U.S. Department of Agriculture

Report to Congress

on the

Dairy Promotion

and Research Program

and the

Fluid Milk

Processor Promotion Program

2013 and 2014 Program Activities
2

Contact Information

Promotion, Research, and Planning Division

Dairy Program, 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

Oral Capps, Jr., Ph.D.

Executive Professor, Regents Professor and Co-Director of

Agribusiness, Food, and Consumer Economics Research Center

Texas A&M University

Department of Agricultural Economics

2124 TAMU

College Station, TX 77843

(979) 845-5911

AFCERC@tamu.edu

Webpage: http://AFCERC.tamu.edu

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

National Fluid Milk Processor Promotion Board

1250 H Street, NW, Suite 950

Washington, DC 20005

(202) 737-0153

http://www.whymilk.com
3

In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil

rights regulations and policies, the USDA, its Agencies, offices, and employees, and institutions

participating in or administering USDA programs are prohibited from discriminating based on

race, color, national origin, religion, sex, gender identity (including gender expression), sexual

orientation, disability, age, marital status, family/parental status, income derived from a public

assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in

any program or activity conducted or funded by USDA (not all bases apply to all programs).

Remedies and complaint filing deadlines vary by program or incident.

Persons with disabilities who require alternative means of communication for program

information (e.g., Braille, large print, audiotape, American Sign Language, etc.) should contact

the responsible Agency or USDA’s TARGET Center at (202) 720-2600 (voice and TTY) or 

contact USDA through the Federal Relay Service at (800) 877-8339. Additionally, program 

information may be made available in languages other than English.

To file a program discrimination complaint, complete the USDA Program Discrimination

Complaint Form, AD-3027, found online at http://www.ascr.usda.gov/complaint_filing_cust.

html and at any USDA office or write a letter addressed to USDA and provide in the letter all

of the information requested in the form. To request a copy of the complaint form, call (866)

632-9992. Submit your completed form or letter to USDA by: (1) mail: U.S. Department of

Agriculture Office of the Assistant Secretary for Civil Rights 1400 Independence Avenue, SW

Washington, D.C. 20250-9410; (2) fax: (202) 690-7442; or (3) email: program.intake@usda.

gov. 

USDA is an equal opportunity provider, employer, and lender.

Mention of a trade name or brand name does not constitute endorsement or recommendation by 

USDA over other similar products not named.

September 2017
4

Contents

Contact Information.........................................................................................2

Executive Summary..........................................................................................5

Chapter 1: The Dairy and Fluid Milk Processor Promotion Programs................................8

Chapter 2: USDA Activities..............................................................................20

Chapter 3: 2013 Quantitative Evaluation of the Effectiveness of Marketing and Promotion 

Activities by the Milk Processor Education Program, Dairy Management, Inc., and Qualified 

Program........................................................................................................24

Chapter 4: 2014 Quantitative Evaluation of the Effectiveness of Marketing and Promotion 

Activities by the Milk Processor Education Program, Dairy Management, Inc., and Qualified 

Programs......................................................................................................50

Chapter 5: National Dairy Promotion and Research Board 2013 and 2014 Financial 

Information...................................................................................................74

Chapter 6: National Fluid Milk Processor Promotion Board 2013 and 2014 Financial 

Information..................................................................................................115

Chapter 7: Qualified Dairy Product Promotion, Research, or Nutrition Education 

Programs.....................................................................................................124
5

Executive Summary

The enabling legislation of the dairy producer, dairy importer, 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 dairy and fluid milk promotion programs are conducted under the 

Dairy Production 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 

dairy and fluid milk programs, including an accounting of funds collected and spent; USDA 

oversight; and independent analyses of the effectiveness of the advertising campaigns. Unless 

otherwise noted, this report addresses program activities for combined fiscal periods January 1

through December 31, 2013, and January 1 through December 31, 2014, of the Dairy Promotion 

and Research Program and the Fluid Milk Processor Promotion Program.

Dairy Promotion and Research Program

Mandatory assessments collected under the Dairy Act totaled $102.5 million in 2013 and $109.7 

million in 2014, including interest income. The National Dairy Promotion and Research Board 

(Dairy Board) portion of the revenue from the 15-cent-per-hundredweight producer assessment 

was $99.8 million, and the 7.5-cent-per-hundredweight dairy importer assessment was $2.6 

million in 2013. The Dairy Board portion of the revenue from the producer assessment in 2014 

was $102.8 million, and the importer portion was $2.6 million. Qualified dairy product 

promotion, research, or nutrition education programs (Qualified Programs (QPs))

1 revenue was 

$206 million for 2013 and $212 million for 2014. 

Expenditures by the Dairy Board and many of the QPs are integrated through a joint process of 

planning and program implementation to work together on the national, regional, State, and local 

level. 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. 

The Dairy Board continued its support for childhood health and wellness through the publication 

of the The Wellness Impact: Enhancing Academic Success Through Healthy School 

Environments. The report reinforces the “learning connection” – the link between quality 

nutrition, physical activity, and academic performance and aligns with the Dairy Board’s support 

of Fuel Up to Play 60 – the largest in-school childhood health and wellness program in the 

country. 

 1 Qualified Programs (QPs) are State, regional, or importer organizations that conduct a dairy 

product promotion, research, or nutrition education program, authorized by Federal or State law, 

or that were active programs prior implementation of the Dairy Act. The Dairy Order provides 

that dairy producers can receive a credit up to 10 cents, against the 15 cents per hundredweight 

national assessment, and importers can receive up to 2.5 cents per hundredweight, for 

contributions to QPs.
6

The Dairy Board also continued its support of sustainability research and created an industrywide Stewardship and Sustainability Guide to help companies answer customer and consumer 

questions about dairy’s sustainability. Details of the activities of the Dairy Board are presented 

in Chapter 1. Details of the Dairy Board’s 2013 and 2014 finances are presented in Chapter 5. 

Details of the Qualified Programs’ activities can be found in Chapter 7. 

Fluid Milk Processor Promotion Program

The 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 

lower 48 States and the District of Columbia. The Fluid Milk Board continued to focus on 

occasion-based strategies, long-range planning, and a strategic roadmap that identified breakfast 

at home as having the best potential to stem the decline in fluid milk consumption. 

During 2013, the Fluid Milk Board launched a variety of messages and ads highlighting milk’s 8 

grams of protein per 8-ounce serving. Through these messages, the Fluid Milk Board sought to 

educate general market and Hispanic consumers on the versatility of fluid milk and how it can 

help make breakfast a powerful way to start the day. The Fluid Milk Board also continued its 

efforts to position chocolate milk as the refuel beverage of choice for athletes. 

Assessments totaled $100.3 million in 2013 and $97.3 million in 2014. 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 

2013 assessments was $9.3 million, and the amount returned from 2014 assessments was $9.2 

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

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

Fluid Milk Processor Promotion Program are presented in the Fluid Milk Board section in 

Chapter 1 of this report. Details of the Fluid Milk Board’s 2013 and 2014 finances are presented 

in Chapter 6.

USDA Activities

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

oversight objectives ensure the boards and QPs properly account for all program funds and they 

administer the programs in accordance with the respective Acts and Orders and USDA 

guidelines and policies. 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 management reviews. The boards reimburse the U.S. Secretary of Agriculture, as 

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

analyses discussed in Chapter 3. Chapter 2 details USDA’s oversight activities. 
7

Independent Analyses

Chapter 3 and Chapter 4 describe the results of the independent econometric analyses, conducted 

by Texas A&M University, on the effectiveness of the programs implemented by the Dairy 

Board and the Fluid Milk Board. Analyses indicate the generic fluid milk marketing activities 

sponsored by the programs have helped mitigate the decline of fluid milk consumption. 

Chapter 3 presents the combined effects of 2013 promotion activities on the consumption of fluid 

milk, cheese, butter, all dairy products, and dairy exports, and includes benefit-cost ratios 

(BCRs) for dairy producers and fluid milk processors. The BCRs for producers were as follows 

for every dollar invested in demand-enhancing activities: (1) fluid milk - $3.98, (2) cheese -

$6.21, and (3) butter - $29.49. The BCR for fluid milk processors attributed to fluid milk 

promotion activities is $4.88. Chapter 3 also quantitatively assesses the impacts of the dairy 

producer partnership with McDonald’s involving specialty coffee. 

Chapter 4 presents the combined effects of 2014 promotion activities on the consumption of fluid 

milk, cheese, butter, all dairy products, and dairy exports, and includes BCRs for dairy producers 

and fluid milk processors. The BCRs for producers were as follows for every dollar invested in 

demand-enhancing activities: (1) fluid milk - $3.93, (2) cheese - $6.71, and (3) butter - $29.53. 

The BCR for fluid milk processors attributed to the fluid milk promotion program was calculated 

to be $4.87. Chapter 4 also provides a qualitative and quantitative analysis of dairy product 

imports and assessments.
8

Chapter 1

The Dairy and Fluid Milk Processor 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. This chapter details the 

activities of each board. 

