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Dairy Lab Services Annual Report 2017 Table of Contents District Meeting Schedule 2017................................................ .............4 District Meeting Agenda 2017...............................................................5 Highlights 2016......................................................................................6 President’s Message...............................................................................7 Manager’s Message...............................................................................8 DLS Bylaws......................................................................................9-14 Guest Speaker, Dr. Larry Tranel..........................................................15 DLS Financials 2016......................................................................16-17 IL High Milk Herds by Breed & State Averages 2016..................19-21 IA High Milk Herds by Breed & State Averages 2016..................22-25 DHIA Sample Numbers Graph............................................................26 Commercial Sample Numbers Graph..................................................27 DLS DHIA High Milk Cows by Breed 2016.................................28-29 DLS DHIA Herd and Cow Average by Breed.....................................30 Lab Quality Control.............................................................................31 DairLites Sample Numbers..................................................................31 QCS, Why are my DHI Test and Payment Results Different?.......32-33 Illinois Milk Permit Map.....................................................................35 Iowa Milk Permit Map.........................................................................36 NDHIA Uniform Operating Procedures.........................................39-42 NDHIA, Accurate Records..................................................................40 DLS State Distribution of Member Herd and Cow Numbers..............47 DLS Herd Size Distribution.................................................................47 DLS Special Tests Offered..................................................................48 Special Tests Submission Form...........................................................48 Iowa and Illinois High Lifetime Milk 2016...............Inside Back Cover Regional Map........................................................................Back Cover

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*** 2017 DLS DISTRICT MEETING SCHEDULE *** All Dairy Lab Services dairy producer members and Field Technicians are invited to attend the 2017 Dairy Lab Services District Meetings. Attending members will have the opportunity to select, or be, a delegate to represent your area at the Dairy Lab Services Annual meeting to be held at 10:00 am on Friday, March 24, 2017 at the Grand River Center in Dubuque, Iowa. To encourage participation DLS will be providing a meal at each meeting location. Because an accurate count is needed for these meals, we ask that you call DLS at 800-747-7421, Ext. 100 and leave a message with the number of meal reservations, a week before the meeting in your area. Region

Date / Time

Location

City, State

11

Tuesday, February 14, Noon

Pizza Ranch

Sioux Center, IA

10

Wednesday, February 15, Noon

Gus & Tony’s Townhouse

West Union, IA

8

Thursday, February 16, Noon

Gus & Tony’s

Waukon, IA

9

Friday, February 17, Noon

Dugan’s Restaurant**

Floyd, IA

6

Monday, February 20, Noon

Country Junction

Dyersville, IA

2

Thursday, March 2, 7:00 pm

Pathway Christian School

Kalona, IA

7

Friday, March 3, Noon

Johnson’s Supper Club

Elkader, IA

5

Wednesday, February 22, 7:30 pm

Community Building

Elizabeth, IL

3

Thursday, February 23, Noon

Candlelight Inn

Rock Falls, IL

4

Friday, February 24, Noon

Beltline Café

Freeport, IL

1

Monday, February 27, 7:15 pm

American Legion**

Teutopolis, IL

1

Tuesday, February 28, Noon

Country Kitchen

Oakdale, IL

**New location If you are not able to attend one of these producer meetings and would like to be on the ballot as a delegate or be a candidate for the Advisory Board, receive a 2017 DLS Annual Report or an update on DLS business, please contact Dairy Lab Services at 563-557-7421 X100 or Terry Hopper at 563-599-2507 prior to the meeting for your area. This is a producer organization and your input is important regardless of being able to attend a particular meeting. You may attend any meeting location; however candidacy and voting are restricted to your home District.

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2017 DISTRICT MEETING AGENDA WELCOME 2017 ANNUAL REPORT CONTENT 2016 FINANCIAL REPORT 2016 DAIRY LAB SERVICES HIGHLIGHTS ELECTION OF DELEGATE(S) AND ALTERNATE -Elected or appointed by membership -DLS pays delegate travel expenses ($100 per day, Ride time @$10/hour, Mileage @ $0.44/mile)* -Eligible to vote on issues at the Annual meeting (Friday, March 24, 2017) -District delegates vote on Region Director Election (if applicable) ADVISORY BOARD MEMBER -Selected or appointed by current Board member -DLS pays travel expenses ($100 per day, Ride time @$10/hour, Mileage @ $0.44/mile)* -Offer input to the direction of the company -Meets with the DLS Board (Thursday, March 23, 2017) afternoon

