Report to Congress

on the

National Dairy Promotion

and Research Program

and the

National Fluid Milk

Processor Promotion Program

2008 Program Activities

 Volume 25 
U.S. Department of Agriculture

Report to Congress

on the

National Dairy Promotion

and Research Program

and the

National Fluid Milk

Processor Promotion Program

2008 Program Activities 

 July 2010
ii

Contact Information

To obtain additional copies of this Report to Congress on the National Dairy Promotion and 

Research Program and the National Fluid Milk Processor Promotion Program and the complete 

independent analysis of the programs, please contact: 

Promotion and Research Branch

Dairy Programs, Agricultural Marketing Service, USDA

Stop 0233, Room 2958-South 

1400 Independence Avenue, SW 

Washington, DC 20250-0233 

(202) 720-6909 

http://www.ams.usda.gov/dairy

To obtain copies of the complete independent analysis report or for questions on Chapter 3, 

please contact:

Harry M. Kaiser, Ph.D. 

Cornell Commodity Promotion Research Program

Department of Agricultural, Resource and Managerial Economics

Cornell University

349 Warren Hall

Ithaca, NY 14853 

(607) 255-1620 

http://www.cornell.edu

For additional information about the National Dairy Promotion and Research Board and Dairy 

Management Inc., please contact:

National Dairy Promotion and Research Board 

Dairy Management Inc.

10255 West Higgins Road, Suite 900 

Rosemont, IL 60018-5616 

(847) 803-2000 

http://www.dairyinfo.com

For additional information about the National Fluid Milk Processor Promotion Board, please 

contact: 

National Fluid Milk Processor Promotion Board

1250 H Street, NW, Suite 950 

Washington, DC 20005 

(202) 737-0153 

http://www.whymilk.com
iii

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and 

activities on the basis of race, color, national origin, age, disability, and where applicable, sex, 

marital status, familial status, parental status, religion, sexual orientation, genetic information, 

political beliefs, reprisal, or because all or a part of an individual's income is derived from any 

public assistance program. (Not all prohibited bases apply to all programs.) Persons with 

disabilities who require alternative means for communication of program information (Braille, 

large print, audiotape, etc.) should contact USDA's TARGET Center at (202) 720-2600 (voice 

and TDD). 

To file a complaint of discrimination write to USDA, Director, Office of Civil Rights, 1400 

Independence Avenue, S.W., Washington, D.C. 20250-9410 or call (800) 795-3272 (voice) or 

(202) 720-6382 (TDD). USDA is an equal opportunity provider and employer. 
Contents

Contact Information ................................................................................................................ ii

Executive Summary .................................................................................................................1 

Chapter 1: The Dairy and Fluid Milk Promotion Programs ...................................................3 

National Dairy Promotion and Research Board .......................................................................3 

National Dairy Council®/ School Marketing ...........................................................................5 

National Dairy Council®/ Nutrient Rich Foods Coalition .......................................................6 

Research ...................................................................................................................................7 

Export and Dry Ingredients ......................................................................................................7 

3-A-DayTMof Dairy for Stronger Bones ..................................................................................10 

Innovation Center For U.S. Dairy ..........................................................................................11 

Sustainability Summit ............................................................................................................11 

Communications and Technology .........................................................................................12 

Qualified State or Regional Dairy Product Promotion, Research, 

 or Nutrition Education Programs .........................................................................................13 

National Fluid Milk Processor Promotion Board ..................................................................13 

Medical and Scientific Activities ...........................................................................................14 

National Fluid Milk Programs ...............................................................................................15 

Sponsorships ..........................................................................................................................15 

Advertising .............................................................................................................................16 

Promotions .............................................................................................................................16 

Public Relations .....................................................................................................................18 

Business Development and Research ....................................................................................19 

School Marketing ...................................................................................................................19 

Chapter 2: USDA Activities .................................................................................................21 

National Dairy Promotion and Research Board Oversight ....................................................21 

Nominations and Appointments ............................................................................................21 

Organic Exemption ................................................................................................................22 

Amendment to the Dairy Act .................................................................................................22 

Foreign Agricultural Service ..................................................................................................23 

Contracts ................................................................................................................................23 

Contractor Audits ...................................................................................................................23 

Collections .............................................................................................................................23 

Compliance ............................................................................................................................24 

Qualified Programs ................................................................................................................24 

National Fluid Milk Processor Promotion Board Oversight ..................................................24 

Nominations and Appointments ............................................................................................24 

Order Amendment .................................................................................................................25 

Program Development ...........................................................................................................25 

Contractor Audits ...................................................................................................................25 

Compliance ............................................................................................................................25 

iv
Contents, continued

Chapter 3: Impact of Generic Fluid Milk and Dairy Advertising and Promotion 

 on Dairy Markets: An Independent Analysis ......................................................................26 

Highlights ...............................................................................................................................27 

Analysis of Generic Fluid Milk Marketing ............................................................................28 

Fluid Milk Model Estimation .................................................................................................35 

Fluid Milk Model Simulation ................................................................................................38 

Fluid Milk Processor Benefit–Cost Analysis .........................................................................39 

Analysis of All-Dairy Product Generic Marketing ................................................................40 

Dairy Model Estimation .........................................................................................................44 

Dairy Farmer Benefit–Cost Analysis .....................................................................................45 

Appendices can be found online at www.ams.usda.gov/dairy. 

v 
Executive Summary

The enabling legislation of the dairy producer and fluid milk processor promotion programs 

requires the U.S. Department of Agriculture (USDA) to submit an annual report to the House 

Committee on Agriculture and the Senate Committee on Agriculture, Nutrition, and Forestry. 

The producer and processor programs are conducted under the Dairy Production and 

Stabilization Act of 1983 (7 U.S.C. 4501 et seq.) (Dairy Act); the Dairy Promotion and 

Research Order (7 CFR § 1150) (Dairy Order); the Fluid Milk Promotion Act of 1990 

(7 U.S.C. 6401 et seq.) (Fluid Milk Act); and the Fluid Milk Promotion Order (7CFR § 1160) 

(Fluid Milk Order), respectively. This report includes summaries of the activities for the 

National Dairy Promotion and Research Program and the National Fluid Milk Processor 

Promotion Program, including an accounting of funds collected and spent; USDA activities; and 

an independent analysis of the effectiveness of the advertising campaigns of the two programs. 

Unless otherwise noted, this report addresses program activities for the fiscal period 

January 1 through December 31, 2008, of the producer and processor programs. Additionally, 

all appendices associated with the report can be found at online at www.ams.usda.gov/dairy. 

Producer Dairy Promotion and Research Program

Mandatory assessments collected under the Dairy Act totaled $284.5 million in 2008. The 

National Dairy Promotion and Research Board (Dairy Board) portion of the revenue from the 

15-cent per hundredweight producer assessment was $95.5 million for 2008, and Qualified 

Programs revenue from the producer assessment was $189.0 million. Expenditures by the Dairy 

Board and many of the Qualified Programs are integrated through a joint process of planning and 

program implementation so that the programs on the national, regional, State, and local level 

work together. The Dairy Board continued to develop and implement programs to expand the 

human consumption of dairy products by focusing on partnerships and innovation, product 

positioning with consumers, and new places for dairy product consumption. One such endeavor 

was accomplished through continuing to integrate single-serve plastic bottled milk into the 

menus of quick-serve restaurants such as Burger King®, Wendy’s®, and Subway®. The Dairy 

Board also continued to promote its 3-A-DayTM of Dairy for Stronger Bones, a nutrition–based 

marketing and education program developed to help solve the Nation’s calcium crisis and 

increase consumption of milk, cheese, and yogurt; as well as its “New Look of School Milk” 

campaign which includes efforts to improve the school milk experience for the Nation’s children 

through improvements in packaging, flavors, and availability. Details of the 2008 activities of 

the National Dairy Promotion and Research Program are presented in the National Dairy 

Promotion and Research Board section in Chapter 1 of this report. 

National Fluid Milk Processor Promotion Program 

The National Fluid Milk Processor Promotion Board (Fluid Milk Board) continued to administer 

a generic fluid milk promotion and consumer education program funded by America’s fluid milk 

processors. The program is designed to educate Americans about the benefits of milk, increase 

milk consumption, and maintain and expand markets and uses for fluid milk products in the 

48 contiguous States and the District of Columbia. During 2008, the Fluid Milk Board evolved 

its messaging to use the role of calcium-rich fluid milk products in successful weight 

1 
maintenance for moms and refueling after exercise for teens as central themes and focal points 

for its activities. In its promotion programs such as “Campaign for a Healthy Weight” and 

“Make a Splash with Curves,” the Fluid Milk Board encouraged moms to choose milk to help 

maintain a healthy weight. For teens, the 2008 integrated Body By MilkSM campaign, combining 

advertising, promotion, and public relations components, stressed the importance of maintaining 

a healthy weight through a healthy diet, and keeping fit and strong by drinking three glasses a 

day of lowfat or fat–free milk to help muscle recovery after exercise. Assessments generated 

$107.2 million in 2008. The Fluid Milk Order requires the Fluid Milk Board to return 80 percent 

of the funds received from California processors to the California Milk Processor Board. The 

amount returned to California from the 2008 assessments was $10.4 million. The California 

fluid milk processor promotion program uses the funds to conduct its promotion activities, which 

include the got milk?® advertising campaign. The fluid milk marketing programs are research 

based and message focused. Activities of the National Fluid Milk Processor Promotion Program 

for 2008 are presented in the Fluid Milk Board section in Chapter 1. 

USDA Oversight

USDA has oversight responsibility for the dairy and fluid milk promotion programs. The 

oversight objectives ensure that the Boards and Qualified Programs properly account for all 

program funds and that they administer the programs in accordance with the respective Acts and 

Orders. All advertising, promotion, research, and education materials are developed under 

established guidelines. All Board budgets, contracts, and advertising materials are reviewed and 

approved by USDA. USDA employees attend all Board and Committee meetings, monitor all 

Board activities, and have responsibility for obtaining an independent evaluation of the 

programs. Additional USDA responsibilities relate to nominating and appointing Board 

members, amending the Orders, conducting referenda, assisting with noncompliance cases, and 

conducting periodic program reviews. The Boards reimburse the Secretary of Agriculture, as 

required by the Acts, for all of USDA’s costs of program oversight and for the independent 

analysis. In 2008, the Secretary of Agriculture appointed 13 members to the Dairy Board and 10 

members to the Fluid Milk Board. Approximately 863 dairy producers were granted organic 

exemptions from paying producer assessments in 2008, representing approximately 1.2 billion 

pounds of production. Compliance for both Boards continues in a timely manner and at a high 

rate. Chapter 2 details USDA’s oversight activities. 

Independent Analysis and Fluid Milk Market and Program Assessment

Chapter 3 presents the results of the independent econometric analysis, conducted by Cornell 

University (Cornell), of the effectiveness of the dairy and fluid milk promotion programs. It is 

estimated that generic fluid milk marketing efforts sponsored by fluid milk processors and dairy 

farmers have helped mitigate the decline of fluid milk consumption. The generic fluid milk 

marketing activities increased fluid milk consumption by 6.87 billion pounds per year, on 

average, from 1995 to 2008. Had there not been generic fluid milk marketing conducted by the 

two National Programs, fluid milk consumption would have been 9.9 percent lower. Cornell 

concluded that these marketing efforts have had a positive and statistically significant impact on 

per capita fluid milk consumption. Details of Cornell’s independent evaluation are presented in 

Chapter 3. 

2 
Chapter 1

The Dairy and Fluid Milk Promotion Programs

The Dairy Board and the Fluid Milk Board continued to develop and implement programs to 

expand the human consumption of fluid milk and dairy products. Each promotion program had 

many unique activities. The Dairy Board continued its focus on partnerships and innovation to 

provide consumers with dairy products “how they want them, when they want them, and where 

they want them.” The Fluid Milk Board used the role of calcium–rich fluid milk products in 

successful weight maintenance for moms and refueling after exercise for teens as central themes 

and focal points for its activities. 

National Dairy Promotion and Research Board 

The mission of the Dairy Board is to coordinate a promotion and research program that 

maintains and expands domestic and foreign markets for fluid milk and dairy products produced 

in the United States. The Dairy Board is responsible for administering the Dairy Order, 

developing plans and programs, and approving budgets. Its dairy farmer board of directors 

administers these plans and monitors the results of the programs.

The Secretary of Agriculture appoints 36 dairy farmers to administer the Dairy Order. The 

appointments are made from nominations submitted by producer organizations, general farm 

organizations, qualified State or regional dairy products promotion, research or nutrition 

education programs (Qualified Programs), and by other means as determined by the Secretary of 

Agriculture (7 CFR §1150.133(a)). Dairy Board members serve 3–year terms and represent 

1 of 13 regions in the contiguous 48 States. Dairy Board members elect four officers: Chair, 

Vice Chair, Treasurer, and Secretary. Current Dairy Board members are listed in Appendix A–1, 

which can be found online at www.ams.usda.gov/dairy. A map of the contiguous 48 States 

depicting the 13 geographic regions can be found online in Appendix H–1 at 

www.ams.usda.gov/dairy. 

Total Dairy Board actual revenue for 2008 was $95.5 million (including assessments and 

interest). This amount was less than the Dairy Board budget of $104.7 million for that period. 

The Dairy Board amended its budget to $125.9 million by incorporating program development 

funds not budgeted previously and an $11.1 million carry–forward from their 2007 budget. The 

Dairy Board budget for 2009 projects total revenue of $101.2 million from domestic assessments 

and interest. The Dairy Board administrative budget continued to be within the 

five–percent–of–revenue limitation required by the Dairy Order. A list of actual income and 

expenses for 2007–2008 is provided online in Appendix B at www.ams.usda.gov/dairy. USDA’s 

oversight and evaluation expenses for 2007 and 2008 as well as the Dairy Board’s approved 

budget for 2009 can also be found in Appendix B at www.ams.usda.gov/dairy. An Independent 

auditor’s report for 2008 is provided online at www.ams.usda.gov/dairy in Appendix C–1. 

The Dairy Board has two standing committees: the Finance and Administration (F&A) 

Committee and the Executive Committee. The F&A Committee is made up of the Dairy Board 

officers and appointees named by the Dairy Board Chair. The Dairy Board Treasurer is the 

Chair of the F&A Committee, and the full Dairy Board serves as the Executive Committee. 

3 
The remaining committees for the Dairy Board are joint program committees with the United 

Dairy Industry Association (UDIA).

In March 1994, the Dairy Board approved the creation of Dairy Management Inc. (DMI), a 

management and staffing corporation. DMI is a joint undertaking between the Dairy Board and 

UDIA. UDIA is a federation of 18 of the 59 Qualified Programs under the direction of a board 

of directors. DMI merged the staffs of the Dairy Board and UDIA to manage the Dairy Board 

programs as well as those of the American Dairy Association® and National Dairy Council®

throughout the contiguous 48 States. DMI serves both boards and is structured into product 

platform and mission areas. These platform and mission areas include: Platforms, Partners, 

Sales and Marketing; Export, International Marketing, and Ingredients; Research, Regulatory 

and Scientific Affairs; Strategic Planning, Business Development and Information Management; 

Child Nutrition and Fitness Initiative, Nutrition Leadership, and Integrated Marketing 

Communications; Image and Industry Relations; and Finance and Administration, Human 

Resources, Strategic Operations. During 2008, DMI successfully implemented a national 

staffing structure which utilizes personnel throughout DMI and the UDIA federation to plan and 

execute the national programs.

Since January 1, 1995, the Dairy Board and UDIA have developed their marketing plans and 

programs through DMI. DMI facilitates the integration of producer promotion funds through a 

joint process of planning and program implementation so that the programs on the national, 

regional, State, and local level work together. The mission of DMI is to drive increased sales of 

and demand for U.S. dairy products and ingredients, on behalf of U.S. dairy farmers. DMI 

works proactively, and in partnership with leaders and innovators, to increase and apply 

knowledge that leverages opportunities to expand dairy markets. 

DMI funds 1–to 3–year research projects that support marketing efforts. Six Dairy Foods 

Research Centers and one Nutrition Institute provide much of the research. Their locations and 

the research objectives can be found online in Appendix E–1 at www.ams.usda.gov/dairy. 

Additionally, lists of DMI’s dairy foods and nutrition projects can be found online at 

www.ams.usda.gov/dairy in Appendices E–2 and E–3, respectively. Universities and other 

industry researchers throughout the United States compete for these research contracts.

At its inception, the DMI Board of Directors consisted of 12 dairy farmers from the Dairy Board 

and 12 dairy farmers from the UDIA Board. An amendment to the articles of incorporation of 

DMI to expand the DMI Board size took effect January 1, 2001, and the expanded DMI Board 

(77) now comprises all Dairy Board (36) and all UDIA (41) members. Voting is equalized 

between the Dairy Board and UDIA. 

The committees for program activities are comprised of board members from the Dairy Board

and UDIA. The Dairy Board and UDIA separately must approve the DMI budget and annual 

plan before they can be implemented. In October 2007, both boards approved the 2008 unified 

dairy promotion plan budget and national implementation programs. Similar to previous plans, 

the 2008 unified dairy promotion plan continued to support the underlying theme of investing 

dollars where the consumers are — not where dairy cows are. The unified dairy promotion plan 

was consistently implemented in the top 150 demand–building consumer markets nationwide. 

4 
DMI, through Qualified Programs, hosted dairy director regional planning forums across the 

country to review and create marketing strategies for development of the unified dairy promotion 

plan. These forums are designed to create one unified dairy promotion plan and allow 

opportunity for Qualified Program board members to ask questions, raise concerns, and offer 

their thinking on the plan’s direction and development. 

At the 2008 forums, dairy directors across the country reviewed and endorsed a unified 

marketing plan that continued to focus on (1) 3–A–Day of DairyTM for Stronger Bones, a 

nutrition–based marketing and education program developed to help solve the Nation’s calcium 

crisis and increase consumption of milk, cheese, and yogurt; (2) “New Look of School Milk” 

which includes efforts to improve the school milk experience for the Nation’s children through 

improvements in packaging, flavors, and availability; (3) Foodservice, where funds are invested 

to help promote the expansion of flavors and the range of packaging for milk in foodservice and 

restaurants, as well as other dairy product offerings; (4) Partnerships and innovation, which 

include efforts to help provide consumers dairy products when, where, and how they want them; 

and (5) Dairy Image and Confidence, which aims to protect and enhance consumer confidence in 

dairy products and the dairy industry through correcting misinformation and inaccurate claims 

against dairy. The success of the unified marketing plan relies heavily upon DMI’s ability to 

expand partnerships with processors, retailers, schools, health professional organizations, and 

manufacturers.

The joint Dairy Board and UDIA Board committee structure provides the framework for DMI 

program activities. The Dairy Board and UDIA Board Chairs assign their respective board 

members to the following joint program committees: Products and Relationships; Producer and 

Industry Relations; Industry Priorities; and Export, Ingredients and Science. Each committee 

elects a Chair and Vice–Chair. The joint committees and the DMI staff are responsible for 

setting program priorities, planning activities and projects, and evaluating results. The Joint 

Evaluation Committee continued to operate in 2008. During 2008, the Dairy Board and UDIA 

Board met jointly six times.

The following information describes Dairy Board and UDIA program activities along with new 

programs and initiatives implemented in 2008. 

National Dairy Council®/School Marketing

The National Dairy Council® www.nationaldairycouncil.org (NDC), 

the nutrition marketing arm of DMI, has been the leader in dairy 

nutrition research, education, and communication since 1915. NDC 

provides timely, scientifically sound nutrition information to the 

media, physicians, dieticians, nurses, educators, consumers, and other 

health professionals. NDC continues to work closely with school 

foodservice professionals and milk processors vis–à–vis the benefits of offering an enhanced 

milk product in the school cafeteria. The foundation of these efforts is comprised of the results 

of a year–long School Milk Pilot Test conducted in 2002. Currently, more than 55 processors 

now offer milk in single–serve plastic resealable containers on the school meal line and supply 

10,700 schools representing nearly 6.3 million students nationwide. This number grows each 

5 
year as DMI continues to implement its “New Look of School Milk” initiative and represents 

over 160 million pounds of additional milk sold each year. DMI–funded market research shows 

that improving students’ school milk experience can help recapture school milk consumption of 

up to 400 million gallons lost since 1993. 

NDC also continued its active support and participation in 

the Action For Healthy Kids® (AFHK) initiative. AFHK 

(www.actionforhealthykids.org) was created in response 

to the Healthy Schools Summit in 2002, and its mission is 

to inform, motivate, and mobilize schools, school 

districts, and States to chart a healthier course for the Nation’s children and adolescents. AFHK 

is comprised of 51 State teams (including all 50 States and the 

District of Columbia) and a partnership of more than 40 

national organizations and Government agencies spanning 

education, health, fitness, and nutrition arenas. AFHK, in 

partnership with the National Football League, continued to 

promote ReCharge! Energizing After–school, TM the first 

nationally distributed after–school program that fully 

integrates nutrition and physical activity through 

teamwork–based strategies for youth in grades 3–6. 

National Dairy Council®/Nutrient Rich Foods Coalition

The activities of the Nutrient Rich Foods Coalition (Coalition) continued in 2008, with the NDC

and other Coalition members from all food groups dedicated to working with scientific 

researchers to develop an approach to address the complete nutrient package of a food and how 

to maximize nutrients from the calories they consume. Through research and education, the 

Coalition aims to shift the way people choose foods and beverages, from focusing on single 

“nutrients to avoid” to understanding the complete nutrient package as a way to build better diets 

and improve diet quality. On the science front, the Coalition worked in 2008 to present its 

current findings on a scientifically sound and validated definition of nutrient density, which was 

called for by the advisory committee of the 2005 Dietary Guidelines for Americans. The 

Coalition also developed tools to help health professionals and media spread the word about the 

importance and ease of choosing nutrient–rich foods first. The Coalition published additional 

studies in 2008 on nutrient–rich foods in academic journals and garnered the support of 

prominent nutrition thought–leaders, with its scientific advisory panel of third–party experts 

continuing to guide the science. 

In addition to reaching kids through the classroom with “Pyramid 

Cafè” and “Pyramid ExplorationsTM,” NDC continued its distribution of 

“Little D’s Nutrition Expedition” and “Arianna’s Nutrition Expedition” 

as the primary focus of nutrition education activities in 2008. Similar to 

“Pyramid Cafè” and “Pyramid ExplorationsTM,” these two programs also 

are targeted to second and fourth grades and reach millions of students 

with messages that low fat and fat–free milk and dairy products are a key 

6 
part of a healthy diet. Survey results continue to show a high utilization rate for these programs. 

These programs and other resources are available for teachers, school foodservice professionals, 

and consumers at: www.nutritionexplorations.org. 

Research

In 2008, milk and dairy–related nutrition and product research was continued in the following 

areas:

1. The role of milk and milk products in the prevention of colon cancer and reduction of blood 

 pressure.

2. Establishing the genetic basis for the activity of probiotic cultures. 

3. Demonstration of milk consumption by teens to meet their calcium needs without adversely 

 affecting weight. 

4. The contribution of dairy’s nutrient package in the development and maintenance of strong 

 bones. 

5. Investigation of the added value of fortification through the use of probiotics, nutraceuticals, 

 nutrient delivery, and flavor enhancement. 

6. The impact of differing milk options and experiences in schools on childhood fluid milk 

 consumption behavior and attitudes. 

