The Scoop - Winter 2020

WINTER 2020 | VOLUME 4

A LOOK BACK AT 2020

FARM SERVICES

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INTRODUCING ST. ALBANS CREAMERY & SUPPLY New look, same great service for our farm supply store

COMMERCIAL

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INDUSTRY

BACK FOR THE HOLIDAYS

DFA MILK IN SCHOOLS ACROSS THE COUNTRY

Kemps® is bringing back a seasonal favorite — just in time for the holidays

A look at how milk reaches today’s youngsters

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COOPERATIVE

LOOKING BACK ON 2020 There is no doubt 2020 was a year of change, but it was also a year of opportunities and achievements. Despite the challenges we faced, employees, industry partners and our family farm-owners came together to ensure we continued to feed families across the nation and around the world with all the possibilities of dairy. As COVID-19 changed how we worked at times, across our business and throughout the supply chain, we continued to learn, identify and implement new efficiencies, build upon our customer relationships and strengthen our presence in the communities in which we live and work. From our giveback efforts through the Farmers Feeding Families Fund, to welcoming new employees from our acquisition of a substantial portion of Dean Foods’ assets and so much more, we made it a year to remember.

Expanding the DFA family While the acquisition of a substantial portion of Dean Foods’ assets earlier this year wasn’t part of our strategic plan, when Dean Foods filed for bankruptcy last year, we knew we needed to do something — for our family farm-owners and the U.S. dairy industry. We welcomed many new employees, and our consumers can now enjoy a variety of dairy products from revived regional brands across the country.

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Launching new products We introduced a variety of tasty, innovative and surprising products to consumers this year.

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Scan the QR code to hear Chairman of the Board Randy Mooney’s perspective on where the Cooperative has been and where we are going.

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thescoop | Winter 2020

Working through COVID-19 The coronavirus (COVID-19) pandemic changed our world, but all of our essential workers ensured our nutritious, high-quality dairy products made it to store shelves. We learned quickly, built upon customer relationships, strengthened our presence in our communities and kept our business running during an unprecedented time.

Highlighting our social responsibility This year, we took steps to vocalize our commitment to sustainability and shared the ways we care for our people, our planet and our communities. On Earth Day in April, we launched our 2020 Social Responsibility Report detailing the Cooperative’s three sustainability pillars that support our sustainability strategy.

And, in October, we formally announced our commitment to reducing greenhouse gas emissions by 30% by 2030.

SUSTAINABILITY PILLARS OUR PLANET OUR PEOPLE OUR COMMUNITIES To read the 2020 Social Responsibility Report, visit dfamilk.com/sustainability

Coming together To help ensure our Cooperative is fulfilling our values of integrity, passion, quality and community, and with ongoing social unrest in our country amid a pandemic, there was no better time to assess where we’ve been, where we are and where we need to be in terms of diversity and inclusion. Our inaugural Diversity and Inclusion Advisory Council was formed to bring employees together from across the Cooperative to do just that. To learn more about the council and its ongoing efforts, visit The Parlor or Moospace.

Aligning with our value of community Through our DFA Cares Foundation, the Farmers Feeding Families Fund (FFFF) was established to help support communities with increased need for reliable, nutritious food, including dairy. Starting in April and carrying on through June Dairy Month, Hunger Action Month in September and the holiday season, we have continued to fundraise and give back to our communities through the fund.

Highlights from the FFFF, our diversity and inclusion efforts and other community initiatives this year include: $650,000 raised to date through the FFFF since April.

All of our Areas made a product or monetary donation, or hosted a food distribution event, to celebrate June Dairy Month.

16.5 million servings donated to date through the FFFF.

$5,610 raised during Hunger Action Month in September to stock food pantries with dairy products.

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refrigerators donated to food banks in Vermont, New Mexico, Washington, D.C., and Colorado — with more to come.

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employees with vast diversity in race, age, gender, sexual orientation, job role, location and experience, helped pioneer DFA’s inaugural Diversity and Inclusion Advisory Council. thescoop | Winter 2020

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INDUSTRY

MILK PRICING 101 We all know the dairy produced on our more than 7,500 family farms across the country is enjoyed in many delicious ways. As consumers, we keep a variety of these dairy products in our refrigerators at all times — from a gallon of 2% milk or a tub of spreadable butter, to a bag of shredded Colby Jack cheese.

