [Government Code Section 11126(a)(1)] ▪ Pending Litigation – Attorney should be present with memo prepared for the board of directors. [Government Code Section 11126(e)(1)] ▪ Chair must announce in open session that the Board is entering into closed session and state the (general) purpose of the closed session ▪ Only board members and people necessary to conduct the business of the closed session should be present ▪ When closed session adjourns, open session must be reconvened and the general nature of any actions taken in closed session must be reported ▪ Minutes of the closed session must be prepared and kept in confidential file

Comments from Public

Minutes Must Indicate Each Member’s Vote on Motions

Closed Sessions

Closed Session Process

Rights of the Public:

▪ To attend meetings free from conditions ▪ To tape, record or broadcast meetings ▪ To comment on any agenda item (may post a time limit) ▪ To make comments regarding non-agenda items (may impose time limit) ▪ To have access to documents provided to board members ▪ To receive notice to all meetings of the board or its committees including agenda ▪ Assurance that the meeting will not begin before the time stated on the notice

California Milk Advisory Board 2156 W Grant Line Road, Suite 100 Tracy, CA 95377 Telephone: 209-883-6455

I. Required Continuation Hearing – A public hearing must be held every five years to consider the CMAB’s continuation. The last continuation hearing was September 16, 2020. The next required continuation hearing will likely occur in the summer of 2025.

II. Fiscal Year – The CMAB’s fiscal year is January 1 to December 31.

III. Board Composition – The Board shall consist of 18 producer members and 18 producer alternates. There may also be a public member and public alternate who may not have a financial interest in the milk industry. There may not be more than 1 vote from any one production entity. Board seats are generally allocated in accordance with the number of milk producers within each district. The district allocation of Board seats is reviewed every three years.

IV. Role of Alternates – When a producer member is unable to attend a meeting, he or she may designate any alternate member from their district to serve in their place.

V. Interim Filling of Vacancies – When a producer member position becomes vacant, the Chairman may designate any alternate from the same district to serve as an interimmember until the next round of district nominations and preference voting during which CDFA will seek a replacement. When an alternate producer position becomes vacant, the Board may recommend and the Department may consider appointment of a producer to fill the vacancy or the position may remain vacant until the next round of district nominations and preference voting during which CDFA will seek a replacement. VI. Term of Office – The term of office for all members and alternates is 3 years. Terms are staggered so that one-third of the Board positions are filled each year. Terms begin March 1 and run through February 28 three years later. VIII. Selection /Appointment Process – All members and alternates are appointed by CDFA. Recommendations for producer appointments for each district are generated through a two-step mail process conducted each fall consisting of a self-nomination procedure followed by preference voting. Recommendations for the public positions are generated by a vote of the producer Board members. IX. Executive Committee – Each March the Board shall select an Executive Committee consisting of a Chairman, Vice Chairman, Secretary, Treasurer and three additional Board members. The Chairman is limited to three consecutive terms. X. Board Quorum and Board Voting Procedures – A quorum of the Board shall consist of 10 members. Except as provided in the two exceptions below, actions of the Board shall be valid if approved by a majority of the members present, provided there is a quorum of the Board present. • Any action recommending a minor amendment to the CMAB Marketing Order must be approved by not less than 75% of the producer members of the full Board. • Board actions related to the selection or dismissal of the CEO shall not be valid unless approved by a ⅔ vote of the full board . VII. Term Limits – The CMAB has no term limits. Board members and alternates may serve as long as they continue to be rechosen via their district’s nomination and preference voting process.