7. The role of dairy as part of a heart–healthy diet.

8. The role of calcium–rich dairy products in weight loss and maintenance. 

Export and Dry Ingredients

DMI’s export enhancement program is implemented by the U.S. Dairy Export Council 

(USDEC). USDEC receives primary funding from three sources: DMI, USDA’s Foreign 

Agricultural Service (FAS), and membership dues from dairy cooperatives, processors, 

exporters, and suppliers. In 2008, USDEC received $11.8 million from DMI; $5.8 million from 

USDA’s Market Access Program, Foreign Market Development Program, and other FAS 

programs that support commodity groups in promotion of their commodities in foreign markets; 

$829,000 from membership dues; and $1.4 million from other sources. USDEC began its 13th 

year of operation in 2008, and its total budget was $19.98 million.

USDEC has offices in Washington, D.C.; Mexico City, Mexico; Tokyo, Japan; Seoul, South 

Korea; Hong Kong, Taipei, and Shanghai, China; Bangkok, Thailand; Beirut, Lebanon; London, 

England; and São Paulo, Brazil (Figure 1–1). In 2008, strong global demand in the first half of 

the year for dairy protein led to another record year for dairy exports. Export shipments 

gradually weakened as the year progressed, and U.S. suppliers finished 2008 with the first 

negative quarter (-29 percent) since 2006. Softened demand, the global economic crisis, and 

increasing milk production in Oceana and South America all contributed to the downturn in 

exports. 

Export data confirm that U.S. dairy product export value reached $3.8 billion while volume 

reached 2.5 billion pounds in 2008 (Figure 1–2). In 2008, 10.8 percent of total U.S. milk solids 

7 
8 

Figure 1–1. USDEC Offices. 

 

Mexico City, 

Mexico 

Washington, DC

London, 

England Seoul, South Korea

Shanghai Tokyo, Japan

and Taipei, 

China

Hong Kong, 

China

Bangkok, 

Thailand

Beirut, 

Lebanon

São Paulo, 

Brazil

were exported, while imports represented 4.0 percent. For comparison, in 2007, exports 

represented 9.5 percent of U.S. milk solids production and imports were greater at 4.4 percent

(Figure 1–3). 

Export gains in 2008 occurred in most product categories. By volume, the major U.S. dairy 

exports were skim milk powder/nonfat dry milk (+51 percent), whey proteins (-17 percent),

Figure 1–2. Value and Volume of U.S. Dairy Exports. 

-

1,000 

2,000 

3,000 

4,000 

98 99 00 01 02 03 04 05 06 07 08

U.S. Dairy Exports

Value (million $) Volume (million lbs., total milk solids)

$3.8 billion

2.5 billion 

lbs.

Source: USDEC, USDA
9 

Figure 1–3. U.S. Dairy Trade Balance, 1996–2008. 

U.S. DAIRY TRADE BALANCE, 1996-2008

3.7%

4.5% 4.4%

5.0%

5.5% 5.5%

5.1%

5.7%

7.5%

8.3%

9.3% 9.5%

2.7% 2.9%

3.6% 3.9% 4.2% 4.2% 4.2% 4.4% 4.5% 4.6% 4.4% 4.4% 4.0%

10.8%

0%

2%

4%

6%

8%

10%

12%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Total Milk Solids, % of U.S. Production

Exports

Imports

Source: USDEC, USDA

cheese (+32 percent), and lactose (+2 percent). Mexico, Southeast Asia, and Canada remained 

the largest destinations for U.S. dairy products. USDEC continued working to improve the 

export capabilities of domestic dairy companies by providing up–to–date information on market 

conditions, global trade trends, and regulatory requirements for export. 

Ongoing reverse trade mission activities provide opportunities for domestic dairy product 

suppliers to meet potential importers visiting the United States.

DMI’s 2008 ingredients program was conducted through DMI’s Innovation and Ingredients 

Program (Innovation Program) and through the Web site www.innovatewithdairy.com. DMI’s 

Innovation Program supports dairy product and nutrition research, ingredient applications 

development, and technical assistance for the dairy, food, and beverage industries. 

Producer–funded product research and innovation, along with insights into consumer 

preferences, are tools that DMI provides to U.S. dairy ingredient suppliers to help sell U.S. dairy 

ingredients to food and beverage manufacturers. Dairy, food, and beverage manufacturers look 

to DMI as a partner and resource. With food and beverage manufacturers, DMI provides 

know–how and laboratory and professional resources to help develop or improve foods using 

dairy ingredients.

DMI’s Innovation Program hosted the 2008 Dairy Innovation Forum (Forum) in Scottsdale, 

Arizona. The invitation–only Forum continued a DMI tradition of bringing together top decision 

makers in science and marketing to develop ways to increase consumption of dairy products. 

Participants included industry representatives such as dairy processors and cooperatives, food 

manufacturers, Government officials, ingredient suppliers, State and regional representatives, 

and university researchers. The Forum continued to focus on innovation — a key to the future of 
10 

the dairy and dairy ingredient industries. Additionally, the Forum aimed to allow top industry 

experts to share the latest dairy product innovations, strategic insights, research, technological 

advances and trends that can help the dairy industry take advantage of growth opportunities. 

DMI publications that support the Innovation Program include: (1) Dairy Council 

Digest–published six times per year and focuses on the latest dairy nutrition research relevant to 

dairy, food and beverage manufacturers and health professionals; (2) Ingredient Specification 

Sheets–cover technical basics of a variety of dairy ingredients and are updated as new data is 

available; (3) Dairy Herald–reports periodically on how food formulators and markets can take 

advantage of taste, cost, functional, and nutritional appeal of dairy ingredients; (4) Application 

Monographs–published as necessary, provide a comprehensive look at how whey protein and 

other dairy ingredients can be used in foods and beverages for different functionality needs; 

(5) Tools for Innovation–a periodic supplement from DMI and Dairy Foods magazine that 

covers dairy product trends and research; (6) Innovations in Dairy–a technical bulletin, published 

two to three times a year on specific topics in dairy products, ingredients, processing, and 

packaging; and (7) Dairy Business View–an e–newsletter published bi–monthly with Dairy 

Foods magazine and covers dairy industry news, new technologies, business trends, innovation, 

and research.

3–A–DayTM of Dairy for Stronger Bones 

The 3–A–DayTM of Dairy for Stronger Bones (3–A–DayTM) marketing and 

nutrition education campaign was officially launched on March 3, 2003, 

and continued in 2008. The program objectives are to increase total 

consumption of dairy products and reinforce dairy as the leading source 

of calcium by providing simple guidance about dairy food selections. 

The development of the program was a joint dairy industry effort led by 

DMI. A key component of the 3–A–DayTM program is the logo, which 

appears on packages and labels of milk, cheese, and yogurt products 

containing 20 percent or more of the daily value of calcium. 

Health professional outreach remained a critical component of the 3–A–DayTM program. The 

American Academy of Family Physicians, the American Academy of Pediatrics, the American 

Dietetic Association, and the National Medical Association all continued their support and 

partnership with DMI and 3–A–DayTM. The National Hispanic Medical Association and the 

School Nutrition Association are the latest health professional organizations to partner with dairy 

to educate the public about dairy’s role in a healthy diet and the need to consume three servings 

of milk, cheese, and yogurt daily. By working with key health professional partners like these, 

DMI continued to provide a clear, practical message to the public on the importance of dealing 

with the Nation’s calcium crisis. Combined, these organizations represent more than 250,000 

health professionals nationwide. DMI’s 3–A–DayTM advisory panel, comprised of leaders from 

these organizations along with other nutrition experts, continued to help guide the overall 

campaign as well as nutrition philosophy and principles. 
11 

Innovation Center for U.S. Dairy 

Dairy producers, processors and manufacturers

announced an unprecedented agreement to 

collaborate on pre–competitive initiatives 

through a new Innovation Center for U.S. Dairy 

(Innovation Center). The goal of the initiative 

is to accelerate industry innovation throughout the supply chain to grow sales in an increasingly 

competitive consumer marketplace.

The Innovation Center was established by dairy farmers through DMI. It is the first organization 

of its kind to bring together milk producers, processors and manufacturers under one 

organization to collaborate on major issues affecting the dairy industry. The Innovation Center 

held its inaugural meeting on July 1, 2008, in Rosemont, Illinois. 

The Innovation Center provides a forum for the entire dairy industry to work together to offer 

consumers the products they want — when and where they want them — and increase dairy 

sales through pre–competitive collaboration. It combines the collective resources of the industry 

to provide consumers with nutritious dairy products and foster industry innovation for healthy 

people, healthy products, and a healthy planet. The Board of Directors for the Innovation Center 

represents leaders from across the dairy value chain, including producers and chief executives of 

the Nation’s leading processors, manufacturers, and brands. The Innovation Center is supported 

and staffed by DMI. The priorities include: Sustainability, Health and Wellness, Product 

Development, Information and Communications, Regulatory Issues (excludes pricing), 

Consumer Confidence, and Globalization. 

The Innovation Center will move its priorities forward through enlisting cross–industry 

Operational Committees charged with developing action plans. These committees and purposes 

include: Health and Wellness Committee — to increase category sales and demand for dairy 

products by identifying and meeting the health and wellness needs and desires of consumers; 

Product Development and Information Committee — to act as the steward of the 

pre–competitive innovation assets and resources of the industry; Globalization — to provide a 

strategic analysis of the global dairy landscape to provide a common understanding of the 

challenges, opportunities, and threats posed by increasing globalization to the U.S. dairy 

industry; and Sustainability — to provide consumers with the nutritious dairy products they want 

in a way is that is economically viable, environmentally sound, and socially responsible. 

Sustainability Summit

In June 2008, dairy leaders announced an industry–wide commitment and action plan to reduce 

fluid milk’s carbon footprint while increasing business value, from farm to consumer. The 

action plan was an outcome of the industry’s first Sustainability Summit for U.S. Dairy, a 

gathering of 250 leaders representing producers, processors, non–governmental organizations, 

university researchers and Government agencies held in Rogers, Arkansas, June 16 to June 19. 

The plan focuses on operational efficiencies and innovations to reduce greenhouse gas emissions 

while ensuring financial viability and industry growth. 
12 

The summit attendees recommended a number of actions, including: (1) Reduce energy use in 

the milk supply chain by developing technologies for next generation milk processing on the 

farm and in the plant; (2) establish a mechanism to optimize returns to the dairy industry from a 

carbon credit trading system that encourages the reduction of greenhouse gas emissions; 

(3) reduce carbon emissions and increase energy efficiency for dairy farmers and processors 

through financially viable best management practices and tools that calculate individual farm 

energy and alternative energy opportunities; (4) supply green power to communities by 

expanding the use of methane digesters; (5) stimulate development of low–cost, low–carbon, 

consumer–acceptable packaging; and (6) reduce cooling costs and emissions associated with 

refrigeration by expanding economically feasible, environmentally responsible, and 

consumer–accepted dairy products. Only those projects that are within the parameters of the 

Dairy Act and Dairy Order will be funded by the checkoff program. 

The summit, held in conjunction with the University of Arkansas’ Applied Sustainability Center, 

was the first major step in a comprehensive dairy industry–wide initiative bringing together 

producers, processors, and others to identify and address sustainability opportunities. The 

innovative ideas and initiatives advanced by the summit participants will be further refined for 

possible testing and evaluation. The goal will be to field–test several prototype projects to 

determine their real–world viability as ways to reduce greenhouse gas emissions. 

Communications and Technology

Consumers receive mixed messages through the media about the nutritional value and benefits 

of food. DMI worked to provide consumers with education and information based on sound 

nutritional science and communicated the value of dairy products to consumers as well as to 

health professionals and educators. DMI also worked to inform dairy farmers about how their 

assessment dollars were being used. The organization continued to communicate to dairy 

producers and other industry audiences through publications (such as the annual report, joint 

newsletters with Qualified Programs, and dairy cooperative check inserts), dairy industry events 

(including major trade shows and producer meetings), and media relations (including press 

releases, feature placement, and farm broadcast interviews). DMI continued its “Dairy 

Ambassadors” program, which uses a select group of dairy producers to deliver consistent 

messages about the dairy promotion program to producers and other industry audiences. 

DMI continued its support for butter through cooperation and public relations activities with the 

American Butter Institute, including the Web site www.butterisbest.com, a consumer resource 

center with current cooking trends and ideas, butter recipes, and links to other butter–related 

Web sites. DMI also continued to work with the Wisconsin Milk Marketing Board to execute 

co–funded retail butter promotion activities. The national effort helped to drive incremental 

retail butter sales in select markets across the United States.

Another activity of the Communications and Technology program was the issues management 

program. The objective of this program is to identify, monitor, and manage key issues that may 

influence consumer perceptions of dairy products. DMI coordinated its issues management 

activities with Qualified Programs as well as with other dairy and agricultural groups. The 

organization worked with these groups to bring forth sound, science–based information to 
13 

address consumer issues, and continued a proactive program to educate consumers and to 

reinforce the positive attributes of dairy foods, dairy farmers, and dairy farming practices to this 

audience.

As part of an effort to help protect the image of dairy producers and the dairy industry among the 

public, DMI continued its Web site, www.dairyfarmingtoday.org. The site educates the public 

about how today’s dairy producers care for their animals, protect the land, and produce safe, 

wholesome milk. 

Qualified State or Regional Dairy Product Promotion, Research, or Nutrition Education 

Programs 

Qualified Programs are certified annually by the Secretary of Agriculture. To receive 

certification, the Qualified Program must: (1) conduct activities that are intended to increase 

human consumption of milk and dairy products generally; (2) have been active and ongoing 

before passage of the Dairy Act, except for programs operated under the laws of the United 

States or any State; (3) be primarily financed by producers, either individually or through 

cooperative associations; (4) not use a private brand or trade name in its advertising and 

promotion of dairy products (unless approved by the Dairy Board and USDA); and (5) not use 

program funds for the purpose of influencing governmental policy or action (7 CFR §1150.153). 

A list of the Qualified Programs is provided online at www.ams.usda.gov/dairy in Appendix F. 

The aggregate revenue from the producers’ 15–cent per hundredweight assessment directed to 

the Qualified Programs in 2008 was $189 million (approximately 10 cents out of the 15–cent 

assessment). See Appendix B–7 and Appendix B–8 at www.ams.usda.gov/dairy for aggregate 

income and expenditure data of the Qualified Programs.

Some of these Qualified Programs participate in cooperative efforts conducted and coordinated 

by other Qualified Programs and/or other organizations such as DMI, the Dairy Board, and 

UDIA. Their goal in combining funding and coordinating projects is more effective and efficient 

management of producers’ promotion dollars through larger, broad–based projects. For 

example, UDIA coordinates nationally through DMI the programs and resources of 18 federation 

members and their affiliated units to support the unified marketing plan. 

National Fluid Milk Processor Promotion Board 

The National Fluid Milk Processor Promotion Board (Fluid Milk Board), as authorized in the 

Fluid Milk Act, administers a fluid milk promotion and consumer education program that is 

funded by fluid milk processors. The program is designed to educate Americans about the 

benefits of milk, increase fluid milk consumption, and maintain and expand markets and uses for 

fluid milk products in the contiguous 48 States and the District of Columbia. 

The Secretary of Agriculture appoints 20 members to the Fluid Milk Board. Fifteen members 

are fluid milk processors who each represent a separate geographical region, and five are 

at–large members. Of the five at–large members, at least three must be fluid milk processors and 

at least one must be from the general public. Four fluid milk processors and one public member 
14 

serve as at–large members on the current Fluid Milk Board. The members of the Fluid Milk 

Board serve 3–year terms and are eligible to be appointed to two consecutive terms. The Fluid 

Milk Promotion Order (Fluid Milk Order) provides that no company shall be represented on the 

Board by more than three representatives. Current Fluid Milk Board members are listed online 

in Appendix A–2 at www.ams.usda.gov/dairy. A map of the Fluid Milk Board regions can be 

found online at www.ams.usda.gov/dairy in Appendix H–2. 

The Fluid Milk Board elects four officers: Chair, Vice Chair, Secretary, and Treasurer. Fluid 

Milk Board members are assigned by the Chair to the Fluid Milk Board’s program committees. 

In 2008, the Fluid Milk Board made a significant strategic shift from having the committees 

focused by discipline (advertising, promotions, and public relations) to having three committees 

focused by consumer target (Moms, Teens, and Hispanics) with the fourth committee focused on 

business development and research to address the Fluid Milk Board’s concern that it provides the 

best program priorities, planning activities and projects, and evaluating results. The Fluid Milk 

Board maintained the Finance Committee that reviews all program authorization requests for 

funding sufficiency, the Fluid Milk Board’s independent financial audit, and the work of the 

Board’s accounting firm. The Fluid Milk Board met three times during 2008. 

The National Fluid Milk Processor Promotion Program (MilkPEP) is funded by a 20–cent per 

hundredweight assessment on fluid milk products processed and marketed commercially in 

consumer–type packages in the contiguous 48 States and the District of Columbia. The program 

exempts from assessment those processors who process and market 3 million pounds or less of 

fluid milk products each month, excluding fluid milk products delivered to the residence of a 

consumer. Assessments generated $107.2 million in 2008. The Fluid Milk Order requires the 

Fluid Milk Board to return 80 percent of the funds received from California processors to the 

California Milk Processor Board. The amount returned to California from 2008 assessments was 

$10.4 million. The California fluid milk processor promotion program uses the funds to conduct 

its promotion activities, which include the “got milk?®” advertising campaign. 

The actual income and expenses for 2007–2008 as well as USDA’s oversight and evaluation 

expenses for 2007–2008, and the Fluid Milk Board’s approved budget for 2009 can be found 

online at www.ams.usda.gov/dairy in Appendix B. Appendix C, also found online at 

www.ams.usda.gov/dairy, contains an independent auditor’s report for the period of January 1 

through December 31, 2008. The Fluid Milk Board’s administrative expenses continued to be 

within the 5–percent–of–assessments limitation required by the Fluid Milk Order. 

Medical and Scientific Activities

The Fluid Milk Board’s Medical Advisory Board (MAB), comprised of academic, medical, and 

health care professionals with expertise relevant to the health benefits of fluid milk, met twice in 

2008. The MAB provides guidance to the Fluid Milk Board’s development of key nutritional 

and health messages for consumers and health professionals. MAB members assisted the Fluid 

Milk Board in continuing relationships with health and health professional organizations such as 

the American Academy of Pediatrics, the American Dietetic Association, and the American 

Heart Association. They also appeared as medical professionals in the media, providing 

science–based statements supporting the health benefits of milk. 
15 

The medical and scientific activities of the Fluid Milk Board also included preparing press 

materials and acting as spokespersons on breaking research with relevance to fluid milk. The 

MAB worked over the past year to inform others in the scientific community of the new and 

emerging research showing that three servings of milk each day as part of a daily nutrition plan 

may help people maintain a healthy weight, and that consuming milk after exercising can aid in 

muscle recovery and rehydration. These communications and activities continue to highlight 

milk’s nutritional profile that includes nine essential vitamins and minerals. 

National Fluid Milk Programs 

The Fluid Milk Board continued to execute a generic national fluid milk processor promotion 

program. The fluid milk marketing programs are research–based and message–focused for the 

purpose of positively changing the attitudes and purchase behavior of Americans regarding fluid 

milk. MilkPEP’s primary objectives are to increase the consumption of fluid milk and to identify 

and support growth opportunities for the fluid milk industry. For 2008, the fluid milk marketing 

plans were designed to conduct marketing and promotional activities emphasizing milk’s role in 

weight maintenance and refueling after exercise. Many communication media were used to 

accomplish these objectives, including television and print advertising, press releases, 

promotions, Internet, and others. The program’s target audiences included women and moms, 

teens, and Hispanics. 

The got milk?®/Milk Mustache advertising campaign, continued to provide the basis for 

advertising activities and other program delivery methods. A description of the 2008 program 

activities follows.

Sponsorships

The Fluid Milk Board continued leveraging its multi–year partnership with the Walt Disney 

Corporation®. The sponsorship provides a unique opportunity to raise milk’s image among teens 

and young adults by highlighting the message that milk is a great beverage of choice for active 

teens and for athletes of all ages. As part of the partnership, milk continued to be “the official 

training fuel” of Disney’s Wide World of SportsTM, while the Milk House, a state–of–the art 

facility that hosts more than 30 championships and 20 tournaments for more than 40 different 

amateur sports (including baseball, football, soccer, volleyball, and inline hockey) annually, 

remained the centerpiece arena. The Milk House features prominently displayed got milk?®

signage and milk mustache posters throughout the complex. 

The Fluid Milk Board sponsored the Scholar Athlete Milk Mustache of the Year (SAMMY) 

program for the tenth year and awarded 25 high school students from various regions across the 

United States a $7,500 scholarship. Each applicant was required to list his/her high school 

achievements and tell why milk is an important beverage to include in his/her daily regimens. 

This year SAMMY received more than 65,000 applications. In addition to the scholarship award, 

each of the 25 winners were inducted into the SAMMY Hall of Fame and featured in a special 

milk mustache advertisement which appeared in USA Today, Sports Illustrated, and ESPN
16 

magazine. Winners were selected by milk mustache celebrity judges and honored during the 

awards ceremony at Disney’s Milk House. 

Advertising

The Fluid Milk Board advertising program consisted of television and print advertising as well as 

media–driven promotions. The advertisements highlighted specific, relevant health–benefit 

messages about milk and its nutrient content, while media–driven promotions served to extend 

the advertising campaign. 

The “Little Victories” television advertisement was modified to encourage women to include low 

fat or fat–free milk as part of their daily diet to promote milk’s weight maintenance benefits. 

The commercial prominently featured women being active with their families and consuming 

milk. 

Fluid milk print advertisements produced in 2008 included celebrity 

advertisements targeting moms and women; celebrity advertisements 

with the active, bone growth, refuel, and healthy weight messages 

targeting teen boys and girls; contest and sweepstakes announcements 

and winners; Hispanic outreach; school milk posters; and trade 

advertisements. The Fluid Milk Board leveraged the logo for milk’s 

message: “the Campaign for Healthy Weight, Milk Your Diet.” 

Appendix G, which can be found at www.ams.usda.gov/dairy, 

includes thumbnail images of the Fluid Milk Board’s television and 

print advertisements, public relations, and promotion efforts. 

The national Hispanic advertising campaign continued as part 

of industry outreach to the growing Hispanic population. 

The advertisements continued to feature the popular tagline, 

“Más leche, Más logro” (“More milk, More achievement”), 

which reminds Hispanic moms to include low fat or fat–free 

milk to promote milk’s healthy weight benefits. Print 

advertising featured celebrities Alicia Villareal and Charytín 

Goyco along with several Hispanic advertorials, brochures, 

and television commercials designed to complement the general market’s weight maintenance 

message with an integrated Hispanic overlay. Hispanic consumers were directed to 

www.eligeleche.com for more information on Hispanic healthy weight activities. 

Promotions 

The Fluid Milk Board conducted promotions to help increase fluid milk sales in retail outlets. 

The promotions worked to move more milk out of the grocery store refrigerator and to increase 

sales in other retail outlets such as convenience stores, independent grocery stores, drug stores, 

and mass merchandisers. For some promotions, the Fluid Milk Board worked with partners to 

increase the appeal to consumers. Promotional activities continued to focus on feature incentives 

to increase advertisements, displays of milk, and programs offering prizes directly to consumers 
17

to help drive incremental purchases. Qualified Programs played an important role in the 

execution of these retail programs. 

