2023 September Board Book

CALIFORNIA MILK ADVISORY BOARD

Board of Directors Meeting

September 13 – September 14, 2023

CALIFORNIA MILK ADVISORY BOARD 2156 W Grant Line Road, Suite 100 Tracy, California 95377 (209) 883-6455 RealCaliforniaMilk.com BOARD MEETING AGENDA Wednesday, September 13, 2023 at 7:30 am and Thursday, September 14, 2023 at 8:00 am

University of California, Merced 5200 Lake Road Merced, CA 95343 (209) 228-4400

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

4. Financial Report – Treasurer André Brasil

5. Individual District Reports

6. Marketing Branch Report

a. Procedure for filling open board seats

7. Report from Chairman

8. Report from Chief Executive Officer – John Talbot

9. Situation Assessment

10. Program Review and Proposals a. Advertising b. Communications

c. Business Development d. Processor Partnerships e. Producer Relations

f. CDIC g. CDRF

11. Guest Speaker – Michael Vickerman, Yummy Industries

12. Committee/Industry Meetings Update

13. National Dairy Board Update

14. Minutes of Last Board and Executive Committee Meetings a. Public comments on agenda items 15. Other Business a. Previously discussed or tabled agenda item(s) for this meeting b. Items to be discussed at next board meeting

16. Public comment on non-agendized items

17. 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

September 2023

Statement of Income & Expenses

Milk Production Comparison

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

Month Ending CY % to Month Ending PY % to Year Ending 7/31/2023 Budget 7/31/2022 Budget 12/31/2023 Actual PY Budget

Revenue Assessment Income *

$ 24,409,069

59% $ 24,621,513

59% $ 41,530,000

Non-Assessment Income **

64,668

60,397

95,000 245,000

68%

58%

Other Income

785,841 321%

131,469 376%

-

-

Outside Income - Grant Reim

132,189

Total Revenue

25,391,766

24,813,379

41,870,000

61%

59%

Expenses

Advertising

9,789,831 2,304,804 2,866,124 748,835 3,170,350 1,271,409 466,829 395,167 341,085 352,069 1,299,725 23,008,783 2,554

11,162,055 2,342,373 2,707,791 730,829 2,245,248 1,008,244 549,569 426,817 400,277

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

55% 57% 45% 34% 49% 87% 48% 52% 49% 43% 75% 53% 5%

61% 52% 40% 34% 35% 70% 51% 52% 56% 15% 36% 50% 51% 41% 59% 35% 22% 50% 72% 56% 51% 55% 45% 33% 66% 44% 67% 58% 44% 0%

Communications Domestic Retail

Foodservice

International Initiative

Tradeshows

Processor Relations Industry Intelligence Producer Relations

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

Education and Community Relations

7,041

CDIC

365,888 866,312

Dairy Research Foundation

1,732,966 43,323,362

22,812,444

Office Operational

212,366

194,678 51,714 14,733 17,967 92,302 26,660 11,475 30,415 42,190 495,297 24,739 30,369 9,275 54,888 32,000 10,967 -

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 -

45%

Rent

3,982

5%

Travel & Automobile

12,613 10,341 88,074 28,840 70,533 30,124 39,536 413,467 27,795 29,983 6,825 57,632 28,500 12,717 79

32% 17% 50% 60%

Legal

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

1% 0%

115%

52% 55% 52% 56% 33% 49% 46% 61% 60% 49%

Board Per Diem Marketing Branch

Fiscal & Compliance Audit Assessment Collection Fee

1,073,409

1,139,669

2,176,638

Total Expenses

$ 24,082,192

53% $ 23,952,113

50% $ 45,500,000

Year to Date Payroll: $2,155,055 * Estimated July Assessment at $3,456,248 ** Estimated June and July Non-Assessment at $18,500

CMAB Milk Production Comparison

2018 to 2019 2019 to 2020 2020 to 2021 2021 to 2022 2022 to 2023 % Change % Change % Change % Change % Change

