2023 December Board Book

What do you view as the biggest challenges in the dairy industry and how are you overcoming those challenges? Tim Omer: The dairy industry is filled with successes and challenges. We are fortunate that we get to make quality products that are loved by consumers, and that our company continues to thrive. As the popularity of specialty cheese continues to grow, companies must manage the impact of this growth, including achieving more sustainable operations and finding innovative ways to better serve our customers and protect the environment. Additionally, like many industries, finding and retaining top talent continues to be a challenge. Dennis Rodenbaugh: One of the greatest challenges faced by U.S. dairy farmers is volatility in milk pricing. It creates an immediate financial impact, challenges their ability to plan for the future, and harms the opportunity to sustain their business through the next generation. We’ve helped through advocacy efforts to form and maintain programs like Dairy Margin Coverage (DMC) and Dairy Revenue Protection (DRP), which are governmental risk management programs that help many farmers through these volatile cycles. Had these programs not been in place through the pandemic crisis, and even through this painful 2023 milk price cycle, I believe the rate of dairy farm closures would have been exponentially greater and the risks to milk supply availability in certain regions would be exacerbated. I believe DFA has developed the most expansive array of risk management tools in the industry. We offer our farmer-owners these tools to mitigate or manage through milk pricing volatility. I’m proud and grateful for our risk management and member service teams that are committed to educating and communicating about these tools and encouraging our members to utilize programs like DMC and DRP. Another challenge for the dairy industry is how sustainability is viewed and managed by disparate entities. We increasingly see continents, countries, and even states that institute forms of sustainability regulations or initiatives as though they are an individual planet. To some extent, what is happening is simply pushing emissions from one geography to another and sometimes driving production to regions of lower efficiency models, which exacerbates emissions. If we’re to truly have a serious and net beneficial impact on the environment, it must be in the context of all stakeholders around the globe working within a comprehensive model. One of the first things I did when transitioning into the CEO role was to begin talking with industry partners about the need to build not only a U.S. coalition, but also a global dairy coalition to help address challenges within the greenhouse gas protocols. The current accounting methodology fails to credit dairy for the tremendous positive impact and solutions it continues to deliver in the arena of sustainability. Heather Anfang: More consumers want to know where their food comes from, and they want to feel good about the food they eat. American farmers represent fewer than 1% of the population but are being asked to continue to feed a rapidly growing world population in an increasingly sustainable and efficient manner. As a cooperative, Land O’Lakes has taken a leadership position in supporting on-farm sustainability by helping customers achieve their environmental goals while keeping farmer profitability at the forefront. We are committed to investing in programs, tools, and support to drive voluntary practice changes that not only contribute to the health of the planet, but also position farmers and the agriculture sector for success in a challenging operating environment. Joe Diglio: The biggest challenge is aligning our industry’s supply and demand. We have plenty of ability to produce high quality dairy products, but we have challenges meeting the needs of those who desire the nutrition that dairy provides globally. This isn’t a new challenge, but it’s a continued concern. As an industry, we focus on producing products effectively and efficiently within the domestic market, yet the demand for these products goes beyond U.S. borders, and servicing other countries in the global economy is critical for our success. Considering the problem domestically, we often produce our products in rural communities distant from population centers. Even in our own states, we have to get dairy products from where they’re produced to a marketplace in need. The challenge is how do we move that even further from an export perspective for countries who can’t produce any of the products we have, whether it’s because of their lack of resources or environmental challenges that don’t allow them to meet their nutritional needs? Overcoming these challenges relies on policy and innovation and leaves more questions than answers. How do we unite to develop policies that are more equitable, achievable and desirable? How do we use the innovation of new products and other innovations in ways to achieve supply chain efficiencies? How do we create a sustainable economic position so that producers are able to produce the products where they aren’t jeopardized or concerned about longevity in the industry? The best place to start is collaborating with each other to continue the conversation and keep humanity at the forefront of discussions. Matt McClelland: Prairie Farms is in the midst of celebrating its 85th anniversary, and due to the general dynamic nature of the dairy industry, we’ve navigated challenges since our founding in 1938. Each year brings a new set of challenges, and we overcome them by leaning on learnings from prior years to implement solutions. Quite often, the solutions uncover new growth opportunities. Paul Snyder: Farmers and the dairy industry aren’t strangers to struggle. From razor-thin margins and fluctuating market prices to unpredictable weather conditions, there isn’t a challenge our dairy farmers can’t overcome, but the challenges are constant. The dairy industry has an