One per Region

*Region 1 and Region 11 will be $150 per day

DIRECTOR ELECTIONS - Scott Bohnert Region 2 - Matt Berning Region 5 - Pat Reisinger Region 8 - Matt Fordyce Region 11 - Al Steffens Region 10

End of 1st Term Eligible for 2nd Term Election End of 1st Term Eligible for 2nd Term Election End of 1st Term Eligible for 2nd Term Election End of 1st Term Eligible for 2nd Term Election 1 year appointment to fill unexpired term until 2018

QUESTIONS FROM THE MEMBERSHIP ANNUAL MEETING TO BE HELD ON FRIDAY, MARCH 24, 2017 AT THE GRAND RIVER CENTER, 500 BELL STREET, DUBUQUE, IA 563-690-4500 Hotel rooms at the Grand Harbor Resort and Water Park (skywalk) 563-690-4000 THANK YOU Dairy Lab Services 5105 Wolff Road Dubuque, IA 52002 800-747-7421

Terry Hopper General Manager 563-599-2507 cell

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Dairy Lab Services – 2016 Highlights DHIA Highlights 2016 management sample volume of 1.44M samples. Test date through DLS is 2.22 days / DRMS is 2.54 days for annual average. Field, Meter and Lab have passed Quality Certification Service for 2016. Commercial Business The payment sample lab is an important part of DLS business. DLS has two Foss BactoScan units, a rapid bacteria counting instrument. Status as a quality, independent choice for the commercial milk industry. Growing the Business All-time high in total $$ sales and all-time high in sample volume for 2016. Johnes, Milk Pregnancy Test (MPT) and PCR testing in house. We are a production lab rather than research lab. Financial Integrity DLS finished 2016 with a stable financial picture. Upgraded equipment and cash reserves will ensure our future. Maintaining total sales with controlled expenses will keep DLS competitive. Board Leadership The Board of Directors is a responsible and professional group. Involved, caring and asking questions is a fitting description. We have a wide range of experience and expertise to see us into the future. Meeting Expectations Timely lab results - DHIA and commercial - are of utmost importance. Website and email have drastically reduced waiting time for results. With few exceptions, samples are run the same day they come in the door. Thank you To all of our DHIA producer members and commercial lab customers. To the Board of Directors for their direction and leadership. To all employees – each of you are important and needed. Your business is truly appreciated; we are looking forward to 2017!

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President’s Message

Alan Steffens DLS Board President

Last year my thoughts were about the ‘constant change’ in this dairy business and this year I must report that most of the cows and heifers were sold in a dispersal sale on October 28th. We are still milking a few of the older cows that did not sell (soon) but what a change in lifestyle after milking 40+ years, including an early career stretch that included not missing a milking for 7 years! There have been so many positive experiences serving on this Board that includes attending the National DHIA meetings and the DRMS Annual meetings, so many dairy producers and industry folks from all over this country and around the world that I’ve been given the chance to rub elbows with. Dairy Lab Services has come through 2016 in good shape and continues to do well for our members. Sample volume, management and commercial, has remained steady just as the financial picture has remained steady for our members this year. These tough financial times on the farm just seems to be a part of the dairy business that we would all like to see moderate and not have such high high’s and low low’s for the wholesome and nutritious product we produce. The lab is in good shape, inside and out, with modern equipment and experienced employees to serve our members and cash reserves to ensure our capabilities for years to come. This is my last President’s Message, as someone new will need to fill my unexpired term for one year on the DLS Board, I would like to say a heartfelt ‘Thank you’ to my fellow Board members, DLS Management staff, Field Technicians, Lab Technicians, route drivers and other DLS employees that contribute to the continued success of our company. My eleven years on this Board have definitely been a positive influence on my life, very enjoyable, and wish everyone a happy and prosperous 2017!!

