Leaders Attend Land O’ Lakes Dairy Regional Fall Meeting MICHELLE RANCK Lancaster Farming Staff CARLISLE (Cumberland Co.) Two of the top dairy leaders in the country were in Carlisle for the Land O’Lakes fall regional meeting on Tuesday. More than 200 producers at tended the meeting that included a director’s report, management report, and operations report be sides separate region governance meetings. Land O’ Lakes is an organization owned by coopera tives and dairy producers throughout the nation, including nearly 3,000 members in the Mid-Atlantic region. During the meeting, Land O’Lakes President and Chief Ex ecutive Officer Jack Gherty gave a management report and re ported on a progressive and fin ancially strong year. Also pres enting during the meeting were Jack Prince, executive vice presi dent and chief operating officer of the dairy foods division; Gor don Hoover, secretary of the Land O’Lakes corporate board and Lancaster County dairy pro ducer; and Bill Schrieber, vice president of Eastern operations. Hoover gave the board of di rectors report. “As legislative is sues become more and more im portant, it becomes more important to take extremely ac tive roles in the legislative pro cess,” he said. He cited Land O’Lake’s Politi cal Action Program (PAC) as an example of the organization’s in volvement in legislation. Legisla tive success included, with pas sage of the appropriations bill, an extension of the Dairy Price Sup port program, $6OO million in market loss payments to dairy farmers, $7.1 billion in assistance to wheat, feed, grain and seed producers, plus the establishment of permanent normal trade rela tions (PNTR) with China. Upcoming issues, said Hoover, included 2002 Farm Bill discus sions to have policy in place and develop unity among agricultural programs. The September board meeting is primarily for long-range plan ning, said Hoover. “We are ex tremely committed in this envi ronment of change and volatility to compete and win. We have a committed board and coopera tive on behalf of our members,” he said. In Gherty’s management re port. he outlined several reasons the dairy industry is facing diffi cult times. A slumping, volatile market, intense competition, ongoing in tegration consolidation, and ac celerating change are obstacles facing the industry, said Gherity. Even in this environment, said Gherity, Land O’ Lakes contin ues to pursue its mission of opti mizing members’ dairy, crop, and livestock production. For the first three quarters of 2000, sales were up three percent from a year ago to $4.4 billion, accord ing to Gherty. The organization made major acquisitions of agronomy facilities, saw $68.7 million in earning in the dairy foods division, invested capital, saw equities go up and long-term debt go down. - The organization also formed AgriAlliance, which brings to gether five organization to create a cooperative. Land O’ Lakes also established a Farmland Feed organiztion, putting together two competing Midwestern co-ops to reduce cost of production for each. This year Land O’ Lakes expanded the layer business, which in turn should help in crease the feed business, said Gherty. The organization’s seed business is now the fourth largest seed company in the nation. Also this year the organiza tion’s infrastructure was upgrad ed, as the Carlisle facility’s ca pacity was doubled. Land O’ Lakes purchased Madison Dairy, a major private label butter pro ducer, in the past year. In addi tion, progress has been made on the joint venture of a cheese and whey plant in the West. To expand into the e-com merce outlet, Dairy.com is also in the works for the organization as a tool for both producers and processors. New technology and biotech nology will bring food safety to the forefront of dairy issues, according to Gherty. “Integration of the food sup ply chain is blurring the line be tween production agriculture and processing. Chains are being built,” said Gherty. Land O’ Lakes must grow to compete effectively, said Gherty. Resources are finite, and growth must be consistent with proactive management of the portfolio, or, more simply, the or ganization must continue to be come more focused. One example of becoming focused is selling businesses, even good businesses, to invest in others. Another crit ical aspect to the growth and ef fectiveness or the organization is generating industry-competitive financial results. “Land O’ Lakes must perform as a business,” said Gherty. Also, exceptional people are essential to build the right cul ture, environment, and team work for the organization. Land O’ Lakes is more than a farm supply or dairy coop, said Gher ty, and that strength can be lev eraged to create competitive ad vantage. Also in Gherty’s report, he paid a special tribute to Bob Dever, vice president of public affairs, who, after 31 years with Land O’ Lakes, is moving from full time to a consulting position for the company. The operations report was given by executive vice president and chief operat ing officer for the Dairy Foods Group Jack Prince. “Volumes are up, and we are have a record year in butter sales,” Prince said. “Although soft pricing has affected our dol lars sales. Dairy Foods earnings through September are $lB.l million on the value-added side and $4.7 million on the industrial side. That’s in addition to the one-time net gain of $45.9 mil lion on repositioning our Dairy Foods assets, including the sale of the Fluid Dairy Division and the revaluing of assets related to the Alpine Lace cheese business.” Key accomplishments in 2000, said Prince, include a two-fold in butter volume production and earnings up $8.6 million. The Madison Dairy acquisition in creased the volume for the com pany by 20 percent. Also in 2000, Land O’ Lakes launched the “Ultra Creamy” product line. The foodservice sector had a record year, with volume up seven percent, plus