10220 N. Ambassador Drive Kansas City, Missouri 64153

July 16, 2010 Dear DFA Equity Holder, In 2008, we were pleased to announce that our Board of Directors approved an enhanced Age Retirement Program (“Program”). Under the Program, inactive equity holders meeting eligibility requirements no longer have to wait ten (10) years before receiving their retirement payout. To date, approximately 3000 inactive equity holders with equity totaling $38.6 million have been accepted into the program. This year’s application deadline for the Age Retirement Program is August 31, 2010. Inactive equity holders who are retired from the dairy industry prior to January 1, 2010 and are sixty-seven (67) years of age or older on August 31, 2010 may begin annual receipt of portions of their retirement balance. Upon approval of an application, these individuals can receive one-tenth (1/10th) of their inactive equity account balance each year beginning in 2010 until the balance is paid in full. For example, if an inactive equity holder currently age sixty-seven (67) or older retired from the dairy industry in 2005, they would be scheduled for payment in 2015 under the current ten (10) year retirement program. If accepted to participate in the Age Retirement Program, they would receive one-tenth (1/10th) of their equity balance at time of application each year until 2015, at which time their remaining account balance would be paid in full. Age Retirement Program payments will be made this fall. An application form is enclosed and must be completed in full and postmarked no later than August 31, 2010 for you to be eligible for participation. Completed applications should be mailed to the attention of the Equity Department of your nearest Area Office (addresses below). Since we do not have complete age data for all inactive equity holders, DFA reserves the right to modify the Program at any time as necessary to meet funds allocated to the Program or for any other reason. All payments are subject to the DFA Bylaws and specific DFA Board of Directors’ authorization. Please review the policies for the Program on the reverse side of this letter carefully. If you have any questions, please call the Equity Department of your nearest Area Office at the number listed below. Sincerely,

Joel Clark Senior Vice President - Accounting Central Area – 1-800-260-5274 10220 N. Ambassador Drive, Kansas City, Missouri 64153

Southeast Area – 1-800-735-6455 10411 Cogdill Road, Knoxville, Tennessee 37932

Mideast Area – 1-800-837-6776 1035 Medina Rd., Suite 300, Medina, Ohio 44256

Southwest Area – 1-800-994-2674 3500 William D. Tate Ave., Suite 100, Grapevine, Texas 76051-8734

Mountain Area – 1-800-626-6455 1140 South 3200 West, Salt Lake City, Utah 84104

Western Area – 1-877-622-8250 170 N. Maple St., Suite B106, Corona, California 92880

Northeast Area – 1-800-926-2667 5001 Brittonfield Parkway, East Syracuse, New York 13057

DFA’S AGE RETIREMENT POLICY FOR INACTIVE EQUITY HOLDERS SIXTY-SEVEN (67) YEARS OF AGE OR OLDER

Below are the policies for payment of inactive equity through DFA’s Age Retirement Program (“Program”). Payments will be made in accordance with the following: 1. DFA equity account holders sixty-seven (67) years of age or older who are retired from the dairy industry

may apply to receive one-tenth (1/10th) of their current inactive equity account balance (capital retains and allocated equities) each year thereafter until the balance is paid in full.

2. An applicant’s status as inactive (i.e. no longer milking) will be subject to verification by DFA field staff. Additional proof regarding an applicant’s status may be required by DFA prior to acceptance of application.

3. Application for retirement of inactive equities must include the following information: - Completed application form - Proof of age (copy of driver’s license, birth certificate, passport or other similar official documentation)

4. Inactive equity accounts combined with active equity accounts are eligible to participate; however, at the time the application is approved, the account(s) to be retired will be segregated and no longer combined for base capital calculation.

5. Equity purchased from other members in the ten (10) years prior to the time of application will be excluded from payment through this Program.

6. Inactive equity holders electing to participate in the Program are eligible to sell (pursuant to an approved DFA program) all, but not less than all, of their remaining inactive equity balance at any time.

