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January 23, 2003

Agri-Mark Farmers Purchase McCadam Cheese Business

Move adds farm family members and business strength

Methuen, Mass. -- Agri-Mark dairy farmers have voted to expand their investment in the Northeast dairy industry by merging with the Chateaugay Cooperative. The merger will strengthen Agri-Mark with the addition of 150 Chateaugay dairy farm families, who currently send their milk to McCadam Cheese in Chateaugay, N.Y. Agri-Mark members ratified the merger in a vote on January 21, 2003. The Chateaugay Cooperative farmers approved the transaction the following day. The merger between the two cooperatives will be completed when Agri-Mark purchases assets of McCadam's cheese business, including the Chateaugay manufacturing plant and inventories, from Valio, Ltd. of Finland. McCadam Cheese is known for its high quality New York Cheddar, Muenster, Havarti and other cheeses. The business transfer is planned to take place on January 31, 2003 and the former Chateaugay Cooperative members will then officially become Agri-Mark members. "Ten years from now I believe we will look at the purchase of McCadam Cheese as a new era of milk marketing for Northeast dairy farm families," says Carl Peterson, a dairy farmer from Delanson, NY, who serves as Chairman of the Board of Agri-Mark. "I look forward to working with our new and current members to expand the McCadam business and further strengthen the position of all of our farmers in the marketplace. Farmers will do better in the long run if they own and control their own marketing businesses." Agri-Mark's Chairman is enthusiastic about the business transaction. He says that the past year saw farmers receive their lowest milk prices in 25 years, highlighting the need for value-added products and marketing for dairy farmers. According to Peterson, McCadam Cheese, with 2002 sales of $50 million, manufactures many varieties of cheese that Agri-Mark previously did not produce, particularly Muenster and other European-style cheeses. These items represent additional shelf space in supermarkets for Agri-Mark farmers and a higher price for their milk. "There were many obvious synergies between McCadam Cheese and Agri-Mark," says Paul P. Johnston, Agri-Mark President and General Manager. "The addition of the McCadam brand and the close proximity of our markets and our processing and packaging plants were all essential to making the deal work for both parties." "We are not purchasing this business to sit on it, " says Johnston. "We intend to continue making top quality New York State dairy products. We will use our experience in growing a regional cheese brand to actively expand the McCadam business. To begin, we will be investing in the Chateaugay plant and in more brand marketing than the company has had in the past." The cheese produced at the McCadam plant in Chateaugay will be packaged at Agri-Mark's cut-and-wrap facility in Cabot, Vt., while the whey produced at Chateaugay will be transported and utilized by Agri-Mark's whey protein processing plant in Middlebury, Vt. Agri-Mark also operates cheddar cheese manufacturing facilities in both of these Vermont towns. The remaining Agri-Mark facility is a butter and milk powder manufacturing plant in West Springfield, Mass. Agri-Mark, with approximately $550 million in 2002 sales, will market more than 300 million gallons of farm fresh milk each year for 1,450 dairy farm families in New England and New York. The cooperative has been marketing milk for dairy farmers since 1917, and also represents their legislative interests in the Northeast and in Washington, D.C. In addition to the newly purchased McCadam brand of New York cheeses, Agri-Mark also owns the award-winning Cabot brand of Vermont Cheddar, butter and other dairy products. Agri-Mark has invested in operations to manufacture and market valuable whey proteins and sells fluid milk from its farmers to the region's largest dairy processors. For more information about Agri-Mark, visit our web site at www.agrimark.net.


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