The Fluid Milk Board conducted four national promotions and a back–to–school feature 

incentive program in 2008. The first promotion, “Make a Splash with Curves,

” a 4–week retail 

promotion program launched in March, included in–store displays of promotional clings and 

wobblers encouraging women to purchase milk and collect three milk caps, take them to their 

local participating Curves® location, and receive three free weeks’ trial membership. 

Additionally, at Curves® locations, posters informed members of the chance to win 1 of 24 free 

2–year memberships at Curves® fitness centers by entering online at www.whymilk.com. 

The second promotion, “Chief Health Officer” (CHO), 

launched on Mother’s Day in May, celebrated moms. The 

retail component promoted the $100,000 grand prize CHO 

salary. In–store signage of wobblers and clings prompted 

moms to go to www.whymilk.com each day to enter. 

Additionally, the Milk Mustache Mobile tour supported the 

CHO program from April to September. Tour attendees 

were asked to “mominate” their mom by providing a video 

explaining why they have the best mom. One winner was 

selected and she received her own Milk Mustache ad. A

Hispanic overlay, Super Mamá, was created as part of the 

retail component and the Milk Mustache Mobile Tour. 

The third promotion showcased milk’s value message: “milk gives you great nutritional bang for 

your buck.” It coincided with milk’s ad launch of financial expert Suze Orman sharing that even 

with today’s economy, the cost of a serving of milk is about a quarter a glass, and with milk’s 

nine essential nutrients, it contains the best nutritional value for the consumer’s dollar. The 

promotion featured an online sweepstakes where consumers could win $100 in groceries. 

During the back–to–school timeframe, the Fluid Milk Board conducted an all–milk feature 

incentive program bringing the Refuel with Chocolate Milk message to moms for the first time. 

The program promoted milk, and especially chocolate milk, as a great beverage choice for mom 

to help refuel her kids after their sports activities. In–store point–of–sale materials included 

banners, wobblers, and static clings to aid retailers in creating displays in the dairy case. 

The final promotion, “Chocolate Milk —The Official 

Drink of Halloween,” was a flavored milk feature 

incentive program that rewarded retailers for feature ad 

and display activity. Held in October, the program 

promoted flavored milk as a healthy treat for moms to give 

her kids at Halloween.

Promotional point–of–sale materials included banners, wobblers, and static clings to aid retailers 

in creating exciting in–store displays. This promotion also included a Hispanic component, Día 

de Los Muertos, or “Day of the Dead.” Appendix G, which can be found online at
18 

www.ams.usda.gov/dairy, includes thumbnail images of the Fluid Milk Board’s promotional 

activities. 

Public Relations

The public relations programs continued to focus on (1) the nutritional benefits of milk; 

(2) emerging scientific studies that highlight milk’s benefits; (3) leveraging the high interest 

generated by the celebrities and the got milk?®/Milk Mustache campaign; and (4) preparing for 

and responding to misinformation and negative news about milk or the educational campaign. A 

wide variety of initiatives were implemented to reach specific target audiences. Almost 2 billion 

media impressions were garnered through the integrated public relations program. The program 

provided support for the four national retail promotions by helping to build public awareness and 

increase retailer participation.

For the 11th consecutive year, the Milk Mustache Mobile 

Tour made its way around the United States. This year’s 

tour, “Chief Health Officer,” (CHO) ran from April 

through August, covering 75 cities nationwide, with 

8 cities conducting Hispanic overlays. Events included 

Curves® workout equipment, fluid milk sampling, and 

health assessments by a nutritional expert. This year the 

tour trucks’ signage was dedicated to moms and featured 

celebrity moms Marg Helgenberger, Mariska Hargitay, and Charytín Goyco. The CHO tour 

provided consumers a “Weighing In on the American Diet” report detailing Americans’ eating

habits and encouraging Americans to eat right, move more, and choose three glasses of low fat or 

fat–free milk daily as part of a healthy diet and to help maintain a healthy weight. 

The 2008 “Refuel Your School” program encouraged high school 

sports teams to show how they recover with chocolate milk. 

Twenty–five winners were awarded $1,000 to support fitness and 

nutrition programs and a special got milk?® recognition assembly. 

Additionally, MilkPEP continued to raise consumer awareness 

through television, radio, print, and online stories as well as 

visiting cities nationwide to promote low fat chocolate milk as a 

recovery drink to participants in local walk/runs and other sporting 

events and by engaging local processors. Research in the International Journal of Sport 

Nutrition and Exercise Metabolism featured a study which encouraged low fat chocolate milk as 

a recovery beverage after strenuous exercise. The study found that cyclists who drank the low fat 

chocolate milk were able to pedal nearly twice as long in the second round of exercise than those 

who consumed the carbohydrate replacement drink and as long as those who consumed the fluid 

replacement drink. 

The Fluid Milk program also addressed the growing need of processors and retailers in response 

to the new Supplemental Nutrition Program for Women, Infants and Children (WIC) guidelines 

that would be more restrictive on the purchase of full fat milk. MilkPEP’s solution was to 
19 

provide educational materials regarding the nutritional equivalency of low fat and fat–free milk. 

Bi–lingual posters and brochures were produced and sent to State WIC offices to educate 

participants. Materials were also made available for order by processors and retailers to use in 

their local markets. 

MilkPEP continued providing processors access to customizable National Programs, such as the 

Milk Mustache Mobile, and related media materials at www.milkpep.org to use in their own 

public relations efforts. Additionally, the Web site provided a daily email to processors for 

breaking news, a list of dietetic spokespersons for use as a resource, processor success stories, 

and links to a searchable library of medical research studies.

Brochures, news releases, and other information on milk advertising and promotions were made 

available to consumers through Web sites www.whymilk.com, www.bodybymilk.com, and 

www.eligeleche.com.

Business Development and Research

The Business Development and Research committee (BDR) is a joint effort of the Fluid Milk 

Board, processors, and suppliers. This ongoing effort was established to address barriers to fluid 

milk consumption not targeted by the advertising, promotion, and public relations activities.

Over the years, BDR, formerly known as the Fluid Milk Strategic Thinking Initiative (FMSTI),

has conducted market tests and studies in various business channels to develop proven ways to 

increase milk sales and subsequently turned these studies into customer–friendly processor 

materials which may be found at www.milkdelivers.org. These materials include reports on 

milk’s opportunities in vending, foodservice, convenience and drug store, supermarket, and 

school foodservice channels. Some of the materials included are brochures focusing on new 

ways to get kids to drink more milk; vending sales kits containing results from the 

Multi–Channel Vending Test; and many other reports and studies published in prior years 

highlighting opportunities for increasing milk sales. 

Complete reports, studies, executive summaries, and press releases for the Fluid Board’s ongoing 

processor initiatives are available for processors on the Web site www.milkpep.org. Customers 

can also visit www.milkdelivers.org or call the milk hotline at 1–800–945–MILK (6455) for 

copies of presentations, videos, and marketing materials.

School Marketing

The Fluid Milk Board continued its efforts to increase milk sales in schools. The “Capturing the 

School Milk Opportunity” seminars continued with a focus on reaching out directly to School 

Nutrition Professionals. The seminars present a myriad of options that can be implemented to 

improve school milk sales. The 2008 seminar series focused on school State organizations 

across the country. 

The “Spotlight On” program continued in 2008 and recognized School Nutrition Professionals 

who actively encouraged students to improve their health by consuming more milk. The 
20 

program rewarded one contestant per month and a grand prize winner at the end of the year. 

Monthly winners received got milk?® cooler barrels for their schools and iPods® for themselves. 

Entrants shared their stories via essays submitted on www.milkdelivers.org. The program was

open to various school influencers including food service directors, administrators, and board 

officials. MilkPEP posted all entries on the Web site in order to inspire more success stories and 

to provide ideas to other schools to improve their milk opportunities to students such as adding 

new flavors and packaging; hosting milk sampling days; or adding milk to the à la carte 

selections. 

The Fluid Milk Board expanded its School Image Poster Program for the 2008–2009 school year 

to help educate students and school food service professionals about the role milk plays in good 

nutrition. Kits were sent to 45,000 participating public middle and high school foodservice 

directors in August for the beginning of the school year 

promoting the BodyByMilkSM (BBMSM) campaign, which 

spoke to teens directly about a healthy lifestyle that included 

drinking milk. Kits contained truck–sized posters, static 

clings, and banners to be displayed in school cafeterias. In 

the BBM “Drink Milk Get Music” program, teens were 

rewarded for drinking milk with free music downloads. Smaller posters were sent to schools 

with cafeteria size limitations. More than 60,000 public elementary schools received posters 

with traditional health messages such as the “nine essential nutrients active bodies need.” 

This year’s posters featured various artists, actors, and 

athletes such as Miley Cyrus, Dwight Howard, All–American 

Rejects, Taylor Swift, Amanda Bynes, Steve Nash, Masi Oka, 

Olympic athletes (male and female versions), and Hayden 

Panettiere. The posters and other school materials are 

displayed online at www.usda.ams.usda.gov/dairy in 

Appendix G. The BBMSM 

message encouraged teens 

to drink three glasses of low fat or fat–free milk daily to give 

their bodies the nutrients they need, like protein to build 

muscle. Additionally, some studies suggest teens who choose 

milk tend to be leaner than those who choose sugary 

beverages. The BBMSM program integrated messaging in 

print advertising and promotion in the schools’ cafeterias, 

online, and at retail. Students were encouraged to save their 

UPC codes from milk containers and redeem them online for free music downloads at 

www.bodybymilk.com. 
21 

Chapter 2

USDA Activities

Dairy Programs, of USDA’s Agricultural Marketing Service (AMS), has day–to–day oversight 

responsibilities for the Dairy Board and the Fluid Milk Board. Dairy Programs oversight 

activities include reviewing and approving the Dairy and Fluid Milk Boards’ budgets, budget 

amendments, contracts, advertising campaigns, and investment plans. Approval of program 

materials is a major responsibility of Dairy Programs. Program materials are monitored for 

conformance with provisions of the respective Acts and Orders, USDA’s My Pyramid, the 

U.S. Dietary Guidelines for Americans, and other legislation such as the Nutrition Labeling and 

Education Act. 

Dairy Programs continues to ensure that the collection, accounting, auditing, and expenditure of 

promotion funds is consistent with the enabling legislation and orders; to certify Qualified 

Programs; and to provide for evaluation of the effectiveness of both promotion programs’ 

advertising campaigns. Dairy Programs assists the Boards in their assessment collection, 

compliance, and enforcement actions. 

Other Dairy Programs responsibilities relate to nominating and appointing Board members, 

amending the orders, conducting referenda, and conducting regular management reviews. Dairy 

Programs representatives attend full Board and committee meetings, and other meetings 

of consequence to the program. 

National Dairy Promotion and Research Board Oversight

Nominations and Appointments

The 36 members of the Dairy Board who administer the program serve 3–year terms, with no 

member serving more than two consecutive terms. Dairy Board members must be active dairy 

producers and are selected by the Secretary of Agriculture from nominations submitted by 

producer organizations, general farm organizations representing dairy producers, Qualified 

Programs, or other interested parties.

Thirty–one nominations were received by USDA for 12 expiring terms and 1 reapportioned seat 

for the Dairy Board. The reapportioned seat was based on the Board’s request to USDA that 

member representation be modified to reflect the current geographic distribution of milk 

produced in the 48 contiguous States. The Board is required to review the geographic 

representation of its members every 3 to 5 years. A proposed rule was issued on July 24, 2008, 

with a 15–day comment period. No comments were submitted regarding the modifications, and 

a final rule adopting the proposed changes was published in the Federal Register on 

September 30, 2008. 

A press release issued on November 13, 2008, announced the appointment of eight new members 

and five incumbents. Twelve appointees will serve 3–year terms, November 1, 2008, through 

October 31, 2011, and one appointee from Region 2 will serve a 2–year term, November 1, 2008, 

through October 31, 2010. 
22 

Newly appointed were: John B. Fiscalini, Modesto, California (Region 2, shortened term); 

Ronald E. Shelton, Greeley, Colorado (Region 3); Harold A. Wick, Austin, Colorado (Region 3); 

Byron A. Lehman, Newton, Kansas (Region 4); Kenton W. Holle, Mandan, North Dakota 

(Region 5); Sharon K. Laubscher, Wonewoc, Wisconsin (Region 6); Larry B. Jaggers, Glendale, 

Kentucky (Region 8); and Ellen H. Paradee, Grand Isle, Vermont. (Region 13). 

Reappointed to serve second terms were: Ronald L. Koetsier, Visalia, California (Region 2); 

William R. D. Anglin, Bentonville, Arkansas (Region 4); Carl F. VanDen Avond, Luxemburg, 

Wisconsin (Region 6); Douglas D. Nuttelman, Stromsburg, Nebraska (Region 7); and Carl A. 

Schmitz, Wadesville, Indiana. (Region 9). 

A list of current Dairy Board members can be found online at www.ams.usda.gov/dairy in

Appendix A–1. Appendix H–1, which can also be found online at www.ams.usda.gov/dairy, is a 

map of the contiguous 48 States depicting the 13 geographic regions under the Dairy Promotion 

and Research Order (Dairy Order). 

Organic Exemption 

Effective February 14, 2005, any persons producing and marketing solely 100 percent organic 

products were exempted from paying assessments to any research and promotion program 

administered by the Agricultural Marketing Service (70 FR 2743, published January 14, 2005). 

The final rule amended Section 1150.157 of the Dairy Order. In States that have mandatory 

assessment laws, dairy producers are only exempt from the Federal assessment. Producers are 

still responsible for remittance of State assessments. In 2008, approximately 863 dairy producers 

were granted exemptions representing approximately 1.2 billion pounds of production. The 

Dairy Order requires producers to re–apply annually to continue to receive the exemption. 

Amendment to the Dairy Act 

On November 10, 2005, the President signed the Agriculture Appropriations Bill (Bill), which 

modified Section 781 of the Dairy Production Stabilization Act of 1983 (7 U.S.C. et seq.). The 

modification implemented a 1–year allowance (during fiscal year 2006) for the Dairy Board to 

obligate and to expend funds for any activity to improve the environment and public health. 

Additionally, the Bill required the Secretary of Agriculture to review the impact of any 

expenditure pursuant to this change and include the review in the 2007 report of the Secretary of 

Agriculture to Congress on the dairy promotion program. 

At its January 2006 meeting, the Dairy Board passed a motion authorizing expenditure of up to 

$6 million, administered and overseen by the National Milk Producers Federation (NMPF), to 

fund a portion of the National Air Emissions Monitoring Study (NAEMS). The NAEMS is 

intended to collect air emission data and create tools that all dairies can use, whether they are 

participating in the Environmental Protection Agency Air Quality Compliance Agreement 

(Consent Agreement) or not, to determine whether their air emission levels are in excess of the 

Clean Air Act thresholds and Comprehensive Environmental Response, Compensation and 

Liability Act and Emergency Planning and Community Right to Know Act reporting 

requirements. The Consent Agreement was developed to offer protection to operations while 
23 

research is conducted to determine the size and type of farms that may have regulatory 

responsibilities. Currently, little air emissions data exists for dairy operations. 

NMPF is responsible for representing the interests of the Dairy Board with the Agriculture Air 

Research Council (AARC), through two board members on the AARC. The AARC is the 

non–profit organization formed to administer the air emission study and manage the accounting 

of the funds for all livestock and poultry groups involved. 

The latest report of the AARC notes that the study is approximately 50 percent complete. The 

study is projected to conclude in the first half of 2010; and the focus will shift to wrap–up, 

equipment reconciliation, site decommissioning, and final data transfer to the U.S. 

Environmental Protection Agency (EPA). The EPA will have up to 18 months to complete the 

data interpretation.

Foreign Agricultural Service

The Secretary of Agriculture has delegated oversight responsibility for all foreign market 

development activities outside the United States to the USDA Foreign Agricultural Service 

(FAS) (7 CFR 2.43(a)(24)). FAS reviews the USDEC foreign market development plan and 

related export contracts. USDEC export contracts also are reviewed by AMS Dairy Programs to 

ensure conformance with the Dairy Act, Dairy Order, and with established USDA policies. In 

2008, the USDA’s Foreign Market Access Program and the Market Promotion Program provided 

matching funds to USDEC for dairy product promotion and market research in Japan, Mexico, 

Southeast Asia, South Korea, and Latin America. 

Contracts 

The Dairy Act and Dairy Order require that all contracts expending assessment funds be 

approved by the Secretary of Agriculture (7 CFR 1150.140). During 2008, Dairy Programs 

reviewed and approved 393 Dairy Board and Dairy Management Inc. (DMI) agreements, 

amendments, and annual plans. A list of contractors and corresponding Dairy Board initiatives 

approved by USDA can be found online at www.ams.usda.gov/dairy in Appendix D–1. 

Contractor Audits 

During 2008, DMI retained the certified public accounting firm Ernst & Young to audit the 

records of the following contractors: FoodMinds (public relations and communication), Team 

Services, LLC (marketing), Utah State University (research), RTC (marketing research), and 

Market Makers (export). These contractors represented expenditures totaling approximately 

$3.8 million. The audits did not reveal any findings. DMI continues to enhance procedures to 

improve management and internal controls over contracts. 

Collections

The Dairy Act specifies that each person making payments to a producer for milk produced in 
24 

the United States and purchased from the producer shall, in the manner as prescribed by the 

Dairy Order, collect an assessment based upon the number of hundredweights of milk for 

commercial use handled for account of the producer and remit the assessment to the Dairy 

Board. The current rate of assessment is 15 cents per hundredweight of milk for commercial use 

or the equivalent thereof as determined by the Secretary of Agriculture. 

The Dairy Act provides that dairy farmers can direct up to 10 cents of their 15–cent per 

hundredweight assessment to Qualified Programs. During 2008, the Dairy Board received 

about 5.05 cents per hundredweight of the 15–cent assessment.

Compliance

Compliance by responsible persons in filing reports and remitting assessments continues in a 

timely manner and at a high rate. No significant differences were discovered when comparing 

the audit results to what was reported by the responsible persons. The Dairy Board verifies that 

the credits claimed by responsible persons are actually sent to Qualified Programs. This 

verification is done by contract with each Qualified Program. When noncompliance exists, the 

Dairy Board takes initial action on the matter. If the Dairy Board is unsuccessful in resolving the

violation, the matter is referred to USDA for further action. 

Qualified Programs

Dairy Programs reviewed applications for continued qualification from 59 Qualified Programs. 

A list of the active Qualified Programs is provided online at www.ams.usda.gov/dairy in 

Appendix F. Consistent with its responsibility for monitoring the Qualified Programs, Dairy 

Programs obtained and reviewed income and expenditure data from each of the programs. The 

data reported from the Qualified Programs are included in aggregate form for 2007 and 2008 in 

Appendix B–7 and Appendix B–8 online at www.ams.usda.gov/dairy. 

National Fluid Milk Processor Promotion Board Oversight

Nominations and Appointments

The 20 members of the Fluid Milk Board serve 3–year terms, with no member serving more than 

two consecutive terms. The Fluid Milk Promotion Order (Fluid Order) provides that no 

company shall be represented on the board by more than three representatives. Fluid Milk Board 

members who fill vacancies with a term of 18 months or less are permitted to serve 2 additional 

3–year terms. Fluid Milk Board members are selected by the Secretary of Agriculture from 

nominations submitted by fluid milk processors, interested parties, and eligible organizations. 

In a news release issued on February 18, 2009, the Secretary of Agriculture announced five

reappointments and two new appointments to the Fluid Milk Board. Reappointed to serve a 

second term was Ed Mullins, Carlinville, Illinois (Region 9). Reappointed to serve their first 

terms after filling vacancies lasting less than 18 months were Jay S. Bryant, Reston, Virginia 

(Region 3); Charles S. Mayfield, Jr., Athens, Tennessee (Region 6); John R. Zuroweste, Dallas, 

Texas (Region 12); and Janey K. Thornton, Ph.D., (At–Large Public). 
25 

Newly appointed were: Timothy Kelbel, Cincinnati, Ohio (Region 15); and Miriam E. Brown, 

Des Moines, Iowa (At–Large Processor). The reappointed and newly appointed members were 

officially seated at the July 16–18, 2009, meeting, except for Janey K. Thornton, Ph.D., who 

resigned her position as the Board’s public member. In a news release published on 

June 23, 2009, the Secretary of Agriculture announced the appointment of Mary A. Hill, 

(At–Large Public) to fill the vacant public seat. The terms for these appointees will expire on 

June 30, 2012. 

A list of current Fluid Milk Board members can be found online in Appendix A–2 at 

www.ams.usda.gov/dairy. A map depicting the 15 geographic regions under the Fluid Milk 

Order can be found online at www.ams.usda.gov/dairy in Appendix H–2. 

Order Amendment

A Final Rule, published in the May 21, 2008, Federal Register (73 FR 29389) with an effective 

date of July 1, 2008, adopted a proposal submitted by the Fluid Milk Board. Section 1160.213 of 

the Fluid Order was amended to reduce the burden of late payment fees applied to processors 

who underreport the amount of assessments they owe due to unintentional errors or 

miscalculations. Specifically, the amendment reduces late–payment charges provided that the 

processor has not made more than two reporting errors in the prior 12 months. 

As a direct result of the amended Fluid Order, 7 of 88 total processors realized a reduction in late 

fees.

Program Development 

The Fluid Milk Board contracted directly with Lowe Worldwide; DRAFTFCB; Weber 

Shandwick; and Siboney, U.S.A., to develop its mom and teen advertising, promotions, 

consumer education/public relations, and Hispanic advertising/public relations, respectively. 

Contractor Audits

The Fluid Milk Board retained the certified public accounting firm of Snyder, Cohn, Collyer, 

Hamilton & Associates, P.C., to audit the records of Siboney, U.S.A., in order to determine if the 

agency had conformed to the financial compliance requirements specified in its agreement with 

the Fluid Milk Board for the period of January 1 through December 31, 2008. 

The Fluid Milk Board continues to enhance its internal contract control system in order to ensure 

that the amounts invoiced to the Fluid Milk Board are in compliance with established contracts 

and procedures. 

Compliance

Compliance by fluid milk processors in filing reports and remitting assessments continues in a 

timely manner and at a high rate. 
26 

Chapter 3 

Impact of Generic Fluid Milk and Dairy Advertising and Promotion on Dairy 

Markets: An Independent Analysis

The Dairy Production Stabilization Act of 1983 (Dairy Act; 7 U.S.C. 4514) and the Fluid Milk 

Promotion Act of 1990 (Fluid Milk Act; 7 U.S.C. 6047) require an annual independent analysis 

of the advertising and promotion programs authorized by these Acts that operate to increase 

consumer awareness and sales of fluid milk and dairy products. Since 1998, economists from 

the Department of Applied Economics and Management at Cornell University have conducted 

the independent analyses of the National Dairy Promotion and Research Program (Dairy 

Program) and the National Fluid Milk Processor Promotion Program (Fluid Milk Program). In 

this chapter, the 2008 evaluation results of the effectiveness of the Dairy and Fluid Milk 

Programs are presented. The economic evaluation focuses on generic marketing activities by 

dairy farmers and fluid milk processors that are designed to increase the demand for fluid milk 

and dairy products. The results of two separate models are presented. 