And it’s not only the fridge. Our pantries house various dried mixes, dips and treats like chocolate bars that contain dairy.

While these products may all be familiar in your household, what you may not know is what “class” of milk they fall into when it comes to pricing milk. Milk, as a commodity, is regulated and priced in a unique and complex way. Supply and demand, along with various federal and state dairy policies determine the prices farmers receive for raw milk from the farm.

U.S. Department of Agriculture (USDA) oversees the Federal Milk Marketing Order (FMMO) program, which was established nearly 100 years ago to ensure the prices paid to farmers for milk supported both adequate supply for consumers and an improved price for farmers. Today, nearly 80% of the milk produced in the United States is regulated under FMMOs, which include 11 geographic pricing regions across the country.

FMMOs work by pooling milk revenue and paying farmers a uniform price — no matter what category or “class” their milk falls into. Put simply, each month, FMMOs establish uniform prices paid to farmers by first classifying milk by its end use. The classes include Class I, Class II, Class III and Class IV. The FMMO then combines, or pools, the value of that milk and shares that value among the farmers participating in one of the 11 regional marketing orders. Pooling ensures farmers within the region collectively benefit from the proceeds of all milk in the pool, rather than some earning more and others earning less due to the type of processing plant they deliver to.

When you pull a dairy product out of your fridge, you may not think about what class it falls into, but now you know our family farm-owners are getting paid a fair price — whether their milk went into that stick of butter or a bottle of chocolate milk.

CLASSES OF MILK EXPLAINED

CLASS I

“Drinkable” milk used for beverages (fluid milk, eggnog)

CLASS II

“Spoonable” milk used for soft products (cottage cheese,

ricotta cheese, milk shakes and ice cream mixes, sour cream, yogurt, custards, puddings)

CLASS III

Milk used for cheese (cream cheese and other spreadable cheeses, and hard cheese)

CLASS IV

Milk used to produce butter or milk products in dry form

(whole milk powder and nonfat dry milk)

FARM SERVICES

INTRODUCING ST. ALBANS CREAMERY & SUPPLY In April 2019, DFA welcomed the dairy farm-owners of St. Albans Cooperative Creamery in St. Albans, Vt., and its plant, which is now part of the Ingredient Solutions Division, to the DFA family. In addition to welcoming these members and staff, DFA also acquired the cooperative’s farm supply store, called St. Albans Co-op Store. The store itself has been, and continues to be, an integral part of the town of St. Albans, Vt., providing customers — including its dairy farm-owners — with everything from feed and fencing to gardening supplies and groceries, including a multitude of dairy products.

As part of our continued investment in St. Albans, earlier this month, the store was officially renamed St. Albans Creamery & Supply. The store will continue to operate and serve the St. Albans community as it has for several decades. A sister store to The Creamery in Beaver, Utah, as part of a phased investment, in the future, the store will serve and sell even more delicious dairy products. Stay tuned for more information next year.

As always, St. Albans Creamery & Supply will continue to have a focus on all things Farm. Home. Community., and will provide the local community with the same great service and products.

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thescoop | Winter 2020

BRAND TALK

BACK FOR THE HOLIDAYS When it comes to food, we all have brands we swear by and limited-edition products we wait not-so-patiently for every year.

But there’s one fan favorite that holds a special place in the hearts of families throughout the Upper Midwest: Kemps® Gingerbread Man Ice Cream Sandwiches. These treats consist of Kemps’ delicious vanilla ice cream sandwiched between real gingerbread cookies. It has been more than 25 years since fans have seen this product on store shelves, and the beloved desserts are finally making a comeback.

The demand for these treats never stopped; loyal customers head to Facebook each year to ask for their holiday favorite back. They created a Facebook page called “Bring back the Kemps Gingerbread Man Ice Cream Sandwiches,” where more than 1,300 fans come together to share their stories and memories of their favorite frozen treat.

Customers know they can always turn to Kemps because it has been nourishing families with dairy products made with milk from local family farm-owners since 1914.

“People love this local brand because of the high-quality dairy products we provide,” says Rebecca Heagney, director of brand marketing at Kemps. “It is a trusted brand that many consumers grew up with and remember from their childhood.”