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Manager’s Message

Terry Hopper, General Manager

It is always interesting to look back over the last calendar year and take in the happenings of how quickly this dairy business environment can change. This next year will bring new rules such as the tail docking ban and the Veterinary Feed Directive (VFD), using a Margin Protection Program (MPP) that does not seem to work the way the dairymen had hoped, and then the lower milk and cull beef markets that put a huge financial squeeze on our members. The goal of this dairy producer owned and operated business is to provide management records to our members to manage their dairy herds profitably, especially in down market years. Dairy Lab Services has come through 2016 in good financial standing, with a modern lab for management information samples (DHIA) as well as our commercial milk payment lab samples. This lab is in good shape inside and out, and is able to deal with down years that inevitably happen. Our lab has three Foss component instruments that measure fat, protein, lactose, total solids, SNF, SCC, FPD, and MUN at 500 - 600 samples per hour. The commercial lab has two Foss BactoScan instruments (130 & 150 samples per hour) that measure bacteria and PI counts with a result in about 10 minutes instead of a 48 hour incubation period on petri film. All five instruments have a bar code scanner to read commercial samples to insure proper automated results delivery. Last year had a good sample volume with just over 1.4 million management samples and about 400,000 commercial samples that were analyzed for components in addition to different tests such as antibiotics, water added, bacteria, PI, etc. tests performed on a single sample. The success of the Milk Pregnancy Test (MPT) has been nothing short of fantastic, the addition of the in-house testing for Johnes has also been very good and these services certainly save our members time and effort in their herds’ reproductive and health management programs. There are many people, at all levels of this company, which provide the necessary effort to make Dairy Lab Services the successful company it is. Our eleven DLS Board members give an excellent mix of experience, learning and understanding. There are about 35 active Field Service Technicians, ranging from over 40 years’ experience to less than a year on the job. There are five commercial lab technicians, five DHIA lab technicians, one person in shipping and receiving, one meter center tech, five route drivers, two large herd sample vial handlers, three department managers and about a thousand customers. Employees are always busy and here for our dairy business customer needs and continued success in this ever changing dairy world. Thank you for a great 2016 and looking forward to 2017!!

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AMENDED AND RESTATED BYLAWS OF DAIRY LAB SERVICES, INC. ARTICLE I: MEMBERSHIP SECTION I. ELIGIBILITY. All producers of agricultural products (individuals, firms, partnerships, corporations, or associations) shall be eligible to become voting members of this corporation. In every case following the adoption of these Bylaws, any producer becomes a member when the following three conditions have been met: A. The producer has on file a valid membership agreement with the corporation. B. The producer has purchased products or services from the corporation. C. The producer receives written notification of membership and a copy of these Bylaws. No producer shall hold more than one membership. Employees of this corporation or its service affiliates shall be eligible for membership, if they meet the criteria for membership, but no employee of this corporation or its service affiliates shall be eligible to serve as delegate or director. SECTION II. TRANSFERABILITY. Membership shall not be transferable. SECTION III. TERMINATION. Membership in this cooperation shall terminate if any of the following events occur: A. The member dies. B. The member ceases to be an agricultural producer. C. The member has become ineligible for membership. D. The member has failed to purchase products or services for a period of at least 120 consecutive days. E. The Board of Directors or its authorized representative finds that the member has violated any Bylaw, policy, or procedure of the corporation. SECTION IV. DISCIPLINARY PROCEDURES. Disciplinary procedures in those matters not covered in any way by the NCDHIP Rules (Article IX) shall be administered according to policies determined by the board of directors. Disciplinary procedures in those matters covered by Article IX shall be dealt with as follows: The general manager or designee shall investigate any alleged infractions and shall utilize the following procedures if it appears an infraction has been committed. A. Identify the infraction and submit proposed sanctions in writing to the accused member by certified mail. The proposed sanctions shall be final unless the member submits a written request for appeal within 10 days of receiving the proposed sanctions. The request for appeal must be accompanied by a check in the amount of $500.00. Failure by the member to accept certified notice shall render the proposed sanctions final. B. On timely request for appeal the accused member shall select, within 30 days from the date of that request, three persons from the eleven person Hearing Panel elected by corporate members. The three persons selected shall not include anyone from the same membership region as the accused. The three person panel, within 30 days of the date of selection, will schedule and hold a hearing on the matter. Either or both may be represented by council. The panel will submit a written decision to both parties, and that decision may reaffirm, negate, or modify in any way the previous decisions. If the panel finds for the accused, the $500.00 deposit shall be returned. In the absence of appeal by either party, after a period of 15 days from the date of the written decision, the finding of the panel shall become final. C. Either party may, during the 15 day period, appeal the ruling to the corporation board of directors. The board of directors shall review only the evidence presented at the hearing, and it shall issue its determination based thereon. Neither the members of the hearing panel, the board of directors, officers, nor employees of the corporation or its service affiliates shall become personally liable for decisions rendered or put into effect as provided for in these Bylaws.