The first is a fluid milk–only demand model used to evaluate the economic impacts of all generic 

fluid milk marketing activities, of both programs, on fluid milk demand. The generic fluid milk 

marketing activities include fluid milk advertising and non–advertising marketing activities used 

to increase demand. Advertising includes all media activities such as television, print, radio, 

outdoor, and Web advertising by dairy farmers and fluid milk processors. Non–advertising fluid 

milk marketing includes health and nutrition educational programs, public relations, promotion 

programs, school milk programs, food service programs, retail programs, child nutrition fitness 

initiative, single serve milk promotions, value added marketing (issues/crisis, trade service 

communications, strategic research, and Real Seal), and trade service communications. 

The advertising and non–advertising marketing variables represent all demand–enhancing 

activities by fluid milk processors and dairy farmers that have an impact within 1 year after being 

conducted. More recently, Dairy Management, Inc. (DMI), which is the national association1

implementing a significant part of the Dairy Program, has conducted some marketing activities 

that require longer than 1 year to have an impact on demand. These activities are not included in

 

this analysis. Non–demand enhancing activities that are not a part of this analysis include 

expenditures on overhead, longer–term business development programs, research, loans and 

grants, technical support, industry relations, and corporate technology. While the dairy farmers’ 

and fluid milk processors’ programs utilize various types of marketing strategies to increase fluid 

milk consumption, the effects of fluid milk marketing under both programs are combined 

because the objectives of both programs are the same and data cannot be satisfactorily segregated 

to evaluate the two programs separately. 

1 Dairy farmer assessments to promote fluid milk and dairy products are paid to the Dairy Board and 59 Qualified 

State or regional programs (QPs). In 2008, the Dairy Board accounted for $0.0505 of the $0.15 per hundredweight 

assessment on all milk, or about $94.4 million. The remaining $0.0995 per hundredweight, or about $188.8 million 

was accounted for by QPs. Promotion is carried out at the national level by DMI, which is a joint undertaking 

between the Dairy Board and United Dairy Industry Association (UDIA). UDIA is a federation comprised of 18 of 

the 59 QPs. DMI operations were supported by Dairy Board funds and contributions of $83.4 million from UDIA in 

2008. The remaining QP funds were used locally by QPs to conduct their own advertising and promotion activities. 
27 

The second model is a combined fluid milk and dairy product demand model (measured in terms 

of domestic commercial disappearance) used to evaluate the economic impacts of all generic 

marketing activities for those products. This model, which is hereafter referred to as the 

“all–dairy products” model, is included because the dairy farmer programs now emphasize an 

“all–dairy” promotion strategy over product–specific campaigns. As in the fluid milk–only 

model, marketing activities in the all–dairy model include generic advertising and 

non–advertising marketing activities. Also, advertising and non–advertising marketing strategies 

are included as two separate variables in the demand model. Unlike the fluid milk–only model, 

the marketing activities in the all–dairy model include activities for all–dairy products (fluid and 

manufactured dairy products). This model provides a measure of the economic impact of all 

demand–enhancing, generic marketing activities by processors and farmers.

Highlights

While per capita fluid milk consumption has been declining for decades in the United States at 

about 1.0 percent per year, generic fluid milk marketing activities sponsored by fluid milk 

processors and dairy farmers have helped mitigate some of this decline. It is estimated that these 

marketing efforts have had a positive and statistically significant impact on per capita fluid milk 

consumption. Specifically, over the period 1995 through 2008, it is estimated that a 1.0 percent 

increase in generic fluid milk advertising expenditures resulted in a 0.06 percent increase in per 

capita fluid milk consumption when holding all other demand factors constant. Over the same 

period, it is estimated that a 1.0 percent increase in generic fluid milk non–advertising marketing 

expenditures resulted in a 0.032 percent increase in per capita fluid milk consumption when 

holding all other demand factors constant.

In terms of total consumption of fluid milk, generic fluid milk marketing activities increased 

fluid milk consumption by an average of 6.87 billion pounds per year. Put differently, had there 

not been generic fluid milk marketing conducted by the two national programs, fluid milk 

consumption would have been 9.9 percent less than it actually was over this time period. Hence, 

fluid milk marketing efforts by fluid milk processors and dairy farmers combined have had a 

positive and statistically significant impact that is partially mitigating declines in fluid milk 

consumption. 

An average benefit–cost ratio (BCR) was computed for the Fluid Milk Program based on the 

period, 1998–2008. The BCR was 6.78, implying that, on average over the period 1998–2008, 

the benefits of Fluid Milk marketing programs have been 6.78 times greater than the costs, i.e., 

every dollar invested in Fluid Milk marketing yielded an additional $6.78 in industry net 

revenue. To make allowance for the error inherent in any statistical estimation, a 90 percent

confidence interval was calculated for the average BCR. The estimated lower bound for the 

average BCR was 2.18. Hence, it is reasonable to conclude that this confidence interval gives 

credence to the finding that the benefits of the Fluid Program’s marketing activities have been 

considerably greater than the cost of the programs.

In terms of the all–dairy product demand analysis, the average advertising elasticity for this 

period on a non–fat and fat basis was 0.034 and 0.027, respectively; a 1.0 percent increase in 

media advertising expenditures would increase per capita all–dairy product demand by 0.034 

percent (nonfat basis) and 0.027 percent (fat basis). The average non–advertising marketing 
28 

elasticity for this period was 0.014 (nonfat) and 0.021 (fat); a 1.0 percent increase in media 

advertising expenditures would increase per capita all–dairy product demand by 0.014 percent

(nonfat) and 0.021 percent (fat). Thus, the total marketing (advertising and non–advertising) 

effort by dairy farmers and fluid milk processors has had a positive and statistically significant 

impact on dairy consumption. 

A BCR was calculated for the Dairy Program for the period of 1998 through 2008. The benefits 

of the Dairy Program were calculated as the change in dairy farmers’ net revenue (producer 

surplus) due to demand enhancement from all marketing activities under the Dairy Program by 

way of increased sales and higher prices. The costs of the Dairy Program were calculated as the 

differences in total assessment revenues before and after the National Program was enacted. The 

results show that the average BCR for the Dairy Program was 5.49 (nonfat solids basis) and 7.07 

(milk fat basis) from 1998 through 2008. This means that each dollar invested in generic dairy 

marketing by dairy farmers during the period would return between $5.49 and $7.07, on average, 

in net revenue to farmers. These BCRs apply to all of the Qualified Program’s marketing 

programs, but exclude the longer term (programs that have no impact within a year) demand 

expansion programs conducted by DMI. The level of the marketing BCR suggests that the 

combined marketing programs supported by dairy farmers have been a successful investment. 

The estimated lower bounds for a 90 percent confidence interval for the average BCR in the 

nonfat and fat models were 1.42 and 2.81, respectively. Hence, it is reasonable to conclude that 

these confidence intervals give credence to the finding that the benefits of the Dairy Program’s 

marketing activities have been considerably greater than the cost of the programs. 

Analysis of Generic Fluid Milk Marketing

Per capita fluid milk consumption in the United States has been steadily declining for decades. 

Among the factors behind this decline are changes in U.S. demographics, changes in consumer 

preferences for fluid milk, how and where people consume food, changes in consumer income 

and retail fluid milk prices, changes in advertising and marketing by producers of beverages that 

compete with fluid milk, and changes in generic fluid milk advertising and marketing. The 

following is a brief graphical overview of changes in per capita fluid milk consumption and 

factors hypothesized to affect fluid milk consumption from 1995 through 2008. It is important to 

emphasize, however, that the decline in per capita fluid milk consumption has occurred over a 

significantly longer period of time than since 1995. 

Figure 3–1 illustrates the declining trend in per capita fluid milk consumption2

 since 1995. From 

1995 through 2008, annual per capita consumption declined by 12.8 percent. This translates into 

an average annual rate of decline of a little over 1.0 percent per year. Annual per capita 

consumption actually increased slightly from 2005 to 2006, increasing from 183.8 pounds to 

184.3 pounds, but declined from 184.3 to 180.6 from 2006 to 2008. 

One potential cause of declining per capita fluid milk consumption may be the increasing trend 

in food consumed away from home. As people consume more food away from home, fluid milk 

 

2 All consumption data used in this study were adjusted for leap year.
29 

Figure 3–1. Per Capita Fluid Milk Consumption.

165

170

175

180

185

190

195

200

205

210

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Pounds

Year 

consumption may be diminished by the lack of availability of many varieties of fluid milk 

products at the Nation’s eateries as well as the expanding availability of fluid milk substitutes. 

Many eating establishments carry only one type of fluid milk product, which causes some people 

who would normally drink fluid milk to consume a different beverage if the preferred fluid milk 

product is not available. 

Figure 3–2 illustrates the trend in expenditures on food consumed away from home as a 

Figure 3–2. Food Away From Home Expenditures as Percent of Total Food Expenditures. 

44.0

45.0

46.0

47.0

48.0

49.0

50.0

51.0

52.0

53.0

54.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Percent

Year
30 

percentage of total food expenditures. From 1995 through 2008, the annual average percentage 

of expenditures on food consumed away from home increased by 11.6 percent. While there were 

some ups and downs in the percentage of food consumed away from home over this period, the 

general trend is increasing from 1995 through 2006. From 1998–1999, there was a small dip in 

food away from home expenditures as a percent of total food expenditures and the decline in per 

capita fluid milk consumption lessened considerably. More recently, food away from home 

expenditures as a percent of total food expenditures has decreased in 2 consecutive years, 2007 

and 2008, and will likely decrease again in 2009. It is evident from Figures 3–1 and 3–2 that per 

capita fluid milk consumption and eating away from home are negatively correlated. Thus the 

increase in food consumed away from home appears to be responsible for some of the decrease 

in per capita fluid milk consumption. 

A second factor for declining per capita fluid milk consumption may be changes in U.S. 

demographics. One important change is the proportion of young children in the population, 

which is lower than it was in 1995 (since 2002 the trend has increased marginally, but is still 

lower than it was in 1995). Since young children are one of the largest fluid milk–consuming 

cohorts, any decline in that cohort negatively impacts per capita fluid milk consumption. 

Figure 3–3 shows the percentage of the population that was under 6 years old from 1995 through 

2008, a segment of the population that decreased 7.1 percent between 1995 and 2000. Therefore, 

there is a positive correlation between per capita fluid milk consumption and this age 

cohort—both have declined since 1995. Note that since 2000, there has actually been a marginal 

increase in this age cohort, but it is still below levels in the mid–1990s. 

Since 1995, the retail price of fluid milk products has generally been rising relative to the retail 

Figure 3–3. Percent of Population Under 6 Years of Age. 

6.4

6.5

6.6

6.7

6.8

6.9

7.0

7.1

7.2

7.3

7.4

7.5

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Percent

Year
31 

price of other nonalcoholic beverages. This pattern is displayed in Figure 3–4. While there have 

been some periods since 1995 where retail fluid milk prices declined relative to other beverage 

prices, there is clearly an increasing trend over time making milk more expensive than other 

nonalcoholic beverages. From 1995 through 2008, annual average fluid milk prices rose 36.2 

percent relative to other beverages. These retail fluid milk price increases are likely responsible 

for some of the decline in per capita fluid milk consumption. Between 2004 and 2006, the price 

of fluid milk relative to other beverages declined by 5.6 percent, which may be an important 

reason for the slight increase in per capita consumption in 2006. However, from 2006 to 2008, 

the retail price of milk relative to other beverages increased by 10.2 percent and per capita 

consumption declined by 1.0 percent. 

Fluid milk’s loss of market share to other beverages also may be due to aggressive marketing by 

competing beverage producers. Indeed, both dairy farmers and fluid milk processors started 

generic marketing programs to combat competing marketing from other beverage producers. 

Figure 3–5 displays the combined real generic fluid milk advertising expenditures divided by 

real bottled water plus soy beverage advertising. The general trend has been an erosion in the 

ratio of generic fluid milk advertising to competing beverage advertising. For example, in 1995, 

this ratio was 0.32, indicating that total generic fluid milk advertising was about one–third the 

total advertising budgets for bottled water plus soy beverages. By 2008, this ratio fell by almost 

one–half to 0.17. Hence, in terms of advertising, fluid milk has lost advertising market share to 

two of its main competitors, which likely had a negative impact on per capita milk consumption 

over this time period.

Figure 3–4. Retail Price of Fluid Milk Relative to Other Beverage Retail Prices.

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

1.30

1.35

1.40

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Price ratio

Year
32 

Figure 3–5. Generic Fluid Milk Advertising Divided by Bottled Water and Soy Beverage 

Advertising. 

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Advertising Ratio

Year

One factor that may have diminished some of the decline in per capita fluid milk consumption is 

the growth in real income over this period. Fluid milk is considered to be a “normal” good, 

which means that consumption increases as consumers’ disposable incomes increase. Figure 3–6 

illustrates the steady positive trend in real per capita disposable income (in 2008 dollars) from 

1995 through 2008. Since 1995, real per capita income has increased by 22 percent, however, 

there was no growth from 2007 to 2008. 

Figure 3–6. Real Per Capita Disposable Income, in 2008 Dollars. 

25.0

27.0

29.0

31.0

33.0

35.0

37.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

$1,000

Year
33 

Another factor that may have diminished some of the decline in per capita fluid milk 

consumption over part of this time period is generic marketing efforts by fluid milk processors 

and dairy farmers. The dairy farmer checkoff program is the largest checkoff program in the 

United States in terms of revenue and the third largest program is the fluid milk processor 

program. 

Figure 3–7 shows generic fluid milk advertising real expenditures (in 2008 dollars) by dairy 

farmers and fluid milk processors. Over this period, dairy farmers, primarily through DMI, have 

significantly reduced their investment in generic fluid milk advertising. Real fluid milk 

advertising expenditures have fallen from $143.5 million in 1995 to just over $10 million in 

2008, a 92.6 percent decrease. Since the Fluid Milk Program had its first full year of operation 

in 1997, its expenditures on fluid milk advertising have also declined from $97 million (1997) to 

$60.1 million in 2008, or 38.1 percent. Collectively, generic fluid milk advertising by both dairy 

farmers and fluid milk processors decreased by 70.6 percent. 

Figure 3–8 shows generic fluid milk non–advertising marketing activities (in 2008 dollars) by 

dairy farmers and fluid milk processors. The trend in these expenditures has been the opposite of 

generic advertising. Dairy farmers have increased their annual expenditures of 

non–advertising marketing from almost $26 million in 1995 to $65.8 million in 2008, an increase 

of 154.2 percent. Fluid milk processors increased their expenditures in this category from 

$17 million in 1997 to $37.8 million in 2008, a 121.9 percent increase. Collectively, generic 

fluid milk non–advertising marketing expenditures by both dairy farmers and fluid milk 

processors increased by 141.4 percent. 

Figure 3–9 shows combined generic fluid milk marketing (advertising and non–advertising) 

Figure 3–7. Real Generic Advertising by Dairy Farmers and Fluid Milk Processors.

0

20

40

60

80

100

120

140

160

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Million $

Year

Farmer advertising Processor advertising
34 

Figure 3–8. Real Generic Non–Advertising Marketing Expenditures by Dairy Farmers and 

Fluid Milk Processors.

0

10

20

30

40

50

60

70

80

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Million $

Year

Farmer nonadvertising marketing Processor nonadvertising marketing

activities (in 2008 dollars) by dairy farmers and fluid milk processors. The trend here has been 

negative for both farmers and processors. Dairy farmers have decreased their annual 

expenditures of combined fluid milk marketing from $169.4 million in 1995 to $76.5 million in 

2008, a decrease of 54.9 percent. Some of this decline is due to inflation, which has eroded the 

Figure 3–9. Real Generic Fluid Milk Marketing Expenditures by Dairy Farmers and Fluid Milk 

Processors.

0

20

40

60

80

100

120

140

160

180

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Million $

Year

Farmer fluid milk marketing Processor milk marketing
35 

purchasing power for marketing activities, but the primary reason for this decline has been a 

decision by dairy farmers to reduce expenditures on fluid milk marketing. Fluid milk processors 

decreased their combined generic marketing expenditures from $114 million in 1997 to 

$97.9 million in 2008, a 14.2 percent decrease. Almost all the decline in fluid milk processor 

generic milk marketing has been due to inflation eroding the purchasing power of their 

marketing dollars. Collectively, generic fluid milk marketing expenditures by both dairy farmers 

and fluid milk processors decreased by 38.5 percent since 1995. 

Fluid Milk Model Estimation 

To more formally evaluate the relationship between per capita fluid milk consumption and 

factors hypothesized to influence that consumption, we used an econometric modeling approach. 

Because there are factors other than generic marketing by dairy farmers and fluid milk 

processors that influence the demand for fluid milk, we used this model to identify the effects of 

individual factors affecting demand. The following variables were included as factors 

influencing per capita fluid milk demand: the consumer price index (CPI) for fluid milk; the CPI 

for nonalcoholic beverages, which was used as a proxy for fluid milk substitutes; the percentage 

of the U.S. population less than 6 years old; per capita disposable income; variables to capture 

seasonality in fluid milk demand; expenditures on food consumed away from home as a 

percentage of total food expenditures; expenditures on competing beverage advertising 

(bottled water and soy beverage advertising combined), expenditures on generic fluid milk 

advertising, and expenditures on generic fluid milk non–advertising marketing activities.3 Since 

the goals of the farmer and processor marketing programs are the same with regards to fluid 

milk, all generic fluid milk advertising by both programs was aggregated into a single 

advertising variable, and all generic fluid milk non–advertising marketing by both programs was 

aggregated into a single non–advertising marketing variable. 

The model was estimated with national quarterly data from 1995 through 2008. To account for 

the effects of inflation, prices and income were deflated by the CPI. Generic fluid milk 

advertising and competing advertising expenditures were deflated by a media cost index 

computed from annual changes in advertising costs by media type. Generic fluid milk non–

advertising marketing expenditures were deflated by the CPI for all items. Because advertising 

has a carry–over effect on demand, past fluid milk advertising expenditures also were included in 

the model as explanatory variables using a distributed–lag structure.

4

 Similar procedures were 

used to capture this carry–over effect for competing advertising. 

The impacts of variables affecting demand can be represented with what economists call 

“elasticities.” Elasticities measure the percentage change in per capita demand given a 1.0 

percent change in one of the identified demand factors while holding all other factors constant. 

 

3 As mentioned in the introduction, the advertising expenditures include media expenditures for television, radio, 

print, and outdoor advertising, while the non–advertising marketing expenditures included funds spent on fluid milk 

public relations, sales promotions, nutrition education, retail programs, and sponsorships by dairy farmers and fluid 

milk processors.

4 Specifically, a second–degree polynomial lag structure was imposed. The demand model included current 

advertising expenditures and 11 quarters of lagged advertising expenditures to capture the carry–over effect of 

advertising. Similarly, competing advertising included current and nine quarters of lagged expenditures. 

Non–advertising marketing expenditures were lagged six quarters. 
36 

Table 3–1 provides average elasticities for the period 1995 through 2008 for model variables, all 

of which have a statistically significant effect on consumption.5 

The most important factors influencing per capita fluid milk demand are demographic changes 

and the proportion of food expenditures on food eaten away from home. While not as large in 

magnitude, retail fluid milk prices, income, expenditures on generic fluid milk advertising and 

non–advertising marketing efforts, and competing beverage advertising expenditures also 

impacted per capita fluid milk demand. Each factor is further discussed in detail.

The percentage of the population under 6 years of age was the most important factor affecting 

fluid milk consumption. This factor has an estimated elasticity of 0.706, which means that a 1.0 

percent increase in this age cohort measure would result in a 0.706 percent increase in per capita 

fluid milk demand when holding all other demand factors constant. This result is consistent with 

previous studies, which show that one of the largest fluid milk–consuming segments of the 

population is young children. While this age cohort has declined since 1995, it has been slowly 

rising the last several years, which should have a mitigating influence on declining per capita 

fluid milk consumption. 

The amount of food that is consumed away from home, measured in this model as per capita 

expenditures on food eaten away from home as a percentage of per capita expenditures on all 

Table 3–1. Average Elasticity Values (1995–2008) for Factors Affecting the Per Capita Retail

Demand for Fluid Milk.a* 

 

Demand factor Elasticity

Percent of population under 6 years of age 0.706* 

Percent of food away from home expenditures -0.499*

Per capita income 0.207*

Retail fluid milk price -0.174*

Bottled water + soy beverage -0.019*

Generic fluid milk advertising 0.060*

Generic fluid milk non–advertising marketing 0.032*

a Example: A 1.0 percent increase in the retail price of fluid milk is estimated to reduce per capita sales of fluid milk 

by 0.174 percent. For more information on the data used, see Table 3–5.

* All coefficients were statistically significant at the 1.0 percent significance level or less. 

 

5 The estimated model fit the data extremely well. Most variables were statistically significant at the 1.0 percent

significance level or better. The adjusted goodness–of–fit measure indicated that the explanatory variables explained 

97 percent of the variation in per capita fluid milk consumption. Various statistical diagnostics were performed and 

no statistical problems were found except for auto–correlation, which was corrected for using an autoregressive 

(AR1) error correction procedure.
37 

food, has an elasticity of -0.499. This means that a 1.0 percent increase in the food consumed 

away from home would result in a 0.499 percent decrease in fluid milk demand when holding all 

other demand factors constant. 

As mentioned previously, this negative relationship may be due to the limited availability of 

fluid milk products and high availability of fluid milk substitutes at many eating establishments, 

which frequently offer only one or two types of fluid milk beverages. One can hypothesize that 

because of these limited choices, some people who would ordinarily choose fluid milk choose 

another beverage instead. This result suggests the need to target the retail food service industry 

in an effort to increase away–from–home consumption. 

Per capita disposable income has a positive and statistically significant impact on per capita fluid 

milk consumption. A 1.0 percent increase in real per capita income would result in a 

0.207 percent increase in per capita fluid milk demand, holding all other demand factors 

constant. Similar to the price elasticity in magnitude, the income elasticity is consistent with the 

notion of fluid milk products as a staple commodity in the United States. With income up by 

22 percent since 1995, this has lessened the decline in per capita fluid milk consumption. 

Holding all other factors constant, this 22 percent increase in real income increased per capita 

fluid milk consumption by 4.6 percent over this period. 

Not surprisingly, the retail price of fluid milk has a negative and statistically significant impact 

on per capita demand. The results indicate that a 1.0 percent increase in the real retail price of 

fluid milk would result in a 0.174 percent decrease in per capita fluid milk quantity demanded. 

The magnitude of this elasticity is relatively small, which indicates that U.S. consumers’ fluid 

milk purchasing behavior is relatively insensitive to changes in the retail price. This result, 

which is consistent with other studies, is likely due to the fact that fluid milk is generally 

regarded as a staple commodity in the United States. However, as described in the previous 

section, the retail price of fluid milk has increased substantially since 1995 (36.2 percent) relative 

to the price of other beverages. Consequently, the increase in fluid milk prices has significantly 

contributed to the decline in per capita consumption. For instance, had the real retail price 

remained constant since 1995 instead of increasing by 36.2 percent, per capita fluid milk 

consumption would have been 6.3 percent higher today. 

 

Combined soy beverage and bottled water advertising also has had a negative impact on fluid 

milk demand during the study period. The estimated fluid milk demand elasticity with respect to 

soy beverage and bottled water advertising is -0.019, and statistically significant. 