I. 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. The 

Dairy Board is responsible for administering the Dairy Order, developing plans and programs, 

approving budgets, and monitoring the program results. 

The U.S. Secretary of Agriculture (Secretary) appoints 38 members to the Dairy Board, 36 of 

whom are dairy producers who each represent 1 of 12 geographic regions within the United 

States, and 2 of whom represent dairy importers. The appointments are made from nominations 

submitted by producer organizations, importer organizations, general farm organizations, and 

QPs. Members serve staggered 3-year terms with no member serving more than two consecutive 

terms. 

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

Committee and the Executive Committee. The F&A Committee consists 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. 

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

Dairy Industry Association (UDIA). 

Dairy Management Inc. (DMI), a management and staffing corporation, is a joint undertaking 

between the Dairy Board and UDIA. UDIA is a federation of 19 of the 63 QPs under the 

direction of a board of directors. The mission of DMI is to drive increased sales of and demand 

for dairy products and ingredients, on behalf of dairy producers and dairy importers. DMI works 

proactively in partnership with leaders and innovators to increase and leverage opportunities to 

expand dairy markets. The DMI Board of Directors comprises all Dairy Board (38) and all 

UDIA (45) members. Voting is equalized between the Dairy Board and UDIA.

DMI serves the Dairy Board and the UDIA Board and facilitates the integration of 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 Dairy Board and UDIA Board 

must separately approve the DMI budget and annual plan before they can be implemented. 

During 2013 and 2014, DMI continued to implement a national staffing structure to plan and 

execute the national programs.

DMI funds 1- to 3-year research projects supporting marketing efforts. Six Dairy Foods 

Research Centers and one Nutrition Institute provided much of the research in 2013 and 2014. 

Their locations and the research objectives are provided in Chapter 5. Universities and other 

industry researchers throughout the United States compete for these research contracts.
9

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: Research and Insights; Health and 

Wellness; Export and Ingredients; and Producer Relations and Consumer Confidence. Each 

committee elects a Chair and Vice-Chair. The joint committees and the DMI staff set program 

priorities, plan activities and projects, and evaluate results. During 2013 and 2014, the Dairy 

Board and UDIA Board met jointly six times.

DMI hosted dairy director regional planning forums across the country to review and create 

marketing strategies for the unified dairy promotion plan. These forums are designed to create 

one unified dairy promotion plan and allow opportunities for grassroots dairy producers to ask 

questions, raise concerns, and offer thoughts on the plan’s direction and development. 

The National Dairy Council® 

The National Dairy Council (NDC) is the nutrition marketing arm of DMI and has been the 

leader in dairy nutrition research, education, and communication since 1915. NDC provides 

timely, scientifically sound nutrition information to the media, physicians, dietitians, nurses, 

educators, consumers, and other health professionals. Additionally, NDC funds independent 

research to aid in the ongoing discovery of information about dairy foods’ important role in a 

healthy lifestyle. This research provides insights to industry for new dairy product innovation. 

Health professional outreach remained a critical component of NDC and the 3-Every-DayTM 

program. The American Academy of Family Physicians, the American Academy of Pediatrics, 

the Academy of Nutrition and Dietetics, the National Medical Association, the School Nutrition 

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

partnership with NDC and 3-Every-DayTM. By working with key health professional partners 

like these, NDC continued to provide a clear, practical message to the public on the importance 

of consuming three daily servings of low-fat or fat-free dairy. Combined, these organizations 

represent more than 250,000 health professionals nationwide. 

As an extension of its online engagement of health professionals, NDC continued its blog, “The 

Dairy Report” (www.thedairyreport.com). Blog contributors include NDC registered dietitians, 

Ph.D. nutritionists, and communication experts, as well as guest nutrition and health and 

wellness experts. Through the blog, NDC provides the latest news, analysis, and opinions on 

dairy-related nutrition and health research. 

Fuel Up to Play 60

 

Fuel Up to Play 60 (FUTP60) is an in-school program combining the nutrition expertise of NDC 

and the fitness expertise and star power of the National Football League (NFL) to combat 

childhood obesity and provide youth with resources necessary to improve their personal health 

and school nutrition and wellness environment. FUTP60 is based on the USDA’s Dietary 

Guidelines for Americans that recommend the consumption of low-fat and fat-free dairy foods, 

more fruits, vegetables, and whole grains, and getting 60 minutes of daily physical activity. 
10

During the 2013 and 2014 school year, FUTP60 reached more than 38 million students in more 

than 73,000 schools. Students and schools joined the program by signing up at 

www.fueluptoplay60.com. Through the enrollment, students and schools gained access to a 

School Wellness Kit containing in-school promotional materials and a “Playbook” containing 

healthy eating and physical activity strategies or “plays.” Each of the plays could be tailored to 

individual school health and wellness needs. Students were encouraged to form teams, with 

supervision from an adult program advisor, to carry out the plays and generate excitement for 

making healthy changes throughout the student body. 

Gen YOUth Foundation

The Gen YOUth Foundation (Foundation), launched in 2011 by NDC, is a non-profit 

organization whose mission is to create a movement that will inspire youth to develop healthier 

eating and physical activity behaviors. The Foundation works with schools, communities, and 

business partners to develop and support programs that create lasting changes in the child health 

and wellness arena, including FUTP60. 

The Foundation continued to build on the success of its 2012 Learning Connection Summit with 

the March 2013 publication of The Wellness Impact: Enhancing Academic Success Through 

Healthy School Environments. The report, published in collaboration with the NDC, American 

College of Sports Medicine, and the American School Health Association, reinforces the 

“learning connection” – the link between quality nutrition, physical activity, and academic 

performance. 

Innovation Center for U.S. Dairy

 

Dairy producers, processors, and manufacturers announced an unprecedented agreement in 2008 

to collaborate on pre-competitive initiatives through a new Innovation Center for U.S. Dairy 

(Innovation Center). The goal of the agreement is to accelerate industry innovation throughout 

the supply chain to increase sales in a competitive consumer marketplace.

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

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

one organization to collaborate on industry issues. 

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, products, and a planet. DMI staffs and supports the Innovation Center.

The Innovation Center moves 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; Research and 

Insights Committee – to act as the steward of the pre-competitive innovation assets and resources 
11

of the industry; Globalization Committee – to provide a strategic analysis of the global dairy 

landscape and a common understanding of the challenges, opportunities, and threats to the U.S. 

dairy industry posed by increasing globalization; Sustainability Committee – to provide 

consumers with the nutritious dairy products they want in a way that is economically viable, 

environmentally sound, and socially responsible; and Food Safety Committee – to improve food 

safety practices and to protect trust in dairy.

Sustainability

Dairy leaders continued their industry-wide commitment and action plan to reduce the dairy 

industry’s carbon footprint while increasing business value from farm to consumer. The action 

plan was an outcome of the industry’s June 2008 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. 

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

while ensuring financial viability and industry growth. The dairy industry has committed to a 

goal to reduce the carbon footprint of fluid milk by 25 percent by the year 2020 – equivalent to 

taking more than 1.25 million cars off the road every year. The industry will reduce greenhouse 

gas emissions throughout the entire dairy value chain from production of feed for dairy cows 

through retail. Based on goals from the Sustainability Summit, the following projects and 

resources have been created to help reduce greenhouse gas emissions: 

1. Farm Smart: Includes support tools that adapt to the size, region, soils, and watersheds 

unique to each dairy. The tools give producers the ability to assess and mitigate their 

environmental profile; track and measure their footprint; plan for future improvements 

and communicate progress to customers, community members, regulators, and other 

stakeholders. Farm Smart tools were upgraded in 2014, and new tools were debuted to 

estimate loss impact, provide practice alternatives, estimate dollar value of 

improvements, and quantify potential environmental benefits. The upgraded tools 

featured four modules: Feed Management, Energy Consumption, Nutrient Management, 

and Herd Management. Farm Smart has been funded in part by the Walton Family 

Foundation and USDA’s Natural Resources Conservation Service (NRCS).

2. Farm Energy Efficiency (FEE): Promotes energy conservation, efficiency, cost savings, 

and greenhouse gas reductions through outreach efforts linking dairy producers to 

programs and funds to assist with energy audits and technology upgrades. In 2013, FEE 

urged dairy producers to apply for funding for energy audits and equipment upgrades 

through USDA’s NRCS’ Environmental Quality Incentives Program. Through a 3-year 

joint initiative with USDA NRCS, more than 50 dairy experts in 10 target States were 

trained to help complete on-farm energy audits.

3. Dairy Power/Biogas Capture and Transport: Focuses on harnessing the value and 

potential of anaerobic methane digester systems for U.S. dairy producers. The project 

seeks to put 1,300 methane digesters on dairy farms by 2020. The project also focuses on 

partnerships between dairy farms, food processors, and retailers to turn waste into a 
12

source of value with methane digester systems by combining food waste with cow 

manure to maximize environmental, economic, and community benefits.