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ARTICLE II: REGIONS AND DISTRICTS SECTION I. REGIONS. The territory of the corporation shall be divided into eleven (11) regional areas, each containing approximately one-eleventh (1/11) of the total membership. Any region that does not vary more than 25 percent in its membership from one-eleventh of the total membership shall be deemed to have the satisfied the requirements of these Bylaws. SECTION II. DISTRICTS. Each Region shall be divided into districts within the region. The geographical area of a district shall not be smaller than a county, and its boundary lines shall conform to the county lines. A district shall include 50 or more members but shall not include more than 350 members. SECTION III. INITIAL REGIONS AND DISTRICTS. The initial boundary lines of regions and districts shall be determined by procedures set forth in the plan of the merger. SECTION IV. REDISTRICTING OF REGIONS AND DISTRICTS. At the third regional meetings held subsequent to the merger the delegates in each region shall elect one member from their region as member of a redistricting committee. That committee shall, in the year of its election only, redistrict the territory and establish regions and districts as described in Sections 1 and 2 of this Article, if the committee deems such redistricting necessary and desirable. It shall utilize membership roles as of the most recently concluded calendar year. The report of that committee shall be filed with the Secretary at least 90 days prior to the next district meetings, and in the absence of fraud and/or gross arbitrary action the report of the committee shall be final. If two board members are in the same region upon redistricting, the new regions will have an election to elect new board members. No member of the Board of Directors shall be a member of the redistricting committee. SECTION V. VOTING RIGHTS. Each member shall have voting rights only in the district in which the member’s principle agricultural operation is located. Questions of assignment to districts shall be resolved by the Board of Directors.

ARTICLE III. MEETINGS SECTION I. DISTRICT MEETINGS. A. Members of each district shall hold an Annual District Meeting, at a time and place set by the Board of Directors. Notice of the Annual District Meetings, and any Special District Meetings, shall be mailed to each member in the district not less that fifteen (15) days prior to the meetings, or they may be published in the regular publication of this corporation and sent to the membership not less than 15 days prior to the first district meeting. B. More than one district may be combined to hear reports, but each district must meet separately to elect delegates. C. Each district meeting shall be conducted by a chairperson in which the district is located, or a designate. D. A quorum shall consist of 10% of the members eligible to vote in the district, not to exceed 50. E. Delegates and their responsibilities. 1. Delegates shall be elected by the members at each Annual District Meeting. There shall be one delegate for each 50 members or a major fraction thereof. 2. Alternates shall be elected to serve if the delegate is unable to serve. There shall be one Alternate for each three delegates with a minimum of one Alternate per district. The qualifications for an Alternate shall be the same as those for delegate. 3. Delegates and Alternates shall serve for one year, or until the next Annual District Meeting, whichever comes first. 4. A delegate must be a member eligible to vote in the district in which elected. A delegate who loses eligibility shall cease to be a delegate and will be replaced by the elected Alternate. In the event no eligible Alternate is available, members in the district may meet to name replacements. 5. Delegates shall keep informed on the affairs of the corporation and shall serve as a communication link with the members of the district. 6. At their respective regional meetings, the delegates shall elect the members of the redistricting committee and the Hearing Panel. There shall be one committee member and one panel member from each region. The term of office shall be three years for redistricting committee members and one year for hearing panel members. 7. At their respective regional meetings, the delegates shall elect the board of directors. 8. A delegate shall have one vote on each question.