Finally, the generic fluid milk marketing activities conducted by fluid milk processors and dairy 

farmers have had a positive and statistically significant impact on per capita fluid milk demand. 

The average advertising elasticity is computed to be 0.06 and is statistically significantly 

different from zero at the 1.0 percent significance level. Thus, a 1.0 percent increase in generic 

fluid milk advertising would increase per capita fluid milk consumption by 0.06 percent holding 

all other demand factors constant. The generic non–advertising marketing elasticity is computed 

to be 0.032 and is statistically significant at the 1.0 percent significance level. In terms of 

relative elasticities, generic advertising is about 1.9 times more effective than non–advertising 

marketing. Even though generic fluid milk advertising appears to be more effective than 
38 

non–advertising marketing, the trend over time especially by DMI has been to phase advertising 

out of their marketing plans, while the fluid milk processors and some of the QPs still invest 

heavily in advertising. 

Fluid Milk Model Simulation 

To examine the impact of dairy farmer and fluid milk processor marketing on total consumption 

of fluid milk, the estimated demand equation was simulated for two scenarios for the period from 

1998 through 2008: (1) a baseline scenario in which the combined fluid milk marketing 

(advertising and non–advertising) expenditures were equal to actual marketing expenditures 

under the two programs, and (2) a no–national–Dairy–Program, no–Fluid–Milk–Processor–

Program scenario in which there was no fluid milk–processor–sponsored marketing and 

dairy–farmer–sponsored fluid milk marketing was reduced to 42 percent of actual levels to 

reflect the difference in assessment before the national program was enacted. A comparison of 

these two scenarios provided a measure of the impact of the national Dairy and Fluid Milk 

Programs.

Figure 3–10 displays the simulation results for annual fluid milk consumption for the two 

scenarios. These marketing activities were responsible for creating an additional 6.87 billion 

pounds more milk consumption each year on average. Put differently, had there not been generic 

fluid milk marketing conducted by the two National Programs, fluid milk consumption would 

have been 9.9 percent less than it actually was over this time period. Hence, the bottom line is 

that the fluid milk marketing efforts by dairy farmers and fluid milk processors combined have 

had a positive and statistically significant impact that is partially mitigating declines in per capita

fluid milk consumption. 

Figure 3–10. Simulated Milk Consumption With and Without Generic Fluid Milk Marketing. 

0.0

10.0

20.0

30.0

40.0

50.0

60.0

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Billion pounds

Year

Program No Program
39 

Fluid Milk Processor Benefit–Cost Analysis 

One way to measure whether the benefits of a program outweigh the cost is to compute a BCR. 

A BCR can be computed as the change in net revenue6

 due to generic dairy marketing divided by 

the cost of the checkoff program. In previous years, a BCR measure was not estimated for the 

fluid milk processor program because the necessary price data were unavailable. For this year’s 

report, the necessary price data were obtained from a sampling of fluid milk processors and a 

BCR was calculated. To compute the BCR for the fluid milk processors’ program,7 the 

estimated demand equation was simulated for two scenarios for the period from 1998 through 

2008: (1) a baseline scenario in which the combined fluid milk marketing (advertising and 

non–advertising) expenditures were equal to actual marketing expenditures under the two 

programs, and (2) a no–Fluid Milk Program scenario, in which there was no fluid 

milk–processor–sponsored marketing, but dairy farmer fluid milk marketing expenditures were 

set at historical levels. A BCR for the fluid milk processor program can be computed on the 

basis of the difference in market conditions between these two scenarios.

To estimate the BCR, an estimate of the supply response by fluid milk processors and a margin 

equation from the processor to retail price levels are necessary.8

 Using quarterly data from 

1995 through 2008, a supply function for processors was estimated and the long–run own price 

elasticity of supply was computed to be 0.31 (i.e., a 1.0 percent increase in the processor price 

results in a 0.31 percent increase in quantity supplied of fluid milk products). For the margin 

equation, the retail price index was regressed on the wholesale processor price and a trend term. 

The three equations, retail demand equation, processor supply equation, and the margin equation, 

were used to simulate the processor market impacts of the Fluid Milk Program. 

Table 3–2 presents the average quarterly impacts and BCRs (from 1998 to 2008) for the fluid 

milk processor program. The Fluid Milk Program’s generic marketing had a positive impact on 

the price fluid milk processors received over this period under both assumed supply response 

cases. The average increase in price from 1998 to 2008 was 4.1 percent. In other words, had 

there not been any marketing by the Fluid Program, the average fluid milk processors’ price 

would have been 4.1 percent lower from 1998 to 2008 than it actually was. The increase in 

overall fluid milk consumption due to the Fluid Program was 5.2 percent. 

Fluid Milk Program marketing efforts had a positive impact on processor net returns over this 

period as well. The average increase in processor net returns from 1998 to 2008 was 

$746 million per year. In other words, had there not been any Fluid Milk Program marketing, 

average fluid milk processor net revenue would have been $746 million per year lower from 

1998 to 2008 than it actually was. 

 

6 “Net revenue” is defined as the aggregate gain in total fluid milk processor revenue from price and demand 

enhancements due to generic fluid milk advertising and non–advertising less the increase in supply costs for the 

additional milk marketed by fluid milk processors. 

7 A separate BCR is computed for the dairy farmers’ program in the next section.

8 All the results of the econometric estimation are provided in the following report: Kaiser, Harry M. “Measuring 

the Impacts of Generic Fluid Milk and Dairy Marketing.” Research Bulletin, Department of Applied Economics and 

Management, Cornell University, 2009, which is available from the following Web URL: 

http://aem.cornell.edu/research/rb.htm. 
40 

Table 3–2. Average Market Impacts of Fluid Processor Generic Marketing Program, 

1998–2008. 

Item

Change in processor price (percent) 4.1

Change in fluid milk consumption 5.2

Change in processor net returns ($ million per year) 746.0

Change in marketing costs ($ million per year) 110.2

Benefit–cost ratio 6.78

Lower bound of 90 percent confidence interval for BCR 2.18

How does the gain in processor net returns compare with the costs of the Fluid Milk Program? 

To answer the question, an average BCR was computed. A BCR greater than 1.0 implies that the 

total benefits of the Fluid Program exceed the costs. The average BCR from 1998 to 2008 was

6.78. This implies that, on average over the period 1998–2008, the benefits of Fluid Milk

marketing programs have been 6.78 times greater than the costs, i.e., every dollar invested in the 

Fluid Milk Program’s marketing yielded an additional $6.78 in industry net revenue. 

To make allowance for the error inherent in any statistical estimation, a 90 percent confidence 

interval was calculated for the average BCR, providing a lower bound for the average BCR. One 

can be 90 percent “confident” that the true average BCR lies within those bounds. The estimated 

lower bound for the average BCR was 2.18. Since this lower bound is above 1.0, it is reasonable 

to conclude that these confidence intervals give credence to the finding that the benefits of the 

Fluid Program’s marketing activities have been greater than the cost of the programs. 

Questions often arise with respect to the accuracy of these BCR estimates. BCRs for commodity 

promotion programs are generally found to be large because marketing expenditures in relation 

to product value are small and, as such, only a small demand effect is needed to generate large 

positive returns. For example, generic milk marketing expenditures by fluid milk processors is 

only a tiny percentage of the recent average annual value of processor milk sales. The marketing 

activities resulted in modest gains in the quantity of milk products and a positive effect on 

processor prices, resulting in large positive net revenue from the marketing investment. 

Analysis of All–Dairy Products Generic Marketing

The following is a brief graphical overview of changes in per capita domestic commercial 

disappearance of all dairy products and factors hypothesized to affect it from 1995 through 2008. 

Figures 3–11 and 3–12 display the per capita domestic commercial disappearance of all dairy 

products since 1995 on a solids nonfat and fat basis, respectively.9

 The trends in per capita 

consumption are completely different for the fat basis measure compared with the solids nonfat

based measure.

 

9 Derived estimates of domestic commercial disappearance on a milk equivalent fat and skim solids basis from data 

for production, imports, exports, and commercial stocks of dairy products. There is significant potential for error in 

these estimates due to reporting errors, product inclusion, domestic stock estimates, and general conversion factors. 
41 

Figure 3–11. Domestic Per Capita Commercial Disappearance of Fluid Milk and Dairy 

Products (milk solids nonfat basis).

520

525

530

535

540

545

550

555

560

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Pounds

Year

On a fat basis, per capita consumption has increased by 10.7 percent over this period, while on a 

solids nonfat basis, per capita consumption has actually decreased by 1.4 percent. A major 

reason for the difference in fat and nonfat domestic disappearance is the majority of dairy 

exports are nonfat products and exports have grown substantially in recent years. Hence, while 

domestic disappearance on a nonfat basis has been decreasing in recent years, this is really 

reflective of increases in nonfat dairy exports. 

Figure 3–12. Domestic Per Capita Commercial Disappearance of Fluid Milk and Dairy 

Products (fat equivalent basis).

520

540

560

580

600

620

640

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Pounds

Year
42 

An important factor influencing per capita commercial disappearance of all dairy products is the 

retail price of dairy products. Figure 3–13 displays the CPI for fluid milk and all dairy products 

relative to the CPI for all items. This figure indicates that there have been both ups and downs 

for retail dairy prices relative to all prices in the economy. However, the general trend has been 

upward and dairy product prices have increased by 12.1 percent since 1995. The fact that dairy 

products have become more expensive relative to everything else consumers buy has had a 

negative impact on dairy consumption.

A factor that had a positive impact on per capita commercial disappearance of all dairy products 

is the growth in real income over this period. All dairy products are considered to be “normal” 

goods, which means that consumption increases as consumers’ disposable incomes increase. 

Figure 3–6 illustrates the steady positive trend in real per capita income (in 2008 dollars) from 

1995 through 2008. Since 1995, real per capita income has increased by 22 percent. 

Another factor that may have contributed to increasing per capita domestic commercial 

disappearance of all dairy products over part of this time period is generic marketing efforts by 

fluid milk processors and dairy farmers. Figure 3–14 shows generic fluid milk and dairy product 

advertising real expenditures (in 2008 dollars) by dairy farmers and fluid milk processors. Real 

dairy farmer advertising expenditures have fallen from $261.4 million in 1995 to $72.5 million in 

2008, a 72.3 percent decrease. Since the Fluid Milk Program’s first full year of operation in 

1997, their expenditures on fluid milk advertising have also declined from $97 million (1997) to 

$60.1 million in 2008, or 38.1 percent. However, since 2002, spending by fluid milk processors 

has been relatively stable, averaging $61 million per year. Collectively, generic dairy advertising 

by both dairy farmers and fluid milk processors (in 2008 dollars) decreased by 63.1 percent. 

Figure 3–13. Retail Price of Dairy Products Relative to all Other Retail Prices

0.80

0.82

0.84

0.86

0.88

0.90

0.92

0.94

0.96

0.98

1.00

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Price ratio

Year
43 

Figure 3–14. Real Generic Dairy Advertising by Dairy Farmers and Fluid Milk Processors.

0

50

100

150

200

250

300

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Million $

Year

Processor advertising Farmer advertising

Figure 3–15 shows generic dairy non–advertising marketing activities (in 2008 dollars) by dairy 

farmers and fluid milk processors. The trend in these expenditures has been the opposite of 

Figure 3–15. Real Generic Non–Advertising Dairy Marketing Expenditures by Dairy Farmers 

and Fluid Milk Processors. 

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Million $

Year

Farmer nonadvertising marketing Processor nonadvertising marketing
44 

generic advertising. Dairy farmers have increased their annual expenditures of non–advertising 

dairy marketing from $73.2 million in 1995 to $149.4 million in 2008, an increase of 104.2 

percent. Fluid milk processors increased their expenditures in this category from $17 million in 

1997 to $37.8 million in 2008, a 121.9 percent increase. Collectively, generic fluid milk 

non–advertising marketing expenditures by both dairy farmers and fluid milk processors 

increased by 107.6 percent. 

Figure 3–16 shows combined generic dairy marketing (advertising and non–advertising) 

activities (in 2008 dollars) by dairy farmers and fluid milk processors. The trend here has been 

negative for both farmers and processors. Annual expenditures of combined fluid milk 

marketing by dairy farmers decreased from $334.5 million in 1995 to $221.9 million in 2008, a 

decrease of 33.7 percent. Some of this decline is due to inflation, which has eroded the 

purchasing power for marketing activities, but the primary reason for this decline has been a 

decision by DMI to reduce expenditures on traditional advertising and non–advertising activities. 

Annual combined generic marketing expenditures by fluid milk processors decreased from $114 

million in 1997 to $97.9 million in 2008, a 14.2 percent decrease due primarily to inflation. 

Collectively, generic fluid milk marketing expenditures by both dairy farmers and fluid milk 

processors decreased by 29.7 percent. 

Dairy Model Estimation 

To examine the overall impact of the fluid processor and dairy farmer programs on overall dairy 

demand, we estimated a combined fluid milk/dairy product demand model that included all 

generic dairy advertising activities as one demand determinant, and all non–advertising dairy 

marketing activities as another demand determinant. Expenditures for the following advertising 

activities were aggregated into one variable assumed to impact the all–dairy product demand 

model: television, radio, print, and outdoor media advertising for fluid milk and manufactured 

Figure 3–16. Real Generic Dairy Marketing by Dairy Farmers and Fluid Milk Processors. 

0

50

100

150

200

250

300

350

400

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Million $

Year

Farmer dairy marketing Processor dairy marketing
45 

dairy products by dairy farmers and fluid milk processors. Expenditures for the following 

non–advertising, marketing activities were aggregated into one variable: retail programs, school 

marketing, food service and manufacturing programs, integrated communications, public 

relations, sales promotions, nutrition education, retail programs, and sponsorships conducted by 

fluid milk processors and dairy farmers. In addition, the following variables were included as 

factors influencing per capita all–dairy products demand: the CPI for all–dairy products, per 

capita disposable income, and variables to capture seasonality in dairy product demand. Similar 

to the fluid milk demand model, the all–dairy products demand model was estimated on a per 

capita basis to control for the influence of population increases on demand. 

The model was estimated with national quarterly data for 1995 through 2008. To account for the 

impact of inflation, all prices and income variables were deflated by the CPI for all items. 

Generic fluid milk and cheese advertising expenditures were deflated by a weighted average 

media cost index (television, radio, print, and outdoor). Generic fluid milk and cheese 

non–advertising marketing expenditures were deflated by the CPI for all items. 

Table 3–3 provides elasticities for the all–dairy product demand models on a fat and nonfat 

solids basis.10 All variables were statistically significant. The results indicate that a 1.0 percent 

increase in the real price for dairy products would result in a 0.31 percent and 0.145 percent 

decrease in per capita all–dairy product demand on a nonfat and fat basis, respectively, holding 

all other variables constant. The average income elasticity for 1995 through 2008 was 0.128 

(nonfat basis) and 0.207 (fat basis); in other words, a 1.0 percent increase in real per capita 

income would result in a 0.128 percent (nonfat basis) and 0.207 percent (fat basis) increase in per 

capita demand for all–dairy products holding all other variables constant. 

The major interest here is the advertising and non–advertising marketing elasticities. The 

average advertising elasticity for this period on a nonfat and fat basis was 0.034 and 0.027, 

respectively; a 1.0 percent increase in media advertising expenditures would increase per capita 

all–dairy product demand by 0.034 percent (nonfat basis) and 0.027 percent (fat basis). The 

average non–advertising marketing elasticity for this period was 0.014 (nonfat basis) and 0.021 

(fat basis), respectively; a 1.0 percent increase in media advertising expenditures would increase 

per capita all–dairy product demand by 0.014 percent (nonfat basis) and 0.021 percent (fat basis). 

Unlike for fluid milk demand, the advertising and non–advertising elasticities were not 

statistically different from each other.

Dairy Farmer Benefit–Cost Analysis 

It should be pointed out that DMI has made a significant shift in its marketing programs in the 

past 2 years. Previously, the bulk of DMI’s marketing expenditures were allocated to media 

advertising and to non–advertising marketing activities. In 2008, these traditional marketing 

activities accounted for only $31.25 million of DMI’s marketing budget. The same is not true 

for the Qualified Programs, which continue to spend the majority of their marketing budgets on 

advertising and shorter term, non–advertising marketing activities. The remaining marketing 

 

10 The two models are for milk equivalent, calculated on a fat solids basis and nonfat solids basis. Not to be 

confused with models for nonfat solids and fat solids.
46 

Table 3–3. Average Elasticity Values (1995–2008) for Factors Affecting Per Capita All–Dairy 

Products Demand.

Nonfat solids basis Fat basis

Demand Factor Elasticity Elasticity

CPI for all–dairy products 

Per capita income

Generic dairy advertising

Generic dairy non–advertising marketing

-0.307* 

 0.128** 

 0.034** 

 0.014* 

-0.145** 

 0.207* 

 0.027* 

 0.021* 

* Statistically significant at the 1.0 percent level or better. 

**Statistically significant at the 10 percent level.

budget was spent on their new business plan of strategic business development with dairy 

processors and manufacturers, which is not included in the analysis that follows. 

DMI has stated that they do not expect any short–term benefits of these programs for 2008, but 

rather expect to see these benefits to accrue in the longer term. Hence, the BCRs that follow 

only include the advertising and shorter term, non–advertising marketing activities by dairy 

farmers.

We calculated BCRs on both a milk fat and nonfat solids basis by simulating two scenarios: (1) 

a baseline scenario in which combined marketing (advertising and non–advertising marketing) 

levels were equal to actual marketing expenditures under the two programs, and (2) a no–

national–Dairy–Program scenario in which there was fluid milk–processor–sponsored marketing, 

but dairy–farmer–sponsored marketing was reduced to 42 percent of actual levels to reflect the 

difference in assessment before and after the national program was enacted. A comparison of 

these two scenarios provided a measure of the impact of the Dairy Program. The benefits of the 

Dairy Program were calculated as the change in dairy farmer producer surplus (i.e., net revenue) 

due to demand enhancement from all marketing activities under the Dairy Program (i.e., the 

difference in producer surplus between scenarios 1 and 2). The demand enhancement reflects 

increases in quantity and price as a result of the dairy farmers’ marketing program. The costs of 

the Dairy Program were calculated as the difference in total assessment revenue before and after 

the national program was enacted (after netting out the expenditures on DMI’s new business 

plan, which was not included in this analysis). These scenarios were run for the time period 

1998 through 2008 for the two milk–equivalent models: milk fat and nonfat. 

As was the case for the Fluid Program, an own price elasticity of farm supply was necessary to 

compute the BCR and consequently a farm milk supply equation was estimated. Using quarterly 

data from 1995 through 2008, a supply function for dairy farmers was estimated and the 

long–run own price elasticity of supply was computed to be 1.3, i.e., a 1.0 percent increase in the 

producer price results in a 1.3 percent increase in quantity supplied of farm milk. This estimate 

was used as the base case for computing the BCR. 

 
47 

Table 3–4 presents the average quarterly impacts and BCR (from 1998 to 2008) for the dairy

farmer program. The average all milk price from 1998 through 2008 was $14.78 per 

hundredweight. In the counter–factual no–mandated–Dairy–Program scenario for the 

nonfat solids model, the average all milk price was $14.57 per hundredweight, which is 21 cents 

lower. Thus, had there been no mandated Dairy Program over this period, the price farmers 

receive for their milk would have been 1.4 percent lower than it actually was. The total quantity 

of milk demand was estimated to be 2.1 percent higher, on a nonfat solids basis as a result of the 

Dairy Program. In the counter–factual no–mandated–Dairy–Program scenario for the milk fat

model, the average all milk price was $14.52 per hundredweight, which is 26 cents lower. Thus, 

had there been no mandated Dairy Program over this period, the price farmers receive for their 

milk would have been 1.7 percent lower than it actually was. The total quantity of milk demand 

was estimated to be 2.3 percent higher, on a fat basis as a result of the Dairy Program.

The results show that the average BCR for the Dairy Program was 5.49 (nonfat solids basis) and 

7.07 (milk fat basis) from 1998 through 2008. This means that each dollar invested in generic 

dairy marketing by dairy farmers during the period would return between $5.49 and $7.07, on 

average, in net revenue to farmers. The level of the BCR suggests that dairy farmer expenditures 

on advertising and non–advertising promotions have been a successful investment. To see how 

the BCR has varied over time, the models were simulated for an earlier time period (1997–99) 

and the latest time period (2006–08). The results indicate that the estimated BCR for the earlier 

and later time periods were almost identical.

In another interpretation of the BCR, the increase in real (2008 dollars) generic dairy marketing 

expenditures resulting from the Dairy Program costs dairy producers an additional $157.3 

million per year on average from 1998 through 2008. The additional generic dairy marketing 

resulted in higher demand, prices, and net revenue for dairy producers nationwide. Based on the 

simulations conducted, we estimate that the average annual increase in producer surplus 

(reflecting changes in both revenues and costs) due to the additional generic marketing under the 

Dairy Program was $863.6 million on a nonfat basis and $1.112 billion on a fat basis. Dividing 

$863.6 (or $1,112) million by the additional Dairy Program cost of $157.3 million results in the 

estimated benefit–cost ratios of 5.49 (nonfat basis) and 7.07 (fat basis).

To make allowance for the error inherent in any statistical estimation, a 90 percent confidence 

interval was calculated for the average BCR, providing a lower for the average BCR. One can be 

90 percent “confident” that the true average BCR lies within those bounds. The estimated lower 

Table 3–4. Average Market Impacts of Dairy Farmer Generic Marketing Program, 1998–2008. 

Item Nonfat basis Fat basis

Change in all milk price (percent) 1.4 percent 1.7 percent

Change in producer surplus ($ million per year) 863.6 1,112

Change in marketing costs ($ million per year) 157.3 157.3

Benefit–cost ratio 5.49 7.07

Lower bound of 90 percent confidence interval for BCR 1.42 2.81
48 

bound for the average BCR in the nonfat and fat model is 1.42 and 2.81, respectively. Since both 

lower bounds are above 1.0, it is reasonable to conclude that these confidence intervals give 

credence to the finding that the benefits of the Dairy Program’s marketing activities have been 

greater than the cost of the programs. 

The change in generic dairy marketing expenditures noted previously is a mere 0.64 percent of 

the recent average annual value of farm milk marketings from 1998 through 2008 ($24.56 

billion). The marketing activities resulted in modest gains in the quantity of dairy products and a 

positive effect on milk prices, resulting in large positive net revenue from the marketing 

investment. 

