On Board With The Chairman - June 2025

Dear Member-Owners,

‍

Your Board of Directors held their most recent monthly meetingon Thursday, June 25th. Board Chairman Cory Vanderham was unable to attend, so asvice chairman, I acted as chair for the meeting.

Brad Anderson started the meeting by giving an update on domesticand global market conditions. As of this writing, there are positive indicators,particularly with respect to dairy markets that drive on-farm milk prices, andexport opportunities are currently a big part of that.

Jason Allen then presented a financial report for May, aswell as the year-to-date report. The May financials were on target with ourexpectations when evaluating 2025 risk and establishing the member milk checkassessment in May. There were very good questions and robust discussions fromthe board about our business going forward.  

As members should expect, the ongoing member milk check assessmentwas discussed at length, and member feedback from the past month was shared andnoted. With respect to member feedback, your board and management welcomediscussion and questions from the collective membership. As directors on yourboard, we are elected to represent the member-owners in governing CDI, andevery one of us takes that responsibility very seriously.

Michael Burdeny, Chief Commercial Officer, gave an updatenext. While most of you know Michael as the leader of our retail butter salesoperation for the past five-plus years, he now provides strategic leadershipover the sales of our ingredients (powder) and packaged milk (Valley NaturalBeverages) as well.

On the butter front, our newest innovation – the Challenge butter“cubes” – is generating positive feedback. In fact, I came across anadvertisement for the new product on TV last week! Look for them at your local Walmart,Save Mart, and/or Albertsons/Safeway locations.

Valley Natural Beverages is still producing some initialproducts for sale on our first line, but processing across our second and thirdpackaging lines is pending final regulatory approval. All systems are installedand ready to produce, but the bureaucracy of Sacramento is providing one finalreminder of why many businesses look outside of California for investment! Onceregulatory approval is secured, we will start to see a steep ramp up in volumesbeing produced at that facility. The California Milk Advisory Board has beeninvolved in supporting the launch of this facility, and we appreciate thatsupport as we put more California milk into this growing market.

Next, Michael reviewed our current performance, goals, andplans regarding our ingredients business. One major highlight is the newproduction of lactoferrin at our Turlock North plant. Initial production hasconfirmed that this latest investment can produce some of the highest-qualityproducts in the market, which will ensure we are able to secure the necessarymarket pricing to make this investment a success. The team is currentlydeveloping our market for this product, now that we have samples in hand. Asyou can imagine, products like this undergo extensive testing on both theseller’s (CDI) and prospective buyer’s side before new supply agreements aresecured; however, we have seen some solid market interest.

Finally, Rob Vandenheuvel provided an operations report. Robreviewed key indicators in our plants, including gain/loss performance, costcontrols, milk flows, product mix, etc.  Recenthauling delays, which have particularly impacted member-owners in the Visalia,Fresno, and Turlock areas, were also a focus of Rob’s report. A combination ofplant downtime – both at our plants and those of our customer plants – andmember milk flows that have not dropped in line with the typical May/Junepost-flush trend has created some pinch points in the network, causing backupsat the plants. Too many members are having to call the No Spill Hotline,particularly for this time of year, and staff have been working hard to managethe controllable factors contributing to this unusual situation for June.

As we rapidly approach July 4^th, we continue topray for our country and its military personnel, who are serving away fromtheir families. I hope everyone has a safe Independence Day and a great rest ofyour summer.

You are always welcome to reach out to your board members as we navigate through some challenging times for the cooperative.

‍

All the best,

Neil Zwart

‍

‍