Over

XI. Maximum Assessment – Either 10 cents per hundredweight or 1% of Gross Dollar Value

XII. Authorized Activities:

A. Research Authority – The CMAB may fund research relating to milk and dairy products. Such research may include research studies concerning the production, processing or distribution of milk, the health and nutrition of milk or dairy products or the development of new uses for milk or dairy products. B. Education Authority – The CMAB may fund programs designed to acquaint producers, handlers, consumers or other interested persons with educational information. Such programs may include information regarding quality improvement, sanitation practices, procedures, or methods as applied to market milk or dairy products. Education programs may be designed to also make available to producers, handlers and the public the findings of research programs. • Milk and Dairy Products Other than Cheese, Ice Cream and Butter - The Board may develop programs of advertising and trade promotion relating to market milk and dairy products, provided , that any such plans, with the exception of plans that make incidental references to brands of cheese, ice cream, or butter as described below, shall be directed toward increasing the sale of such milk and dairy products without reference to any private trade name used by any handler or milk or dairy products. • Cheese, Ice Cream and Butter - The Board may develop advertising and sales promotion plans to allocate funds for promotions of cheese, ice cream, or butter products made with California milk, including promotions in which brand or trade names are used ; provided , that the use is incidental to the promotion of the California milk product and not in direct promotion of the brand or trade name; and provided further , that the allocation of funds is made available on a nondiscriminatory basis to all retailers and manufacturers of butter, ice cream, or cheese utilizing milk produced in California. Permissible private brand or trade name marketing promotions may include advertising, performance allowances, sales promotions, couponing subject to Section 61375 and in-store promotion programs and materials and other marketing communication tools. • Official Board Brands, Trade Names, Labels and Other Distinctive Designations - The Board is authorized to establish and to regulate the permissive use of official Board brands, trade names and labels, and other distinctive designations of grade, quality or condition, except the grade or quality designations in effect pursuant to State or Federal grade standards, for any product in which market milk or other dairy products are used. Any official Board brand or trade name which is established pursuant to this section shall not be construed as a private brand or trade name with respect to Section 58889 of the Code. C. Advertising and Sales Promotion and Market Development Authority:

CMAB Glossary of Terms

ACV (All commodity volume) – Total grocery dollars attributed to individual retail groups in a defined geographic trade area .

Advertising awareness – One diagnostic tool that companies use to gauge the success of a campaign, advertising awareness studies measure whether or not consumers have knowledge of the ad or recall seeing it.

Advertorial – An advertisement in a print publication designed to look like a news or feature article.

Aseptic: Aseptic packaging is a procedure consisting of sterilization of the packaging material or container, filling with a commercially sterile product in a sterile environment and producing containers that are tight enough to prevent recontamination (hermetically sealed). Aseptically packaged ultra-high temperature (UHT) milk is shelf-stable and does not require refrigeration.

Brand – A name or symbol that identifies a company’s product as distinct from those of its competitors . A well- developed brand communicates a promise to the consumer about a product’s unique benefits.

Broker – An agent who is authorized to buy or sell products for another organization. Brokers facilitate the movement of dairy products from processors to retail stores.

California Dairy Innovation Center (CDIC) – A collaboration of California processors, universities and check-off organizations focused on stimulating innovation in the dairy sector. Staffed and managed by CMAB. California Dairy Quality Assurance Program (CDQAP) – An educational program collaboratively offered by the California dairy industry, state and federal regulatory agencies, and the University of California. Its goal is to encourage, through education and voluntary certification, science-based dairying practices which promote the health of the consumer, the environment, and dairy livestock. California Dairy Research Foundation (CDRF) – The mission of the CDRF is to increase the utilization of milk through investments in research. The scope of this research includes dairy foods, dairy herd health and food safety, nutrition, and dairy quality assurance. California Department of Food & Agriculture (CDFA) – The CDFA promotes and fosters confidence in California agriculture by implementing and communicating public policy and programs. The CDFA interfaces with the dairy industry in a variety of areas including exports, promotion and research marketing orders, producer milk pricing, pooling and distribution of milk revenue, quality and sanitation, and animal health.

Cable TV – Television service purchased by consumers that is carried to homes by direct wires (cables).

Cause Marketing – An initiative in which CMAB partners with one or more other organizations to positively address a specific need with a social responsibility charge. This includes things like food donation programs and often carry positive public relations opportunities.

Centralized buying – Under a centralized buying system, the responsibility for product selection and purchase is consolidated in a central market office, rather than with the individual stores.

Club store – A members-only, large-scale, high-volume store that stocks a large number of products that sell at low prices. Examples include Costco and Sam’s Club.

Control label products – A brand developed by a small regional or local wholesaler, as distinguished from a brand bearing the name of a manufacturer or producer. Control label products are typically distributed to a limited number of retailers.

Cost-per-engagement (CPE) – A means of measuring digital and social media advertising effectiveness that shows the cost when a digital ad or piece of social media content is engaged with.

Cost-per-thousand (CPM) – A means of measuring advertising effectiveness that shows the cost, per 1,000 people reached, of buying advertising space or time in a given media outlet.

Cross-promotion – A sales promotion that uses one brand to promote another, non-competing brand.

