On Board With The Chairman - February 2026

Dear Member-Owners,

 The board of directors held its February meeting on itstypical schedule at its typical location, but the agenda was not typical. Theboard and management took a new approach this month, with most of the meetingspent doing a deep dive into the Operations and Transportation side of ourbusiness. We had regular monthly financial and membership updates as well, butthe bulk of the meeting was spent digging into the strategic outlook on the twoissue areas stated above. This new structure for our meetings is intended to fosterdeeper discussions between the board and management about CDI’s strategicdirection, rather than taking a broader look at the business at each meeting.Next month, the board will spend the bulk of the meeting digging into ourcommercial activities, and the following month will be a deeper dive intofinancial issues.

Rob was first to present, diving into the markets. For thoseof you who follow the markets closely, you’ve noticed a steady rise over thelast five weeks among the dairy commodities. This has been a bit of fresh airfor every producer as well as our Co-Op. Rob informed the board that they’vebeen working closely with our hedging team to ensure we’re protecting ourselveswith the strategy we’ve set forth, while also maximizing spot markets when wecan. Looking specifically at California, Rob spoke about the supply and demandfor raw milk in the state. As we all know, the closure of Leprino’s LemooreEast plant on January 1, combined with unplanned downtime at CDI andcustomer plants in January and February, has created a significant surplus ofmilk in the market, making it difficult to secure additional outlets. The teamcontinues to look at all options on the table to better handle the surplusmilk, including some out-of-state opportunities that are now secured and arestarting to have a meaningful impact on milk handling in early March.

Jason Allen presented next with the January Financial Report.January was a profitable month for CDI, with all sectors of our Co-Op showing greatimprovements from the previous month. Jason informed the board about ourinventory positions, where they are, and where we expect them to be headinginto the flush season. The team has done a great job managing these and takingadvantage of the rise in the markets.

Panna Agrawal, our Chief Operating Officer, was next on theagenda, and the board got a deep dive into the plants. Panna has been on theteam since July, and the improvements we’ve seen since his arrival have beentremendous. Panna and his team have done a great job of introducing a newculture of business accountability across our processing facilities. Pannawalked us through the changes he’s made at each plant and how he’s challengingeach facility to think differently going forward – whether that’s in measuringsite-specific financial/operational performance or in how we evaluate capitalimprovements and measure their impact. There’s a lot of great work being doneat the plants, and I’m excited for members to get the opportunity to meet Pannaat the annual meeting in April. There’s still a lot more work to be done, butsetting the right expectations for our plant leaders and teams is a criticalpart of the process that is getting renewed attention under Panna’s leadership.

Darrin Monterio was next, diving into the transportationside of our Co-Op – specifically regarding raw milk and processed fluids. Whilemost of the presentation was focused on raw milk hauling from the farm to theplant, Darrin also touched on some exciting changes being implemented in ourprocessed fluid transportation (plant-to-plant movements of products like creamand condensed skim milk) that will reduce costs to CDI. As for raw milkmovements off member farms, I know many members are concerned about this.Darrin informed the board of some headwinds he sees contributing to higherhauling costs, as well as some thought-starters on potential ways to addressthem. As CDI hauling costs are largely pooled across all members, anyinefficiencies are shared across the membership. Darrin will be working with acommittee comprised of board members and transportation industry partners tobring options to the board in the future, with the goal of reducing our haulingcosts while still providing the best service possible to the dairy.

As I close, I’d like to remind all of you to mark yourcalendars for our annual meeting on in Visalia on Wednesday, April 22. Also, ifyou haven’t mailed your ballots for the board member elections, please mailthem or call your field representative and give them your ballot to get it infor you. As always, if you have any questions, please reach out to me.

All the best,

Cory Vanderham

Chairman of the Board

Vanderham West Dairy

Lazy V Farms

559-269-9618

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