2020

2021

2022

2023

January February

3,497,591,436 3,591,881,356 3,348,120,007 3,315,540,632 3,662,406,250 3,711,091,837 3,475,821,700 3,629,592,418 3,538,575,590 3,709,808,492

3,523,704,645 3,516,877,642 3,294,415,818 3,255,648,146 3,704,999,229 3,623,879,592 3,597,030,053 3,524,284,916 3,655,797,733 3,627,458,745

-3.46% -1.16% -0.91%

4.07% 2.70% -1.90% -0.19% 4.86% -0.97% -0.64% -1.18% 2.98% 1.33% -0.16% -2.19%

March

0.86% -0.12% 4.42% -0.90% -2.02% 0.35% -0.07% 4.84% -1.46% -0.78%

April May June

-1.15% 2.48% 0.24% -0.78% 0.38% -1.13% 2.57%

1.85% 3.55% 0.39% -1.53% 2.14% -0.63% 2.53% -5.67%

3,325,976,064 3,443,968,122 3,457,426,027 3,404,671,543 3,444,001,804 3,422,363,281 3,508,881,474 3,309,799,621

July

3,446,864,031

1.28% 0.52% 2.27% 2.15% -0.06% 0.08% 1.13% 1.84% -1.05% 2.66% 0.28% -0.84% 0.20% 1.62% -0.30%

August

3,352,677,803 3,370,209,607

September

3,261,414,984 3,259,551,116 3,262,119,753 3,366,497,491 3,428,295,882 3,392,424,997 3,329,290,479 3,338,449,997 3,310,255,775 3,422,732,261 3,478,072,463 3,467,696,688

October

November December

-0.15%

Total

1.90%

41,025,105,869

1.64%

41,025,105,869 41,698,825,203

-0.19%

41,698,825,203 41,621,616,223

-1.94%

24,742,254,979 24,262,620,205

8/25/202312:33 PM

Milk Assessments

Production Comparisons

ADVERTISING & COMMUNICATIONS

Presentation to the Board of Directors

September 2023

CMAB Advertising Update CMAB Social Media Update CMAB Communications Services Program Coverage Dashboard s Press Releases

CMAB Advertising Update

2023 California Freestyle Campaign: Where We Are Now Our latest iteration of the California Freestyle campaign launched in April with the release of all new TV spots across broadcast TV, connected TV, and online video as well as video cutdowns, and extensions on paid and organic social. We kicked off the campaign with our Latin Pop and Country spots on TV, and then in late June, we added our Reggaeton TV spot into the mix.

To keep Freestyle top of mind, we produced a social campaign extension focusing on the food pillar called “Remixed Recipes.” To show how versatile California dairy is, we created an interactive video carousel that lets users become food DJs. Users are shown one recipe featuring a flavor profile or key ingredient, and with one “swipe” users are shown a different recipe featuring the same flavor profile or key ingredient. Every swipe of the carousel remixes the dish in an unexpected way. As for what’s to come, we’ll be launching another social campaign extension called “Pass The Remix,” a social video content series showing how ingredients and influences can build upon each other to remix a dish and make it even better than the original. Additionally, we will

continue monitoring the performance of our TV spots to understand the effectiveness of our creative rotation and to determine whether or not we need to make any optimizations to our creative work.

Media Highlights

TV

2023 (4/10/23 - 6/30/23) ● California Freestyle 2.0 :30 (Latin Pop and Country), :15 (Latin Pop and Country) ● 75MM Impressions

Paid Social

2023 (1/1/23 - 6/30/23)

● 92 Pieces of Content ● 163MM Impressions ● 869K Video Views ● 158K Clicks

Paid Search

2023 (1/1/23 – 6/30/23)

● 1.6MM Impressions ● 142K Clicks

YouTube

2023 (4/10/23 - 6/30/23)

● 4.9MM Impressions ● 4MM Views

Digital Media

2023 (4/10/23 - 6/30/23)

● 38.4MM Impressions ● 24.7MM Video Views ● 506K Clicks

Website

● Enhanced RCM homepage to feature a carousel of latest Freestyle spots (Country, Latin Pop, and Reggaeton). ● Continued to curate new recipes pertaining to latest food trends and local promotions to drive awareness of Real California Milk. ● Slated to build Spanish-translated web pages of Cheese and More content on the Spanish site this Summer.