Culinary Advisory Panel – A panel of multi-cultural food bloggers who help guide CMAB on appropriate messaging, thematic content, and recipe creation for all ethnic promotions to ensure relevancy and lend authenticity. Dairy Business Innovation Initiative (DBII) – Pacific Coast Coalition – Funded by USDA, Dairy Business Innovation (DBI) Initiatives support dairy businesses in the development, production, marketing, and distribution of dairy products. DBI Initiatives enhance academic capacity, provide direct technical assistance and grants to dairy businesses. The DBII Pacific Coast Coalition, hosted by Fresno State, in partnership with CMAB/CDIC is one of four in the United States. Dairy Management, Inc. (DMI) – A non-profit organization that conducts integrated programs in marketing communications, promotion, and research on behalf of America’s dairy farmers . It was formed in 1995 by the National Dairy Board and the United Dairy Industry Association. Designated Market Area (DMA) – Is a region or territory where people get the same television and radio options. They are often linked by major metropolitan cities, but in rural areas, can be combined. Nielsen divides the country into 210 DMAs. These areas represent 210 television media markets.

Direct-to-Consumer (DTC) – A business model of selling products directly to consumers through an ecommerce platform without the help of third-party wholesales or retailers.

Drop Shipping – is a form of retail business wherein the seller accepts customer orders without keeping stock on hand. Instead, in a form of supply chain management, the seller transfers the orders and their shipment details to either the manufacturer, a wholesaler, another retailer, or a fulfillment house, which then ships the goods directly to the customer. As such, the retailer is responsible for marketing and selling a product, but has little or no control over product quality, storage, inventory management, or shipping.

E-commerce – Sales completed through the online channel.

ESL (Extended Shelf Life) – means that the milk is “longer lasting” and does not spoil as quickly as fresh milk. Yet, like fresh milk, ESL milk has to be stored in the fridge regardless of whether it is opened or unopened. ESL milk will last drinkable for 4-6 weeks (unopened).

Foodservice – The business of making or serving prepared foods, as in a restaurant.

Freight on Board (FOB) – Is a shipment term that defines the point in the supply chain when a buyer or seller becomes liable for the goods being transported. Purchase orders between buyers and sellers specify the FOB terms and help determine ownership, risk, and transportation costs. Gallup – A market research company that tests television and radio commercials, print ads and Internet ads to measure their effectiveness. Gallup tracks ads after they run to measure how effective they are at reaching a targeted market segment.

Green House Gasses (GHG) – Includes water vapor, carbon dioxide, methane, nitrous oxide, and ozone. The balance of these gasses in our atmosphere control the temperature at the surface of the earth.

HDPE (High Density Polyethylene) – A thermoplastic polymer made from petroleum. As one of the most versatile plastic materials around, HDPE plastic is used in a wide variety of applications, including milk jugs. HDPE is recyclable. HPP (High Pressure Processing) – A non-thermal preservation method which uses pressure and that guarantees food safety and achieves an increased shelf life, while maintaining the organoleptic and nutritional attributes of fresh products and can help protect heat-sensitive compounds in milk and colostrum (such as immunoglobulin). It can be applied to milk and dairy products but is not approved in the US as an alternative to pasteurization.

Independents – Food retailers that are one-store operations. Independents are usually small businesses serving local communities.

In-store demos – Retail store promotions which involve handing out product samples directly to consumers staffed by a trained local product demonstrator.

Integrated campaign – A marketing campaign that employs a variety of promotional methods – advertising, public relations, direct marketing, in-store promotions -- and coordinates them so they work together to reach the greatest number of people.

IRC (instant redeemable coupon)/on-pack IRC – A coupon placed directly on a product that either gives a price off on that package or a related product in the store immediately at check-out.

IRI (Information Resources, Inc.) – A company that gathers data on food products sold in supermarkets and grocery stores nationwide and sells it to subscribers. The data is collected on a weekly basis from the stores’ scanners, and IRI analyzes it to provide information on pricing, speed of sales and geographic distribution. Mat mail – A publicity method in which a brief feature story on a product is formatted and typeset so that newspapers can run the story as-is. The mat mail typically includes a visual and is distributed to small suburban daily and weekly newspapers. Media Monitoring – A company that monitors traditional and online media as well as social media and captures articles for its customers. For example, through Ketchum, the CMAB contracts with Cision and Lexis-Nexis to capture news and feature stories on California dairy. This enables the CMAB to track its publicity efforts. (formerly Clipping Service)

Merchandising – Drawing attention to products inside a store by arranging them in creative, eye catching displays.