7. Shareholders of a corporation are eligible to participate in the Program provided they provide (1) proof that they no longer own shares in the corporation as of the application date, (2) proof of a certain ownership percentage (corporate resolutions, stock register, corporate minutes, tax returns or other similar documents) for at least seven (7) consecutive years preceding the application date, and (3) corporate authorization for payment to be made to the corporation. Actively milking corporations will be limited to a maximum payment of 50% of the equity balance regardless of the eligible shareholders’ ownership percentage. Payment to inactive corporations may be up to 100% if all shareholders meet necessary requirements. An amount equal to the shareholders’ ownership percentage will be moved into an inactive account listed under their individual name and social security number at the time of acceptance. General partnerships, limited partnerships, LLCs, joint ventures, accounts with dairy names and similar entities will be handled in the same manner as corporations.

8. Participants in previously grandfathered age retirement programs (Milk Marketing, Inc. and Mid-America Dairymen, Inc.), if eligible, may make a non-revocable election to participate in the Program.

9. Checks will be made payable only in the name of the retired equity holder. Under no circumstances will a check be issued in another person’s name except in the case of a valid court order.

Since DFA does not have complete age data for all inactive equity holders, DFA reserves the right to modify the Program at any time as necessary to meet funds allocated to the Program or for any other reason. All payments are subject to the DFA Bylaws and specific DFA Board of Directors’ authorization.

Form No. 220 Page 1 of 2 7/2009

Application for Retirement of Equity for Retired Inactive Equity Holders

INDIVIDUAL INFORMATION

Applicants must comply with conditions set forth in “DFA’s Age Retirement Policy for Inactive Equity Holders Sixty-Seven (67) Years of Age and Older.” Name: ________________________________________________

Address: ________________________________________________

City, State, Zip: ________________________________________________

Phone number: ________________________________________

Equity ID No.: __________________

Date of birth: __________________ (mm/dd/yyyy) – 67 years old or older by August 31, 2010

Actively milking? _____ yes _____ no

Ownership/Interest in another dairy (including non-DFA dairies)? _____yes _____ no

One form of ID required as proof of age (please check one and attach copy).

______ - Birth certificate _____ - Driver’s license

_____ - Passport _____ - Other official document I certify with my signature that the information provided is true and accurate and I agree to abide by the policy as set forth by DFA’s Board of Directors.

Signature: ______________________________ Date: ____________

Print name: ______________________________

Applications must be postmarked by August 31, 2010.

Form No. 220 Page 2 of 2 7/2009

CORPORATE INFORMATION Only complete if equity is held by a corporation, LLC or legal

entity other than the individual named on first page of application Entity Type: _____ Corporation _____ LLC _____ Other (please specify)

Legal Entity Information:

Entity Name: ________________________________________________

Entity Address: ________________________________________________

City, State, Zip: ________________________________________________

Equity ID No.: __________________

Entity actively milking? _____ yes _____ no

Dates of ownership by individual named on front of application:

From To Ownership (mm/dd/yyyy) (mm/dd/yyyy) percentage ___________ ___________ ___________

Attach copies of the following:

____ Copy of document(s) proving ownership and ownership percentage(s)

____ Copy of document(s) proving that individual no longer has ownership

CORPORATE AUTHORIZATION

As a corporate officer, I hereby authorize the payment of corporate equity due to the retirement of certain shareholders. I further certify that (1) payment will be utilized to pay retired shareholder(s), (2) said individual(s) are sixty-seven (67) years of age or older, and (3) I am authorized to sign on behalf of the corporation.

Signature: ______________________________ Date: ____________

Print name: ______________________________

Title: ______________________________

Corporation: ______________________________

FOR FIELD STAFF / OFFICE USE ONLY

I have, to the best of my ability, verified this INDIVIDUAL and/or CORPORATION is no longer active in the dairy business, either with DFA, any other cooperative, or independently. If at any time I have knowledge that this INDIVIDUAL and/or CORPORATION has started in the milking business again I will notify DFA’s corporate office immediately. DFA Field Staff/Manager signature: ___________________________ Date: ____________

Print Name: ___________________________

Applications must be postmarked by August 31, 2010.