For many people, these ice cream sandwiches bring back fond recollections — spending time with friends, celebrating birthdays or making memories with kids, parents and grandparents. Some comments on the Facebook page talk of the times grandkids would visit their grandparents and they could always find these in the freezer; others who now have families of their own discuss still requesting these from their parents after more than 40 years; and overall the memories shared are about celebrating the holidays with family and these sweet treats.

The Kemps team says they are excited to bring this product back again after more than two decades. “We are most excited to be able to surprise and delight our fans with this product this year — especially those who have created a special Facebook page to bring the product back,” says Kelly Graf, brand manager and project lead at Kemps.

Kemps is known for its unique flavor offerings and fun, limited-edition products, such as pumpkin pie ice cream and seasonal eggnog, that keep customers grabbing for more year after year. People hold brands close to their hearts, and for Kemps lovers, it’s the totally, utterly delicious products that have been bringing joy and happiness to each taste bud for more than 100 years. This product is available at major grocers and retailers in Minnesota and Wisconsin.

INNOVATION

COLAB CONVERSATIONS SPARK IDEAS Earlier this year, our innovation team launched CoLAB Conversations, brainstorming sessions to inspire creativity, and several teams have participated, including most recently the risk management team.

“In these facilitated brainstorming sessions, attendees get the ability to ‘step away’ from their jobs and really think openly about the

presented problem or question,” says Doug Dresslaer, director of cultural innovation.

“We are all focused on doing the best job for DFA every day, but we also need time to think about ways to improve how we do our jobs, whether that’s through new processes, better project flow or even new services for our farmer-members.”

brainstorm how they could best support member farms to identify and manage serious issues. After three sessions and a spreadsheet full of ideas, their next step is to sort through the options to identify which ones to implement.

To schedule a CoLAB Conversations session for your team, email colab@dfamilk.com.

Doug says during these sessions there are no wrong answers or suggestions. It’s an open environment where everyone is welcome to think creatively and offer ideas they may not have a chance to suggest in regular meetings.

The risk management team wanted to

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INDUSTRY

DFA MILK IN SCHOOLS ACROSS THE COUNTRY Just like when we were kids, grabbing a carton is still the norm at school cafeterias across the country, and at DFA, we are responsible for ensuring children learning in-person or at home, are continuing to get the milk they know and love. For DFA, sharing milk in schools is not only an opportunity to build a young fanbase of dairy, but to also showcase a variety of our brands and fulfill our commitment to local communities.

COVID-19. From April through May, DFA milk going to schools dropped 40% but remained active with many school districts across the country providing meals and milk to children in their community through local drive-thru events. Today, it has slowly picked back up to 70% of normal demand. As our world continues to deal with COVID-19, our supply chain and the people who keep it alive, will continue to meet demand and adjust as needed.

With more than 17,000 individual addresses in DFA’s school milk delivery portfolio, simply getting the milk to schools can be complex and expensive.

There isn’t a one-size-fits-all solution because some schools require multiple deliveries each week, some are supplied by school district warehouses and others receive deliveries from third-party distributors. Holidays, summer breaks and other downtimes create wrinkles in the demand causing it to be high one day and possibly low the next. To meet this fluctuating demand and constant unknown, everyone in the supply chain has to remain flexible and dedicated to ensuring milk is there when it needs to be.

“There are times when the demand for milk is unpredictable, such as the pandemic we are currently experiencing. We also know our family farm-owners can’t stop milking their cows based on the ups and downs, and for that, we appreciate their ability to balance the milk supply so that it’s available when needed,” says Tom Murray, president of Dairy Brands South.

Before the COVID-19 pandemic changed our world, the majority of school milk business took place August through May with 140 million half pint containers of white and chocolate milk being produced per month for schools. During summer months, this demand would typically drop to 10–20 million units to help supply summer school program needs.

Now, during an unprecedented global pandemic, there hasn’t been a steady normal for school milk. With schools impacted from April to now, each day is a new challenge with various hurdles to overcome based on the spread of

For our family farm-owners, the supply chain and you, our DFA employees, dealing with difficult times isn’t anything new, it’s a challenge we signed up for and dedicate ourselves to each and every day. By providing value to our farmer-owners, we are not only helping them produce milk efficiently and sustainably, but we are also ensuring communities around the world can enjoy the simple pleasures of dairy. Schools within those communities house the next generation of leaders, caregivers and young people who will shape our world for the future. It is our duty to supply them with one of nature’s most nutritious foods — milk.