Network TV – A group of television stations that are linked for the simultaneous broadcast of the same programs. With the network system, advertisers can reach a larger audience at a lower cost-per-person than with a single station.

Nielsen – Nielsen is a company that collects sales data on products sold in supermarkets, like cheese and dairy products. These data allow manufacturers to track sales of their products.

PET (Polyethylene terephthalate) – Obtained from petroleum sources, PET is a clear, strong, and lightweight plastic that is widely used for packaging foods and beverages, especially convenience-sized soft drinks, milk, juices, and water. PET is fully recyclable. PHA (Polyhydroxyalkanoates) – An emerging class of bioplastics that are bio-based and biodegradable (some are compostable). PHAs are produced by bacterial fermentation using bio-derived feedstocks – including dairy waste (whey, permeate) – and thus are an alternative to fossil fuel-derived plastics in some applications.

Publicity – A form of public relations that takes the form of editorial exposure, such as a news or feature article about a product. Publicity differs from advertising in that the company doesn’t pay the newspaper or TV station to run the story. POS (Point of Sale)/POP (Point of Purchase) – The in-store promotion of a product to make the product stand out among its competitors. POS can range from a simple ad that is hung on a grocery store shelf to a large, elaborate display. Private label – A brand developed by a large retailer or wholesaler, as distinguished from a brand bearing the name of a manufacturer or producer. Since manufacturers’ brands have large advertising expenditures built into their cost, a private brand can buy the same goods at a lower cost and sell them at a lower price. Product Display Page – A webpage specific to a product, found on a retailer’s own website like HEB.com or other third-party e-commerce website like Instacart.com. This page can include an image gallery, a description of the product, nutrition information, video content, availability in-store, and more. An optimized product display page will increase the product’s relevancy to consumers and likelihood of it showing sooner in web search. Qualitative research – Advertising research that explores issues deeply to gain insight into how consumers feel about a product and why they buy it. Qualitative research relies on in-depth interviews with open- ended questions like “How do you decide which cheese to buy?”

Quantitative research – Research that gathers measurable information from a large number of consumers. The surveys use closed-ended questions that require a simple answer.

Rating points – The measurement of the actual viewing or listening audience for a program or commercial. If a program has a rating of 10 points, it means that 10 percent of all households in a particular area had their television sets tuned to that program. A program with a high rating will deliver a large audience to advertisers for their commercials.

Retail authorizations – Approval by retail chains for their local and regional buyers to purchase merchandise for their organization.

Rotation – The pattern of how television and radio commercials are aired during the broad time period purchased by the advertiser. If an ad runs in the same time period on different days each week, it is called a horizontal rotation. If the ad runs throughout a particular day, it is a vertical rotation. Satellite media tour – A publicity method that allows a celebrity or company spokesperson to participate in up to 25 interviews per day with TV reporters. The person being interviewed sits in a television studio and is connected to remote locations via satellite hook-up, increasing the reach of the publicity program at a relatively low cost. SEO (Search Engine Optimization, as it related to food commerce) – The process of improving the appearance and positioning of your product on a website page. This can be done by optimizing content and boosting relevancy, or through paid means where an individual product is boosted into a top position so more consumers see it, engage with it, and ultimately drive more sales. SKU (Stock Keeping Unit) – A number associated with a retail product for inventory purposes. Retailers use SKUs to identify and track individual products. Each product must have a SKU, and each SKU must be unique; for example, a pint bottle and a quart bottle of the same product have separate SKUs. According to recent research, the average number of SKUs carried in a typical supermarket is 30,580. Shopper Marketing – A retailers own communication vehicles within their physical store and digital touchpoints. Because it is executed by the retailer, loyal shoppers are more likely to engage with shopper marketing tactics such as their weekly email blasts, festival-type promotions, etc.

Short-Lived Climate Pollutants (SLCP) – Short-Lived Climate Pollutants include black carbon, methane, tropospheric ozone, and hydrofluorocarbons (HFCs). They have relatively short atmospheric lifetimes but are believed to have significant warming impacts on climate.

Slotting fees – Fees that supermarkets charge suppliers and manufacturers to place their products on the shelf.

Spot TV – Commercial time on local television stations, as distinguished from commercial time on a network.

Talent Fees/Residuals – Fee paid to actors used in a broadcast commercial.

Third Party Logistics (3PL) – An organization's use of third-party businesses to outsource elements of its distribution, warehousing, and fulfillment services.