The latest phase of the California Freestyle campaign launched on April 10 across Broadcast TV, CTV (Hulu, Peacock, Paramount+), pre-roll (YouTube), and social (Meta, Pinterest), with ads running within home, food, family and sports content. As a complement to the TV and digital video launch, the team is actively exploring other channels to help support sustainability within Southern California. In 2023, we’re supporting four local retail promotions throughout the year: Hispanic Lent, Tacos, Tequila y Más, Summer Snacking, and Holiday Mornings Mean More. Local Promotions As of July 2023, we’ve already completed three of our four local promotions. These hard working campaigns help to spread awareness and drive sales of featured dairy products, while leveraging influencer partnerships and running digital banners and social content.

● Hispanic Lent: Established Real California Milk processors as the leaders in Hispanic dairy during the Lenten season, where there is an increase in the use of cheese and cremas as consumers seek non-meat meals. Leverage paid social posts to promote this local promotion. ● Tacos, Tequila y Más: Positioned Real California

Milk and participating partners in California, including California and Nevada Beef Councils, and Camarena Tequila, as the solution to deliver an authentic food experience leading up to the Cinco de Mayo holiday. We utilized the pairing of different beef taco recipes with tequila-based beverages through paid social posts, display banners, and rich media placements. ● Summer Snacking: Kicked off June Dairy Month and summer timing to create top-of mind awareness for snacks made with dairy products from Real California Milk. Leveraged paid social posts, digital display, content creator-produced content to promote Summer Snacking. In this local promotion, we performed an A/B test to determine which of our target audience members is likely to click on our ad on Pinterest which drives traffic to both the RCM recipe page and to the Instacart-branded page. ● Holiday Mornings Mean More (coming up) : This local promotion will position Real California Milk dairy products as nutritious ingredients to elevate holiday breakfast and brunch meals.

Social: Maintaining “Fewer Things. Done Better. Seen More” Throughout 2023, we’ve continued with our “Fewer Things. Done Better. Seen More” approach. With this strategy, we’ve shaped the overall social budget for the year which has allowed us to better plan and have greater visibility into the number of pieces we’ll be able to support throughout the year.

We develop our social content with our three content pillars in-mind - Our Food, Sustainability, and Brand, in addition to some PR & dairy holidays. For Our Food content, we’re continuing to lean into health and wellness as well as seasonal moments like back-to-school. We’re also looking out for opportunities to lean into any trending dairy product topics, such as new ways to use cottage cheese. Looking specifically at paid social, we promote paid social posts on Meta (Facebook/Instagram) and Pinterest. These platforms complement each other and work hard for our social strategy. Meta has the largest audience pool and helps us to achieve the most reach across our audience,

while Pinterest is the primary platform where people go to find recipes and event planning inspiration. By catering the content specific to the platforms, we have seen much success with our campaigns. We're continuing to monitor performance and learn about our audience and the types of content they prefer and are more likely to engage with. We observe where we can make optimizations, with our biggest takeaway from the past year being an overall preference for short-from video content on Instagram. RealCaliforniaMilk.com In 2023, we’re continuing to enhance the user experience by deploying timely and relevant content on both the English and Spanish sites. On the homepage, the user is shown the latest Freestyle Remix TV spots in a video carousel where the user can rotate and watch the Country, Latin Pop, and Reggaeton spots. The Recipes page continues to curate new recipes related to the latest food trends (cottage cheese and snackle boxes) and local promotions (tacos and Lent appropriate dishes). Our social media posts drive users to multiple pages on the website, where the users can learn more about Sustainability and Health and Wellness.