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9. Delegates shall vote in place of and for members on all questions that require membership approval at special, regional, and annual meetings of the corporation. Voting at district meetings shall be done by the membership of the district. SECTION II. REGIONAL MEETINGS. The delegates from each region shall meet after the district meetings to elect a hearing panel member. Every third year they shall also elect a director and a redistricting committee member. All elections shall be by ballot and shall require a majority of ballots cast. If more than one ballot is required to reach a majority, the succeeding ballots shall be limited to the two candidates who received the highest number of votes on the previous ballot. A majority of the delegates elected from a region shall constitute a quorum. Attendance by and Alternate when a delegate is absent shall be counted as attendance of a delegate for purposes of determining a quorum. Regional meetings may be held in conjunction with the annual meeting of the corporation, if the board of directors deems it appropriate to do so. SECTION III. ANNUAL MEETINGS OF THE CORPORATION. Only delegates duly elected at District Meetings shall be eligible to vote at the Annual Meeting or any special Meeting of this corporation. In any case where the delegate is absent, the Alternate must vote instead. A. The Annual Meeting shall be held not later than 180 days after the end of the fiscal year. The time and place of the annual meeting shall be set by the board of directors. More than one annual meeting may be held if the board of directors deems it appropriate to do so. B. Written notice of the annual meeting shall be prepared by the secretary and mailed to the last known post office address of each delegate and alternate not less than 15 days prior to the date of meeting. In lieu of mailed notice the notice may be published in the corporations newsletter not less than 15 days prior to the meeting date. Failure of any delegate or Alternate to receive the notice shall not invalidate any action, which may be taken by delegates at the meeting. C. Attendance of at least a majority of the total voting delegates shall constitute a quorum of any annual or special meeting. Attendance of an Alternate when the delegate is absent shall be counted as attendance of the delegate for purposes of determining a quorum. In the event a delegate quorum is not present, matters before the delegates will be decided by a majority vote of delegates present. SECTION IV. SPECIAL MEETINGS. A special meeting of a district, a region, or the corporation may be called by the board of directors or the president. Special meetings may be held at multiple locations and times but yet be considered a single meeting, when the Board of Directors deems it appropriate to do so. A special meeting of a district, region, or corporation shall be called upon receipt of a written petition signed by 20% of the voting constituency of the district, the region, or the corporation. The voting constituency of a district is the members of record; the voting constituency of a region is the delegates from that region; and the voting constituency of the corporation is the delegate body of the corporation. Notice of time, place, and the purpose shall be in accord with the provisions for an annual meeting. No business shall be considered at a special meeting expect as stated in the notice of the meeting. SECTION V. VOTING BY PROXY. There shall be no voting by proxy at any district, regional, annual, or special meeting.

ARTICLE IV: DIRECTORS SECTION I. QUALIFICIATIONS. Except for the first board of directors as specified in the plan of merger, the board of directors shall consist of eleven (11) directors, one elected from each region at the annual regional meeting. The term of office shall be 3 years. At the first election of regional directors, regions 1, 4, 7, and 10 shall each elect a director for a three year term. Regions 2, 5, 8, and 11 shall elect a director for a two year term. Regions 3, 6, and 9 shall elect a director for a one year term. Thereafter all terms shall be for three years. A. Only members in good standing shall be eligible to serve as directors. If a delegate is elected as director, that person loses delegate status and is replaced by an Alternate. B. No person shall be eligible to serve as director whose spouse, sibling, offspring, or parent is employed by the corporation or one of its service affiliates. C. No individual may serve more than four consecutive three year terms as director. There shall be no limit to the total number of terms or years that individual may serve as director, so long as consecutive term requirement has been met. D. A director must be a member within the region where he or she serves as director. SECTION II. ADDITIONAL DIRECTORS. If the territory served by this corporation is enlarged by consolidation, merger, acquisition, or other means, these Bylaws may be amended to include additional