UF/MF (Ultra- and microfiltration) – Membrane-based processes applied to milk to separate its components based on molecular weight/size. During UF all the proteins are retained, whereas MF selectively retains casein and permeates whey proteins. UF is primarily used to produce dairy ingredients that have an increased protein content and reduced lactose contents, such as milk protein concentrate (MPC) and whey protein concentrate (WPC) UHT – Ultra-high temperature processing sterilizes milk by heating it above 135 °C (275 °F) for a short time. UHT milk packaged in a sterile container has a typical unrefrigerated shelf life of six to nine months. Unique Visitors Monthly (UVM) – Refers to the number of distinct individuals requesting pages from the website during a given period, regardless of how often they visit. Visits refers to the number of times a site is visited, no matter how many visitors make up those visits. United Dairy Industry Association (UDIA) – UDIA coordinates with its members, 18 state and regional dairy promotion organizations, to develop and implement programs and services to support the dairy industry. Universal product code (UPC) – Grocers use the UPC to identify products and prices, and to track their sale. UPCs are translated into barcodes (a series of vertical parallel bars printed on a product’s package) that are read or “scanned” by electronic cash registers.

Velocity – The rate of retail sales that a brand or SKU achieves through a store, group of stores or market area over a defined period of time.

Video news release (VNR) – Information about a product produced in a video newscast format and distributed to the news departments of television statements. If, after the news director reviews the VNR and he/she decides to use it, the video is typically edited and aired as a news item during a newscast. Warehouse store (superstore ) – A large-scale, high-volume store that stocks a large number of products that sell at low prices such as Wal-Mart. Can be called a “warehouse club” if the store sells only to members such as Costco or Sam’s Club.

Wire service (Associated Press) – A newsgathering organization that that collects stories for newspapers and distributes them electronically to subscribers.

Cheeses

Artisan Cheese – Refers to cheeses that are handmade in small quantities with respect for the tradition of the cheese. Artisan cheeses can be, but are not necessarily, made from milk obtained from animals located on the farm where the cheese is made.

Commodity Cheese – Describes popular varieties of cheese typically produced in large quantities with a flavor profile that appeals to the majority of consumers. These cheeses are sold in supermarkets, either as branded products or under private labels, or distributed for foodservice use. In California, Cheddar, Jack, and Mozzarella (low-moisture form) are popular commodity cheeses.

Farmstead Cheese – Refers to cheeses made from milk obtained from animals located on the farm where the cheese is made.

Specialty Cheese – A broad term that describes non-commodity cheeses. Specialty cheeses are cheese varieties with distinctive flavor profiles catering to a special niche in the market. Specialty cheeses can be unique varieties of cheese (i.e., Camembert, St. George, Teleme) or specialized versions of popular cheeses such as Cheddar, Jack, or Mozzarella (i.e., raw milk Cheddar, Dry Jack, high-moisture Mozzarella). This category also includes handmade artisan and farmstead cheeses. Specialty cheeses are typically sold as branded products in specialty food stores and in supermarket gourmet cases.

Organizations

CARB – California Air Resource Board CARES – Dairy CARES CCOA – California Creamery Operators Association CDC – California Dairy Campaign CDI – California Dairies, Inc. CDIC – California Dairy Innovation Center CDFA – California Department of Food and Agriculture CDQAP – California Dairy Quality Assurance Program CDRF – California Dairy Research Foundation CEPA – California Environmental Protection Agency CFMPB – California Fluid Milk Processor Board CMAB – California Milk Advisory Board

DCC – Dairy Council of California DFA – Dairy Farmers of America DIC – Dairy Institute of California DMI – Dairy Management, Inc. DWR – Department of Water Resources

IDFA – International Dairy Foods Association IFIC – International Food Information Council IMGC – International Milk Genomics Consortium LOL – Land O’ Lakes MilkPEP – Milk Processor Education Program MPC – Milk Producers Council NMPF – National Milk Producers Federation USDA – United States Department of Agriculture

USDEC – U.S. Dairy Export Council WUD – Western United Dairymen

ADMINISTRATION

Presentation to Board of Directors

December 2023

Statement of Income & Expenses

2024 Administrative and Procedural Policy

2024 Operations Resolutions

California Milk Advisory Board Statement of Income and Expenses As of October 31, 2023

