March 1, 2006
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Beginning April 1, producer-handlers in the Pacific Northwest and Arizona-Las Vegas marketing areas will only be exempt from Federal Milk Marketing Order pricing and pooling requirements if they market less than 3 million pounds of fluid products per month, the U.S. Department of Agriculture (USDA) says. A federal exemption has historically been given to dairy farmers who process and market milk from their own farms. But some of these operations have grown very large in recent years, resulting in millions of pounds of unregulated milk and putting regulated producers and processors at a competitive disadvantage, reports the International Dairy Foods Association (IDFA). One of these large-scale producer-handlers, Hein Hettinga’s Sarah Farms of Yuma, Ariz., made national headlines last month by fighting against the new limitation, accusing dairy giants like Dallas-based Dean Foods Co. and Kansas City, Mo.-based Dairy Farmers of America (DFA) of trying to drive him out of business. Dean and DFA accused Hettinga of exploiting a loophole in the Depression-era federal order system beyond its original intent.
Milk production continues to surge, and commercial demand appears sluggish at best, according to a February report from Bob Yonkers, chief economist for IDFA. Wholesale dairy product prices have fallen to levels not seen since 2003. USDA says some of the price declines are due to market expectations for the coming year. For more information, visit
Land O’Lakes Inc. has announced it will focus its future on four core areas — dairy foods, feed, seed and agronomy — and intends to exit areas where it does not hold a leading position. “I’m a believer in fewer but bigger things,” says Land O’Lakes’ new president and chief executive, Chris Policinski. The Arden Hills, Minn.-based farm and dairy cooperative, with more than $7 billion in annual sales, has significantly paid down debt in recent years and hopes to go further, but Policinski said the co-op also is eyeing ways “to pursue growth options” through acquisitions.
A flurry of dairy-based drinks has hit the market in the past few months and will continue to be introduced throughout the year. PepsiCo Inc. recently announced its partnership with ice cream giant Ben & Jerry’s Homemade Inc., South Burlington, Vt., to produce ready-to-serve milkshakes later this year. Meanwhile, Coca-Cola Co. and Godiva reportedly are working together to produce a line of ready-to-drink coffee beverages. They will join products from Bravo Foods International, North Palm Beach, Fla. (in which Coca-Cola is significantly invested), and Hershey’s MilkShakes from Dallas-based Dean Foods Co.
Winn-Dixie Stores Inc., Jacksonville, Fla., announced last month it will sell or close 35 more stores, bringing total closures to 361 since the regional supermarket operator filed for bankruptcy protection last year. Winn-Dixie plans to close 28 stores in Florida, three in Georgia, two in Alabama and two in Louisiana.
St. Louis-based Monsanto Co. will pay at least $200 million to the University of California as royalties for Monsanto’s usage of a dairy cow growth hormone originally developed by U-Cal researchers in 1979.  The hormone —  somatotropin — became one of the first biotech patents ever sought in 1980, but took it until 2004 for the U.S. Patent & Trademark Office to recognize the university’s patent. In addition to an upfront payment of $100 million, Monsanto will pay a usage royalty of 15 cents per dose sold to dairy farmers for use of the hormone, sold by the company under the brand name Posilac.
A Dallas-based investment firm has bought Green Bay Cheese Co., Green Bay, Wis. Fairmount Food Group LLC announced in February that it has acquired the Wisconsin cheese facility, known to be the largest deli cheese packager in the United States.

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