COMMBR0901

Your Investment in DFAUnderstanding your equity and how it is returned

DFA Area OfficesNortheast

East Syracuse, N.Y. • 1-800-926-2667

Mideast Medina, Ohio • 1-800-837-6776

Central Kansas City, Mo. • 1-800-260-5274

Southeast Knoxville, Tenn. • 1-800-735-6455

Southwest Grapevine, Texas • 1-800-994-2674

Mountain Salt Lake City, Utah • 1-800-626-6455

Western Ripon, Calif. • 1-877-622-8250

Dairy Farmers of America, Inc.10220 N. Ambassador Drive

Kansas City, MO 641531-888-332-6455

www.dfamilk.com

Dairy Farmers of America, Inc. (DFA) strives to return equity to our members in a fiscally responsible manner. As an equity holder, you are eligible to participate in our equity retirement programs.

When you join the Cooperative, you pay into the organization through equity investments. Through your DFA equity account, you receive your share of the Cooperative’s earnings, based on the amount of milk marketed through DFA, plus any money that is retained from your milk check. When you cease marketing milk through DFA, these investments are returned to you through your equity account.

RevisedEquityBrochFinal.indd 1 6/11/10 9:22 AM

Equity AccountsThere are three payment options:

1. Normal RetirementNormal retirement occurs 10 years from

the time you cease marketing milk through DFA. For example, if you discontinue milking operations any time during 2010, you can expect to receive your entire equity account balance, in full, during 2020, subject to final Board approval.

2. Estate RetirementThe estate retirement option is used in

the case of a deceased account holder. The equity of a deceased account holder will be paid in full to the estate. For partnerships, equal ownership is assumed unless otherwise designated. For example, if an account is in the deceased member’s name only, the deceased member’s estate will be paid in full.

If the account is held jointly with the member’s spouse, only 50 percent will be paid to the deceased member’s estate. Deceased owners of a corporation may be eligible. Contact your Area office for more information.

3. Age RetirementAge retirement occurs when you cease milk

production at or after age 67. You may apply to receive a payment of one-tenth of your account balance each year until paid in full. Contact your Area office for additional eligibility requirements. DFA also honors age retirement plans for two predecessor cooperatives: Mid-America Dairymen, Inc. (Mid-Am) and Milk Marketing Incorporated (MMI). Contact DFA’s equity department for more on the eligibility requirements of those plans.

Selling EquityInactive members may sell their equity in total

or in part to active DFA members. Sellers are responsible for finding a buyer and negotiating

the price of sale. When details of the sale are finalized, the current member must send a completed transfer form to their local DFA Area office for approval. DFA offers free classified advertising of equity for sale in its member publication, the DFA Leader, andon myDFA.

Need more information about your equity retirement options?

Contact DFA’s equity department at 1-877-643-7848, e-mail your question to equity@dfamilk.com or contact your Area office (listed on reverse).

RevisedEquityBrochFinal.indd 2 6/11/10 9:23 AM

DAIRY FARMERS OF AMERICA, INC.10220 N. Ambassador Dr.

Kansas City, Missouri 64153

Southeast Area1-800-735-6455

10411 Cogdill RoadKnoxville, Tennessee 37932

1.888.DFA.MILK

Financial Report

As Of and For the YearsEnded December 31, 2009 and 2008

Southwest Area1-800-994-2674

3500 William D. Tate Ave., Suite 100Grapevine, Texas 76051-8734

Western Area1-877-622-8250

170 N. Maple St., Suite 106Corona, California 92880

Central Area1-800-260-5274

10220 N. Ambassador DriveKansas City, Missouri 64153

Mideast Area1-800-837-6776

1035 Medina Rd., Suite 300Medina, Ohio 44256

Mountain Area1-800-626-6455

1140 South 3200 WestSalt Lake City, Utah 84104

Northeast Area1-800-926-2667

5001 Brittonfield ParkwayEast Syracuse, New York 13057

WWW.DFAMILK.COM

Dairy Farmers of America, Inc. and Subsidiaries Dairy Farmers of America, Inc. and SubsidiariesCondensed Consolidated Statements of Operations Condensed Consolidated Balance Sheets(In thousands) (In thousands)

