Dairy Farmers of America’s joint venture with the Chinese

DFA Introduction

A Global Perspective

Our approach to China

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DFA overview

• A farmer-owned cooperative

• Member farms across the US

– Nearly 9,000 member farms

– Produce 23% of all US milk

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Member Farms

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DFA overview

• A farmer-owned cooperative

• Member farms across the US

– Nearly 9,000 member farms

– Produce 23% of all US milk

• Processing network

– 33 DFA managed facilities

– Invested in 77 facilities in total

• Diverse commercial businesses

– $5+ billion annual revenue

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DFA Processing Network

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DFA overview

• A farmer-owned cooperative

• Member farms across the US

– Nearly 9,000 member farms

– Produce 23% of all US milk

• Processing network

– 33 DFA managed facilities

– Invested in 77 facilities in total

• Diverse commercial businesses

– $5+ billion annual revenue

• Leading US dairy company

– $18 billion annual revenue

– Marketing 30% of all US milk

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DFA Overview

A Global Perspective

Our approach to China

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Global Dairy Demand

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More People….More Money….More Places

Globalization

• Free flow of information

• Free flow of capital

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Globalization

• Free flow of information

• Free flow of capital

• Practical impacts

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150,000

160,000

170,000

180,000

190,000

200,000

210,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Domestic consumption U.S. milk production

U.S. milk production and consumption

13 Source: U.S. Department of Agriculture

Domestic consumption 10-yr. CAGR:

+0.4%

5.2%5.7%

5.3%5.8%

8.2%8.6%

9.4%9.8%

11.0%

9.3%

12.7%13.3%

13.2%

15.5% 15.4%

4.0% 4.3% 4.3% 4.6% 4.6% 4.9% 4.6% 4.5%4.1%

3.4%2.9% 3.0% 3.2% 3.0% 3.2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Tota

l mil

k so

lid

s, p

erc

en

t of U

.S. p

rod

uct

ion

U.S. Dairy Trade Balance

Exports Imports

Note: 2014 is through December

Dairy Trade Balance Total milk solids, percent of U.S. milk production

14 Source: National Milk Producers Federation

10-year shift in U.S. milk production

Source: USDA National Agricultural Statistics Service

-24.6%

-36.4%

-38.7%

-22.1%

-23.9%

-20.9%-2.7%

-35.3%5.7%

-9.3%

-6.5%

-10.0%

-61.2%

-55.3%

-6.9% 35.2%

40.0%

-14.5%

-9.9%

-2.1%

-1.3%

0.9%

5.4%

-19.4%

-49.4%

32.4% -64.9%

20.7%

43.0%

65.1%

13.5%

46.2%

-31.0%-28.5%

32.2%

40.0%

-42.1%

17.9%

-26.8%

30.8% 36.6%

-36.6%

68.7%

9.1%

-8.8%

-37.3%

14.6%

72.4%

Milk Production Shift

3-year average (2000-02) vs. (2009-11)

Increase greater than 25% (12)

Increase f rom 10 to 25% (4)

Increase f rom 0 to 10% (4)

Decrease f rom 0 to 10% (9)

Decrease f rom 10 to 25% (6)

Decrease greater than 25% (13)

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Are we competitive?

• New Zealand

• European Union

• Brazil and Argentina

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Grain and milk production annual average growth rate

17 Source: Rabobank, % CAGR 2006

vs. 2013

The value of farmers

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DFA Overview

A Global Perspective

Our approach to China

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• Enter markets where we can compete

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DFA’s Approach

China’s food challenge

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People

Farmland

Fresh Water

7 percent

3 percent

22 percent

• Enter markets where we can compete

• Focus on volume growth and “premiumization”

• Follow our U.S. customers and develop relations with leading local companies

• Build lasting relationships with like minded businesses

• Understand and manage risk

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DFA’s Approach

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DFA’s joint venture with the Chinese

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DFA’s joint venture with the Chinese

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DFA’s joint venture with the Chinese

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DFA’s joint venture with the Chinese

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DFA’s joint venture with the Chinese

Thank You

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