On Board With The Chairman - December 2025

Dear Member-Owners,

Your board of directors held its monthly meeting on December 18, a week early due to the upcoming Christmas holiday. The board had a rather large board packet to get through due to the typical end-of-the-year tasks that went along with some big discussions referenced below.

Rob Vandenheuvel kicked off the meeting with his presentation after officially taking over as the new CEO. Rob updated the board on current and projected market conditions, as well as milk production trends. The board had good discussions on how to manage those dynamics into the coming year, as the staff prepares for some uncertainty in the new year, such as a large plant closure in the state on January 1 and continued volatile markets. Rob also informed the board of some organizational moves he made amongst his team, including a realignment of the Executive Leadership Team and some other personnel moves aimed at better serving the needs of the organization while reducing corporate overhead expenses.

Jason Allen then presented the board with the November and year-to-date financials. November came in on target with the latest forecasts, and as we sit in late December, we expect the year-end results to be in line with those forecasts as well. Jason went over the proposed 2026 budget for the Co-Op, and the board had a long discussion on how to handle the new year. At the member meetings held in October and November, there was a common call for greater transparency into how the core business of buying milk and selling milk/butter/powder is doing, which the board absolutely agrees with. We had mentioned that we would like to move to a structure that allows the members to have better insight into how the business is performing, without the noise of Federal Order depooling revenues. With that, we can assure members that the $2.50 per hundredweight assessment will be coming off after December. Moving forward, for the first quarter of 2026, based on the budget and expected business performance, CDI will be assessing members $0.75 per hundredweight for milk produced in the first quarter. This assessment will be reevaluated towards the end of the first quarter, and members will be made aware of any changes going into the second quarter. While both the board and management are laser-focused on doing what is needed to get to a reliably profitable core business, this milk price structure will provide a better indication of that progress during the course of this transformation of the organization.

In addition, Jason led a discussion about CDI’s capital structure. One of the largest single-line-item expenses in our budget is interest, which has grown due to not only higher rates, but also significant investments funded nearly entirely by additional debt at the cooperative. CDI’s Base Capital Plan, which outlines the member investment requirements into the Co-Op, includes the ability to retain $0.25 per hundredweight from member revenue each year, but only $0.15 per hundredweight is sourced from the monthly milk check, with the balance retained from a year-end patronage. After extensive discussions, the board unanimously approved a recommendation to retain the full $0.25 per hundredweight from monthly milk checks starting January 1, 2026, as well as raising the Base Capital Goal, which is currently set at $2.50 per hundredweight, to $3.00 per hundredweight. A letter with more information about this change will be sent shortly, so please keep an eye on your email inbox and mailbox.

Michael Burdeny then presented some great news about our new plant, Valley Natural Beverages (VNB). The commercial team secured a packaged milk contract that we’ve been anxiously waiting for, which will bring some significant flows into that plant in 2026. While we’re not able to disclose the details of that agreement, including our commercial partner, we’re excited to start this process and see that investment start to get meaningful throughput, and we will share more information as this relationship progresses.

Darrin Monteiro then presented some requests for hardship consideration due to the Capacity Shortage Surcharge (CSS) that members were informed about in November, which will come into effect starting on January 1, 2026. The bylaws that authorize the CSS include no accommodation for hardship requests (which is why no such process has been distributed to the membership), but multiple members nonetheless requested consideration by the board. The board has taken the position that under this current CSS, NO adjustments to members’ “Historical Production” (i.e., October 2025 daily average milk pickups) will be made, either now or going forward. The board understands that each of our members has different on-farm dynamics, and due to the structure of the CSS, there is no way to plan for its implementation. However, enforcing the program as expressly laid out in the Bylaws is the best course of action for the organization as a whole. Darrin also informed the board about the upcoming elections for board seats coming up in 2026. Look for information about this in the near future.

I want to take this part of my letter to share my sincere appreciation and gratitude to those who’ve reached out to the directors, shown your support, and given your encouragement. I’d also like to thank those of you who’ve called and challenged us on these issues. We’ve worked tirelessly on them from the beginning, and we won’t stop until it’s finished. I am personally driven by those challenges and use them as motivation to work even harder than we have before, and I know the staff is as well.

As we head into the Christmas season, my prayer is that we as an industry can find the time to take a breath of fresh air and wind down for a moment. When these challenging times come, we tend to forget to find that time to lean into our Lord in prayer, take a moment with family, and enjoy the blessings that Christ has given us. I hope everyone has a safe and enjoyable Christmas season and that we have a great and prosperous start to our 2026 year.

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 All the best,

Cory Vanderham

Chairman of the Board

Vanderham West Dairy

Lazy V Farms

559-269-9618

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