On Board With The Chairman - December 2024
Dear Member-Owners,
Your Board of Directors held its December meeting this past Tuesday in Bakersfield, which included a highly anticipated plant tour of Valley Natural Beverages (VNB) after the meeting. The meeting was packed with lots of information and decisions for the board due to our not having a board meeting in November.
Brad kicked off his portion of the meeting with his market updates on powder and butter. Both markets seem to move with their seasonal trends, and the team is managing inventories and positions accordingly. Brad gave us updates on all the projects that have been taking place in various plants. We’re seeing the finish line on all those projects approaching soon and look forward to the improved efficiencies that they’ll provide. We’re also happy to say that those projects are also on time as well as on budget. We had multiple projects going on at once at multiple sites, and managing these many moving parts effectively was a great success on the staff’s part.
Jason Allen was up next to report on October and year-to-date financials. October was hit with stranded costs at the plants, and November and December will see the same, due to the lower milk flows from theH5N1 virus that all of us are dealing with on farm. We’ve all seen the impact on production and profitability on our respective farms, and it’s showing at the plants. With the lower milk throughputs, we’ve been able to run higher yielding assets for finished goods longer to help offset those stranded costs, but it’s still a situation that we’ve got to deal with. Jason and his team presented the budgets for 2025; and we’re seeing some strong year-over-year improvements from all the levers staff and the board have been extremely focused on the last 16 months.
Patti Smith gave an update on the Ingredients group. That team has worked hard at managing the powder inventory to a lower level and is on pace to hit their year-end targets as we move into the new year. She also gave us an update on the Lactoferrin project going on at Turlock North. That project is moving at a great pace, and we should have it up and running by the mid-1stquarter of 2025 and have a salable product come March 2025, which will help our core business.
Rob Vandenheuvel was up next in the meeting, providing an update on milk production and pricing through November. Rob also led us through USDA’s final decision on the amendments to the Federal Milk Marketing Order, which is in the referendum stage after a lengthy administrative process. While no regulatory decision will achieve 100 percent of anyone’s goals, management and the board believe this package of amendments, which resulted from a multi-year effort with the National Milk Producers Federation, represents a strong improvement in the FMMO program. Therefore, the board approved a bloc vote on behalf of our membership in favor of a continued CA-FMMO under the amended provisions.
After the meeting concluded, the board drove over to VNB to take a tour of the new plant. VNB took its first load of Skim Milk on December5 to test-run the machines and work on the CIP to make sure it was able to function as it should. On December 16, the first load of whole milk was received. The board was able to watch the Extended Shelf Life (ESL) line in operation as well as sample the finished product. It was awesome to see this concept, which has been years in development, turn into a reality. It was equally impressive to see the plant producing its first product within 15months from the start of construction, with all of the regulations the state of California has to offer. I’d like to give a huge gratitude of thanks to Peter Ernster (SVP of Valley Natural Beverages) and Troy Hancock (Site Director of Valley Natural Beverages) for the time and effort they’ve put into this project daily. This plant is state-of-the-art, and we’re excited to add it to our portfolio. There will be a ribbon cutting event in the near future, so look for that announcement in your inbox at some point.
As we enter the Christmas season and all the rush of trying to make all the Christmas concerts, programs, and family parties, let us also take time to reflect on the true reason for Christmas: the birth of our Lord and Savior. I hope you’re able to find time in the rush to celebrate and worship as a family, have that quality time as a family around the dinner table, and reflect on the countless blessings he’s provided us year in and year out. We continue to pray for our country and that the Lord will show his mercy and grace upon us.
As always, if you have any questions feel free to reach out to myself or any of the other directors.
All the best,
Cory Vanderham
Chairman of the Board
Vanderham West Dairy
Lazy V Farms
559-269-9618