4. Cow of the Future: Seeks scientifically sound, economically viable, and socially 

responsible ways of reducing enteric methane emissions through improvements in dairy 

cow nutrition, genetics, and health. The project aims to reduce greenhouse gas emissions 

for fluid milk by 600,000 metric tons through the adoption of existing technologies and 

practices and research into new opportunities. In 2013, the Cow of the Future team 

worked on the Considerations and Resources on Feed and Animal Management: Cow of 

the Future Report to Improve Business Value and Reduce Greenhouse Gas Emissions 

report. The report adds environmental and economic considerations to known feed and 

animal best management practices for on-farm decision makers, including the importance 

of identifying and providing the macro- and micro-nutrient needs at all phases of a cow’s 

life to enhance animal health, increase milk productivity, and reduce enteric emissions.

5. Dairy Plant Smart: Helps dairy processors and manufacturers track and reduce energy 

use, operating costs, and greenhouse gas emissions associated with energy, fuel, 

refrigerant, and packaging. The project provides an average of greenhouse gas emissions 

data for plants in the same region as well as a national average to serve as a benchmark. 

Dairy Plant Smart promotes dairy industry participation in the U.S. Environmental 

Protection Agency’s (EPA) Energy Star Challenge for Industry. The program recognizes 

individual dairy plants that have reduced their energy intensity by 10 percent within 5 

years.

6. Dairy Fleet Smart: Combines science-based decision making tools with recommended 

management practices that reduce fuel consumption, costs, and greenhouse gas emissions 

associated with milk transportation and distribution. The tool complements the EPA’s 

SmartWay Program, which helps long-haul fleets and professional drivers reduce fuel 

consumption, emissions, and air pollution. When used in tandem with the SmartWay 

program, Dairy Fleet Smart provides performance-improvement tools tailored to dairy 

industry shippers and carriers.

7. Dairy Coordinated Agricultural Project Grant: USDA announced a grant of nearly $10 

million in support of the development of Farm Smart. Researchers at the University of

Wisconsin-Madison used the grant to study the environmental impact of various dairy 

production systems and develop best management practices for producers to implement 

at the farm level. 

Export and Dry Ingredients

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

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

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

exporters, and suppliers.
13

In 2013, USDEC received $15.9 million from DMI; $4.7 million from FAS’s Market Access 

Program and Foreign Market Development Program; and $1.1 million from membership dues. In 

2014, USDEC received $16.7 million from DMI; $5.7 million from FAS; and $1.3 million from 

membership dues.

In 2013 and 2014, USDEC continued to focus on maximizing its resources to USDEC members 

and aligning them with a shifting global business environment. USDEC has offices in 

Washington, D.C.; Mexico City, Mexico; Tokyo, Japan; Seoul, South Korea; Hong Kong and 

Shanghai, China; Ho Chi Minh City, Vietnam; Bangkok, Thailand; Beirut, Lebanon; and São 

Paulo, Brazil (Figure 1-1).

Figure 1–1. U.S. Dairy Export Council Offices.

USDEC continued the use of the Web site www.innovatewithdairy.com to help increase demand 

for U.S. dairy ingredients by promoting the ways that dairy adds the difference in taste, 

functionality, and convenience. The ingredient program supports dairy product and nutrition 

research, ingredient applications, development, and technical assistance for the dairy, food, and 

beverage industries. Dairy, food, and beverage manufacturers use this program to find knowhow, laboratory, and professional resources to help develop or improve foods using dairy 

ingredients.

Publications supporting the innovation and ingredients program include: (1) Ingredient 

Specification Sheets–provide technical basics on a variety of dairy ingredients and are updated as 

new data are available; (2) Dairy Herald–reports periodically on how food formulators and 

markets can take advantage of the taste, cost, functional, and nutritional appeal of dairy 

ingredients; (3) Application Monographs–published as necessary to provide a comprehensive 

look at how whey protein and other dairy ingredients can be used in foods and beverages for 

different functionality; (4) Tools for Innovation–periodic supplement from DMI and Dairy Foods 

magazine covering dairy product trends and research; (5) Innovations in Dairy–technical 

bulletin, published two to three times a year on specific topics regarding dairy products, 

ingredients, processing, and packaging; and (6) Dairy Business View– e-newsletter published bi-
14

monthly with Dairy Foods magazine covering dairy industry news, new technologies, business 

trends, innovation, and research.

Dairy Research Institute

 

DMI created the Dairy Research Institute (DRI) in 2010 to conduct research on behalf of the 

Innovation Center, the National Dairy Council, and other sponsors by building on the dairy 

promotion program’s investment in research. The nonprofit organization works with and 

through industry, academia, government, and commercial partners to increase pre-competitive, 

technical research in nutrition, products, and sustainability. DRI is the first organization of its 

kind to provide an industry-wide approach to technical research for the dairy industry. 

DRI research priorities are categorized into four areas. Nutrition Research includes blood 

pressure, dairy protein, digestive health, milk fat/cheese, obesity, metabolic health, body 

composition and performance, and the relationship of food and beverage nutrient density to 

climate impact. Product research includes applications and technical support for cheese, fluid 

milk/cultured products, milk ingredients/fractions, and whey/co-products. Sustainability 

research projects include greenhouse gas reduction opportunities and lifecycle assessments. 

Finally, planning/partnership/regulatory research includes business development strategy, 

planning and partnerships, and regulatory affairs guidance. 

In 2013, DRI continued its monthly e-newsletter, Dairy Research Insights, to provide updates on 

recent technical research to dairy industry stakeholders. The e-newsletter features summaries of 

published research related to DRI’s nutrition, product, and sustainability priority areas. 

The e-newsletter also provides a list of upcoming events, such as conferences, short courses, and 

workshops.

Industry and Image Relations

Few consumers are connected to food production, and they receive mixed messages through the 

media about the agriculture industry. 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.

DMI continued www.dairygood.org, as a platform for the dairy industry to collectively come 

together and tell its story using unified messaging. The web site’s goal is to put a “face” on the 

dairy industry and amplify conversations that take place in other dairy social media channels, 

such as NDC and FUTP60, to demonstrate dairy’s commitment to food and nutrition security, 

and to drive conversations to promote consumer confidence in the dairy industry and its 

products. 

To help dairy producers directly communicate with consumers about dairy farming practices, 

DMI continued its “Telling Your Story” (TYS) program in 2013 and 2014. TYS provides dairy 

producers with public relations, presentation, and media training to build and maintain 

consumers’ confidence in the dairy industry’s production practices and products. DMI’s TYS 
15

social media component includes Facebook, YouTube, Twitter, and blogs to develop a network 

of social media-savvy dairy advocates to tell the industry’s story, build a positive image, and 

counter inaccurate or uninformed commentary online about dairy farming practices and products. 

DMI continued its Issues Management and Crisis Readiness programs. DMI staff and related 

dairy industry representatives work to monitor and identify current and potential issues where the 

safety, benefit, or reputation of dairy producers or dairy products may be publicly called into 

question. As needed, the network of representatives responds to media requests, trains dairy 

spokespeople, builds third-party relationships within the agricultural industry, and distributes

media alerts with key messages to maintain consistent industry-wide responses. Primary areas of 

focus included animal welfare, environment, sustainability, food safety, child nutrition, and 

modern farming practices. 

The Crisis Readiness program continued to develop a strong network of dairy industry and 

agricultural representatives. Through this coordinated effort, the program developed a plan to 

communicate quickly, accurately, and effectively in the event of a crisis such as a disease 

outbreak, product contamination, or food-borne illness. The program led several regional crisis 

drills that engaged many sectors of the industry by focusing on hypothetical scenarios ranging 

from animal disease outbreaks to the international tampering of dairy products. These drills 

helped to maintain the industry’s state of readiness and reinforced the critical nature of steps 

taken within the first 24 hours of a crisis. 

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 cofunded retail butter promotion activities. The national effort helped to drive incremental retail 

butter sales in select markets across the United States.

II. 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 funded by 

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

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

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

The U.S. 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. The members of the Fluid Milk Board serve 

3-year terms and are eligible to be appointed to two consecutive terms. The Fluid Milk Order 

provides that no company shall be represented on the Board by more than three representatives. 
16

The Milk Processor Education Program (MilkPEP) carries out the activities of the Fluid Milk 

Board. 

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 occasion-based program 

committees. The program committees are responsible for setting program priorities, planning 

activities and projects, and evaluating results. The Fluid Milk Board maintains 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 2013 and three times during 2014.

The Milk Processor Education 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 consumer residences.

Medical Advisory Board

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, continued to 

meet in 2013 and 2014. The MAB provides guidance to the Fluid Milk Board’s development of 

key nutritional and health messages for consumers and health professionals. As in previous 

years, the MAB members assisted the Fluid Milk Board in continuing relationships with health 

and health professional organizations such as the American Academy of Pediatrics, the Academy 

of Nutrition and Dietetics, and the American Heart Association. They also were featured as 

medical professionals in the media, providing science-based statements supporting the health 

benefits of fluid milk.