Month Ending CY % to

Month Ending

Year Ending 12/31/2023

PY % to

10/31/2023

10/31/2022

Budget

Budget

Actual

PY

Budget

Revenue Assessment Income *

$ 34,076,045

82% $ 34,859,825

84% $ 41,530,000

Non-Assessment Income **

84,041

78,628 210,132

95,000 245,000

88%

75%

Other Income

1,030,022

420%

600%

Outside Income - Grant Reim

132,189

-

-

Total Revenue

35,322,296

35,148,585

41,870,000

84%

84%

Expenses

Advertising

13,838,732 3,226,962 3,986,694 1,507,170 4,673,241 1,453,126

14,299,749 3,288,157 4,277,317 1,287,345 3,934,171 1,224,779

17,834,000 4,039,000 6,350,000 2,175,000 6,438,388 1,459,000

78%

78%

Communications Domestic Retail

80%

73%

63%

63%

Foodservice

69%

59%

International Initiative

73%

61%

Tradeshows

100%

85%

Processor Relations Industry Intelligence Producer Relations

662,307 560,888 456,917 13,308 706,618

776,351 537,660 475,047 15,214 490,087

981,600 753,658 695,750 48,000 816,000

67%

72%

74%

66%

66%

66%

Education and Community Relations

28%

32%

CDIC

87%

49%

Dairy Research Foundation

1,732,966 32,818,928

1,299,468 31,905,344

1,732,966 43,323,362

100%

75%

76%

71%

Office Operational

291,794

275,806 73,917 21,351 24,695 129,137 41,115 11,475 42,361 58,361 672,182 34,456 46,372 12,675 71,051 46,000 16,850 -

476,000 87,600 40,000 62,000 174,838 48,000 10,000 58,000 72,000 800,000 50,000 91,000 14,000 125,000 47,000 21,200 -

61%

58%

Rent

5,608

6%

84%

Travel & Automobile

18,837 13,549 128,680 40,487 97,865 42,178 56,480 578,788 39,054 42,839 10,225 86,126 47,750 18,167 79

47%

51%

Legal

22%

30%

Insurance - Employee Freight & Postage Employee Education Depr, Amort & Interest Money Investment Plan Admin Salary & Wages Board Travel Expenses Board Meeting Expenses Liability Insurance

74%

70%

84%

111%

1%

115%

0%

0%

73%

78%

78%

71%

72%

74%

78%

63%

47%

51%

Board Per Diem Marketing Branch

73%

91%

69%

57%

Fiscal & Compliance Audit Assessment Collection Fee

102%

96%

86%

90%

1,518,506

1,577,805

2,176,638

70%

60%

Total Expenses

$ 34,337,434

75% $ 33,483,149

70% $ 45,500,000

Year to Date Payroll: $3,078,650

* Estimated October Assessment at $3,324,576 ** Estimated September and October Non-Assessment at $14,900

2024 Administrative and Procedural Policy of the California Milk Producers Advisory Board

The Administrative and Procedural Policy set forth below is not intended to amend or modify relevant provisions within the Marketing Order for Research, Education, and Promotion of Market Milk and Dairy Products in California. The purpose of this policy is to clarify the general provisions of the Marketing Order. The policy may be amended from time to time upon recommendation of the California Milk Producers Advisory Board and approval of the Department of Food and Agriculture.

I.

Officers of the Board

The Officers of the Board shall be the Chairman, Vice Chairman, Secretary, and Treasurer.

A. The Chairman shall: (1) call meetings of the Board when he deems it necessary; (2) preside at meetings of the Board; (3) sign contracts approved by the Board in conjunction with the Chief Executive Officer on behalf of the Board; (4) buy group meals as necessary; (5) be an ex officio member of all committees other than the Executive Committee; (6) recommend the establishment of committees; and (7) recommend committee appointments.

B. The Vice Chairman shall be first in line to act in the place of the Chairman in case of the Chairman’s absence, disqualification, disability, or at the discretion of the Chairman.

C. The Treasurer shall be second in line to act in the case of the absence, disqualification, disability, or at the discretion of the presiding officer. The Treasurer is responsible for reviewing the financial statement accounts to the Board.

D. The Secretary shall be third in line to act in the case of absence, disqualification, disability, or at the discretion of the presiding officer. The Secretary shall: (1) keep an accurate record of the proceedings of the Board; and (2) attest papers, documents, and other instruments on its behalf. E. As the terms of office of new members and alternate members are from March 1 through February 28 of the following year, and since usually a few days of March elapse before the newly-elected Board meets to elect new officers and Executive Committee members, the officers and Executive Committee members, as well as members of the special committees of the Board, shall be appointed to serve from March 1 of any given year through February 28 of the following year, or until their successors have been named and qualified for the following year.

