TEGMA 2017 Fall Transportation Symposium
John Wilson Senior Vice President
Dairy industry trends
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Million pounds Annual dairy consumption by product category Annual U.S. Commercial Disappearance 230 210 Fluid Cheese NFDM Butter Frozen and cultured 190 170 150 130 110 90 70 50 30 10 Source: USDA National Agricultural Statistics Service
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Billion pounds Annual U.S. milk production Annual Milk Production 230 210 190 1996-2016 CAGR +1.5% 170 150 130 110 90 70 50 Source: USDA National Agricultural Statistics Service 5
Number of farms Number of Dairy Farms U.S. dairy farms 120,000 100,000 2016 41,809 dairy farms 80,000 60,000 40,000 20,000 0 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Source: USDA National Agricultural Statistics Service 6
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Average dairy cows per farm U.S. average cows per farm Annual Average U.S. Dairy Farm Size 250 200 2016 9.4 million dairy cows 41,809 dairy farms 150 100 50 0 Source: USDA National Agricultural Statistics Service 7
U.S. milk production percent change 2016 vs. 2006 8
U.S. milk production 2016 vs. 2015 (million pounds) Current milk production Qty. change from prior year % change from prior year* 9
We used to be an island
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total milk solids, percent of U.S. production U.S. dairy trade balance Total milk solids, percent of U.S. production 16% 14% Exports Imports 12% 10% 8% 6% 4% 2% 0% Source: USDA Foreign Agricultural Statistics Service 11
Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Volume change from prior year (billion pounds) Milk production of major dairy Top 5 global exporters milk production Change from prior year, billion pounds 2.5 2.0 1.5 1.0 0.5 0.0-0.5-1.0-1.5-2.0-2.5 Argentina Australia US New Zealand EU Source: USDA NASS, USDEC
Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Billion pounds EU-28 milk production Billion pounds 34 32 EU milk production 12-month rolling avg. 30 28 26 24 22 20 June 2017 +0.9% prior year YTD % Chg.* -0.2% Source: USDEC
2016 EU-28 milk production by country Million pounds Germany 70,429 Hungary 3,411 France 54,490 Lithuania 3,122 United Kingdom 32,061 Romania 2,102 Netherlands 31,579 Slovakia 1,814 Poland 24,537 Latvia 1,795 Italy 23,751 Estonia 1,576 Spain 15,132 Greece 1,365 Ireland 15,105 Slovenia 1,267 Denmark 11,633 Bulgaria 1,169 Belgium 8,557 Croatia 1,080 Austria 6,816 Luxembourg 798 Sweden 6,310 Cyprus 435 Czech Republic 6,158 Malta 95 Finland 5,268 Portugal 4,063 EU-28 total 335,916
Source: USDEC *Provisional estimates EU-28 milk production* June 2017
Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Billion pounds New Zealand milk production Billion pounds 8 7 NZ milk production 12-month rolling avg. 6 5 4 3 2 1 0 June 2017 +21.1% prior year YTD % Chg.* +3.2% Source: USDEC
Million pounds U.S. fluid milk sales Million pounds Monthly U.S. Fluid Milk Sales 4,500 4,300 4,100 3,900 3,700 3,500 3,300 2015 2016 2017 June 2017-0.7% YTD % Chg.* -1.6% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: USDA Agricultural Marketing Service *Leap-year adjusted 17
Million pounds U.S. total NFDM and SMP commercial disappearance Million pounds 3,000 2,500 Annual U.S. NFDM & SMP Commercial Disapperance June 2017 Dom. Consumption: -22.2% Exports: +8% Forecast 2,000 1,500 1,000 500 0 Domestic Consumption Exports 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: USDA ERS
Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Aug-03 Feb-04 Aug-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Oct-07 Apr-08 Oct-08 Apr-09 Nov-09 May-10 Nov-10 May-11 Dec-11 Jun-12 Dec-12 Jun-13 Jan-14 Jul-14 Jan-15 Jul-15 Feb-16 Aug-16 Feb-17 Aug-17 Dollars per pound U.S. NFDM vs. global SMP price U.S. dollars per pound $2.80 $2.60 $2.40 $2.20 $2.00 $1.80 $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 U.S. NFDM price (CME) Oceania SMP price (USDA) EU SMP price (EU Commission) U.S. vs Oceania powder prices Bi-Weekly Source: USDA, CME Group, GlobalDairyTrade
Million pounds U.S. total butter commercial disappearance Million pounds 2,500 2,000 June 2017 Dom. Consumption: -4.0% Exports: +272.3% Annual U.S. Butter Commercial Disapperance Forecast 1,500 1,000 500 Domestic Consumption Exports 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: USDA ERS
Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Aug-03 Feb-04 Aug-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Oct-07 Apr-08 Oct-08 Apr-09 Nov-09 May-10 Nov-10 May-11 Dec-11 Jun-12 Dec-12 Jun-13 Jan-14 Jul-14 Jan-15 Jul-15 Feb-16 Aug-16 Feb-17 Aug-17 Dollars per pound U.S. butter vs. U.S. vs Oceania butter prices global butter Bi-Weekly price U.S. dollars per pound $3.20 $3.00 $2.80 $2.60 $2.40 $2.20 $2.00 $1.80 $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 U.S. Butter Price (CME) Oceania Butter Price (USDA) EU butter price (EU Commission) Source: USDA, CME Group, GlobalDairyTrade
Million pounds 14,000 12,000 U.S. total cheese commercial disappearance Million pounds June 2017 Dom. Consumption: +2.7% Exports: +32.5% Annual U.S. Total Cheese Commercial Disapperance Forecast 10,000 8,000 6,000 4,000 2,000 Domestic Consumption Exports 0 Source: USDA ERS 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Aug-03 Feb-04 Aug-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Oct-07 Apr-08 Oct-08 Apr-09 Nov-09 May-10 Nov-10 May-11 Dec-11 Jun-12 Dec-12 Jun-13 Jan-14 Jul-14 Jan-15 Jul-15 Feb-16 Aug-16 Feb-17 Aug-17 Dollars per pound U.S. vs. global cheese price U.S. dollars per pound $3.00 $2.80 $2.60 $2.40 $2.20 $2.00 $1.80 $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 U.S. vs Oceania cheese prices Bi-Weekly U.S. cheese price (CME blocks) Oceania cheese price (USDA) EU cheese price (EU Commission) Source: USDA, CME Group, GlobalDairyTrade
Dairy Farmers of America
DFA overview A farmer-owned cooperative Member farms Nearly 8,000 member farms and over 13,000 members Diversified manufacturer of dairy products, food components and ingredients and a leader in formulating and packaging shelf-stable dairy products 42 manufacturing facilities Annual sales (2016) $13.5 billion
Top 15 customers
DFA s Member Services What we do How we do it Risk management Financing Input and supplies Consultancy Information
42 DFA plants
Consumer Retail Branded cheese and butter products Revenue $515 million Manufacturing facilities 2 Employees 227
Ingredients Dairy protein powder, cheese ingredient and butterfat ingredient products Revenue $1.3 billion Manufacturing facilities 16 Employees 473
DairiConcepts Produces dairy powders, seasoning blends and Italianstyle and American-style cheese Revenue $501.9 million Manufacturing facilities 8 Employees 639
Beverage and Dairy Foods Create products for food and beverage companies under their label and brands Develop new products under DFA brands Revenue $623.3 million Manufacturing facilities 6 Employees 1,002
Fluid Milk and Ice Cream Fluid milk, yogurt, ice cream and cultured products Revenue $1.0 billion Manufacturing facilities 9 Employees 1,796
Leadership
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