The MAB activities of the Fluid Milk Board also included preparing press materials and acting 

as spokespersons on breaking research relevant to fluid milk. The MAB continued to inform 

others in the scientific community about the strong research showing consuming milk after 

exercise can aid in muscle recovery and rehydration.

Fluid Milk Programs

Breakfast at Home – General Market and Hispanic

Breakfast represents the time of day when over half of daily fluid milk consumption occurs. 

Through its Breakfast at Home programs, MilkPEP sought to show the versatility milk can bring 

to the morning routine, including lattes, smoothies, cereal, and of course, milk as a stand-alone 

beverage. MilkPEP leveraged consumer research which shows that consumers would drink and 

serve more milk if the messaging clearly reinforced reasons to believe in consuming milk. The 

most compelling reason, according to the consumer research, was milk’s 8 grams of protein per 

8-ounce serving. 
17

MilkPEP continued its Hispanic campaign as part of the industry’s outreach to the growing 

Hispanic population. MilkPEP continued El Proyecto Desayuno (The Breakfast Project) to 

educate Hispanic parents on the value of milk at breakfast for everyone, not just children. 

During the Super Bowl, MilkPEP featured Victor Cruz of the New York Giants, in the 

“Breakfast Blitz.” Bilingual point-of-sale materials, a 3-minute segment on the number-one 

Spanish-language morning show, Despierta America, as well as social media communications, 

supported the Breakfast Blitz. The program garnered 131 million impressions through 

traditional and social media. 

In 2014, the Hispanic campaign also introduced consumers to MilkPEP’s Great American Milk 

Drive through a separate launch event for Hispanic consumers to ensure the program’s message 

resonated. The launch event generated more than 115 million impressions, reinforcing the 

message of milk’s nutrition and helping ensure it reached families in need. 

MilkPEP also focused on industry collaboration in 2014, partnering with DMI to leverage a 

partnership with Quaker Oats Company (Quaker) to implement the “Make it with Milk” 

program. The program encouraged consumers to increase their protein intake at breakfast by 

making their Quaker oatmeal with milk instead of water. Packages featured Quaker’s iconic 

spokes character, Larry, with a first-time-ever altered image including a milk mustache. 

MilkPEP debuted El Super Desayuna (The Super Breakfast), a television spot that focused on 

Hispanic moms and the power of milk’s protein during breakfast. MilkPEP concentrated on 

certain time periods throughout the year, including Mother’s day, by partnering with morning 

show host Karla Martinez. Martinez appeared in a milk mustache ad as well as digital videos to 

help engage Latina moms. During Hispanic Heritage month, MilkPEP also engaged the Hispanic 

community by having five of the top Hispanic mommy bloggers share milk-based recipes and in 

2014, were able to use the mommy bloggers to share the Quaker “Make it with Milk” program 

with fans. This effort culminated in more than 35 million social media impressions.

MilkPEP also debuted its first major protein message to over 100 million consumers in 2013 

during Super Bowl XLVII during its television commercial. The commercial featured Dwayne 

“The Rock” Johnson and showed how starting the day with milk’s protein could give consumers 

strength to tackle obstacles throughout the day. The protein messaging continued beyond the 

Super Bowl and included the use of celebrity milk mustache print ads and shifted focus from 

milk’s essential nutrients generally to specifically highlighting milk’s protein. In addition to 

“The Rock,” Katie Couric and Taye Diggs were featured in these protein-specific celebrity ads.

To build on the protein message, MilkPEP developed the Protein Fight Club. The campaign 

used humorous videos to convey that each 8-ounce serving of milk contains 8 grams of protein 

and shouldn’t be overlooked at breakfast, especially when consumers are looking for fast, 

portable, and versatile options. The campaign was featured online and provided consumers with 

a chance to win a free gallon of milk each minute for an 8-week period. MilkPEP results showed 

the Protein Fight Club resonated equally among moms and dads, and provided the opportunity 

for MilkPEP to create messaging to appeal to parents in general and focus on milk’s ability to fit 

into any lifestyle as family dynamics change. 
18

In 2014, after 20 years of using the iconic got milk? Milk Mustache campaign, one of the most 

recognizable advertising campaigns in U.S. history, MilkPEP made the strategic decision to 

retire the “got milk?” campaign and launch its new, more contemporary, Milk Life campaign. 

The Milk Life campaign focuses on fluid milk and its nutritional benefits, including high-quality 

protein and its ability to help power the potential of every day. The Milk Life campaign included 

print, television, digital advertising, retail promotions, public relations, and social media all 

supporting the benefits of milk’s protein. Targeting television ads during National Collegiate 

Athletic Association (NCAA) March Madness and the Academy Awards show, as well as print 

ads in People magazine and Sports Illustrated, the Milk Life campaign garnered 71 million 

digital impressions, 191 million print impressions, and 1.6 billion paid impressions from Milk 

Life television advertisements in its first year. 

In 2014, MilkPEP, in partnership with Feeding America®, launched the Great American Milk 

Drive, the first-ever national program designed to deliver nutrient-rich gallons of milk to families 

in need who struggle with food insecurity. Milk is one of the most requested, yet least donated, 

items at America’s food banks because it is perishable. As a result, Feeding America® is only 

able to provide, on average, less than 1 gallon of milk per person per year. MilkPEP’s Great 

American Milk Drive encourages consumers across the United States to donate milk to families 

in need through online or in-store donations. In 2014, 12 retailers, 31 milk companies, and more 

than 20 QPs participated in the program collecting over 143,000 gallons of milk at retail, and 

more than 292,000 total gallons were donated to Feeding America® families across the United

States. 

Refuel | Built with Chocolate Milk

MilkPEP continued to promote its chocolate milk message for exercise recovery to athletes in 

2013, and, through additional research, identified a broader group of interested exercisers. To 

engage this new audience, MilkPEP teamed up with football star Hines Ward. As the face of 

chocolate milk, Ward trained to compete in the 2013 IRONMAN World Championship triathlon 

in Hawaii. Ward joined forces with two everyday athletes, chosen from hundreds of applicants, 

and a wounded warrior from the Challenged Athlete’s Foundation, to create the Become One 

Team. Together, the Become One team participated in a 7-month training and recovery regimen 

that included chocolate milk, with professional coaches and sports dietitians to prepare for the 

race. The Chocolate Milk Grassroots tour traveled across the country to 35 athletic racing events 

with IRONMAN, Rock ‘n’ Roll Marathon, and the Challenged Athletes Foundation. Processors 

were engaged in the race events and distributed over 299,000 samples of low-fat chocolate milk 

to athletes as they completed the races. Chocolate milk was also the Official Refuel Beverage of 

the USA Women’s Ski Jump Team and the USA Hockey Team. Both teams were featured in got 

chocolate milk? print, digital, and television ads. 

In 2014, through research, MilkPEP was able to identify a broader group, about 30 million 

adults, of interested and persuadable exercisers to target with low-fat chocolate milk recovery 

after a tough workout. Launching the Built with Chocolate Milk program, the program no longer 

focused only on elite athletes, but also on athletes and exercisers nationwide seeking recovery 

after a tough workout. Under this program, MilkPEP launched the Mission Apolo: Built with 

Chocolate Milk program, following the training of short-course Olympic speed skater Apolo 
19

Ohno and Women’s Health fitness director, Jen Ator, as they prepared for the ultimate goal of 

completing the IRONMAN World Championship in Kona, HI. The webisodes and 

advertisements demonstrated their strength, endurance, and athletic pursuits, garnering 2 million 

video views on YouTube and 346 million total earned media impressions. The program reached 

a broad audience with the chocolate milk recovery message through media highlights including 

ESPN, NBC Sports, Men’s Health, Huffington post, Triathlete magazine, and Sports Illustrated. 

In continuing its partnership with the IRONMAN series and the Rock ‘n’ Roll Marathon in 2014, 

the Built with Chocolate Milk campaign was expanded to become the “Official Refuel 

Beverage” of the Iron Girl and Esprit de She race series. This program generated over 63 million 

total earned media impressions. Additionally, 25 milk companies participated in marquee 

grassroots events in 2014, distributing over 330,000 samples of low fat chocolate milk to 

approximately 327,000 athletes as they crossed the finish lines. The Built with Chocolate Milk 

campaign also continued to promote strong relationships with Team Chocolate Milk elite 

athletes, including Mirinda “Rinny” Carfrae, Craig “Crowie” Alexander, and Luke McKenzie, 

by supporting them on social media channels throughout 2014.

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, promotions, and public relations activities. 

Over the years, BDR has conducted market tests and studies in various business channels to 

develop ways to increase milk sales and subsequently turn these studies into customer-friendly 

processor materials.

