Dairy Farmers of America Announces Changes to American Cheese Division

New Alliance with Schreiber Foods Formed
August 8, 2007

Kansas City, Mo. - Dairy Farmers of America, Inc. (DFA) has announced changes to its American Cheese division, including the closure of the cooperative’s Corona, Calif., facility and the transfer of DFA’s American cheese (large-bag shredded and packaged) business in Corona and Zumbrota, Minn., to Wisconsin-based Schreiber Foods Inc.

More than 300 employees at DFA’s Corona facility were notified that the facility will operate at a reduced capacity beginning Aug. 31 and cease production of American block cheese and whey products by Dec. 31. An additional 70 employees at the Zumbrota facility and 11 employees at DFA’s headquarters in Kansas City, Mo., also were notified that their positions would be eliminated. A comprehensive effort is underway to ease the burden on workers and their families.

According to Tom Camerlo, chairman of DFA’s Board of Directors and a dairy farmer from Florence, Colo., the decision to cease operations in Corona and to enter into an alliance with Schreiber Foods reflects DFA’s ongoing commitment to reduce or eliminate economic vulnerabilities within its business structure.

“DFA exists to serve its dairy-farmer owners. Although it is difficult to make decisions that result in the elimination of jobs, we have an obligation to our members to make decisions that benefit them,” he said. “Market conditions and operating results have hindered success at our Corona plant and in our American Cheese Division. We constantly look for ways to end losses, and stimulate profitability.”

David Parrish, chief operating officer of DFA’s Western Area Council, which supplies milk to the Corona facility, noted that the members support the changes in the American Cheese Division.

“Although dairy farmers never want to see the plant they ship milk to close its doors, our member-owners understand that we need to operate profitably,” he said. “With many DFA customers providing multiple outlets for milk, our members will continue to have a market for their milk. This is the very nature of cooperative membership.”

DFA and Schreiber officials offer the following comments about their new endeavor.

“DFA is fortunate to have the opportunity to align itself with a first-class company,” Camerlo said. “We can trust that Schreiber will continue to produce top quality products for our customers.”

“We’re pleased that DFA has provided this opportunity to extend Schreiber’s capabilities deeper into the shred sector of the cheese business,” said Larry Ferguson, president and chief executive officer of Schreiber Foods.

Block cheese and whey production employees in Zumbrota and Monett, Mo., will not be affected as DFA plans to continue its commodity American cheese operations in these facilities. Additionally, these changes will have no impact on DFA’s Borden branded or private label retail cheese business.