Michigan’s Dairy IndustryKen Nobis, MMPA President

ONE CENTURY STRONG

1,200DAIRY FARMS

5 Billion LBS. OF MILK

Integrity Leadership Progressive CommunityQuality

Products made at Ovid & Constantine Plants: Butter, Cream, Condensed Milk, Dry Milk Powders, and Specialty Blends.

Middlebury Plant:

Colby, Monterey-jack and Cheddar type cheeses.

MMPA Locations

MMPA Fluid customers

MMPA Customers

Michigan’s Dairy Industry• Ranks 5th nationally

• Dairy is the top ranking segment of Michigan’s agriculture industry.

• Dairy contributes over 20% of Michigan’s cash receipts for Agriculture.

• Represents more than 5.0% of total U.S. milk production.

Top Ten Dairy States

1. California 40.5 billion lbs. -1.0 %2. Wisconsin 30.1 +3.83. New York 14.8 +4.84. Idaho 14.7 +3.95. Michigan 10.9 +6.06. Pennsylvania 10.8 +0.27. Texas 10.7 +4.68. Minnesota 9.7 +2.29. New Mexico 7.7 -1.510. Washington 6.7 +0.7

Number of Dairy Cows & Total Annual ProductionMichigan 2000 - 2016

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

100

200

300

400

500

600

700

800

900

1,000

1,100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016dairy cows milk production

Thousand

Milk production in Michigan has increased 90.6% since 2000 while cow numbers have increased 39.7% during this time.

Million pounds

Milk Production Per Cow- Top 10 States - 2016

State Milk Produced Per Cow1. Colorado 25,980 pounds

2. Michigan 25,957 pounds3. Idaho 24,647 pounds

4. New Mexico 24,479 pounds5. Arizona 24,429 pounds6. Washington 24,094 pounds7. New York 23,815 pounds

8. Iowa 23,634 pounds9. Wisconsin 23,552 pounds

10. Nebraska 23,317 pounds

•Agricultural Land•Climate•Water• Infrastructure•Access to Population Centers

The Michigan Advantage

The Michigan AdvantageAdvances in genetics, nutrition, herd management, and technology innovation have led to greater efficiency in the dairy industry.

$15.729 Billion

Economic Impact

$3.148 billion Dairy Farming

$7.478 billion Dairy Processing

$5.103 billion Wholesaling/Retailing

Dairy’s Economic Impact to Michigan’s

Economy

Source: Michigan State University Product Center, Dec. 2016

U.S. MILK PRODUCTION

15.00

15.50

16.00

16.50

17.00

17.50

18.00

18.50

19.00

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

2014 2015 2016 2017

Bill

ion

Lbs.

February = +2.3% (adjusted for leap year)Calendar Year 2016 = +1.8%

STATE MILK PRODUCTION

600

650

700

750

800

850

900

950

1,000

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

2014 2015 2016 2017

Mill

ion

Lbs.

February = +4.8% adjusted for leap year. Calendar Year 2016 = +6.0%

2016 State Increases (In Millions)State Pounds Percent +/-

Ohio 39 +0.7%Michigan 615 +6.0%Indiana 126 +3.1%Wisconsin 1,093 +3.8%Total 1,873

Four states represented 49% of increase in milk production in the U.S. in 2016.

MMPA Expansion Efforts Since 2008

• Ovid Plant expansion completed in 2010 allows processing of 60% more milk.

• Expanded Ovid wastewater treatment system • Added a new whole milk powder packaging system to expand shelf life of product

• Installed a new butter churn.• Added a second separator at Constantine plant. • In July 2014, MMPA and Foremost Farms USA formed a strategic alliance and have invested $10 million into the MMPA Constantine plant to install reverse osmosis (RO) technology.

+ 4.2 Million Pounds of Milk/Day

MMPA Expansion InvestmentImpact on Processing Capacity 2008 vs. 2016

4Million

Pounds/Day

2008

8.2 Million

Pounds/Day

2016

Michigan's Dairy Industry

Evaluation of further dairy expansion opportunities underway.

Current processing capacity within the state will need to be expanded to accommodate milk production growth.

Increased Demand for Milkfat

• Revised views on impact of dietary fat consumption on cardiovascular health and obesity has led to growth in consumption of milkfat in the U.S. domestic market

• Butter • Fluid whole milk• Yogurt• Cheese• Other products

Cheese Plant

Exploration of Joint Ownership of Cheese Plant