MilkPEP continued its commitment to conducting research and building the strategy for the 

consumer campaign. MilkPEP conducted research that shaped the direction of the consumerfacing breakfast program. In addition to the breakfast segmentation research, MilkPEP 

conducted additional research regarding the Refuel/Built with Chocolate Milk recovery message 

strategy to lead the effort in research campaign development. Ongoing efforts such as the 

Consumption Tracker, Attitude and Awareness Tracker, All Channel Tracking, and the Annual 

School Survey helped the industry keep a pulse on what is happening in milk consumption and 

helped develop new plans to drive better business practices. MilkPEP also continued the 

Nutrition News Bureau program, ensuring the positive research showing milk’s benefits were 

reported in the media, as well as its Supermarket Registered Dietician program, reinforcing 

Supermarket Dieticians’ understanding of the importance of milk and conveying milk’s 

nutritional benefits in in-store programs. 
20

Chapter 2 

USDA Activities

The USDA’s Agricultural Marketing Service’s (AMS) Dairy Program has day-to-day oversight 

responsibilities for the Dairy Board and the Fluid Milk Board. 

AMS Dairy Program’s 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 AMS Dairy Program. 

Program materials are monitored for conformance with provisions of the respective Acts and 

Orders, the U.S. Dietary Guidelines for Americans, and other legislation. AMS Dairy Program 

also uses the “Guidelines for AMS Oversight of Commodity Research and Promotion Programs” 

to govern oversight and facilitate the application of legislative and regulatory provisions of the 

Acts and the Orders.

 

The AMS Dairy Program ensures that the collection, accounting, auditing, and expenditure of 

promotion funds are consistent with the enabling legislation and Orders; certifies Qualified 

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

advertising campaigns. AMS Dairy Program assists the boards in their assessment collection, 

compliance, and enforcement actions. 

Other AMS Dairy Program responsibilities relate to nominating and appointing board members, 

amending the Orders, conducting referenda, public and industry communications, and 

conducting periodic management reviews. AMS Dairy Program representatives attend full board 

and committee meetings and other meetings related to the program.

Dairy Promotion and Research Program Oversight

Nominations and Appointments

The Dairy Board is composed of 38 members, including 36 domestic dairy producers and 2 dairy 

importers, who administer the program. Dairy Board members serve 3-year terms, with no 

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

producers or dairy importers. The Secretary selects dairy producer members from nominations 

submitted by producer organizations, general farm organizations representing dairy producers, 

Qualified Programs, or other interested parties. The Secretary selects dairy importer members 

from nominations submitted by individual importers of dairy products or by organizations 

representing dairy importers.

Collections

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

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

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

use handled for the account of the producer and remit the assessment to the Dairy Board. The 

current rate of assessment for dairy producers is 15 cents per hundredweight of milk for 
21

commercial use or the equivalent thereof, as determined by the Secretary. In addition, the rate of 

assessment for imported dairy products prescribed by the order is 7.5 cents per hundredweight of 

milk for commercial use or the equivalent thereof, as determined by the Secretary.

The Dairy Act provides that dairy producers can direct up to 10 cents of their 15-cent-perhundredweight assessment to Qualified Programs. For the years 2013 and 2014, the net Dairy 

Board assessment was approximately 5.03 cents and 5.15 cents, respectively, per hundredweight 

of milk marketed. The Dairy Act also provides that dairy importers can designate 2.5 cents of 

their 7.5-cent per hundredweight assessment to Qualified Programs. If dairy producers or dairy 

importers do not specify designation to a Qualified Program, then the entire assessment is 

retained by the Dairy Board for use by the national program. 

Contracts

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

the Secretary. The Dairy Program reviewed and approved 318 agreements, amendments, and 

annual plans in 2013. During 2014, the Dairy Program reviewed and approved 395 agreements, 

amendments, and annual plans. 

Contractor Audits

In 2013 and 2014, DMI retained the certified public accounting firm of Ernst & Young to audit 

the records of the following contractors: IntNet; Domino’s Pizza, Inc.; MMS Education, Inc.; 

NPD Group, Inc.; University of Wisconsin-Madison; Almanac Systems, LLC; Keren Fiorenza; 

Watson Green, LLC; Intersport, Inc.; and American Mexican Marketing. No material exceptions 

were found. 

USDA Foreign Agricultural Service

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

development activities outside the United States to the Foreign Agricultural Service (FAS) (7 

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

contracts. AMS Dairy Program also reviews USDEC contracts to ensure conformance with the 

Dairy Act, Dairy Order, and with established USDA policies. AMS Dairy Program approved a 

total of 90 USDEC contracts in 2013 and approved 103 USDEC contracts in 2014.

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 AMS (70 FR 2743, published January 14, 2005). The final rule amended 

Section 1150.157 of the Dairy Order. The amount of exempted assessments in 2013 and 2014 

was approximately $1,010,000 and $1,030,000, respectively. In States having mandatory 

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

producers are still responsible for remittance of State assessments. The Dairy Order requires 

organic producers to re-apply annually to continue to receive the exemption.
22

USDA Dairy Promotion and Research Program Expenses

Per the Dairy Board’s enabling legislation, the Dairy Board reimburses the AMS Dairy Program 

for the cost of administrative oversight and compliance audit activities. In 2013, the AMS Dairy 

Program’s oversight expenses totaled $611,026 and the Federal Milk Market Administrators 

incurred $204,605 in expenses for verification audits conducted on behalf of the Dairy Board. In

2014, the AMS Dairy Program’s oversight expenses totaled $644,129 and the Federal Milk 

Market Administrators incurred $199,707 in expenses for verification audits conducted on behalf 

of the National Dairy Board. 

Qualified Programs

Qualified Programs are State, regional, or importer organizations conducting dairy product 

promotion, research, or nutrition education programs, authorized by Federal or State law, or were 

active programs prior to the Dairy Act. In 2013 and 2014, the AMS Dairy Program reviewed 

applications for continued qualification from 64 Qualified Programs. A list of the active 

Qualified Programs is provided in Chapter 7. Consistent with its responsibility for monitoring 

the Qualified Programs, the AMS Dairy Program obtained and reviewed income and expenditure 

data from each program. The data reported from each Qualified Program are included in 

aggregate for 2013 and 2014 in Chapter 7.

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 

2 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. Fluid Milk Board 

members who fill vacancies with a term of 18 months or less may serve two additional 3-year 

terms. The Secretary selects Fluid Board members from nominations submitted by fluid milk 

processors, interested parties, and eligible organizations. 

Program Development

For the years 2013 and 2014, the Fluid Milk Board contracted directly with MGSCOMM and the 

Interpublic Group Agencies of FCB; Lowe Campbell Ewald, Weber Shandwick, Deutsch 

Worldwide, Inc., and Draft FCB., to develop its mom and teen advertising, promotions, 

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

Collections

The Fluid Milk Act specifies that each fluid milk processor shall pay an assessment on each unit 

of fluid milk product processed and marketed commercially in consumer-type packages. The 

current rate of assessment is 20 cents per hundredweight of fluid milk products marketed.
23

Contracts

The Fluid Milk Act and Fluid Milk Order require all budgets and contracts expending 

assessments be approved by the Secretary. Fluid Milk Board agreements, amendments, and 

annual plans totaled 94 approvals in 2013 and 152 approvals in 2014. Chapter 6 lists the 

contractors and corresponding board initiatives approved by USDA.

Contractor Audits

The Fluid Milk Board retained the certified public accounting firm of Snyder, Cohn, Collyer, 

Hamilton & Associates, P.C. (Snyder Cohn), in 2013 and 2014 to audit the records of: Lowe 

Campbell Ewald, MGSCOMM, Weber Shandwick, Draft FCB, and Deutsch Worldwide, Inc. 

Snyder Cohn’s engagement and agreed-upon procedures were to determine if the agencies had 

conformed to the financial and regulatory compliance requirements specified in their individual 

agreements with the Fluid Board. No material exceptions were found. 

USDA Fluid Milk Processor Promotion Program Expenses

Per the Fluid Milk Board’s enabling legislation, the Fluid Milk Board reimburses USDA for the 

cost of administrative oversight and compliance audit activities. In 2013, the AMS Dairy 

Program’s oversight expenses totaled $409,657 and the Federal Milk Market Administrators 

incurred $79,068 in expenses for verification audits conducted on behalf of the Fluid Milk 

Board. In 2014, the AMS Dairy Program’s oversight expenses totaled $396,045 and the Federal 

Milk Market Administrators incurred $85,268 in expenses for verification audits conducted on 

behalf of the Fluid Milk Board. 
24

Chapter 3 

Quantitative Evaluation of the Effectiveness of Marketing and Promotion 

Activities by the Dairy Promotion and Research Program and the Fluid Milk 

Processor Promotion Program

Introduction

The Dairy and Fluid Milk Acts require an annual independent analysis of the advertising and 

promotion programs that operate to increase consumer awareness and sales of fluid milk and 

dairy products. Texas A&M University researchers were awarded a competitive contract to 

complete the study. Chapter 3 summarizes the quantitative evaluation of the effectiveness of the 

Dairy and Fluid Milk Promotion Programs.