II.

The Executive Committee

A. An Executive Committee shall be selected by the Board, consisting of the Chairman, Vice Chairman, Secretary, and Treasurer of the Board and three additional members of the Board.

B. The Executive Committee, in all cases in which specific directions to the contrary shall not have been given by the Board, shall have and may exercise during the intervals between the meetings of the Board, all the powers and authority of the Board in the management of the Board’s affairs and which are necessary to carry out the actions and policies of the Board in such manner as the Executive Committee may deem best for the interests of the Board, all within the scope of the budget of the Board and each department thereof. C. The Executive Committee shall also serve as the finance committee of the Board and as such shall be specifically delegated the authority to establish the wages and salaries of the employees of the Board. D. The Executive Committee is authorized to recommend the appointment of the Chief Executive Officer of the Board. The Executive Committee shall be responsible for providing general supervision and direction to the Chief Executive Officer and shall periodically report to the Board regarding his performance. This formal annual review shall take place at the December Board meeting. The Executive Committee shall report all of its actions to the Board and all actions taken by the Executive Committee shall be subject to the approval of the Board and the Secretary of the Department of Food and Agriculture.

E. All members of the Executive Committee and the Chief Executive Officer shall serve as Trustees for the California Milk Producers Advisory Board Money Investment Plan.

III.

Board Members

A. District Representation At least once every three years, since 1981, the Board or an authorized committee of the Board shall review the production of market milk, the number of producers, geographic area, and other relevant conditions in relationship to the district representation on the Board to insure equitable representation.

IV.

The Chief Executive Officer

A. Subject to the general direction and control of the Board, the Chief Executive Officer shall: (1) be responsible for supervising all Board employees; (2) employ all other salaried personnel of the Board subject to authorization as to position by the Board; (3) discharge employees as may be deemed necessary; (4) recommend salary adjustments to the Executive Committee for consideration; (5) define job responsibilities of each employee; (6) be responsible for the proper and appropriate administration of all policies and actions that the Board adopts and undertakes; (7) be responsible for the proper performance on behalf of the Marketing Order; (8) be responsible for developing contracts or other legal documents requiring Board approval; (9) be authorized to sign, on behalf of the Board, and in

conjunction with the signature of the Chairman, contracts or other legal documents approved by the Board; and (10) served as Assistant Secretary of the Board.

B. In order to ensure an uninterrupted operation of the Board in the event of extended illness or injury or death of the Chief Executive Officer, a committee has been appointed by the Board of Directors to administer the daily operations of the Board. The committee will be activated when necessary by order of the Executive Committee of the Board. The appointed committee consists of the Vice President of Business Development and the Director of Finance and Administration.

The Vice President of Business Development will be the chairman of the committee, acting as liaison to the Board of Directors. All procedures applicable to the Chief Executive Officer shall be applicable to the chairman of the committee.

The Director of Finance and Administration will be responsible for the financial well-being of the Board, signing documents associated with payroll and related matters.

Each member of the committee, upon activation of the committee, would be immediately authorized to sign all administrative papers designated as their responsibility to provide for the uninterrupted flow of business of the Board.

The following employees of the Board are authorized to sign checks for administration of the Board expenses: Chief Executive Officer, Director of Finance and Administration, and the Accounting Manager. Checks require any two signatures of the above, but usually are signed by the Chief Executive Officer and the Director of Finance and Administration. The signatures of the signatories are officially recorded on bank signature cards. C. Vacancy in the Position of Chief Executive Officer The Executive Committee shall within three months of the date of a vacancy in the position of Chief Executive Officer seek qualified applicants by advertising in a national, state, or regional publication (newspapers or dairy magazines). Within six months of the date of the vacancy, the Executive Committee will screen prospective applicants and select at least the two most qualified candidates for the full Board’s consideration.

The Board shall diligently try to select a new Chief Executive Officer within a year of the date of a vacancy. Any Board action recommending the appointment of a new Chief Executive Officer shall require the concurring vote of two-thirds (2/3) of the full Board.

V.

Board Employees

A. VACATION

Eligibility and Accrual

Temporary and part-time employees do not accrue paid vacation.

Regular full-time employees are entitled to standard vacation accruals as follows: *

Vacation To Be Earned** All vacation will be accrued on a monthly basis by dividing annual vacation amount by twelve.