2009 2008 2009 2008

Net sales 8,077,155$ 11,744,979$ Assets:Cost of sales 7,780,863 11,213,820 Current assets:

Gross profit 296,292 531,159 Cash and cash equivalents 135,971$ 61,995$ Receivables, net 610,529 706,613

Operating costs and expenses: Inventories 165,312 200,175 Selling 49,027 71,406 Other current assets 14,936 36,456 Delivery 83,110 259,835 Total current assets 926,748 1,005,239 General and administrative 118,315 135,984

Total operating costs and expenses 250,452 467,225 Investments in affiliates 567,541 556,544 Property, plant and equipment, net 165,594 417,828 Goodwill 118,561 128,657

Operating income 45,840 63,934 Intangible assets, net 236,661 338,169 Notes receivable 124,085 32,623

Other income (expense): Other long-term assets 37,021 36,986 Earnings of affiliates 83,630 62,570 Assets of discontinued operations 21,435 36,456 Affiliate impairment charges (15,104) - 2,197,646$ 2,552,502$ Interest expense (47,199) (60,296) Other income, net 13,074 17,894

Income before income taxes and Liabilities and equity:discontinued operations 80,241 84,102 Current liabilities:

Checks outstanding 50,488$ 58,105$ Income tax benefit (expense) 2,424 (5,569) Due to members and haulers 313,724 409,613

Accounts payable & accrued expenses 373,613 447,946 Income before discontinued Total current liabilities 737,825 915,664

operations 82,665 78,533 Long-term debt 308,350 464,032

Loss from discontinued operations, Subordinated debt 301,000 356,225 net of tax (9,443) (7,015) Other long-term liabilities 157,302 126,164

Liabilities of discontinued operations 4,976 5,847 Net income 73,222 71,518 Total equity 688,193 684,570

2,197,646$ 2,552,502$ Net income attributable to noncontrolling

interest 7,658 9,840 Net income attributable to DFA 65,564$ 61,678$

and should be read in conjunction with, DFA's audited consolidatedfinancial statements as of and for the years ended December 31, 2009 and 2008.

These condensed financial statements have been derived from,

December 31,

These condensed financial statements have been derived from,

financial statements as of and for the years ended December 31, 2009 and 2008.and should be read in conjunction with, DFA's audited consolidated

Year Ended December 31,

To Our Equity Holders: 2009 was another good year for the business of the Cooperative, and we continued to  show strong improvement in our commercial operations and affiliate/joint venture results.   Our member owners have endured unprecedented financial pressure beginning in late 2008 and continuing to the present.  In an effort to provide them some financial relief, we paid out all of the $25.3 million of 2008 allocated patronage in cash and made special cash payments in July and October totaling $18.3 million from our 2009 earnings.  We also retired equity of $30.2 million through our various equity retirement programs. We acquired the inventory and operations of Berkshire Dairy and Food Products, Inc., a business is engaged in the wholesale marketing of dairy and food products.  We also acquired from Schreiber Foods, Inc. their industrial and foodservice sweetened condensed milk, condensed milk, butter and butter blends product lines and an industrial and foodservice sweetened condensed milk business from Saputo Cheese USA, Inc.  These acquisitions expanded our existing condensed milk and butter businesses. We divested of the operations of National Dairy Holdings (NDH) to Grupo LaLa.  We used the proceeds from this sale to pay down long‐term debt and further strengthen our balance sheet.   In 2009 we continued to build on our strong operating performance in 2008.   Adjusted for the additional $18.3 million of special payments, consolidated operating income was $64.1 million in 2009, compared to $63.9 million in 2008.  Earnings of affiliates, excluding impairment charges, were $83.6 million in 2009, compared to $62.6 million in 2008.  Like 2009, 2010 continues to be a challenging year for our member owners.  DFA continues to work to lessen the impact that the current price cycle is having on our members.  DFA is also working with others in the industry to build consensus for a plan to manage future volatility while still allowing producers to grow.  Through it all, our decisions and day‐to‐day business continue to be guided by our corporate values – Integrity, Accountability, Community, Innovation, Quality and Passion.   Joel ClarkSenior Vice President, AccountingJuly 1, 2010