Background on the Promotion Programs

The Dairy Promotion and Research Program is a coordinated research and promotion program to 

maintain and expand domestic and foreign markets for fluid milk and dairy products. To fund 

the program, U.S. dairy producers pay a 15-cent-per hundredweight assessment on milk 

marketing and importers pay 7.5 cent-per hundredweight assessment, or equivalent thereof, on 

dairy products imported into the United States. Dairy Management Inc. (DMI), a management 

and staffing corporation, is a joint undertaking between the National Dairy Promotion and 

Research Board (Dairy Board) and the United Dairy Industry Association (UDIA). UDIA is a 

federation of 19 of the 63 Qualified Programs (QPs) under the direction of a board of directors. 

The mission of DMI is to drive increased sales of and demand for dairy products and ingredients, 

on behalf of dairy producers and dairy importers. DMI works proactively in partnership with 

leaders and innovators to increase and apply knowledge that leverages opportunities to expand 

dairy markets.

QPs are State, regional, local, or importer promotion programs certified annually by the 

Secretary of Agriculture to receive a portion of the funds generated under the Dairy Promotion 

and Research Program.

 

The Fluid Milk Processor Promotion Program, or Fluid Milk Promotion Program develops and 

finances generic advertising programs designed to maintain and expand markets and uses for 

fluid milk products produced in the United States. Fluid milk processors marketing more than 3 

million pounds of fluid milk per month pay a 20-cent-per-hundredweight assessment on fluid 

milk processed and marketed in consumer-type packages in the United States. The Fluid Milk 

Processor Education Program (MilkPEP) is the staffing organization that carries out the 

promotion programs on behalf of the Fluid Milk Promotion Program. 

The Dairy Promotion and Research Program, funded by dairy producers and dairy importers, and 

the Fluid Milk Processor Promotion program, funded by fluid milk processors, are hereinafter 

referred to as the National Programs.
25

Objectives of the Evaluation Study

The National Programs are evaluated with the key question in mind: Have the demandenhancing activities conducted by dairy producers, importers, and fluid milk processors actually 

increased the demand for fluid milk and dairy products? 

Historically, this question has been answered through econometric studies on the relationships 

between consumption of dairy products and promotion program demand-enhancing 

expenditures. These demand relationships are estimated in a structure that controls for the 

impacts of market forces. Economic returns to dairy producers, importers, and fluid milk 

processors that result from promotion activities and the associated changes in consumption are 

calculated using the parameters obtained from the demand models. The summary indicator of 

economic return on investment is a benefit-cost-ratio (BCR).

 

The objectives of this report are threefold:

1. Determine the combined effects of the program activities of MilkPEP, DMI, and QPs on 

the consumption of fluid milk, cheese, butter, all dairy products, and dairy exports;

2. Develop and implement a simulation model to calculate BCRs for dairy producers and 

fluid milk processors; and

3. Quantitatively assess the impacts of the DMI partnership with McDonald’s involving 

specialty coffee.

This project covers the time period from 1995 to 2013 and captures the joint efforts of DMI, 

MilkPEP, and QPs. It is important to note that the import assessment funding is included in the 

2012 and 2013 aggregate data for fluid milk and dairy products, but there were insufficient data 

to separately assess their impact on consumer demand2

.

Summary of the Findings

The overall finding of this evaluation is that the National Programs have effectively increased the 

demand (domestic and exports) for dairy products. The gains in profit at the farm level were far 

larger than the costs associated with the National Programs combined. The impacts on producers 

as well as on fluid milk processors’ spending are summarized with BCRs. The BCRs are based 

on the demand-enhancing expenditures only; therefore they do not account for certain operating 

expenses such as overhead, technical support, and industry relations.

The BCRs expressed in terms of producer profit at the farm level were calculated to be $3.98 for 

every dollar invested in demand-enhancing activities for fluid milk; $6.21 for every dollar 

invested in demand-enhancing activities for cheese; and $29.49 for every dollar invested in 

demand-enhancing activities for butter. The BCR of export promotion is $5.58 per dollar 

invested. Under both the aggregated fat and skim solids basis, a significant positive relationship 

exists between the demand for dairy and the National Programs’ expenditure, in both the short

run and the long run. The aggregate, all-dairy BCR is 5.53, meaning that the producer profit 

increases by $5.53 for each one-dollar investment in demand-enhancing activities. 

 2 Since the data is quarterly there would not be enough data points to perform an econometric estimation.
26

The partnership between DMI and McDonald’s was effective in stimulating additional servings 

of specialty coffee. Over the period of the partnership, close to 10 percent of McCafe servings 

were found to be associated with partnership expenditures. The cumulative impacts of this 

partnership were spread over a period of 7 months. Hence, evidence exists to indicate DMI is 

helping increase fluid sales by innovating and growing through partnering with quick-serve 

restaurants (QSRs) such as McDonald’s.

Since cost-of-production data are unavailable for fluid milk processors, the fluid milk processor 

BCR is calculated using the milk cost as a proxy for cost of production. The BCR in terms of a 

fluid milk processer is a $4.88 return to fluid milk processors for every dollar invested in 

demand-enhancing activities for fluid milk.

With regard to methodology, the structural econometric models that are the basis for these 

findings are statistically valid and consistent with prior studies in the literature on evaluation of 

generic commodity promotion.

 

DMI, MilkPEP, and QP Promotion Program Expenditures

The data for this analysis were acquired from DMI, MilkPEP, and QPs. The demand-enhancing 

expenditures from all three entities were aggregated. 

The National Programs use advertising as well as other means to influence consumers. 

Advertising dollars are directed to media outlets, including television, outdoor, print, radio, and 

the internet. Marketing activities other than advertising are directed at the retail level of the 

marketing channel or at intermediaries. The non-advertising marketing expenditures include 

health and nutrition education programs; public relations; food service and manufacturing 

programs; sales promotion programs; school milk programs; school marketing activities; retail 

programs; child nutrition and fitness initiatives; and single-serve milk promotion. 

Certain promotion expenditures are not directed at the retail level of the marketing channel; these 

types of expenditures include crisis management, trade service communications, and strategic 

research activities. These expenditures are classified as demand-enhancing expenditures. 

Expenditures for overhead, technical support, and industry relations are excluded from this 

analysis because they are not primarily demand-enhancing. 

Over the past several years, the DMI Board of Directors changed its marketing strategy to focus 

more on partnerships within the dairy industry to increase demand for fluid milk, manufactured 

dairy products, and dairy ingredients. Currently, DMI’s strategies include working with and 

through specific partners to achieve sustainable, category-level sales impacts; attract partner coinvestment to fund demand-enhancing efforts; and maximize resources and impacts in 

increasingly competitive markets. These efforts include co-developing marketing information, 

research, business models, and best practices that can be used by the industry to increase sales of 

fluid milk and dairy products.

Annual promotion program expenditures made by DMI, MilkPEP, and QPs over the period 1995 

to 2013 are depicted in Table 3-1 and in Figure 3-1. On average, slightly more than $350 million 
27

in total was spent annually by the respective entities over this period and close to $400 million 

each year from 2011 to 2013. Median DMI expenditures were close to $90 million per year, 

ranging from $65.3 million to $99.7 million. Similarly, median MilkPEP expenditures were 

about $95 million per year, ranging from $38.7 million to $101.9 million. Finally, median 

expenditures made by QPs were about $173 million per year. 

The data associated with the demand-enhancing activities initiated by DMI and MilkPEP are also 

available on a quarterly basis. QP data are only available on an annual basis. To estimate 

quarterly data for the QPs, the seasonal nature of DMI and MilkPEP expenditure data is assumed 

to be similar to the QP expenditure data. Consequently, the seasonal factors associated with the 

DMI and MilkPEP data are obtained and applied to the annual QP data to arrive at quarterly 

expenditures. The estimation of these data on a quarterly basis is important in allowing for 

sufficient observations to conduct the econometric analysis of demand for dairy products. 

Nominal seasonally adjusted demand-enhancing expenditures by DMI, MilkPEP, and QPs for all 

dairy products (fluid and manufacturing) combined on a quarterly basis from 1995 to 2013 are 

exhibited in Figure 3-2. These demand-enhancing expenditures varied from $50.9 million to 

$96.7 million per quarter, averaging $66.8 million.

