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February 20, 2008

Agri-Mark Dairy Co-op Earns $17.6 Million

Agri-Mark announced a record profit after taxes of $17.6 million for fiscal year 2007. This passed the previous record of $11.4 million the cooperative earned in 2003. This year’s earnings for dairy farmers are welcome news given the past few years of struggling with low market prices and huge increases in production costs, especially energy, both on the farm and within the cooperative. Agri-Mark’s profit allocation to the co-op’s 1,300 dairy farmers will be $.50 per hundredweight for all of the milk each farm family shipped to the cooperative during the 2007 fiscal year. This represents allocated earnings of roughly $9,000 for the average Agri-Mark member milking 100 cows and producing 1.8 million pounds of milk per year. Officials at Agri-Mark say the continued strength of the cooperative's Cabot and McCadam branded businesses, strong demand for the whey proteins and powder produced by the co-op and cost reductions due to changes Agri-Mark made in its business during the past year, all worked to boost profits. In addition, Agri-Mark members also received several million dollars in monthly premiums for overall milk quality and other incentives that the co-op was able to return to its dairy farm families. “Last year was finally a good one for farm prices, but milk production costs also climbed to record levels,” says Neal Rea, a dairy farmer from Cambridge, N.Y., who serves as the co-op’s Chairman of the Board. “That is why I am so pleased that Agri-Mark is able to generate these year-end profits and also earn money for the farm in the form of monthly premiums.” Rea says the benefits of farmers owning added-value businesses was apparent in 2007 as those investments generated significant returns. Last year the Cabot and McCadam brands, both owned by the cooperative, continued to grow both in sales and profits for its farmer-members. The co-op’s Chairman says Agri-Mark’s whey protein plant in Middlebury, Vt., continues to generate strong revenues from processing whey into more value-added products. The investment in the whey facility in 2000 helped turn a little-valued by-product of cheese production into more marketable products. The co-op’s whey proteins and powders are marketed both nationally and internationally and are used as ingredients in hundreds of products, including sports nutrition drinks and baby formulas. Dairy farmer Paul Percy of Stowe, Vt., is one of the few dairy farmers who has served on the Agri-Mark Board of Directors since the co-op was formed in 1980. Percy milks 350 cows on his 1,250 acre family farm and has seen manyt ups and downs in the industry over the years. He says he is pleased with Agri-Mark’s results. “We had an excellent year. Our brands continued to grow and the commercial side of our business was strong as well,” says Percy. “I see the potential for many good years ahead.” Percy also notes that every time a consumer buys Cabot or McCadam dairy products, they are making a significant difference in helping their neighboring dairy farms stay in business. Paul P. Johnston, Agri-Mark President and CEO, also says he is pleased with Agri-Mark’s results, but recognizes the challenges of sustaining such high profit levels year to year, especially given the volatility of both national and international dairy markets and farm milk prices. Still, Johnston says Agri-Mark is stronger financially and better prepared today to face the future. “Northeast dairy farmers need to market a larger percentage of their own high quality dairy products directly to the consumer, so they can capture a larger portion of the dollars they spend on those products,” says Johnston. “We will continue to work to expand our branded sales in 2008 and explore every opportunity to stabilize farm milk prices at levels above the cost of production for our farmer-members.” Agri-Mark, with approximately $836 million in 2007 sales, markets more than 300 million gallons of farm fresh milk each year for 1,300 dairy farm families in New England and New York. The cooperative is headquartered in Methuen, Mass., has been marketing milk for dairy farmers since 1916, and also actively represents their legislative interests in the Northeast and in Washington, D.C. Agri-Mark owns the award-winning Cabot brand of Vermont Cheddar, butter and other dairy products in addition to the McCadam brand of New York Cheddar, Muenster and other cheeses. Cabot won the award of World’s Best Cheddar in 2006 for the second time and McCadam won the award of America’s Best Cheese in 2007. Agri-Mark has also 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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