November 2009 Patron Newsletter

To: FDA Members, Association Creamery Members, Employees, and Milk Haulers

First District Association will hold its annual meeting on Saturday, December 12, 2009. The business session will begin promptly at 10:30 a.m. The annual meeting will also include vendor exhibitions along with a free health clinic from 9:30 a.m. until 1:30 p.m. Please mark your calendar and we hope you take advantage of the opportunity to participate in your cooperative’s annual meeting.

First District Association’s (FDA) fiscal year ended September 30, 2009. FDA ended its fiscal year with respectable financial results considering the severe milk price crisis our industry experienced during the past year. The primary objective for FDA during the past 12 months was focussed on member milk prices. We believe FDA was successful in maintaining efficient plant operations, a strong financial profile, and top competitive milk prices. We believe your cooperative achieved these important objectives without jeopardizing member equity or financial strength. Admittedly, we are optimistic about a better 2010 for our hard working dairy producers!

The cash portion of earnings that will be paid to members at our annual meting on December 12, 2009 is $1,691,800. In addition, the FDA Board of Directors have authorized past member equity redemption in the amount of $1,987,414. The TOTAL cash payment to FDA members (cash portion of earnings plus retained equity) is $3,680,213 to be paid on December 12.

FDA members, employees, and milk haulers should take pride in the success and strong grass roots heritage of FDA. FDA is a "premier" cooperative with an outstanding history resulting from the commitment and loyalty of competent and hard working dairy farm families. Our primary objective has been and will continue to be focused on the future with emphasis on member returns, plant efficiency, strong ethics, quality, financial independence, and the preservation of FDA’s stellar reputation world wide.

We are looking forward to 2010 with a long-term positive outlook. FDA is currently in the early stages of construction involving the replacement of 30 year old evaporator equipment. The building structure and evaporator equipment is scheduled to be commissioned in early summer 2010. We are optimistic that this project will not only enhance process reliability, but will allow for future opportunities involving further enhancement of production, process efficiency, and long term growth opportunity essential for the future sustainability of FDA.

FDA is experiencing intense customer audits focussed on elevated food safety standards global food companies are demanding. These highly reputable and valued customers expect continuous improvements in process control, quality, consistency, and process documentation. It is apparent that these highly respected and reputable organizations are seeking partnerships with limited suppliers (such as FDA) who are willing to "step up to the plate" and meet the required criteria. We believe FDA is prepared for the challenges and we fully expect to meet or exceed future customer expectations.

The USDA announced October Class III milk price was $12.82/cwt., down $4.24/cwt. from last year. Class III futures prices for the next six months (November through April) as of November 13 average $14.63/ cwt. According to Blimlings 11/2/09 Research Report, "Markets are moving into the next phase of the price cycle, the phase that puts things on a higher track. Revised forecasts call for dairy prices to be up 20-30% next year. We will probably see cheese touch $1.70 before it revisits $1.20."

FDA produced a record quantity, 140 million pounds of cheddar cheese during FY 2009, vs. 133 million pounds during 2008, and 127 million pounds in 2007 resulting in a reduction in overall plant operating cost per pound. In addition, FDA produced over 30 million pounds of Lactose and 24 million pounds of Whey Protein Concentrate. This is a great accomplishment and tribute to the FDA team for a job well done!

We realize that the success of our cooperative has been made possible by careful planning along with the wisdom from many individuals over previous generations. We cannot and do not take anything for granted as we move forward. We sincerely appreciate the loyalty and commitment of our dairy farm families and we look forward to your participation at FDA’s upcoming annual meeting on Saturday, December 12.

On behalf of all FDA employees and Board of Directors, we wish each of you a SAFE completion of this year’s harvest with good results.

The First District Association annual meeting will be held Saturday, December 12, 2009, at the Litchfield Middle School. Please mark your calendars. Vendor booths and check distribution will begin at 9:30 a.m. and the business meeting will commence at 10:30 a.m. This meeting is open to FDA members, Association Member Creameries, FDA employees, and invited guests. For those not wishing to attend the business session, an alternative program beginning at 10:30 a.m. is also planned. There will be an exhibition room similar to previous years with informational booths open from 9:30 a.m. until 2:00 p.m. Lunch will be served at noon.

First District Association cash portion of fiscal year 2009 earnings in the amount of $1,691,800.00 will be distributed to members at the annual meeting on Saturday, December 12, 2009. Please review the enclosed FDA notice of annual meeting. In addition, member equity representing prior year’s investment in the amount of $1,987,414 will be distributed to FDA members.

FDA members have good reason to be enthusiastic and proud of the performance and competitive advantages of their cooperative. FDA experienced respectable earnings during the past year while maintaining strong competitive milk prices, less than ten year revolvement of member equity, and a financial balance sheet free of debt.

Honoring Ten Year Milk Quality Award Winners

First District Association is recognized as a quality cooperative with consistent high quality products. FDA members contribute toward this excellent reputation by producing high quality milk. FDA will honor members at your unit meetings for this amazing accomplishment of receiving the ""FDA excellent ten year milk quality award".

First District Association will forward contract milk based on Class III futures for FDA members and customers who desire to lock in base values for milk. First District Association also provides a valuable option for interested and qualified members to "Average Price" a portion of their deliveries. This process allows for a smooth cash flow with level prices. Market information can be obtained by accessing the FDA Internet web page at www.firstdistrict.com, calling our voice mail system toll-free at 1-866-593-4235 or locally dial 593-4235, phoning Blimling and Associates at 1-800-726-9928, or contact Glenn Kaping at (320) 593-4239.

Back