Table 3-1. Annual Dairy Management, Inc., Milk Processor Education Program, and Qualified 

Program Promotion Program Expenditures, 1995 to 2013*

Year DMI MilkPEP QPs Total

1995 $88,105 $43,654 $160,832 $292,592

1996 $99,674 $38,690 $159,600 $297,964

1997 $93,859 $101,850 $160,379 $356,088

1998 $97,570 $100,901 $158,348 $356,819

1999 $90,055 $97,023 $161,161 $348,238

2000 $88,068 $95,158 $169,654 $352,880

2001 $96,185 $95,112 $169,967 $361,264

2002 $92,012 $93,511 $174,857 $360,380

2003 $87,301 $95,688 $165,973 $348,962

2004 $82,871 $97,167 $172,667 $352,705

2005 $76,125 $83,527 $175,081 $334,733

2006 $65,296 $92,030 $182,443 $339,768

2007 $74,623 $101,125 $190,289 $366,037

2008 $99,051 $97,003 $181,091 $377,145

2009 $94,071 $95,109 $187,992 $377,172

2010 $87,512 $98,316 $166,459 $352,287

2011 $88,456 $91,289 $214,758 $394,503

2012 $82,360 $91,893 $216,484 $390,736

2013 $93,184 $89,633 $216,844 $399,662 *

Thousands of dollars 

Source: Dairy Management, Inc., Milk Processor Education Program, and U.S. Department of Agriculture
28

Figure 3-1. Annual Dairy Management, Inc., Milk Processor Education Program, and Qualified 

Program Promotion Expenditures, 1995 to 2013

 Source: Dairy Management, Inc., Milk Processor Education Program, and U.S. Department of Agriculture 

Nominal seasonally adjusted demand-enhancing expenditures for fluid milk from DMI, 

MilkPEP, and QPs on a quarterly basis from 1995 to 2013 are exhibited in Figure 3-3. From 

1995 to 2006, nominal seasonally adjusted quarterly promotion-program expenditures for fluid 

milk ranged from roughly $24.2 to $62.9 million per quarter. After 2006, promotion-program 

expenditures for fluid milk fell noticeably, ranging from $23.5 to $32.3 million per quarter. On 

average over the period from 1995 to 2013, nominal seasonally adjusted demand-enhancing 

expenditures for fluid milk were $34.5 million per quarter.

As exhibited in Figure 4, nominal seasonally adjusted demand-enhancing expenditures for 

cheese ranged from $12.8 to $27.6 million from 1995 to 2004, averaging $21.5 million per 

quarter. From 2005 to the third quarter of 2008, promotion expenditures associated with cheese 

were much smaller compared to the period from 1995 to 2004. On average, expenditures on 

cheese marketing and promotion were $12.0 million during the period. Expenditures on cheese 

increased from the fourth quarter of 2008 to the end of 2013. During this latter timeframe, 

nominal quarterly expenditures on cheese marketing and promotion activities ranged from $9.0 

to $18.9 million, averaging $12.6 million per quarter. Over the period 1995 to 2013, nominal 

seasonally adjusted demand-enhancing expenditures for cheese averaged $17.2 million per 

quarter.
29

Figure 3-2. Nominal Seasonally Adjusted Demand-Enhancing Dairy Management, Inc., Milk 

Processor Education Program, and Qualified Program Expenditures for All Dairy Products, 

1995.1 to 2013.4*

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

100,000,000

1996 1998 2000 2002 2004 2006 2008 2010 2012 *

Includes expenditures not only for advertising and promotion but also for dairy foods and nutrition research, 

nutrition education, and market and economic research.

 Source: Dairy Management, Inc., Milk Processor Education Program, and U.S. Department of Agriculture 

Figure 3-3. Nominal Seasonally Adjusted Demand-Enhancing Dairy Management, Inc., and 

Qualified Program Expenditures for Fluid Milk, 1995.1 to 2013.4

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

1996 1998 2000 2002 2004 2006 2008 2010 2012

Source: Dairy Management Inc., Milk Processor Education Program, Qualified Programs, and calculations 

by the authors.

Dollars Dollars
30

Figure 3-4. Nominal Seasonally Adjusted Demand-Enhancing Dairy Management, Inc., and 

Qualified Program Expenditures for Cheese, 1995.1 to 2013.4

8,000,000

12,000,000

16,000,000

20,000,000

24,000,000

28,000,000

1996 1998 2000 2002 2004 2006 2008 2010 2012

Source: Dairy Management, Inc., Qualified Programs, and and calculations by the authors.

As shown in Figure 3-5, nominal seasonally adjusted demand-enhancing quarterly expenditures 

on marketing and promotion of butter ranged from close to $60,000 to $6 million, averaging 

slightly more than $1 million per quarter over the period 1995 to 2013. Marketing and 

promotion expenditures for butter are a fraction of comparable expenditures for fluid milk and 

cheese.

Figure 3-5. Nominal Seasonally Adjusted Demand-Enhancing Dairy Management, Inc., and 

Qualified Program Expenditures for Butter, 1995.1 to 2013.4

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

1996 1998 2000 2002 2004 2006 2008 2010 2012

Source: Dairy Management, Inc., Qualified Programs, and calculations by the authors

Dollars Dollars
31

Beginning in 2006, DMI transitioned from featuring milk, cheese, and butter in product-specific 

promotions to broader campaigns that relate to a number of dairy products. As a result of an 

increasing number of campaigns affecting multiple products, it is important to assess demand 

enhancements for the aggregate of dairy products as well as within specific product markets.

Global dairy markets are another area in which promotion program funds are invested. The 

export promotion programs as analyzed by this analysis are shown in Figure 3-6a. Nominal 

seasonally adjusted DMI expenditures directed to dairy exports on a quarterly basis ranged from 

just under $800 to approximately $5 million. The trend in these DMI expenditures has been 

upward from 1995 to 2013, averaging about $2.1 million per quarter over this period. As 

exhibited in Figure 3-6b, nominal seasonally adjusted USDA Foreign Agricultural Service (FAS) 

funds awarded through the Foreign Market Development and Market Access Programs on a 

quarterly basis varied from just under $310,000 to about $1.8 million over the period of 1997 to 

2013. On average, USDA FAS funds were nearly $1 million per quarter. As presented in Figure 

3-6c, nominal seasonally adjusted DMI as well as USDA FAS funds ranged from $882 to $5.8 

million per quarter, averaging $3.0 million on a quarterly basis from 1995 to 2013.

Figure 3-6a. Nominal Seasonally Adjusted Dairy Management, Inc., Expenditures Directed to 

Exports of Dairy Products, 1995.1 to 2013.4

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

1996 1998 2000 2002 2004 2006 2008 2010 2012

Source: Dairy Management, Inc., and calculations by the authors. Dollars
32

Figure 3-6b. Nominal Seasonally Adjusted U.S. Department of Agriculture Foreign 

Agricultural Service Funds Awarded to be directed to Exports of Dairy Products, 1997.1 to 

2013.4*

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

1996 1998 2000 2002 2004 2006 2008 2010 2012

*Data were not available prior to 1997. Also, only annual data were available for 1997 and 1998. 

Quarterly interpolations were made for these years.

Source: U.S. Department of Agriculture, Foreign Agricultural Service and calculations by the authors.

Figure 3-6c. Nominal Seasonally Adjusted Dairy Management, Inc., and U.S. Department of 

Agriculture Foreign Agricultural Service Funds Directed to Exports of Dairy Products, 1995.1 to 

2013.4

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

1996 1998 2000 2002 2004 2006 2008 2010 2012

Source: Calculations by the authors.

Dollars

Dollars
33

Trends in Consumption

On average, over the 1995 to 2013 period, quarterly per capita consumption (measured by 

combining domestic commercial disappearance and imports) of butter, cheese, and fluid milk 

was 1.2 pounds, 7.9 pounds, and 46.9 pounds, respectively. The range of quarterly consumption 

for butter was from 0.9 pounds to 1.7 pounds, for cheese from 6.5 pounds to 9.5 pounds, and for 

fluid milk from 39.4 pounds to 53.3 pounds. Cheese consumption per capita has grown 

modestly. Fluid milk consumption has been trending down over the period, on a per-capita basis 

(Figures 3-7 to 3-11). Recent research found that declining consumption reflects changes in the 

frequency of fluid milk intake, rather than changes in portions (Stewart, Dong, and Carlson, 

2013). The majority of Americans born in the 1990s tend to consume fluid milk less often than 

those born in the 1970s, who in turn consume fluid milk less often than those born in the 1950s. 

U.S. milk consumption has declined 25 percent since 1975 due to changing consumption habits 

as well as increased competition from other beverages. 

Total U.S. dairy exports grew over the 1995 to 2013 period largely due to strong growth in 

exports of low-fat dairy products like nonfat dry milk. On a milk-equivalent skim-solids basis, 

the growth in U.S. dairy exports has been manifestly exponential, from an average 1.3 billion 

pounds per quarter in 1995 to just over 9.6 billion pounds on average per quarter in 2013 (Figure 

3-12). Over the same period, however, measured on a milk-equivalent fat basis, average 

quarterly U.S. dairy exports followed a positive but less robust trend from a quarterly average of 

765 million pounds in 1995 to nearly 3.1 billion pounds in 2013 (Figure 3-12).