 
49 

Table 3–5. Description of Variables Used in Econometric Models.a

Variable Description Units Meanb

Consumption Variables

RFDPC Annual retail fluid demand per capita lbs 192.8

(8.90)

RDDPCNF Annual retail all–dairy product demand per capita on a non–fat 

basis

lbs 543.7

(6.6)

RDDPCF Annual retail all–dairy product demand per capita on a fat basis lbs 587.9

(20.53)

Price Indices

RFPCPI Consumer retail price index for fresh milk and cream deflated by 

consumer price index for nonalcoholic beverages (1982–84=1)

# 1.19

(0.11)

RDPCPI Consumer retail price index for all–dairy products deflated by 

consumer retail price index for all items (1982–84=1)

# 0.93

(0.03)

RBEVCPI Consumer retail price index for non–alcoholic beverages 

(1982–84=1)

# 140.2

(8.72)

Demographic and Income Variables

INCPC Annual per capita disposable income, deflated by the consumer 

retail price index for all items (2007=1)

$ 32,110

(2,150)

AGE5 Percent of the population under age 6 % 8.32

(0.25)

FAFH% Food away from home expenditures as percent of total food 

expenditures

% 50.6

(2.18)

Marketing Expenditures

GFMA Annual generic fluid milk advertising expenditures by dairy 

farmers deflated by media cost index (2008 $)

$mil 64.6

(50.4)

GFMN Annual generic fluid milk non–advertising marketing 

expenditures by dairy farmers deflated by consumer price index 

(2008 $)

$mil 47.9

(18.8)

GFDA Annual generic milk and dairy advertising expenditures by dairy 

farmers, deflated by media cost index (2008 $)

$mil 158.7

(69.3)

GFDN Annual generic milk and dairy non–advertising marketing 

expenditures by dairy farmers, deflated by media cost index 

(2008 $)

$mil 112.4

(27.9)

GPMA Annual generic fluid milk advertising expenditures by fluid milk 

processors, deflated by media cost index (2008 $)

$mil 66.6

(25.9)

GPMN Annual generic fluid milk non–advertising marketing 

expenditures by fluid milk processors, deflated by consumer price 

index (2008 $)

$mil 21.0

(9.7)

CBA Annual soy beverage + bottled water advertising expenditures 

deflated by media cost index (2008 $)

$mil 525.5

(58.0)

a Quarterly dummy variables are also included in the model to account for seasonality in demand.

b Computed over the period 1995–2008. Standard deviation in parentheses.
1

Appendix A–1 

National Dairy Promotion and Research Board

Current Member Listing

Region 1 (Oregon and Washington) 

Elizabeth I. Anderson

Onalaska, Washington

Term expired 10/31/2009 

Region 2 (California)

James L. Ahlem 

Hilmar, California 

Term expires 10/31/2010 

Kimberly K. Clauss 

Hilmar, California 

Term expired 10/31/2009 

Ronald L. Koetsier 

Visalia, California 

Term expires 10/31/2011 

Brad J. Scott 

Moreno Valley, California 

Term expires 10/31/2010 

 Mary E. Cameron

Hanford, California 

Term expired 10/31/2009 

John B. Fiscalini 

Modesto, California 

Term expires 10/31/2010 

Stephen D. Maddox 

Riverdale, California 

Term expires 10/31/2010 

Pauline Tjaarda 

Shafter, California

Term expires 10/31/2010 

 

 

 

 

 

 

 

 

 

 

 

Region 3 (Arizona, Colorado, Idaho, Montana, Nevada, Utah, and Wyoming) 

Grant B. Kohler 

Midway, Utah 

Term expires 10/31/2010 

William C. Stouder 

Wendell, Idaho 

Term expired 10/31/2009 

 Ronald E. Shelton 

Greeley, Colorado 

Term expires 10/31/2011 

Harold A. Wick 

Austin, Colorado 

Term expires 10/31/2011 

 

 

 

 

 

Region 4 (Arkansas, Kansas, New Mexico, Oklahoma, and Texas) 

William R. Anglin 

Bentonville, Arkansas 

Term expires 10/31/2011 

Lawrence A. Hancock 

Muleshoe, Texas 

Term expired 10/31/2009 

 Jose L. Gonzalez

Mesquite, New Mexico

Term expires 10/31/2010

Byron A. Lehman 

Newton, Kansas 

Term expires 10/31/2011 

 

 

 

 

 
Appendix A–1, continued

Region 5 (Minnesota, North Dakota, and South Dakota) 

Paul L. Kent 

Mora, Minnesota 

Term expired 10/31/2009 

 

 

 

Kenton W. Holle

Mandan, North Dakota 

Term expires 10/31/2011 

Region 6 (Wisconsin) 

William J. Herr 

Greenwood, Wisconsin

Term expires 10/31/2010 

Sharon K. Laubscher 

Wonewoc, Wisconsin 

Term expires 10/31/2011 

Carl F. Van Den Avond 

Green Bay, Wisconsin

Term expires 10/31/2011 

 

 

 

 

 

 

Peter J. Kappelman

Manitowoc, Wisconsin

Term expires 10/31/2009 

Randy G. Roecker 

Loganville, Wisconsin

Term expired 10/31/2009 

Region 7 (Illionis, Iowa, Missouri, and Nebraska) 

Larry G. Purdom 

Purdy, Missouri 

Term expired 10/31/2009 

 

 

 

Douglas D. Nuttleman 

Stromsburg, Nebraska 

Term expires 10/31/2011 

Region 8 (Alabama, Kentucky, Louisiana, Mississippi, and Tennessee) 

Larry B. Jaggers

Glendale, Kentucky 

Term expires 10/31/2011 

Region 9 (Indiana, Michigan, Ohio, and West Virginia) 

Paul L. Broering 

St. Henry, Ohio 

Term expires 10/31/10 

Carl A. Schmitz

Wadesville, Indiana

Term expires 10/31/2011 

 

 

 

Donald E. Grutner 

Fremont, Indiana 

Term expired 10/31/2009 

Region 10 (Florida, Georgia, North Carolina, South Carolina, and Virginia) 

John M. Larson 

Okeechobee, Florida 

Term expires 10/31/2010 

2
Appendix A–1, continued

Region 11 (Delaware, Maryland, New Jersey, and Pennsylvania) 

Rita P. Kennedy 

Butler, Pennsylvania 

Term expired 10/31/2009 

 

 

 

Paula A. Meabon 

Wattsburg, Pennsylvania

Term expires 10/31/2010 

Region 12 (New York) 

Corinne M. Banker 

Morrisville, New York

Term expires 10/31/2010 

 

 

 

Sandford Stauffer 

Nicholville, New York

Term expired 10/31/2009 

Region 13 (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and

Vermont)

Ellen H. Paradee

Grand Isle, Vermont

Term expires 10/31/2011 

3
Appendix A-2 

National Fluid Milk Processor Promotion Board

Current Member Listing

Region 1 (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and 

Vermont)

Michael F. Touhey, Jr. 

Dean Foods Company 

Franklin, Massachusetts

Term expires 06/30/2010 

Region 2 (New Jersey and New York)

James F. Walsh

H.P. Hood, L.L.C. 

Lynnefield, Massachusetts

Term expires 06/30/2011 

Region 3 (Delaware, District of Columbia, Maryland, Pennsylvania, and Virginia) 

Jay S. Bryant 

Maryland and Virginia Milk Producer’s Cooperative Association, Inc. 

Reston, Virginia

Term expires 06/30/2012 

Region 4 (Georgia, North Carolina, and South Carolina) 

Charles L. Gaither, Jr.

Milkco, Inc.

Asheville, North Carolina

Term expires 06/30/2010 

Region 5 (Florida) 

Michael R. Smith

Publix Super Markets, Inc. 

Lakeland, Florida 

Term expires 06/30/2011 

Region 6 (Ohio and West Virginia)

Charles S. Mayfield, Jr.

Mayfield Dairy (a subsidiary of Dean Foods Company) 

Athens, Tennessee

Term expires 06/30/2012 

4
Appendix A-2, continued

Region 7 (Michigan, Minnesota, North Dakota, South Dakota, and Wisconsin) 

James B. Green

Kemps, L.L.C. (a subsidiary of H.P. Hood, L.L.C.) 

St. Paul, Minnesota 

Term expires 06/30/2010 

Region 8 (Illinois and Indiana)

Brian Haugh 

National Dairy Holdings (a subsidiary of Grupo Lala) 

Dallas, Texas

Term expires 06/30/2011 

Region 9 (Alabama, Kentucky, Louisiana, Mississippi, and Tennessee)

Edward L. Mullins 

Prairie Farms Dairy, Inc.

Carlinville, Illinois

Term expires 06/30/2012 

Region 10 (Texas) 

Robert B. McCullough 

H.E. Butt Grocery Company 

San Antonio, Texas 

Term expires 06/30/2010 

Region 11 (Arkansas, Iowa, Kansas, Missouri, Nebraska, and Oklahoma) 

Steven M. Turner 

Turner Dairy L.L.C. (a subsidiary of Prairie Farms Dairy, Inc.) 

Covington, Tennessee

Term Expires 06/30/2011 

Region 12 (Arizona, Colorado, Nevada, New Mexico, and Utah) 

John R. Zuroweste 

Dean Foods Company 

Dallas, Texas

Term expires 06/30/2012 

Region 13 (Idaho, Montana, Oregon, Washington, and Wyoming) 

Jerry N. Tidwell

Safeway, Inc.

Pleasanton, California

Term expires 06/30/2010 

5
Appendix A-2, continued

Region 14 (Northern California)

Jay B. Simon 

Super Store Industries

Stockton, California 

Term expires 06/30/2011 

Region 15 (Southern California) 

Timothy Kelbel 

The Kroger Company, Western Division 

Cincinnati, Ohio

Term expires 06/30/2012 

Members-At-Large (Processors)

Miriam E. Brown 

Anderson Erikson Dairy 

Des Moines, Iowa

Term expires 06/30/2012 

Michael A. Krueger

Shamrock Foods Company 

Phoenix, Arizona 

Term expires 06/30/2011 

Randy D. Mooney 

Hiland Dairy Foods Company, L.L.C. 

Springfield, Missouri

Term expires 06/30/2010 

Teresa E. Webb

Farmland Dairies, L.L.C. 

Wallington, New Jersey

Term expires 06/30/2010 

Members-At-Large (Public)

Mary A. Hill

Jackson, Mississippi

Term expires 06/30/2012 

6
1

Appendix B–1 

National Dairy Promotion and Research Board

Actual Income and Expenses

(Thousands)

2008 

Income

Assessments $94,484 

Interest 1,036 

Total Income $95,520 

 

General Expenditures

General and Administrative $3,288 

USDA Oversight 819 

Total General Expenditures $4,107 

Program Expenditures

Domestic Marketing and Export Enhancement $105,922 

Amortization of NAEMS1 Study 2,000

 Total Program Expenditures $107,922

Excess of Revenue (Under) Over Expenditures ($16,509) 

Fund Balance, Beginning of Year $55,135 

Fund Balance, End of Year $38,626 

1

National Air Emissions Monitoring Study.

Source: Independent Auditor’s Report of the National Dairy Board and USDA records. 
Appendix B–2 

USDA Oversight Costs for the

National Dairy Promotion and Research Board

(Thousands)

2007 2008 

USDA Oversight Costs

Salaries and Benefits $370,581 $461,036 

Travel 62,733 84,094 

Miscellaneous1 66,920 76,016 

Equipment 5,016 2,509 

Printing 6,604 9,559

USDA Oversight Total $511,854 $633,214 

Independent Evaluation $122,062 $108,523 

Total2 $633,916 $741,737 

1

Includes overhead, transportation, rent, communications, utilities, postage, contracts, supplies, photocopying, and 

 Office of General Counsel costs. 2

The totals for USDA expenses differ slightly from those shown in Appendix B–1 because of end-of-year estimates

 which are adjusted in the following year and correspond to the Federal fiscal year, which runs from 

October 1 through September 30.

Source: USDA Accounting Reports. 

2
Appendix B–3 

National Dairy Promotion and Research Board

2009 Approved Budget

(Thousands)

 2009 

Revenues

Assessments $100,600 

Program Development Fund Draw 14,440 

Interest 600

Total Income $115,640 

Expenses

General and Administrative $4,000 

USDA Oversight 900

Subtotal $4,900 

Program Budget 

Milk $9,168 

Cheese 11,310 

Ingredients 4,400 

Export Enhancement 12,024 

Children’s Fitness and Nutrition Initiative 16,465 

Product Research 6,000 

Nutrition Research 7,924 

Nutrition Affairs 9,934 

Industry Image and Relations 9,515 

Foodservice 759 

Retail 2,273 

Strategy and Insights 15,014 

Other1 5,300

Subtotal $110,086* 

Total Budget Expenditures $114,986 

1

Other includes fixed commitments, butter promotion, value–added milk, and value–added cheese. 

*UDIA Expense share of total is $26,897.

Source: Budgets received and approved by USDA from the National Dairy Board.

3
Appendix B–4 

National Fluid Milk Processor Promotion Board

Actual Income and Expenses

(Thousands)

2007 2008 

Income

Assessments $107,736 $107,207 

Late-Payment Charges 102 106 

Interest 899 381 

Other 71 6

Total Income $108,808 $107,700 

General Expenditures

California Refund $10,257 $10,353 

Administrative 2,875 2,805 

USDA Oversight 425 412 

USDA Assessment Verification 89 74

Total General Expenditures $13,646 $13,644 

Program Expenditures

Media $72,122 $66,953 

Public Relations 12,662 15,260 

Promotions 12,468 11,091 

Strategic Thinking 1,157 1,170 

Medical Advisory Panel 268 226 

Medical Research 100 64 

Research, Local Markets, and Program Measurement 2,228 2,132 

Program Management 120 -

Total Program Expenditures $101,125 $96,896 

Excess of Revenue (Under) Over Expenditures ($5,963) ($2,840) 

Fund Balance, Beginning of Year $28,268 $22,304 

Fund Balance, End of Year $22,304 $19,356 

Source: Independent Auditor’s Report of the Fluid Milk Board and USDA Records. 

4
Appendix B–5 

USDA Oversight Costs for the

National Fluid Milk Processor Promotion Board

(Thousands)

2007 2008 

USDA Oversight Costs

Salaries and Benefits $309,978 $331,759 

Travel 18,506 17,786 

Miscellaneous1 54,813 47,756 

Equipment 3,164 2,721 

Printing 2,306 9,013

USDA Oversight Total $388,767 $409,035 

Independent Evaluation $16,995 $36,174 

Total2 $405,762 $445,209 

1 Includes overhead, transportation, rent, communications, utilities, postage, contracts, supplies, photocopying, and 

 Office of General Counsel costs. 2 The totals for USDA expenses differ slightly from those shown in Appendix B–4 because of end-of-year estimates

 which are adjusted in the following year.

Source: USDA Accounting Reports.

5
Appendix B–6 

National Fluid Milk Processor Promotion Board

Approved Budgets

(Thousands)

2009

Revenues

Assessments $107,000 

Interest 340

Total Income $107,340 

Carryover from Previous Fiscal Year $4,025

Total Available Funds $111,365

Expenses

General and Administrative $2,855 

USDA Oversight 570 

California Refund 10,210

Subtotal $13,635 

Program Budget

Advertising, Promotions, Public Relations $89,841 

Medical Advisory Panel/ Medical Research 350 

Research 2,778 

Business Development 4,048 

Program Measurement 209

Subtotal $97,226 

Total Budget Expenditures $110,861

1

Independent Evaluation costs are included in Program Measurement Expenses.

2

Processor Compliance is included in General and Administrative Expenses.

Source: Budgets from the National Fluid Milk Board received and approved by USDA. 

6
Appendix B–7 

Aggregate Income and Expenditure Data Reported to USDA

by the Qualified Programs

(Thousands)

 2007 2008 

Income

Carryover from Previous Years $60,6721 $63,9901 

Producer Remittances 189,043 189,629 

Transfers from Other Qualified Programs2 51,676 58,369 

Transfers to Other Qualified Programs -51,501 -55,337 

Other Income 9,037 9,062 

Total Adjusted Annual Income $258,927 $265,713 

Expenditures

General and Administrative $8,435 $8,267 

Advertising and Sales Promotion 74,982 69,288 

Unified Marketing Plan4 67,249 66,179 

Dairy Foods and Nutrition Research 5,717 5,926 

Public and Industry Communications 14,556 11,998 

Nutrition Education 15,831 17,033 

Market and Economic Research 1,394 1,232 

Other5 2,126 2,964

Total Annual Expenditures $190,290 $182,887 

Total Available for Future Year Programs $68,637 $82,826 

 

1 Differences are due to audit adjustments and varying accounting periods.

2 Payments transferred between Qualified Programs differ due to different accounting methods and accounting 

 periods. 3 Includes interest, income from processors and handlers, sales of supplies and materials, contributions, and rental

 income. 4 Unified Marketing Plan: Reported local spending by United Dairy Industry Association units participating in the

 Dairy Management Inc. unified marketing plan to fund national implementation programs. 5 Includes capital expenses.

Source: Data reported by the Qualified Programs. 

7
Appendix B–8 

Aggregate Advertising Expenditure Data Reported to USDA

by the Qualified Programs

(Thousands)

 2007 2008 

Advertising Programs

Fluid Milk $13,763 [18.5%] $9,540 [13.8%] 

Cheese 48,008 [64.6%] 46,781 [67.5%] 

Butter 2,786 [3.8%] 2,860 [4.2%] 

Frozen Dairy Products 259 [0.3%] 442 {0.6%] 

Other1 9,554 [12.8%] 9,665 [13.9%] 

Total $74,370 [100%] $69,288 [100%]

1 Includes “Real Seal,” holiday, multi-product, calcium, evaporated milk, foodservice, product donation at State

 fairs, and other events and contributions for displays or promotional events.

Source: Data reported by the Qualified Programs. 

8
FINANCIAL STATEMENTS 

National Dairy Promotion and Research Board 


Years Ended December 31, 2008 and 2007 


With Report of Independent Auditors 


0901-1020411 

National Dairy Promotion and Research Board 

Financial Statements 


Years Ended December 31, 2008 and 2007 


Contents 

Report ofIndependent Auditors .......................................................................................................

.................................................................................................................................

...................................................................................................................

................................................................................................................

..........................................................................................................

1 


Financial Statements 

Balance Sheets 2 


Statements ofActivities 3 


Statements of Cash Flows 4 


Notes to Financial Statements 5 


0901-1020411 
 

Ernst & Young LLP 

233 South Wacker Drive 

Chicago, IL 60606-6301 

Tel: +1 312 879 2000 

Fax: +1 312 879 4000 

www.ey.com 

Report of Independent Auditors 

The Board of Directors 

National Dairy Promotion and Research Board 

We have audited the accompanying balance sheets of National Dairy Promotion and Research 

Board (NDB) as of December 31, 2008 and 2007, and the related statements of activities and 

cash flows for the years then ended. These financial statements are the responsibility of NDB’s 

management. Our responsibility is to express an opinion on these financial statements based on 

our audits. 

We conducted our audits in accordance with auditing standards generally accepted in the United 

States. Those standards require that we plan and perform the audit to obtain reasonable assurance 

about whether the financial statements are free of material misstatement. We were not engaged 

to perform an audit of NDB’s internal control over financial reporting. Our audits included 

consideration of internal control over financial reporting as a basis for designing audit procedures 

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the 

effectiveness of NDB’s internal control over financial reporting. Accordingly, we express no 

such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts 

and disclosures in the financial statements, assessing the accounting principles used and 

significant estimates made by management, and evaluating the overall financial statement 

presentation. We believe that our audits provide a reasonable basis for our opinion. 

In our opinion, the financial statements referred to above present fairly, in all material respects, 

the financial position of National Dairy Promotion and Research Board as of December 31, 2008 

and 2007, and the changes in its net assets and its cash flows for the years then ended, in 

conformity with U.S. generally accepted accounting principles. 

Signed by Ernst & Young LLP 

May 8, 2009 

0901-1020411 1 
National Dairy Promotion and Research Board 


Balance Sheets 


December 31 

2008 2007 

Assets 

Cash and cash equivalents $ 40,847,072 $ 56,273,012 

Assessments receivable, net of allowance for doubtful 

accounts of $200,000 in 2008 and $300,000 in 2007 10,684,514 7,986,431 

Accrued interest receivable 8,024 104,824 

Investment in NAEMS study, net of accumulated 

amortization of $4,166,667 in 2008 and 

$2,166,667 in 2007 1,833,333 3,833,333 

Fixed assets, net of accumulated depreciation of 

$179,365 in 2008 and $165,524 in 2007 28,838 40,517 

Total assets $ 53,401,781 $ 68,238,117 

Liabilities and net assets 

Liabilities: 

Due to related party - DMI $ 14,349,713 $ 12,772,234 

Accounts payable 60,185 134,281 

Accrued expenses and other liabilities 365,546 196,647 

Total liabilities 14,775,444 13,103,162 

Umestricted net assets: 

Designated 27,017,837 23,599,798 

Undesignated 11,608,500 31,535,157 

Net assets - umestricted 38,626,337 55,134,955 

Total liabilities and net assets $ 53,401,781 $ 68,238,117 

See accompanying notes. 

0901-1020411 2 
National Dairy Promotion and Research Board 

Statements ofActivities 

Year Ended December 31 

2008 2007 

Revenues 

Assessments $ 94,484,051 $ 91,951,512 

Interest income 12°36,239 1,719,927 

Total revenues 95,520,290 93,671,439 

Expenses 

Programs: 

Domestic and export marketing 105,921,955 70,132,365 

United States Department ofAgriculture 818,639 712,299 

Amortization ofNAEMS study 2,0°°2°°0 2,000,000 

Total programs 108,740,594 72,844,664 

General and administrative: 

DMI general and administrative 2,738,782 3,157,229 

General and administrative 5492532 500,920 

Total general and administrative 3,2882314 3,658,149 

Total expenses 1122°28,908 76,502,813 

(Decrease) increase in net assets (16,508,618) 17,168,626 

Net assets at beginning ofyear 55,1342955 37,966,329 

Net assets at end ofyear $ 38,626,337 $ 55,134,955 

See accompanying notes. 

0901-1020411 3 
National Dairy Promotion and Research Board 

Statements ofCash Flows 

Year Ended December 31 

2008 2007 

Operating activities 

Change in net assets $ (16,508,618) $ 17,168,626 

Adjustments to reconcile change in net assets to 

net cash (used in) provided by operating activities: 


Amortization ofNAEMS study 
 2,000,000 2,000,000 

Depreciation 
 13,841 3,635 

Changes in assets and liabilities: 


Assessments receivable 
 (2,698,083) 567,499 

Accrued interest receivable 
 96,800 (57,424) 

Due to related party - DMI 
 1,577,479 11,081,627 

Accounts payable 
 (74,096) (115,951) 

Accrued expenses and other liabilities 
 168,899 59,430 

Net cash (used in) provided by operating activities (15,423,778) 30,707,442 

Investing activities 

Purchases of fixed assets (2,162) (12,000) 

Net (decrease) increase in cash and cash equivalents (15,425,940) 30,695,442 

Cash and cash equivalents at beginning ofyear 56,273,012 25,577,570 

Cash and cash equivalents at end ofyear $ 4028472072 $ 5622732012 

See accompanying notes. 

0901-1020411 4 
National Dairy Promotion and Research Board 

Notes to Financial Statements 


December 31,2008 and 2007 


1. Organization 

The National Dairy Promotion and Research Board (NDB) was established on May 1, 1984, 

pursuant to The Dairy and Tobacco Adjustment Act of 1983 (Public Law 98-180), as part of a 

comprehensive strategy to reduce milk surplus supplies in the United States (U.S.) and increase 

human consumption of U.S.-produced fluid milk and other dairy products. The purpose ofNDB 

is to establish a coordinated program of promotion and research designed to strengthen the U.S. 

dairy industry's position in the marketplace and to maintain and expand domestic and 

international markets' usage ofU.S.-produced fluid milk and other dairy products. 

