2023 December Board Book

Omer: Emmi Roth is committed to continuous improvement in all areas, including manufacturing operations and using technology to help us produce our award-winning products. The benefits and potential impacts of AI continue to evolve. As use cases for AI arise, our team will continue to evaluate available tools and consider implementation if they can benefit our business and our customers. Anfang: Our farmers are always looking for new ways to innovate so they can do more and better with less. To ensure we can support farmers well into the future, we’re continuously investing in innovative products, services and market connections that support the long-term relevance of our member-owners, the viability of their communities and an abundant global food supply. To cultivate innovation, Land O’Lakes Inc. and Microsoft Corp. launched a multi-year strategic alliance in 2020 to build cloud, edge computing, sensors and AI solutions to improve services for farmers and dairy producers, propel sustainability initiatives and boost broadband connectivity in rural communities. In many dairy segments, dollar sales have risen, with unit sales falling (with some exceptions of course). Do you think this trend continues, or will it change as inflation lessens? Anfang: Leading within the dairy industry is particularly difficult given current economic conditions and supply chain constraints. But demand for dairy remains resilient, indicating that dairy is a household staple despite rising prices for consumers across the country. We’re working specifically to manage the price point of products on the shelf, ensuring that consumers continually have access to all the dairy staples they know and love while prioritizing our member-owners’ bottom lines. We’ll continue to work closely with member-owners and our corporate staff to chart our path forward as supply chain constraints persist. Omer: The many factors that contributed to this trend as a result of this recent inflationary period will continue to evolve but may not go away. It is up to us as a company to continue to produce the best products we possibly can to provide value for our customers. To that end, we’re continuously looking for ways to improve the value of our products to consumers, such as packaging innovation to keep freshness longer, larger club sizes and unique new products. Diglio: I believe that consumers will continue to purchase products that are both desirable and necessary. Economic conditions may influence whether consumers purchase branded or private- label products, but if our industry continues to tout the necessity of the nutrition dairy provides, I believe that consumers will continue to purchase at levels that can be sustainable. People will always need food and will always seek nutrition, so regardless of the economic conditions, I view that as an opportunity for our industry to continue to evolve and tout the benefits of dairy. McClelland: Retail market data does suggest that inflation has impacted many dairy segments. Because Prairie Farms prioritized expanding our distribution footprint, growing in segments outside of retail, and focusing on the basics of sales and service, it has been a successful year for us. Sustainability is a major goal, but difficult to reach. Can you briefly describe your sustainability efforts? Omer: We’re proud of our commitment to becoming a more sustainable company. We have a dedicated Sustainability Manager who partners with our Sustainability Steering Team to work toward reaching our sustainability goals, including achieving net-zero emissions by 2050, reducing our water use and implementing recyclable packaging. The publication of our “Do Good Report” is part of our commitment to sharing our goals and progress with our customers, stakeholders, and consumers. Snyder: Since our founding in 1909, our farmer-owners have built everything with a long-term outlook to ensure we are here for generations to come. Stewardship lies at the heart of everything we do, and we take seriously our responsibility to the people, animals and environment surrounding us, and we are taking steps to show it. As a Certified B Corp, we’re committed to reducing our impact to help protect and preserve our planet now and for future generations. To be part of the climate solution, TCCA has aligned with the Innovation for U.S. Dairy’s Stewardship Commitment to reach net-zero emissions by 2050 and last year, we set an interim goal of 30% reduction in emissions by 2030. We are not the first company or industry with climate goals and solutions, but we must unite as an industry at large to address climate change head on. While there is still more work to do, we have made some recent progress toward our Stewardship efforts and goals. In 2022, we reduced our overall GHG emissions by 9% compared to our 2020 baseline. Other progress projects include transitioning our truck fleet to renewable diesel (R99) at the end of summer 2022, which will reduce fuel emissions from our fleet by 66%. Diglio: Sustainability isn’t an end goal to reach, it’s the continuation of efforts that benefit the communities we work and live in. Our goals will continue to progress as we achieve results and make a positive impact on the people we influence, the planet we live on, and the value we provide. Our cooperative’s sustainability efforts focus on finding improvements to historical practices and seeking innovations to create new opportunities that offset our carbon footprint while supporting our members, employees and customers. We’re dedicated to investing in sustainable technologies that can be a positive solution we can use redundantly throughout the supply chain. McClelland: This question often arises, and a quote from one of our farmer-owner board members best sums up Prairie Farms’ sustainability efforts, “You don’t throw bent nails away, you straighten them and reuse them.” A disciplined approach has guided our cooperative since 1938 on our farms and in our manufacturing facilities. This means reducing, reusing and recycling at every stage of the production and distribution process. Just as our farm-to-table cycle has evolved in 85 years, so will our sustainability goals as we continue to identify areas of opportunity where we can make significant progress in building a sustainable future for our planet. Anfang: Land O’Lakes is focused on supporting and helping achieve our own and our customers’ sustainability commitments. In 2021, we created the Dairy 2025 Commitment to help our more than 1,000 member-owners complete an intensive, industry-leading on-farm sustainability assessment by 2025. Data points in the assessment include fuel, electricity and water usage, nutrient application, crop rotation and manure management.