How are you dealing with the rising costs of energy and ingredients?

Larry Jensen
Leprino Foods Co.

The rising costs of energy and ingredients are a major concern for all sectors of the dairy industry, from producers to end-users. We are no exception.

We have continued to invest in our facilities to make ourselves more efficient. We constantly strive for improvements in energy consumption and wastewater management, two of the areas where our environmental footprint is most significant and our costs have rapidly escalated.

We view these investments as part of our commitment to environmental stewardship but also as economically vital in the face of rising costs. We have made substantial investments in these areas to help mitigate these impacts. We have also worked with our suppliers and our customers to streamline our supply chain and our distribution networks.

At the end of the day, significant food inflation across all sectors of agriculture is likely to be with us for some period of time. The negative impact on demand is being felt. It is incumbent on all of us to become more efficient stewards of our energy resources.  Likewise, we must continue to innovate and invest to drive productivity in our facilities, in our supply chain and in our distribution network.

Jim Murphy
Senior Vice President of Sales
The Dannon Co.

Many of our products and their benefits are truly unique and they are premium priced. Nevertheless, rising energy costs and commodity costs have been a challenge for us and other dairy companies during the past year and a half. We’ve been aggressively scouring costs in all areas of our supply chain to minimize the need to pass along these rising costs and we’ve implemented a total company productivity plan to minimize any price increases to consumers.

However, we have increased our suggested retail pricing twice during the past year, amounting for a total of just over 10%. While we’ve been successful at cutting costs, these price increases have not compensated for the increased energy costs and commodity costs.

Alan Thomsen
National Accounts Manager
Schoep’s Ice Cream Co. Inc.

We have tried to minimize costs passed on to the consumer. Unfortunately, it doesn’t look good for anybody in the dairy industry.

We are seeing surcharges in areas that we have never seen before. Many of the companies from whom we buy raw ingredients are adding a fuel surcharge rather than a price increase.

It will certainly be a challenge to maintain profitable levels as costs continue to escalate, especially fuel, which means it’s only a matter of time before the consumer feels the pinch.

The question of how to deal with these issues is the most difficult to answer. Our top three keys to dealing with this are to review all costs and determine if any are unnecessary; minimize utility costs by running as many hours as possible during off-peak; and probably the most important is to vote. This is an election year and your only opportunity in the next four to speak your mind.