the additions of new products in cluding sauces. “The value added side of the business posi tions the business to compete long-term,” said Prince. The deli sector had earning of $2.9 million. Alpine Lace, which falls under the deli category, is being repositioned, according to Prince. Known as a low-fat prod uct, Alpine Lace unfortunately was not known for its great taste. Land O’ Lakes, therefore, hopes to reformat the recipe to make the recipe low fat but not nonfat. The Land O’ Lakes fall meeting in Carlisle included the attendance of top leadership of the organization. From left. Bill Schreiber, vice president of eastern operations; Jack Prince, executive vice president, chief operating officer dairy foods, industrial group; Jack Gherty, president and CEO; and Gordon Hoover, secretary of the corporate board of directors. so the company can tout the line as a “healthy product that tastes good, not just a low-fat product,” said Prince. The fluid dairy sec tor was sold to Dean Foods, which allows Land O’ Lakes to become more focused, said Prince. Challenges facing the organi zation are dealing with change and competing with bigger com petitors, said Prince. Land O’ Lakes must become national marketing oriented, invest in people and new technology, drive their business through consumer insight, and continue with prod uct innovation, consolidate in key areas, and streamline the supply chain. On the industrial side, Prince said the organization will focus on being world-class. Land O’ Lakes is already spread national ly and has top facilities, impor tant steps toward becoming a world-class operation, according to Prince. Key accomplishments include financial turnarounds and an ex pansion of Producer Risk Man agement Program. Especially im portant, said Prince, is the restructuring taking place in the upper Midwest, where Land O’ Lakes is evaluating partnerships, ventures, and alliances. In three years, predicts Prince, the struc ture in the upper Midwestern area will look completely differ ent compared to the structure today. “ ‘We don’t discount any opportunity to restructure the Midwest,” said Prince. Challenges facing Land O’ Lakes include the slow pace of change in the company’s system, increased energy and insurance costs, and product losses, such as the large volume of product lost with an antibiotic contamination in a plant. Capital investment, integral to the operation, is still a necessary part of the operation but also a challenge. “ ‘lf we want to be the first choice for producers, we have to make those invest ments,” he said. Besides investments, Land O’ Lakes must also look at consoli dation. “Either you’re a consoli dator or you’re going to have to be one of those that leaves the business.” In the question-and-answer session, Prince covered the or ganization’s strategies for the fu ture, which include continued re structuring in the Upper Midwest. “ ‘We’re not here to see what fancy buildings we can make, or what we can do against the com petition. We’re here to maximize the value of the dairy member’s products,” said Gherty. Dever addressed the issue of the future of the dairy industry on the East Coast. According to Dever, the sheer volume of peo ple residing in the East make a ready market. Coupled with the population growth in the South, Eastern dairy producers should have a promising future. Penn sylvania, said Dever, is ideally lo cated to reach the supply-deficit markets. Prince noted that two-thirds of the dairy market is located east of the Mississippi. “You have the knowledge and technology. It’s a matter of deciding for yourself if you can compete with other dairymen, to ask yourself if you are as good as other dairymen.” To answer questions addres sing cheese, Prince said that Apply For Distinguished Young Holstein Breeder Award STATE COLLEGE (Centre Co.) The Pennsylvania Hol stein Association announces that it is seeking applications for the Distinguished Young Holstein Breeder Award. The contest is open to any Pennsylvania and National Holstein Association member between the ages of 21-40 (as of Dec. 31, 2000) who owns or has management re sponsibilities for a herd of cows. The herd must be on official DHIA test. The award is to recognize ac complishments of young Holstein breeders and to encourage them to establish goals that will aid in their management decisions to help achieve a profitable dairy operation. The winning entry from Penn sylvania will receive a comple- eight billion pounds of cheese are made annually, with a need to build new facilities because of in crease cheese demand. The supply of mozzarella cheese, said Prince, is not keep ing up with the current demand, as evidenced in the addition of other cheeses in the shredded cheese bags available at grocery stores. Mozzarella cheese, he noted, provides the best return for dairy producers, an incentive to make sure that demand is filled. State Dairy Princess Melinda Wolfe, 19, gave a “behind-the scenes” speech about dairying as she outlined the hard work and dedication to the industry that she has seen in her father. Wolfe is an elementary educa tion major at Bloomsburg Uni- versity. The meeting also included sep arate region governance meet ings to elect corporate boards and address policies and resolu tions. During the afternoon session Bill Schrieber, vice president of Eastern operations, spoke about the Carlisle butter plant and Mid-Atlantic operations. mentary room at the 2001 State Convention and Convention Banquet tickets. They will also have their entry sent on for na tional competition. Applications for the Distin guished Young Holstein Breeder Award, are available by contact ing the Pennsylvania Holstein Association, 839 Benner Pike, State College, PA 16801. Phone: (814) 234-0364. Fax: (814) 234-1698. Entry deadline is Jan. 15, 2001. got milk?
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