CULTURE

GIFT IDEAS FOR ALL We made a list, and we checked it twice. A list of DFA-themed gift ideas that is.

You’re sure to find something for everyone on your list.

DFA Store Visit the DFA Store at dfamilk.com/store to shop DFA clothing, accessories, housewares, kids apparel and more.

Half & Half magazine Send recipe inspiration all year long with a gift subscription to Half & Half magazine. Employees can use coupon code HOLIDAYEM2020 at halfandhalfmag.com/subscribe to receive 25% off an annual subscription through Thursday, Dec. 31.

The Creamery Send curated gift boxes to your loved ones featuring cheese made from member milk, jams, meats and other perfect pairings uniquely sourced from Utah from The Creamery, our dairy destination in Beaver, Utah. Employees can get 10% off gift boxes now through Thursday, Dec. 31. Visit thecreameryutah.com and use code DFAEMP2020 at checkout. Orders may also be placed by calling 833-796-4551 or emailing orders@thecreameryutah.com.

Shipping times may be longer this year due to the COVID-19 pandemic, so don’t wait too long to place your order.

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thescoop | Winter 2020

PLANT SPOTLIGHT

MAKING THE WORLD FRIENDLY ONE SCOOP AT A TIME Handmade cakes and novelty flavors aren’t the only aspects of Friendly®’s Ice Cream that make it special. It’s the resilient, loyal and enthusiastic family of employees behind the ice creams and cakes who have proven the name of the company to be exactly what it says it is — friendly.

If you’re unfamiliar, the Friendly’s brand consists of ice cream products and a chain of restaurants, businesses that operate separately, but with the same Friendly’s brand.

Joining DFA’s network of dairy manufacturers in 2020 with the acquisition of a substantial portion of Dean Foods’ assets, all ingredients are sourced locally through DFA’s dairy farm families in the Northeast Area.

Each week, approximately 1.15 million pounds of milk and cream are delivered to the facility, amounting to an average of 20 million gallons of ice cream products yearly.

Friendly’s story began in July of 1935, when two brothers, Curtis and S. Prestley Blake, opened their first ice cream shop in Springfield, Mass., selling double-dip cones for 5 cents each. They named their shop “Friendly,” with the intent of providing a warm, caring and neighborly place for families to visit and enjoy a special treat together.

Over the years, Friendly’s has expanded its manufacturing capabilities, currently operating seven product lines out of its manufacturing facility in Wilbraham, Mass., including four sqround lines (for transitioning between square half gallons of ice cream to round, oval-shaped containers), one cup line (for individual ice cream cups), one 4-gallon bulk line (for 4-gallon ice cream containers) and one cake line.

But the handmade cakes continue to be the star of the show.

In a room of about 30 people, layers of ice cream, crumb toppings, frosting and sprinkles are assembled into ice cream cakes. And they can’t make enough of them.

Demand for Friendly’s ice cream treats keeps the 280 employees who work in the manufacturing facility busy, providing opportunities for stable and long-term employment in the community.

“Last month, we had two employees retire after serving Friendly’s for 50+ years,” says Kristen Cervone, human resources director for the DFA Dairy Brands Ice Cream Division. “Friendly’s has a culture of continuous improvement and long-term employees who believe in the product and want to protect it.”

Friendly’s employees are always looking for ways to improve and help one another. Open communication and goal-oriented mindsets drive positive change in the organization, helping Friendly’s people to grow alongside their product lines.

“Our employees in all three shifts work so hard,” Michelle says. “They appreciate the fact that we are essential, and we get to be here for our communities during these unprecedented times.”

The people at Friendly’s are proud to represent the brand, one another and the more than 7,500 dairy farm families they provide value to through DFA. They are invested in the ice cream cakes and treats that bring joy and celebration to their communities. They are truly making the world Friendly, one scoop at a time.

In the late 1980s, Friendly’s began selling half gallon cartons in grocery stores in New England. By 2014, demand for Friendly’s ice cream treats had grown, allowing the company to introduce ice cream bars, sundae cones and their signature Friendwich ice cream sandwiches.