The United States Department of Agriculture (USDA) approved a joint venture between NDB 

and the United Dairy Industry Association (UDIA) to form Dairy Management Inc. (DMI) 

effective January 1, 1995. The purpose of DMI, a related organization, is to promote greater 

coordination, efficiency, and effectiveness and avoid incompatibility and duplication in the 

marketing programs and projects undertaken by NDB and UDIA. NDB and UDIA will jointly 

plan, develop, and implement their various marketing programs and activities through DMI, 

subject to the approval ofthe USDA. 

NDB funds DMI on a cost-reimbursement basis. Core costs, which include staff salaries and 

benefits, travel, Board of Directors, and office operating expenses, are primarily funded by NDB, 

with UDIA funding one-half of Board of Directors and executive office costs. Marketing 

program costs, which include expenses associated with implementing the marketing programs of 

NDB and UDIA, are funded by NDB and UDIA based on the annual Unified Marketing Plan 

budget. NDB has funded DMI core costs of $26,852,351 and $20,023,639 and program costs of 

$81,808,386 and $53,265,955 for activity related to the years ended December 31, 2008 and 

2007, respectively. 

The U.S. Dairy Export Council (USDEC) is a related organization that was founded by the 

boards of both NDB and UDIA and began operations effective January 1, 1996. The purpose of 

USDEC is to improve the marketing conditions for the U.S. dairy industry with respect to the 

export ofU.S. dairy products by promoting the acceptability, consumption, and purchase of U.S. 

dairy products in international markets. For the years ended December 31, 2008 and 2007, NDB 

reimbursed DMI $7,921,080 and $5,723,896, respectively, for USDEC's operations. This is 

included in the $81,808,386 and $53,265,955 program cost funding for activity related to the 

years ended December 31, 2008 and 2007, respectively. 

NDB reimburses the USDA for the cost of administrative oversight and compliance audit 

activities. Expenses incurred under this arrangement amounted to $818,639 and $712,299 for the 

years ended December 31,2008 and 2007, respectively. 

0901-1020411 5 
National Dairy Promotion and Research Board 

Notes to Financial Statements (continued) 

2. Summary of Significant Accounting Policies 

Basis of Presentation 

The financial statements are prepared on the accrual basis of accounting in conformity with 

generally accepted accounting principles (GAAP) in the United States. These principles require 

management to make estimates and judgments that affect the reported amounts of assets and 

liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of 

revenues and expenses in the reporting period. Actual results could differ from those estimates. 

Net assets, revenues, and investment income or loss are classified based on the existence or 

absence of donor-imposed restrictions in accordance with the Financial Accounting Standards 

Board (FASB) in its Statement of Financial Accounting Standards (SF AS) No. 117, Financial 

Statements ofNot-for-Profit Organizations, as follows: 

• 	 Permanently restricted net assets are assets subject to donor-imposed restrictions 

requiring the asset be retained permanently and invested. Restrictions permit the use of 

some or all ofthe income earned on the invested assets for specific purposes. 

• 	 Temporarily restricted net assets are assets with donor restrictions that expire with the 

passage of time, the occurrence of an event, or the fulfillment of certain conditions. 

Earnings related to temporarily restricted net assets are recorded as temporarily restricted 

net assets until amounts are expensed in accordance with the donor's specified purposes. 

When donor restrictions are met, temporarily restricted net assets are reclassified as 

unrestricted net assets and reported in the statements of activities. 

• 	 Umestricted net assets are not subject to donor-imposed stipulations. Board-designated 

net assets are unrestricted net assets designated by the Board to be used for several 

specific purposes. The Board retains control over these net assets and may, at its 

discretion, subsequently use the net assets for other purposes. 

All net assets ofthe NDB at December 31, 2008 and 2007, are unrestricted. 

0901-1020411 6 
National Dairy Promotion and Research Board 

Notes to Financial Statements (continued) 

2. Summary of Significant Accounting Policies (continued) 

Cash Equivalents 

Cash equivalents include all liquid investments with a maturity ofthree months or less at the date 

of acquisition. 

Financial Instruments 

Financial instruments of NDB consist of U.S. federal agency securities. The fair value of 

financial instruments approximates their carrying value in the financial statements. 

fu 2008, NDB adopted FASB Statement No. 157, Fair Value Measurements (SFAS No. 157), 

which defines fair value as the price that would be received to sell an asset or paid to transfer a 

liability in an orderly transaction between market participants at the measurement date and 

established a framework for measuring fair value. SFAS No. 157 establishes a three-level 

hierarchy for fair value measurements based upon the transparency of inputs to the valuation of 

an asset or liability, as of the measurement date. The three levels are defined as follows: 

., 	 Levell - fuputs to the valuation methodology are quoted prices (unadjusted) for identical 

assets or liabilities in active markets. 

• 	 Level 2 - fuputs to the valuation methodology include quoted prices for similar assets or 

liabilities in active markets and inputs that are observable for the asset or liability, either 

directly or indirectly, for substantially the full term ofthe financial instruments. 

• 	 Level 3 - fuputs to the valuation methodology are unobservable and significant to the fair 

value measurement. 

A financial instrument's categorization within the valuation hierarchy is based upon the lowest 

level ofinput that is significant to the fair value measurement. Pricing for NDB's investments are 

based on the open market and is valued on a daily basis. 

NDB has classified its $39,634,108 of investments included in cash and cash equivalents as of 

December 31,2008, as Levell. 

0901-1020411 7 
National Dairy Promotion and Research Board 

Notes to Financial Statements (continued) 

2. Summary of Significant Accounting Policies (continued) 

Assessments 

Assessment revenue is generated by a mandatory assessment of $0.15 per hundredweight on all 

milk produced and marketed in the contiguous United States. Milk producers can direct up to 

$0.10 per hundredweight to USDA-qualified state and regional generic dairy promotion 

organizations. For the years ended December 31, 2008 and 2007, the net NDB assessment was 

approximately $0.0505 per hundredweight of milk marketed. Assessment revenue is recognized 

in the month in which milk is marketed. 

During 2005, the Dairy Promotion and Research Order was amended to allow organic dairy 

producers, as defined, to be exempt from paying assessments. The amount of exempted 

assessments in 2008 and 2007 was approximately $602,435 and $515,000, respectively. 

Fixed Assets 

Fixed assets consist of computer software and are recorded at cost. Depreciation and 

amortization are provided in amounts sufficient to charge the costs of depreciable assets to 

operations over estimated service lives offive years using the straight-line method. 

Contract and Grant Expense 

Expenses related to contracts are recognized as incurred. Grants for research projects typically 

require periodic reporting of project status and payments. Such payments are expensed as 

progress is achieved. 

Income Taxes 

NDB has received determination letters from the Internal Revenue Service recognizing that they 

are exempt from federal income taxes on related income under Section 501(a) as organizations 

described in Sections 501(c)(b) and 501(c)(3), respectively, ofthe Internal Revenue Code. There 

was no unrelated business taxable income for the years ended December 31, 2008 and 2007; 

therefore, no provision for income taxes has been reflected in the accompanying financial 

statements related to activities ofNDB. 

0901·1020411 8 
National Dairy Promotion and Research Board 

Notes to Financial Statements (continued) 

2. Summary of Significant Accounting Policies (continued) 

New Accounting Pronouncement 

In June 2006 the F ASB issued Financial Interpretation No. 48, Accounting for Uncertainty in 

Income Taxes (FIN 48), which clarified the accounting for uncertainty in income taxes 

recognized in an enterprise's financial statements in accordance with SFAS No. 109, Accounting 

for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for 

financial statement recognition and measurement of a tax position taken or expected to be taken 

in a tax return. This statement was deferred and will become effective for NDB during the year 

ended December 31, 2009. Compliance with this standard is not expected to have a material 

impact on the NDB's financial statements. 

Employee Costs 

NDB's operations are staffed by DMI employees who receive vacation, retirement, health, and 

other benefits provided by DMI. 

Reclassifications 

Certain amounts in the 2007 financial statements have been reclassified to conform to the 2008 

presentation. 

3. Cash and Cash Equivalents 


Cash and cash equivalents consist ofthe following as of December 31: 


2008 2007 

Cash $ 1,212,964 $ 1,113,536 

U.S. federal agency securities 39,634,108 55,159,476 

$40,847,072 $56,273,012 

0901-1020411 9 
National Dairy Promotion and Research Board 

Notes to Financial Statements (continued) 

4. Assessments Receivable 

Assessments receivable are recorded at the estimated net amounts to be received based on the 

amount of milk marketed and the average payment per hundredweight. In accordance with 

Public Law 98-180, NDB forwards unpaid assessments to the USDA for collection and other 

legal proceedings. As of December 31, 2008 and 2007, approximately $67,000 of cumulative 

unpaid assessments were at the USDA pending further action. Such amounts are not included in 

assessments receivable as of December 31, 2008 and 2007, and will not be recorded as revenue 

until such amounts are ultimately received. Civil penalties exist for any persons who do not pay 

the assessment and/or file required milk marketed assessment reports with NDB. 

5. Net Assets 

During 2008 and 2007, NDB's Board designated a portion of net assets for cash reserves. Total 

designations ofnet assets are as follows: 

2008 2007 

Designated net assets: 

Cash reserves $ 1,800,000 $ 1,800,000 

NAEMS study 1,833,333 3,833,333 

Subsequent-year program activity 23,429,594 17,966,465 

Total designated net assets 27,017,837 23,599,798 

Undesignated net assets 11,608,500 31,535,157 

Total net assets $ 38,626,337 $ 55,134,955 

6. National Air Emissions Monitoring Study (NAEMS) 

In 2005, the U.S. Congress approved a one-time waiver in restrictions that limited the use of 

checkoff dollars to post-harvest research activities. The waiver allowed NDB to use checkoff 

money to pay for research into the types of air emissions coming from a cross-section of dairy 

operations. 

In January 2006, NDB contracted with National Milk Producers Federation (NMPF) to conduct a 

research project to study the environmental effects of air emissions from dairy operations. Total 

investment in the project was $6.0 million. This amount was disbursed to NMPF during 2006 for 

the project beginning in December. In tum, NMPF placed these funds into an escrow account, 

and, subsequently, released an NDB-approved portion of these funds to the Agricultural Air 

Research Council (AARC). AARC is conducting the research during a three-year period. 

0901-1020411 10 
National Dairy Promotion and Research Board 

Notes to Financial Statements (continued) 

7. National Air Emissions Monitoring Study (NAEMS) (continued) 

NDB is amortizing this investment over the life ofthe project as follows: 

2008 2007 

Investment in NAEMS Air Emissions Study $ 6,000,000 $ 6,000,000 

Less: 

Accumulated amortization 4,166,667 2,166,667 

Net investment $ 1,833,333 $ 3,833,333 

0901-1020411 11 





























Appendix D–1 

National Dairy Promotion and Research Board 

and Dairy Management Inc. 

Contracts Reviewed by USDA

Advertising and Marketing Services

American Association of School Administrators–Journal Advertising 

American Dairy Association/Dairy Council, Inc.–Professional Staff Services

ARAMARK Educational Services, L.L.C.–Promoting Dairy Products in Schools 

Dairy Farmers, Inc.–Professional Services

Domino’s Pizza–Cheese Promotion Activity 

Flair Communications Agency–Marketing and Program Management Services

G2 Promotional Marketing–Retail Activities; Healthy Milk Awareness

Jefferson Davis Associates–School Milk Packaging Assessment; Acceptance of Shelf–Stable

 Milk

Media Management Services–Appreciative Inquiry Summit Support, School Marketing 

 Strategic Support and Planning 

NFL Properties, L.L.C.–Promotional Activities; Logo Usage Rights

National School Board Association–Journal Advertising 

Novak Birch–Marketing and Creative Services

Prevail! Strategic Marketing and Communications–Child Nutrition and Fitness Initiative

 Platform Management

RTC–Dairy Aisle Reinvention (Continued in 2008) 

Southeast Dairy Industry Association–Professional Services

Subway Franchisee Advertising Trust–Merchandizing of Single–Serve Milk and Yogurt

Western Dairy Farmers–Professional Services

Team Services, L.L.C.–NFL and Sports Marketing Services 

Willard Bishop–Strategic Insights Consulting 

Wisconsin Milk Marketing Board–National Butter Program

Wondergroup–Child Nutrition and Fitness Initiative Activities

Communications, Public Relations, and Nutrition Education

Action for Healthy Kids, Inc.–Sponsorship 

Audrey Welper–Media Consulting

Bader Rutter & Associates–Dairy Ingredients Media Relations Program

Bella Ablava–Russian Marketing Consulting and Services

Blu Skye Sustainability–Dairy Industry Sustainability Initiative

BNP Media–Leadership in School Nutrition Awards Program 

Burson–Marsteller–Dairy Ingredient Crisis Preparation

Ceres Connections–Child Nutrition and Fitness Initiative Consulting

Christopher Klose–Editorial Consulting, Communications 

Cleveland Dovington Partners, Inc.–Information Technology Services and Consulting 

CMA Consulting –Consulting Services Related to Growth Oriented Dairy Producers 

Cooperrider and Associates–Healthy School, Healthy Kids Summit Services

Dairy Farmers, Inc.–Communication Activities, UMP Implementation

Destination Imagination, Inc.– Sponsorship; CNFI Research

1
Appendix D–1, continued

Edelman Public Relations Worldwide–3–A–DayTM, Nutrition, Scientific Affairs, Child

 Nutrition and Fitness Initiative and Dairy Image Public Relations and Communications 

 Activities 

Fleishman Hillard, Inc.–Foot and Mouth Disease Response 

FoodMinds L.L.C.–Health Professional, Nutrition and Scientific Affairs Public Relations; 

Whey Influencer Program; Dietary Guidelines Protection and Promotion

Food, Research, and Action Center–Food Breakfast Expansion 

Fresh Approach–Commodity Roundtable Services 

Gagen MacDonald L.L.C.–Communications Support Activities 

Got Breakfast? Foundation–School Breakfast Program Promotion

Health and Nutrition Network–Media Training and Consulting Services 

IA Collaborative–Nutrient Rich Coalition Architecture, Positioning Evaluation and Brand 

 Development 

I–Site Web Design–School Marketing Web Program 

Image Base Corporation–Video News Release Production; School Milk Video Project

Integer Group–Dairy Producer and Export Communications Program 

JDG Consulting–Dairy Issues Management 

Kelly Czerwonka–Consulting Services 

LevCom–Communications Activity 

McDonalds USD–Co–promotion of Specialty Coffee 

Mobilization L.L.C.–Video and Production services 

National Cattleman’s Beef Association–Naturally Nutrient Rich Score Project

National Dairy Shrine–Dairy Scholarship Program

Natural Marketing–Dairy Industry Sustainability Project Services

Nutrition Impact L.L.C.–Nutrient Density Index; Consulting and Project Services

Promar Japan– Japanese Marketing Activities

Promotion Management Group–Hispanic Program Services

Results Direct–DMI and USDEC Website Activities

Richter Brothers–www.dairyfarmingtoday.org Web site activities

Ruby–Do Special Projects–Industry Image and Relations Consulting 

School Nutrition Foundation–School Marketing and Promotion

Slack Barshinger and Partners–Integrated Marketing and Leadership Communications, 

 Ingredients Media Relations 

Weber Shandwick, Inc.–Consulting and Professional Services; Issues Monitoring and

 Response; Crisis Communications Program 

Export and Ingredients

2020 Company L.L.C.–European Importation Health Certificate Services

American–Mexican Marketing–Mexican Market Representation and Program Activities 

Arab Marketing Finance, Inc.–Middle East Market Representation and Program Activities

Carla Sorenson–Professional Services

Contacts International Consulting, Ltd.–South American Market Representation and Program 

 Activities

Dairy Farmers, Inc.–Caribbean Retail Promotion Activities

2
Appendix D–1, continued

Data Development Worldwide–Evaluation Study of Cloning Issue 

David L. Stiefer–USDEC Consulting Services 

Inavero Institute–USDEC Member feedback survey

International Dairy Foods Association–Export Manual Updates 

IntNet–Korean Market Representation and Program Activities

JDG Consulting–USDEC Domestic Communications Plan

Knechtel, Inc.–Design and Develop Dairy Protein Based Products 

Knowledge Networks–Message and Claims Testing

Market Makers–Japanese Market Representative and Program Activities 

Mistral Group, Ltd.–European Market Representation and Program Activities 

National Milk Producers Federation–Global and Domestic Research Activities; Trade

 Barriers; Marketing Information and Economic Research Services; Animal Health and Welfare

 Issues

Novak Birch–USDEC Website Creative and Design Services

Pasin Group–Estimate of Total Usage of Milkfat (Domestic and Imports–Exports) in the U.S. 

 Based on End–Use

PR Consultants–Chinese Market Representation and Program Activities 

Pacrim Associates–Southeast Asian Market Representation and Program Activities

Promar International–Middle East and North Africa Consulting Services

Promar Japan–Japanese Marketing Activities

Results Direct–USDEC Web site Activities www.usdec.org

Schonrock Consulting–Export Guide Analysis and Consulting Services

Stanton, Emms, and Sia–Export Marketing Research Activities

Story Consulting–Consulting Services 

William Paddock–Consulting Services

Market and Economic Research, Consulting Services 

Arbor Strategy Group–Integrated Macro Trends and Packaging Trend Analysis

Axen Research–Smoothie Understanding Study 

Baker Communications–National and Regional Staff Training Programs 

Burrelle’s Luce–Media Monitoring and Analysis 

Center for Culinary Development–Identify Strategic Innovation Platforms for Delivering 

 Energy Benefits to Consumers Through Milk and Milk–Based Products 

CFE Solutions, Inc.–Consulting Services 

Culinary Sales Support–Ideation, Testing and Recipe Development for Menu Applications 

Decision Insights–Pizza Concept Screener

Deloitte Consulting L.L.P.–Creation of Business Plans and Economic Models

Demeter Communication–Community Outreach Scheduler Services 

Digital Cement–Analysis of Health and Wellness Digital Information Resources

DLG Research–Qualitative Testing of Dairy Concepts Among Hispanics 

D.L. Peterson and Associates–Qualitative Research on Consumer’s Reactions Toward Food 

 Groups to Encourage Message Alternatives

Environ–Review of School Milk Report; Nutrient Intake by Cheese Consumption Project; 

 Exercise Nutrition White Paper; Nutrient Rich Foods Project; 

3
Appendix D–1, continued

Fresh Look Marketing Group–Deli Cheese Tracking Data

Global Dairy Platform, L.L.C.–Development, Maintenance and Dissemination of Specific

 Market and Consumer Research 

GFK Custom Research–Whey Protein Consumer Tracking Study; Dairy Ingredient Concept 

 Screen Testing; Health Professionals Dairy Nutrition Tracking Study; Kids Tracker Program; 

 Dairy Fortified Desserts and Confections Study; Hot Cocoas Market Structure Research;

 Nutrient Rich Foods Consumer Tool

Harris Interactive, Inc.–Nutrient Rich Values–Based Communications Strategy Development

Information Resources, Inc.–Milk and Cheese Category Volume Reports; Current Price

 Environment for Milk and Its Impact on Consumer Spending 

Kiddie–i–OH–Youth Health and Fitness Focus Groups 

Leah Goldman–Value–Added Cheese and Milk Product Focus Groups 

Marketecture–Attitudes, Usage and Trends Analysis; Issue Tracker Study

Marketing Concepts–Unprocessed Whey Market Research; Real Seal Administration

Moskowitz––Jacobs–Hispanic Research; Chocolate Milk Sensory Research; Attitudinal

 Research Projects

Mintel International Group–New Products Database and Market Intelligence Reports

National Milk Producers Federation–Domestic Research Program Activities/Animal Health 

 and Welfare Issues Activities

NPD Group–Snacking Behavior and Consumer Dynamics Surrounding Snack Cheese; Access 

 to NPD Databases; Satiety Research Project

NutriScore–Nutrient Rich Foods Consulting and Services 

NuVista Strategies–Snacking Structure Analysis

PHD Technologies–Meat Applications and Consulting; Trade Mission Activities

Promodata Ad Activity–Advertising Tracking Services

Pursuant, Inc.–Dairy Production Practices Attitude Research

Results Direct–Website support services; Development of Export Guide Migration Functional 

 Specifications

Shainwright Consulting–Consulting and Research Services

Stanwood Consulting– Research Activities to Accomplish Health and Wellness–Related

 Strategy and Insights 

Summit Research, Inc.–Yogurt Sampling; Health Club Messaging; Women and Whey Protein 

 Messaging Research 

Sundberg–Ferrar–Cereal and Milk On–The–Go 

Sunflower–Yogurt Product Hispanic and Baby Boomer Sampling 

Synetics–Lactose Intolerance Research 

Technomic–Review of Dairy Ingredients Used in Food; Pizza and Sandwich Tracking 

Teri Gacek Associates–Qualitative Market Research

TNS Custom Research–SIP Data, iNFOfast Subscription; Child Nutrition Initiative marketing

 and communications research services

Trion Group L.P.–Consulting Services 

Video Monitoring Services–Broadcast Monitoring 

Watson Mulhern L.L.C.–Consulting Services 

4
Appendix D–2 

National Fluid Milk Processor Promotion Board 

Contracts Reviewed by USDA

Medical Advisory Board

Steve Abrams, M.D.–Baylor College of Medicine–Medical Advisory Board Member Services

Susan Barr, Ph.D.–Medical Advisory Board Member Services

Christine Economos, Ph.D.–Medical Advisory Board Member Services

Frank R. Greer, M.D.–Medical Advisory Board Member Services

Robert P. Heaney, M.D.–Creighton University–Medical Advisory Board Member Services

James O. Hill, Ph.D. –Medical Advisory Board Member Services

Rachel Johnson, Ph.D., R.D.–Medical Advisory Board Member Services

Ronald M. Krauss, M.D.–Medical Advisory Board Member Services

Advertising, Promotion, and Public Relations

Bader Rutter & Associates, Inc.–Marketing Communications 

Draft, Inc.–Promotional Services

Outloud, L.L.C.–Marketing Communications Plan 

Publicidad Siboney–Hispanic Marketing Program

Market Research and Evaluation, and Consulting Services

Bethart Bilingual Services–Market Research

Beverage Marketing Corporation–Consulting/Competitive Strategy Development

Click IQ, Inc.–Online Survey

C & R Research–Teen–Focused Market Research

Data Development Corporation–Market Research

Dynamic Logic–Advertising Analysis 

Egg Strategy–Market Research

Greenfield Consulting–Consulting Services 

Harris Interactive–Market Research

Information Resources, Inc.–Market Analysis

International Dairy Foods Association–Professional Management Services

Kelly Fisher–Consulting Services 

Marketing Management Analytics–Marketing Mix Analysis 

Prime Consulting Group–Consulting Services, Survey Analyses and Strategic Planning 

RealMediaValue Company–Media Evaluation Services

Scherer Cybarian–Market Research Summaries

Other Agreements

HBW Group–Office configuration services

Heidrick & Struggles–Executive search

Snyder, Cohn, Collyer, Hamilton & Associates, P.C.–Audit Services

5
Appendix E-1 

Nutrition and Health Research Institute 

and Dairy Foods Research Centers

Nutrition and Health Research Institute

Genetics and Nutrition Institute

Children’s Hospital, Oakland Research Institute: Relationship of Genetics, Dietary Fat 

(Especially Dairy Fat), and Heart Disease.