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regions and directors. In the absence of such an amendment, the redistricting committee will reorganize existing regions to comply with these bylaws. SECTION III. REMOVAL OF DIRECTORS. A director may be removed for cause by a majority vote of the delegates from the region which the director represents at any annual or special meeting of the region. The resulting vacancy shall be filled by election with the delegates of the region voting. Any director who becomes ineligible to be a member shall cease to be a director at the same time. SECTION IV. FILLING VACANCIES. Except for the first board of directors, any vacancy on the board of directors shall be filled by appointment by the board of directors. Candidates for appointment shall be limited to elected delegates from the region in which the vacancy occurs. Duration of the appointment shall be until the next annual or special meeting of the region, at which time the delegates from the region shall elect a director. When a vacancy leaves a term of office incomplete, the election shall be for the remainder of the unfulfilled term only. SECTION V. MEETINGS OF DIRECTORS. The board of directors shall meet as follows: A. The annual meeting of the board of directors may be held immediately following the Annual Meeting of the corporation without further notice, but it must in all cases be held not later than ten days after the annual meeting. B. The board of directors shall meet from time to time as deemed necessary by the board of directors. Meeting for purposes of this bylaw is defined as a physical gathering of the directors at a specific geographical location, or simultaneous communication between the directors without gathering at a specific geographical location, so long as the other requirements for meeting are adhered to. C. The president may call additional meetings at any time and shall do so upon request by a majority of the directors. SECTION VI. NOTICE OF MEETING. Advance notice of all regularly scheduled directors meetings shall be mailed to each director not less than ten days prior to the meeting date, or a meeting may be held on written waiver signed by all of the directors. SECTION VII. QUORUM. A majority of the directors shall constitute a quorum at any and all board meetings, but a lesser number may adjourn to another time upon giving notice to the absent directors of the time and place of the adjourned meeting. Matters before the board shall be decided by a majority vote of the directors present. SECTION VIII. ACTION WITHOUT MEETING. Any action required or permitted by Articles of Incorporation, Bylaws, or statute may be taken by the board of directors, providing a consent in writing, setting forth the action is signed by all directors entitled to vote on such action. SECTION IX. COMPENSATION. Directors shall not receive any salary for their services, but the board of directors may authorize a fixed sum for the time actually spent on business when approved by the board. Directors shall also be reimbursed for expenses necessarily and actually incurred while on business authorized by the board. All compensation and expense reimbursement shall be in accord with applicable statues. SECTION X. EXECUTIVE COMMITTEE. The board of directors may designate 4 or more directors to serve as an executive committee. The executive committee shall have only those powers permitted by law and expressly delegated to it by the board.

ARTICLE V: OFFICERS SECTION I. ELECTION. The directors, at their annual meeting, shall elect a president, a vice president, a secretary, and a treasurer. The offices of secretary and treasurer may be assigned to one individual at the discretion of the board. Only the office of treasurer may be held by a person who is not a director, if the board deems it appropriate. The board may set compensation for officers who are also directors. SECTION II. DUTIES OF THE PRESIDENT. The president shall preside over all meetings of the corporation and the board of directors, perform all duties normally assigned to a presiding officer, and discharge other duties as may be prescribed by Bylaw or by the board of directors.

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SECTION III. DUTIES OF THE VICE PRESIDENT. In the absence of the president, the vice president shall perform the duties of the president. SECTION IV. DUTIES OF THE SECRETARY. The secretary shall record all votes and keep minutes of all meetings, have general charge of the books and records of the corporation, sign necessary papers for the corporation, and keep other records authorized by the board of directors of these Bylaws. The board may delegate a portion of the duties to an employee of the corporation. SECTION V. DUTIES OF THE TREASURER. The treasurer shall perform those duties with respect to finances which are prescribed by the board of directors. The board may delegate a portion of the duties to an employee of the corporation. SECTION VI. REMOVAL OF OFFICERS. The board of directors may remove from office any officer when it deems the best interest of the corporation is best served thereby.

ARTICLE VI: DUTIES OF THE BOARD OF DIRECTORS SECTION I. GENERAL MANAGER. The board may select, employ and fix the compensation of a general manager. The board is also empowered to discharge the general manager. SECTION II. BONDS AND INSURANCE. The board of directors shall require all officers, agents and employees of this corporation, who are responsible for any of its funds or property, to give bonds. The cost of said bonds shall be paid by the corporation. The board shall provide for insurance of this corporation’s property, or property which may be used in the possession of the corporation. In addition, the board shall provide for insurance covering liability for accidents to all employees and the public. SECTION III. FINANCIAL ACCOUNTABILITY. The board of directors shall install and maintain an adequate system of accounts and records. At least once each year the financial records of the corporation shall be audited and a report of the audit shall be made to the members at the annual meeting of the members. SECTION IV. DEPOSITORIES. The board of directors shall select the depository or depositories for the corporation and shall designate those persons who have authority to sign checks and other instruments.

ARTICLE VII: FISCAL YEAR The fiscal year of this corporation shall begin the first day of January and end the last day of December.

ARTICLE VIII: INDEMNIFICATION Each director, officer, agent, or employee of the corporation, now or hereafter serving as such, shall be indemnified by the corporation to the fullest extent permitted by the laws of the State of Iowa. Such indemnification may include, but not necessarily be limited to, all claims and liabilities including reasonable settlement to which such person has or shall become subject by reason of serving or having served in such capacity, or by any reasons of any action alleged to have been taken, omitted, or neglected by such person shall be indemnified against, or be reimbursed for any expense incurred in connection with, any claim, or liability arising out of the person’s own willful misconduct or gross negligence. The board of directors may purchase, at its discretion, insurance to provide for such indemnification.