CMAB Social Media Update

This summer, we are building the Spanish-translated pages of the Cheese and More landing pages, developing a destination on the website that educates our U.S.-based Hispanic consumers and drives awareness about different pairings with cheese. Investing in a Sustainable Future: Latest CDRF Sustainability Research We have officially kicked off our Sustainability research project in partnership with the California Dairy Research Foundation. This project launched in July and is scheduled to wrap-up at the end of October. And as a reminder, this research will shed new light on what resonates best with consumers when it comes to Sustainability in the dairy industry so we can better incorporate that messaging into our own marketing and communications. The research project is being conducted with the help of an outside research agency called Hall & Partners as well as our creative agency, Deutsch LA, and PR agency, Ketchum. Learnings will not only benefit our CMAB marketing team and advertising partners, but will be shared amongst key business stakeholders, including our producers and brand partners. Search Engine Marketing In 2023, we’re continuing to focus on optimizing toward the most cost-efficient keywords, maintaining 80%–90% Branded SOV, updating the campaign based on Google’s latest changes, incorporating Spanish-language keywords and search ads. Non-brand campaigns continue to be geo-targeted to California only, while brand campaigns run nationally.

Additionally, given past success, we’re continuing to run the Dairy Mythbusting campaign while also building out small campaigns around dairy holidays throughout the year.

Lastly, to ensure we are not duplicating efforts across brands, we will continue meeting with MilkPEP, DMI, and CA Milk Processor Board to discuss and align on search teams several times throughout the year.

2023 Paid Search:

Impressions

Clicks

CTR

1,633,129

141,921

8.69%

Appendix Paid Social Performance: The chart below shows social metrics for evergreen content across FB/IG & Pinterest through CMAB and influencer channels, from January through June 2023.

January–June 30, 2023:

Content

Impressions

Engagements

Video Plays

Recipes (All)

119,783,552

74,976

571,782

Recipes (General Messaging) Recipes (Nutritional Messaging)

85,769,923

49,621

571,782

34,013,629

25,355

-

CA Freestyle Video

25,716,144

17,710

282,781

Lent

3,199,911

558

-

Influencer Amplification

6,376,433

20,199

14,892

Tacos, Tequila Y Más

5,507,852

907

-

Summer Snacking

4,284,431

25,693

-

CMAB Communications Services Program

COMMUNICATION SERVICES Public relations activities in Q2 and the first part of Q3 focused on supporting CMAB functional business priorities and delivering key messages to differentiate California dairy among consumers and retail/foodservice audiences. Key Communications Strategies: • Strengthen awareness, affinity, and preference for CA based dairy in CA markets • Highlight milk, cheese, butter, yogurt, cottage cheese and ice cream in creative/messaging • Nurture re-discovered habits and usage occasions that drive dairy sales (breakfast, snacking) • Reach consumers where they are, share farm to table, sustainability, and culinary stories • Continue to maintain role of dairy in fitness/health for consumer, health professional audiences • Spotlight value of dairy: monetary, nutritional, flavor in PR and social media messaging • Promote CA progress in achieving climate neutrality • Continue to provide relevant information/tools for foodservice operators Regional (California)/National Consumer

San Diego Living Burger Board Segment Results: 27k Impressions The CMAB partnered with California Beef Checkoff and dietitian spokesperson Amy Goodson on a Memorial Day grilling segment focused on building a cheeseburger board. The segment, which aired May 24 th , featured messages about how beef and dairy serve as nutritious and affordable ingredients for summer grilling.

Summer Snacking Retail Campaign Lifestyle Release Results : 44 Stories/50M Impressions Stella n Spice Organic/Paid Content Results : 3 Posts/2.7M Impressions The Summer snacking retail campaign ran June through July and was supported through PR media and social media influencer content. The CMAB partnered with influencer Stella Navarro-Kim (@stellanspice) to create sponsored social content featuring Summer Snacking recipes powered by whipped cottage cheese. The campaign was further amplified through geotargeted content and online media placements with publications such as the Los Angeles Times .