Dairy Foods Research Center 

California Dairy Foods Research Center

(University of California–Davis and California Polytechnic State University–San Luis Obispo): 

Specializes in product technology development, ingredient technology, product health 

enhancement properties, food safety, and quality assurance. 

Midwest Dairy Foods Research Center

(University of Minnesota–St. Paul, Iowa State University-Ames and South Dakota State 

University–Brookings): Concentrates on natural and processed cheese functionality and flavor, 

fluid milk flavor and shelf life, genomics of probiotic bacteria, and utilization of acid and salt 

whey. 

Southeast Dairy Foods Research Center 

(North Carolina State University–Raleigh and Mississippi State University–Starkville): 

Specializes in milk and whey ingredient functionality, thermal and biological processing, sensory 

properties of cheese and dairy ingredients, dairy food safety, and microbial technologies for 

starter cultures and probiotics.

Western Dairy Center 

(Utah State University–Logan, Oregon State University–Corvallis, Washington State University–

Pullman, and University of Idaho–Moscow): Specializes in cheese flavor and functionality, fluid 

milk processing, whey and milk utilization, and microbial genetics and physiology. 

Wisconsin Center for Dairy Research

(University of Wisconsin–Madison): Explores functional flavor and physical properties of 

cheese and cheese products, whey and whey components, and milk components used as 

ingredients and as finished products, cheese making and whey processing and separation 

procedures, use of milkfat, and food safety and quality technology. 

1
Appendix E-2 

Dairy Foods Competitive Research Activities

Principal Investigator, Institution, and Project Title

NIZO Food Research (Private Company): Solubility of Milk Protein Concentrate [completed 

in 2008] 

Devin Peterson, Ph.D. (The Pennsylvania State University): Inhibition of Off-Flavor 

Development in Non-Refrigerated Milk by Phenolic Chemistry [continued in 2008] 

Greg Thoma, Ph.D. (University Of Arkansas): Life Cycle Assessment of the Fluid Milk Supply 

Chain: Dairy Products [began 2008] 

Hua Wang, Ph.D. (The Ohio State University Research Foundation): Methods to Maintain 

Dairy Culture Genotypes [continued in 2008] 

Peggy M. Tomasula, Ph.D. (USDA Agricultural Research Service): Development and 

validation of the effect of interventions and processes on persistence of Listeria monocytogenes 

on Queso Fresco cheese [began 2008] 

Shan-Tian Yang, Ph.D. (The Ohio State University Research Foundation): Production of 

Galacto-Oligosaccharides from Whey Lactose [continued in 2008] 

Qixin Zhong, Ph.D., and Bin Zhao, Ph.D. (The University of Tennessee): Magnetic 

Nanotubes to Purify High Value Peptides/Proteins from Unclarified Whey [began 2008] 

2
3

Appendix E-3 

Nutrition Competitive Research Activities

Principal Investigator, Institution, and Project Title

Sean H. Adams, Ph.D. (USDA-Agricultural Research Service-Western Human Nutrition 

Research Center): Evaluation of the Anti-Inflammatory Effects of Calcium and Dairy in a 

Polygenic Obese Mouse Model [continued in 2008] 

David J. Baer, Ph.D. (USDA-Agricultural Research Service-Beltsville Human Nutrition Research 

Center): Effects of Trans-Fatty Acids from Ruminant Sources on Risk Factor for Cardiovascular 

Disease [continued in 2008]; Dietary Protein Sources and Their Effects on Risk Factors Associated 

with Cardiovascular Disease [continued in 2008] 

Leann L. Birch, Ph.D. (The Pennsylvania State University): Parental Influence on Girls’ 

Calcium Intake, Bone Mineral Content and Weight Status–Phase III [completed in 2008]; and 

Mother-Daughter Patterns of Beverage and Dairy Consumption at Home and Away From Home 

in Girls 5 to 15 [began in 2008] 

Robert Brannan, Ph.D. (Ohio University): Whey Protein Inhibition of Oil Absorption in Fried 

Foods [completed in 2008] 

David Cameron-Smith, Ph.D. (Deakin University): Optimal Whey Protein Concentrate 80 

(WPC 80) Dose to Combat Sarcopenia [continued in 2008] 

Joseph E. Donnelly, Ph.D. (University of Kansas): Effects of Visible Cheese on Consumption 

of Food Groups to Encourage [began 2008] 

Ellen M. Evans, Ph.D. (University of Illinois): Higher Protein Diet and Exercise for Optimal 

Weight Loss in Elderly Women [continued in 2008] 

Roger Fielding, Ph.D. (Tufts University): Efficacy of Whey Protein Supplementation on 

Resistance Exercise Induced Changes in Muscle Strength, Fat Free Mass, and Function in 

Mobility-Limited Older Adults [continued in 2008] 

Korry Hintze, Ph.D. (Utah State University): Effect of Milk Fat Globular Membrane (MFGM) 

in Providing Protection Against Gastrointestinal Stress [began in 2008] 

Michael Holick, Ph.D., M.D. (Boston University School of Medicine): The Effect of Dietary 

Calcium and Vitamin D on Prostate Cancer [continued in 2008] 

Robert Hutkins, Ph.D. (University of Nebraska): Anti-adherence Activity of Prebiotic 

Galactooligosaccharides Against Enteric Pathogens [began 2008] 
4

Appendix E-3, continued

Jasminka Ilich-Ernst, Ph.D. (Florida State University Research Foundation): Calcium and 

Dairy-Derived Bioactive Compounds as Stem Cell Mediators of Bone and Fat Metabolism

[began in 2008] 

John L. Ivy, Ph.D. (The University of Texas at Austin): The Effect of Chocolate Milk (CM) on 

Exercise Recovery and Training Adaptation [continued in 2008] 

Nancy L. Keim (USDA-Agricultural Research Service-Western Human Nutrition Research 

Center): The Effect of Dairy Foods in Normalizing the Hypothalamic-Pituitary-Adrenal Axis in 

Overweight/Obese Adults Following Diet-Induced Weight Loss [began in 2008] 

Donald K. Layman, Ph.D. (University of Illinois): Meal Responses to Whey Proteins Enhance 

Protein and Carbohydrate Metabolism in Rats [continued in 2008]

Joan M. Lappe, Ph.D. (Creighton University): Pilot Project Preparatory to a Definitive Study 

of the Efficacy of Milk Minerals in Human Bone Health [completed in 2008] 

Adam L. Lock, Ph.D. (University of Vermont): Influence of Maternal Intake of Conjugated 

Linoleic Acid on Hormone Responses by the Mammary Glands of Female Progeny 

[continued in 2008]; and The Impact of Natural and Industrial Sources of Trans Fatty Acids on 

the Development of Atherosclerosis in the ApoE*3 Leiden Mouse Model [began in 2008] 

Shuichi Machida, Ph.D. (Tokai University): The Effects of Resistance Training Combined 

with Whey Protein Supplementation on Body Composition and Health of Elderly Japanese 

People with Sarcopenia [began 2008] 

Mark A. McGuire, Ph.D. (University of Idaho): The Use of Milk Fat as a Possible Antibacterial 

Agent [began 2008] 

Kevin C. Maki, Ph.D. (Provident Clinical Research & Consulting, Inc.): A Double-blind 

Randomized, Controlled, Crossover Study to Assess the Effects of Protein on Postprandial 

Hunger and Satiety on Men and Women [completed in 2008] 

Kim Fleischer Michaelsen, Ph.D. (University of Copenhagen: The Role of Whey in Nutritional 

Support of HIV Infected Patients on Antiretroviral Treatment: A Randomized Trial in Jimma, 

Ethiopia [began in 2008] 

Lynn L. Moore, Ph.D. (Boston University School of Medicine): Dairy Intake and Metabolic 

Risk in Adolescent Girls [continued in 2008]; and Development of a Food Pyramid Database in 

the Framingham Heart Study Offspring [began in 2008] 

Mary Murphy, M.S., R.D. (ENVIRON): Nutrient Intakes by Cheese Consumption [began and 

completed in 2008] 
5

Appendix E-3, continued

Theresa Nicklas, Ph.D. (Baylor College of Medicine): Understanding Perceived Lactose 

Intolerance in White, Black and Hispanic Adults [began in 2008]; and Healthy Eating and 

Lifestyle for Total Health (HEALTH) [began in 2008] 

Troy Ott, Ph.D. (Pennsylvania State University): A Critical Evaluation of Sterols in Milk and 

Dairy Products [continued in 2008] 

Stuart Phillips, Ph.D. (McMaster University): Responses of Muscle and Whole-Body Protein 

Turnover to Ingestion of Differing Doses of Whey and Soy Protein with and without Resistance 

Exercise in Elderly Men [continued in 2008]; and The Impact of Higher Dairy and Dietary 

Protein on the “Quality” of Hypoenergetic Diet and Exercise Induced Weight Loss in PreMenopausal, Overweight, and Obese Young Women [began in 2008] 

Karen Rafferty, M.S., R.D., Robert Heaney, M.D. (Creighton University): A Project to 

Advance a Research Data Infrastructure by Creating a Master Data Bank [continued in 2008] 

Nancy Rodriguez, Ph.D. (University of Connecticut): Milk’s Impact on Protein TurnoverSpecific Intracellular Signaling Protein in Human Skeletal Muscle During Recovery from 

Endurance Exercise [continued in 2008] 

Michael J. Saunders, Ph.D. (James Madison University): Effects of Chocolate Milk 

Consumption on Markers of Muscle Recovery and Performance During Intensified Training in 

Competitive Soccer Players [began in 2008]

Dale Schoeller, Ph.D. (University of Wisconsin-Madison): A Novel Stable Isotope 

Measurement to Monitor Macronutrient Intake for Future Use in the Study of Interactions of Diet 

and Dairy on BMI and Bone Health [continued in 2008] 

Gloria Solano-Aguilar, Ph.D., Todd R. Klaenhammer, Ph.D. (USDA Agricultural Research 

Service-Beltsville Human Nutrition Research Center and North Carolina State University): 

Effect of Dairy Delivery on Survival and Activity of Probiotic Cultures in vivo [began in 2008]

Debra Sullivan, Ph.D. (University of Kansas Medical Center): A Qualitative Study of 

Children’s Perceptions of Dairy Foods [continued in 2008] 

Angelo Tremblay, Ph.D. (Hopital Laval): Effect of Milk Supplementation on Appetite Control 

in Obese Women Following a Weight Loss Program [continued in 2008] 

Francis Tylavsky, Dr. P.H (University of Tennessee Health Science Center): Role of Dairy 

Products in Decreasing Insulin Resistance and Modulating the Release of Glucagon-Like 

Peptide-1 in Obese African-American Adolescents: A Pilot Study, [completed in 2008] 
Appendix E-3, continued

Marta Van Loan, Ph.D. (USDA-Agricultural Research Service-Western Human Nutrition 

Research Center): The Role of Dairy Foods in Enhancing Central Fat Loss and Weight Loss 

with Moderate Energy Restriction in Overweight and Obese Adults [continued in 2008] 

Jeff Volek, Ph.D. (University of Connecticut): Investigation of Whey Protein Supplementation 

for Physiological Enhancement to Resistance Training and Dietary Regimes in Young Adults 

[continued in 2008] 

Youfa Wang, M.D., Ph.D. (Johns Hopkins University Bloomberg School of Public Health): 

The Influences of Dairy Consumption and Related Nutrients on Obesity, Metabolic Syndrome, 

and Type 2 Diabetes and the Ethnic Differences [began in 2008] 

Eva Wareasjo, Ph.D. (Uppsala University): Milkfat Biomarkers and the Risk of a First Ever 

Acute Myocardial Infarction (AMI) - A Prospective Nested Case-Control Study [began in 2008] 

Richard A. Washburn, Ph.D. (University of Kansas Center for Research): Whey Protein 

Supplementation with Resistance Training: Effect on Body Composition of Young Adults 

[continued in 2008]

 

Connie Weaver, Ph.D. (Purdue University): Influence of Dairy on Bone Mass Accrual, Bone 

Size and Fat and Lean Body Mass in Early Pubertal Overweight vs. Healthy Weight Girls 

[continued in 2008]; and Calcium, Dairy, and Body Fat in Adolescents [completed in 2008] 

Michael B. Zemel, Ph.D. (University of Tennessee Research Foundation): Dairy Attenuation of 

Oxidative and Inflammatory Stress in Metabolic Syndrome [continued in 2008]; Dairy 

Modulation of Oxidative and Inflammatory Stress in Overweight and Obese Subject [completed 

in 2008]; and Exploratory Research in the Role of Dairy in Weight Management and Prevention 

of Obesity-Related Chronic Disease [completed in 2008] 

Jun Zhou, Ph.D., Jack N. Losso, Ph.D., Roy Martin, Ph.D. (The Louisiana State University, 

Pennington Biomedical Research Center): Mechanisms of Reduced Appetite with Whey Protein

[completed in 2008]

6
Appendix F

Qualified State or Regional Dairy Product Promotion,

Research, or Nutrition Education Programs

Allied Milk Producers’ Cooperative

495 Blough Road 

Hooversville, PA 15936–8207 

American Dairy Association Mid East

5950 Sharon Woods Blvd. 

Columbus, OH 43229 

American Dairy Association and Dairy 

 Council, Inc.

219 South West Street, Suite 100 

Syracuse, NY 13202 

American Dairy Association of Alabama 

5340 West Fayetteville Road 

Atlanta, GA 30349–5416 

American Dairy Association of Georgia

5340 West Fayetteville Road 

Atlanta, GA 30349–5416 

American Dairy Association of Kentucky

5340 West Fayetteville Road 

Atlanta, GA 30349–5416 

American Dairy Association of Michigan

2163 Jolly Road 

Okemos, MI 48864 

American Dairy Association of Mississippi

5340 West Fayetteville Road 

Atlanta, GA 30349–5416 

American Dairy Association of Nebraska

8205 F Street 

Omaha, NE 68127–1779 

American Dairy Association of 

 North Carolina 

5340 West Fayetteville Road 

Atlanta, GA 30349–5416 

American Dairy Association of 

 South Carolina

5340 West Fayetteville Road 

Atlanta, GA 30349–5416 

American Dairy Association of 

 South Dakota

2015 Rice Street 

St. Paul, MN 55113 

American Dairy Association of Virginia

5340 West Fayetteville Road 

Atlanta, GA 30349–5416 

California Manufacturing Milk Producers

 Advisory Board 

3800 Cornucopia Way, Suite D 

Modesto, CA 95358–9492 

California Milk Producers Advisory 

Board 

3800 Cornucopia Way, Suite D 

Modesto, CA 95358–9492 

Dairy Council of California

1101 National Drive, Suite B

Sacramento, CA 95834–1945 

Dairy Council of Michigan 

2163 Jolly Road 

Okemos, MI 48864 

Dairy Council of Nebraska

8205 F Street 

Omaha, NE 68127–1779 

Dairy Farmers, Inc.

166 Lookout Place, Suite 100 

Maitland, FL 32751–4496 

1
Appendix F, continued

DairyMAX

2214 Paddock Way Drive, Suite 600 

Grand Prairie, TX 75050 

 

Dairy Promotion, Inc.

10220 NW Ambassador Drive 

Kansas City, MO 64153 

Georgia Agricultural Commodity 

 Commission for Milk

19 Martin Luther King Jr., Dr., SW, Room 

328 

Atlanta, GA 30334 

Granite State Dairy Promotion

c/o New Hampshire Department of 

Agriculture

25 Capitol Street, Box 2042 

Concord, NH 03302–2042 

Idaho Dairy Products Commission 

10221 West Emerald, Suite 180 

Boise, ID 83704 

Illinois Milk Promotion Board

1701 Towanda Avenue 

Bloomington, IL 61701 

Indiana Dairy Industry Development 

Board 

9360 Castlegate Drive 

Indianapolis, IN 46256 

Louisiana Dairy Industry Promotion 

Board 

c/o Louisiana Department of Agriculture 

 and Forestry 

47076 North Morrison Street 

Hammond, LA 70401 

Maine Dairy and Nutrition Council

333 Cony Road 

Augusta, ME 04330 

Maine Dairy Promotion Board 

333 Cony Road 

Augusta, ME 04330 

Massachusetts Dairy Promotion Board

Suite 500, 251 Causeway Street 

Boston, MA 02114 

Michigan Dairy Market Program 

P.O. Box 8002 

Novi, MI 48376–8002 

Mid–Atlantic Dairy Association 

325 Chestnut Street, Suite 600 

Philadelphia, PA 19106 

Midwest Dairy Association

2015 Rice Street 

St. Paul, MN 55113 

Midwest Dairy Council

2015 Rice Street

St. Paul, MN 55113 

Milk for Health on the Niagara Frontier, 

Inc.

4185 Seneca Street 

West Seneca, NY 14224 

Milk Promotion Services of Indiana, Inc.

9360 Castlegate Drive 

Indianapolis, IN 46256 

Minnesota Dairy Research and Promotion 

 Council

2015 Rice Street 

St. Paul, MN 55113 

Nebraska Dairy Industry Development 

 Board 

8205 F Street 

Omaha, NE 68127–1779 

2
Appendix F, continued

Nevada Farm Bureau Dairy Producers

 Committee

2165 Green Vista Drive, Suite 205 

Sparks, NV 89431 

New England Dairy and Food Council, 

Inc.

1034 Commonwealth Avenue 

Boston, MA 02215 

New England Dairy Promotion Board 

1034 Commonwealth Avenue 

Boston, MA 02215 

New Jersey Dairy Industry Advisory 

 Council c/o New Jersey Dept. of 

Agriculture

PO Box 330 

Trenton, NJ 08625–0330 

New York State Dept. of Agriculture and

 Markets

Division of Milk Control and Dairy Services 

10 B Airline Drive

Albany, NY 12235–0001 

North Dakota Dairy Promotion 

Commission 

2015 Rice Street 

St. Paul, MN 55113 

Oregon Dairy Products Commission 

10505 Southwest Barbur Boulevard 

Portland, OR 97219 

Pennsylvania Dairy Promotion Program 

c/o Pennsylvania Department of Agriculture 

2301 North Cameron Street 

Harrisburg, PA 17110–9408

Promotion Services, Inc.

5340 West Fayetteville Road 

Atlanta, GA 30349–5416 

Rochester Health Foundation, Inc.

c/o ADADC, Inc.

219 South West Street, Suite 100 

Syracuse, NY 13202 

Southwest Dairy Museum

P.O. Box 936 

Sulphur Springs, TX 7548 

Tennessee Dairy Promotion Committee

5340 West Fayetteville Road 

Atlanta, GA 30349–5416 

United Dairymen of Arizona

2008 S. Hardy Drive 

Tempe, AZ 85282

Utah Dairy Commission

1213 East 2100 South 

Salt Lake City, UT 84106 

Vermont Dairy Promotion Council

116 State Street, Drawer 20

Montpelier, VT 05620–2901 

Washington State Dairy Council 

4201 198th Street, SW, Suite 102 

Lynnwood, WA 98036–6751 

Washington State Dairy Products 

Commission

4201 198th Street, SW, Suite 101 

Lynnwood, WA 98036 

Western Dairy Association

12000 North Washington Street, Suite 200 

Thornton, CO 80241 

Wisconsin Milk Marketing Board, Inc.

8418 Excelsior Drive 

Madison, WI 53717

3
Appendix G 

National Fluid Milk Processor Promotion Board 

Source: MilkPEP/Lowe Worldwide

Moms Target

Brooke Shields Marg Helgenberger Heidi Klum 

 

Ali Vincent

Campaign for Healthy 

Weight (CFHW) Logo

Martha Stewart 

 Glenn Close Michele Aguilar Trisha Yearwood

1
Appendix G, continued

Moms Target, continued

Heidi Klum Suze Orman Jaci Hasemeyer, Chief 

Health Officer winner

Teens Target

Rihanna Batman Miley Cyrus 

Wes Welker and 

Michael Strahan

Ana Ivanovic Michael Strahan

2
Appendix G, continued

Teens Target, continued

Avery Johnson and 

Josh Howard 

 

 All-American Rejects 

 Dwight Howard

Chris Brown

Olympic Athletes 

Body by MilkSM (BBMSM)

 

 Taylor Swift

School Milk Posters 

Elementary Schools: 

Amanda Bynes  Steve Nash  Dwight Howard  Miley Cyrus

Middle and High Schools:

 Taylor Swift Dwight Howard-Gym Masi Oka All-American Rejects 

3
Appendix G, continued

School Milk Posters, continued 

Middle and High Schools:

 Miley Cyrus Hayden Panettiere Amanda Bynes Steve Nash

 Female Olympic Athletes-Gym 

Source: MilkPEP/DRAFTFCB 

School Materials 

Posters:

 Male Olympic Athletes-Gym

 Group Cornell Enrique Lifehouse 

 Plain White T’s Smashing Pumpkins Rihanna Swift

4
Appendix G, continued

School Materials, continued

Clings: 

 

 

 

Listen Up Drink Up BBMSM Group

Posters:

Group Ana Ivanovic Dwight Howard Jozy Altidore

 

Group-Orange Refuel Cling Group-Red 

 BBM SM Refuel Homepage BBMSM Go Pro Entry Page BBMSM Refuel Trivia Widget

5
Appendix G, continued

Mom Materials 

Chief Health Officer:

 

 

 

Large Promotion Banner Large Hispanic Banner Pink Cling Hispanic Cling 

CHO Mini Channel Strip CHO Promotional Mini Channel Strip

Refuel:

Refuel Poster Refuel Cling Refuel Hispanic Poster Refuel Shelf Talker

WIC:

 Poster Brochure Hispanic Poster Hispanic Brochure 

6
Appendix G, continued

Mom Materials, continued

Halloween POS and Toolkit: 

Promotional Banner Hispanic Promotional Banner Hispanic Cling

Source: MilkPEP/Weber Shandwick

Public Relations Materials 

Milk Mustache Mobile 

Chief Health Officer (CHO) Tour 

 

 

 CFHW Logo 

BBMSM Logo 

CHO Booth

 2008 SAMMY Logo 

 2008 SAMMY Winners 

CHO Curves Booth Caroline O’Neil, MS, RD 

Web Screenshot 

 

 Dwight BBMSM Widget

 

 

 

 

 

7
Appendix G, continued

Source: MilkPEP/Siboney, U.S.A.

Hispanic Materials

 

 Alicia Villareal

 

 Charytín Goyco 

 Super Mamá Contest 

 Super Mamá Brochure Front

Super Mamá Brochure Back 

Hispanic got milk?® Logo 

 Hispanic Halloween 

 Promotional Cling

 

 Super Mamá Winner

Super Mamá POS Mega Cling

 Su-Nui Escobar and Charytín 

Advertorials Super Mamá POS Clings

Hispanic WIC Posters

 

8
Appendix H-1

Regions of the National Dairy Promotion and Research Board

Region 1

[1]

Region 2

[8]

Region 3

[4]

Region 4

[4]

Region 5

[2]

Region 7

[2]

Region 6

[5]

Region 9

[3]

Region 11

[2]

Region 12

[2]

Region 8

[1]

Region 10

[1]

Region 13

[1]

Note: The number in brackets below each region

indicates the number of members within that region.

1 
Appendix H-2

 Regions of the National Fluid Milk Processor Promotion Board

Region 13

Region 14

Region 15

Region 12

Region 7

Region 11

Region 10

Region 8

Region 2

Region 1

Region 3 Region 6

Region 9 Region 4

Region 5

2