“We are a well-known, family name brand in the Northeast — that’s what sets us apart,” says Michelle Roy, human resources manager at the manufacturing facility. “Fond memories spent in the restaurants connect people to our ice cream cakes and novelty treats that make celebrating milestones at home much more special.”

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C0MMERCIAL

ONE TEAM:

HOW INGREDIENT SOLUTIONS CAME TOGETHER FOR A CUSTOMER Suited up in boots and jumpsuits, volunteers and staff at DFA’s plant in Allerton, Iowa, step into a hygienic, stainless steel zone at the top of a spiral staircase. But instead of having a Rapunzel moment, they’re watching as forklifts raise pallets of milk protein concentrate up a full story to set in front of an auger. Then, one by one, each 25-kilogram bag is lifted and poured by hand into the auger to be funneled down into 750-kilogram totes.

While it may sound like boot camp, it’s actually a customer-focused effort to solve a need — which is exactly what team members from across our Ingredient Solutions Division stepped up to do.

Beyond products, Ingredient Solutions offers a variety of capabilities that deliver value to its customers — from partnering with DFA Risk Management on long-term pricing to providing innovative solutions through Research & Development to leveraging the abilities of our manufacturing facilities.

“Allerton was built for agility with advanced nutrition in mind,” says Andrew Rice, product optimization director for nutritional powders. “This forward-thinking has allowed us to utilize the facility to not only produce nutritional powder ingredients like infant formula, but also undertake some additional tasks such as this rebagging contract, which has helped bolster relationships with our key customers at the facility.”

Rebagging is exactly what it sounds like: taking product from one package and putting it into another that is more functional for the customer’s needs.

In this case, it’s for the plant’s largest customer, Fonterra, a global dairy nutrition cooperative.

Due to the stringent food safety and quality standards around this project, each person to enter the rebag zone was required to change into sterile uniforms and then out of them before going to another location in the plant — which is easier said than done. Milk protein concentrate — an ingredient common in processed cheese — is sticky in nature, and with thousands of pounds of powder being rebagged each hour, those jumpsuits, hairnets and goggles are prime candidates for residual dust to stick to.

“This project was challenging in the sheer volume of product that was required to be handled and processed,” says John Van der Hulle, plant manager at the Allerton plant, of the larger-than-normal rebagging project.

“Everyone [plant staff] realized the additional stress that this project placed on the site in regard to resource management.”

Along with the hiring of several new employees to support the existing operation, including Project Supervisor Tim Karr, approximately 35 Ingredient Solutions employees from various cross-functional departments

raised their hands to volunteer (many of whom do not have experience in a manufacturing environment) to provide the all-hands-on-deck support needed to complete this project. The volunteers underwent food safety, quality and operational training before helping.

“The One Team approach was the only way that this project could be accomplished,” says John, who has been at the plant for 25 years and with DFA and its predecessor cooperatives for nearly 40. “And that was proven to be the case.”

Beyond the physical task of pouring the powder to be rebagged, the warehouse team was under significant pressure due to the extensive coordination around ensuring product is where it needs to be, when it needs to be there. The entire process included delivery and receiving, storage, staging, lot management, storing and handling after the rebag and prepping for shipping and management of additional trailer storage, resulting in triple handling of product due to the small size of the warehouse.

“An extensive amount of management went into this project to ensure we had resources at all times to run,” John says. “There are many instances that members of the maintenance team jumped in and helped when we were inbetween resources.”

Production of the rebagging began with one truckload — or nearly 40,000 pounds — every 24 hours and increased by another full truckload per day on average by the time the project was completed on Wednesday, Nov. 4.

This massive project shows the Ingredient Solutions’ team’s ability to live our values and come together to deliver for the customer, which ultimately provides value back to our family farm-owners. Now that’s something we’d all roll up our sleeves for.

Total product packed • 850 metric tons of 42% milk protein concentrate = 33,990 bags or 1,133 totes or 43.6 truck loads • 108 metric tons of 80% whey protein concentrate = 5,400 bags or 180 totes or 7 truckloads

dfamilk.com | © 2020 Dairy Farmers of America | December 2020

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