Length of Service With CMAB

Minimum of 2 weeks per year (0.833 days per month) or a higher amount of vacation time/year agreed to at the time of hire. Vacation accrual rate with prior employer will be considered in setting initial rate. The accrual rate cannot exceed 4 weeks/year.

1 month to 36 months (3 years)

Minimum of 3 weeks per year (1.25 days per month) or one week more per year than the employee’s initial accrual rate. The accrual rate cannot exceed 4 weeks/year.

37 months to 120 months (10years)

4 weeks per year (1.666 days per month) The accrual rate cannot exceed 4 weeks/year.

121 months and over

*Employees hired prior to 1998 are subject to a separate vacation accrual schedule and maximum.

** For purposes of this section on vacation leave and other paid leave, including but not limited to sick leave, bereavement leave, etc., a “week” for both accrual and use of leave is defined as 5 days and a “day” as 8 hours for full -time regular employees.

Vacation can accrue up to a maximum of 10 paid weeks (400 hours). No additional vacation will be earned until accrued vacation time is used or paid out as follows:

Eligible employees may carry over accrued but unused vacation from one year to the next but accrual may not exceed 50 days (400 hours). We encourage employees to use their vacation time, but we recognize that due to the nature of some employees’ jobs, it i s difficult to schedule a vacation each year. Therefore, CMAB will allow employees to sell back unused vacation time up to 10 days per year.

B. Employee Vacation Consolidation for the Week of July 4 and the Christmas Holiday Employees will use vacation days at designated times based on a Board incentive of additional days as Board Holidays. The office will be staffed during normal business hours during the July and December vacation time with minimal staff. The office will be closed the week of Christmas and the week between Christmas and New Year’s.

July 2024 7/03 Vacation (1/2 day)

7/04 Holiday

7/05 Board Holiday

Dec. 2024 12/23 Vacation (1/2 day)

12/24 Holiday

12/25 Holiday

12/26 Vacation

12/27 Vacation

12/30 Board Holiday

12/31 Board Holiday

1/01 Holiday

Jan. 2025 01/02 Return to work (Thursday)

2024 Operations Resolutions of the California Milk Producers Advisory Board

1. Authority of C.E.O. The Board recommends, for approval by the Department, that the Chief Executive Officer (CEO) be given the following authority:

A. To make inter-item transfers in the budget up to $25,000.00.

B. To pay necessary expenses for persons who are requested by the CEO or the Board, and approved by the Chairman or the Board, to make appearances on behalf of the Board.

C. To call for interviewing of applicants for employment from within or outside the State of California, and to pay necessary expenses.

D. To approve expenses for employees to move residence at Board request, or to approve moving expenses for those accepting employment with the Board, when necessary.

E. To approve payment fees to personnel agencies for recruitment purposes.

F. To approve hiring consultants as appropriate.

G. To approve for payment expenditures for registration for conventions, meetings, classes, dues for professional organizations, and participation in other activities when such membership and participation will, in the opinion of the CEO, benefit the California Milk Advisory Board.

H. To approve vehicle allowances assigned to certain employees when it works to the benefit of the Board and the employees.

2. The Board recommends, for approval by the Department, that Board members, and alternate members serving in the absence of a Board member, be authorized to collect per diem of $100.00 per day while attending Board meetings in addition to the following daily expenses: hotel $235.00 plus tax maximum, and incidentals of $15.00 per travel day. Meals are $30.00 for breakfast, $45.00 for lunch, and $80.00 for dinner maximum. Breakfast is allowed if leaving home before 7:00 a.m. and dinner is allowed if arriving home after 7:00 p.m. Trips requiring expenses exceeding the limits shall be preapproved by the Board. Tradeshows, conventions, etc., usually have expenses related to them that are over the maximum limits approved by the Board. In such cases, the CEO has the authorization to approve the high expenditures for hotels and/or meals related to such travel. 3. The Board recommends for approval by the Department, that Board members, and alternate members serving in the absence of a Board member, CMAB employees, and consultants, who use personal vehicles for Board business and do not receive a monthly vehicle allowance, be reimbursed for personal vehicle mileage at the prevailing Federal mileage rate.

4. The Board recommends, for approval by the Department, the authorization of the payment of a maximum of $30.00 for breakfast, $45.00 for lunch, and $80.00 for dinner at meetings of the District Advisory Committees, and other district committee meetings such as Dairy Princess.

5. The Board recommends, for approval by the Department, the payment of the cost of meals at District Information meetings.