ARTICLE IX: INCLUSION The current version of the National Cooperative Dairy Herd Improvement Program Rules (effective January 1, 1989) shall be considered an integral part of these Bylaws. Any changes in these rules or standards, including change of title, shall be considered integral to these Bylaws. No formal action to amend Bylaws shall be required.

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ARTICLE X: FIELD SERVICE AFFILIATES Any local association providing field services at the time these Bylaws become effective shall be eligible to continue as a service provider, providing all of the following conditions are met. A. The association must execute a written contract with this corporation, and it must adhere to the terms of that contract. B. The association must meet or exceed all standards set by this corporation, NDHIA, NCDHIP, applicable statues, or other regulatory agencies. C. The association may not contravene member’s rights and obligations under these Bylaws. D. This corporation shall not stand responsible for the operations or actions of the local association. It shall determine only whether the local association meets the requirements to serve as field service provider.

. Combinations or mergers of local associations are considered continuing local associations in the context of these Bylaws. The corporation may authorize, by written contract, other legal entities to provide services. Any such authorization would be at the sole discretion of the Board of Directors, and it must be deemed to be in the best interests of the corporation.

ARTICLE XI: LIMITS OF LIABILITY The corporation itself provides a range of services to members or clients directly or through its Field Service Affiliates. It also engages or facilitates on behalf of its members or clients additional services procured from agencies external to the corporation. Where choice of that agency external to the corporation rests with the member or client, the corporation cannot be held liable for the acts, errors, or omissions of that external agency. This bylaw provision does not abridge in any way whatsoever the member’s or client’s right to seek satisfaction or redress from the external agency, nor does it preclude the corporation from rendering assistance to the member or client where it is feasible to do so.

ARTICLE XII: AMENDMENT OF BYLAWS These Bylaws may be amended by majority vote of the delegates assembled at an annual meeting or special meeting of the corporation, provided the proposed amendment has been adopted by resolution of the board of directors and such amendment or a summary thereof is published with the notice of meeting.

ARTICLE XIII: EFFECTIVE DATE The effective date of these Amended and Restated Bylaws shall be March 25, 2011. These Amended and Restated Bylaws supersede the original Bylaws of the Corporation and all amendments thereto.

A Publication of Dairy Lab Services, Inc.

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Guest Speaker for Annual Meeting

Dr. Larry Tranel Dairy Specialist, ISU and Outreach in NE/SE Iowa

Dr. Larry Tranel is Dairy Specialist with Iowa State University Extension and Outreach in NE/SE Iowa for the past 16 years and spent 10 years as Dairy Farm Management Agent with University of Wisconsin-Extension in Iowa County. Larry specializes in dairy facilities and cow comfort, milking systems and financial management and has authored numerous projects including the Dairy TRANS financial analysis software, the Millionaire Model Dairy Project and the TRANS-Iowa Low Cost Parlor. Larry has done financial analysis studies of conventional, grazing and organic dairy farms in Iowa as part of the Millionaire Model Dairy project and tries to help producers understand how to determine the true profitability of their dairy farm. - 15 -


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* Notes for consideration 1) These figures come from the DRMS Service Affiliate Management (SAM) program. These are total herd size numbers not sample numbers. 2) Not every herd tests or takes samples every month, some herds do MO (milk only). 3) About 5,700+/- cows per month have DLS analyze samples but process at Provo or AgSource or ATA. They do not process at DRMS therefore are not in the above numbers. 4) DariLiteS numbers averaged about 8500 +/- samples per month ranging from a few cows to herds with 1500+ monthly samples, along with many variations for the balance of DariLiteS herds. DariLiteS are herds that do not process for cumulative information and get back Fat, Protein, SCC and MUN for each sample. These herds are members of DLS as state dues are calculated in the 50 cent per sample lab rate for DariLiteS.

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Dairy Lab Services 2017 Annual Report  

Dairy Lab Services was founded in 1978 and owned by approximately 1500 dairy producers scattered across Iowa, Illinois, Wisconsin and Minnes...