Figure 3-7. Per Capita U.S. Consumption of Fluid Milk, 1995.1 to 2013.4

38

40

42

44

46

48

50

52

54

1996 1998 2000 2002 2004 2006 2008 2010 2012

Source: U.S. Department of Agriculture 

Pounds
34

Figure 3-8. Per Capita U.S. Consumption of Cheese, 1995.1 to 2013.4

6.4

6.8

7.2

7.6

8.0

8.4

8.8

9.2

9.6

1996 1998 2000 2002 2004 2006 2008 2010 2012

Source: U.S. Department of Agriculture 

Figure 3-9. Per Capita U.S. Consumption of Butter, 1995.1 to 2013.4

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1996 1998 2000 2002 2004 2006 2008 2010 2012

Source: U.S. Department of Agriculture 

Pounds Pounds
35

Figure 3-10. Per Capita U.S. Consumption of All Dairy Products on a Milk-Equivalent Fat 

Basis, 1995.1 to 2013.4

136

140

144

148

152

156

160

1996 1998 2000 2002 2004 2006 2008 2010 2012

Source: U.S. Department of Agriculture and calculations by the authors

Figure 3-11. Per Capita U.S. Consumption of All Dairy Products on a Skim-Solids Basis, 

1995.1 to 2013.4

124

128

132

136

140

144

148

1996 1998 2000 2002 2004 2006 2008 2010 2012

Source: U.S. Department of Agriculture and calculations by the authors

Pounds

Pounds
36

Figure 3-12. U.S. Dairy Commercial Exports on a Milk-Equivalent-Fat Basis and Skim-Solids 

Basis, 1995.1 to 2013.4

0

2,000

4,000

6,000

8,000

10,000

12,000

1996 1998 2000 2002 2004 2006 2008 2010 2012

Source: U.S. Department of Agriculture and calculations by the authors

Overall, the long-run trend of declining consumption of fluid milk is continuing, while per capita 

consumption of other dairy products has been growing. Given this setting, the analysis must 

address whether consumers responded to the demand-enhancing expenditures associated with the 

National Programs. Structural economic models were developed to isolate the sensitivity of 

consumers to the demand-enhancing expenditures from the effects of fundamental economic 

forces such as price and income. The results are reported in the next section.

Findings on Impacts of Demand-Enhancing Expenditures for Dairy Products

This evaluation study indicates a significant positive association between promotion program 

expenditures and consumer demand. This association holds for all dairy products in the 

aggregate and for fluid milk, cheese, butter, and the activities of the Dairy Research and 

Promotion Program and the Fluid Milk Processor Promotion Program individually. The impact 

is modest during the quarter in which expenditures are made, while the cumulative impact is over 

time measurably larger.

 

The key indicator of the impact of marketing and promotion expenditures is a measure of the 

relative sensitivity of consumer demand to demand-enhancing expenditures. This measure, also 

known as elasticity, is defined as the percentage change in consumption given a 1-percent 

change in demand-enhancing expenditures, while holding all other variables constant. 

Attention is centered on the retail level of the marketing chain, and the economic model provides 

structural parameter estimates that are statistically valid and consistent with prior studies in the 

literature on evaluation of generic commodity promotion. This analysis allows the promotion 

elasticities to vary over time, with variation in expenditures. Some of the key findings of the Million Pounds

Skim-Solids 

Basis

Fat Basis
37

economic analysis are as follows: 

• Demand-enhancing expenditures have a significant positive impact on domestic 

consumption of dairy products. (Domestic consumption is defined as domestic 

commercial disappearance plus imports.)

• The dairy markets were more responsive to demand-enhancing expenditures in 

comparison to last year.

The demand responsiveness to promotion was allowed to vary over time. Further, the cumulative 

impact of promotion was also identified. It was found that demand-enhancing expenditures affect 

the market for cheese for up to 6 quarters. The lagged effect on fluid milk was over 16 quarters, 

and for butter, the lagged effect was over 11 quarters. For the aggregate of all dairy products, the 

lagged effect persisted for 9 quarters on a fat basis and for 12 quarters on a skim-solids basis.

To measure the effects of DMI export promotion enhancement expenditures on U.S. dairy 

commercial exports, two U.S. dairy export demand models were specified and estimated using

two different measures of dairy exports: (1) the measure of dairy exports on a milk-equivalentskim-solids basis (SSB) supplied by USDA; and (2) the measure of dairy exports on a milkequivalent-fat basis (FB) supplied by USDA. Simply put, when U.S. prices are low (high) 

relative to Oceania export prices, more (less) is exported.

3

Table 3-2. Estimates of the Sensitivity of Demand to Promotion, Prices, and Income, 1995 to 

2013

Promotion

1995 to 2013

Promotion

2013 only

Own-Price 

Elasticity

Income Elasticity

Butter1 0.057 0.067 -0.275 0.496

Cheese1 0.037 0.027 -0.124 0.244

Fluid milk1 0.090 0.071 -0.059 0.138

All dairy1

Skim-solids basis 0.071 0.061 -0.086 0.270

Fat basis 0.036 0.031 -0.051 0.359

Exports1

Skim-solids basis 0.058 0.058 -0.248 0.741

Fat basis 0.068 0.068 -0.196 1.023

Partnership2 0.083 0.135 -0.693 NA

The parameters entitled “Promotion” are elasticities with respect to demand-enhancing expenditures. The first 

column is for the entire period and incorporates cumulative lagged effects. The second column is for the immediate 

response in 2013.

1

Over the time period January 1995 to December 2013.

2

Partnership to promote specialty coffee, over the time period March 2007 to December 2013.

 3 Drivers of demand included lags of the ratio of the Oceania export butter price to the U.S. butter price on a fat 

basis; lags of the ratio of the Oceania export price for skim milk powder (SMP) to the U.S. nonfat dry milk (NDM) 

price on a skim-solids basis; lags of the measure of world income calculated as the trade weighted, real gross 

domestic products of major importing countries; and inertia or stickiness of dairy exports in world markets.
38

The lag length for export promotion expenditures on an SSB was estimated to be nine quarters. 

The export promotion expenditure elasticity was calculated to be 0.058 in the sample period, 

indicative of a statistically significant effect of promotion. The lag length for the export 

promotion expenditures on a milk-fat basis was estimated to be 6 quarters. The export 

promotion expenditure elasticity was calculated to be 0.068, indicative once again a statistically 

significant effect of promotion. 

Estimation of Consumption Changes Attributed to Promotion Program Expenditures

The primary objective of the analysis provided in this section is to answer the key question 

regarding the National Programs over time: what have been the effects of dairy promotion 

programs on the domestic consumption of fluid milk, dairy products, and exports? In answering 

the key question, the focus is on the effects of the dairy promotion program on the U.S. demand 

and exports of fluid milk and dairy products. Once these market effects have been determined, a 

benefit-cost analysis of the dairy program at the producer level and at the fluid milk processor 

level can be done. In the analysis, the producer BCR of the dairy promotion program is 

calculated as the additional net producer revenues (profit) generated by the promotion program 

divided by the cost of the promotion programs. By using profit over costs, a more complete and 

realistic BCR is calculated for producers. The fluid milk processor BCR is calculated similarly 

to the producers; the cost of milk is used as a proxy for the cost of production since data for fluid 

milk processors’ cost of production are not available. The analysis covers the period of 1995 to 

2013 and also decomposes the results for comparison purposes into four similar time periods: (1) 

1995-1999, (2) 2000-2004, (3) 2005-2009, and (4) 2010-2013.

This analysis is partially accomplished by aligning the annual model of the U.S. dairy industry 

maintained at the University of Missouri Agricultural Markets and Policy Group Dairy Model 

(AMAP Dairy Model) with the observed data over the 1995 to 2013 period. The impact of 

promotion is obtained by removing demand-enhancing expenditures from the system. There is a 

simulated “demand-enhancement” scenario representing the actual history, contrasted with a 

simulated “no-demand-enhancement” scenario (the counterfactual) to reflect the levels of prices 

and quantities expected in the absence of the dairy promotion programs.

This analysis uses the AMAP Dairy Model as modified to account for dairy promotion to answer 

the question posed above regarding the effects of dairy promotion on U.S. dairy markets and 

exports. For this analysis, the AMAP structural dairy model was simulated over the 1995 to 

2013 period to identify how dairy markets would have functioned in the absence of promotion. 

The results for selected key variables in the model for the “promotion” and “no promotion” 

scenarios are presented in Table 3-3.

Table 3 provides a comparison of the “promotion” levels of each variable (actual historical data) 

to the “no promotion” levels (simulated levels without promotion) to show the effects across 

time from dairy promotion spending. There are many factors at play in the year-by-year results 

including the level of promotion expenditures each year and the supply dynamics built into the 

AMAP structural dairy model. In order to provide some insight into these model dynamics, 

Table 3-3 shows four sub periods of results as well as the entire period for selected endogenous 
39

variables. This analysis starts in 1995 and ignores any promotion effects that would have 

occurred prior to 1995

Table 3-3. Effects of Dairy Promotion on U.S. Dairy Markets Based on Simulation of Supply 

Response

Fluid Milk Per 

Capita 

Consumption

Cheese Per 

Capita 

Consumption

Butter Per 

Capita 

Consumption

Nonfat Dry Milk 

Per Capita 

Consumption

(pounds)

Period

1995 - 1999

With Promotion 215.46 27.69 4.38 3.30

No Promotion 194.71 26.41 4.19 3.40

Change 20.75 1.27 0.19 -0.10

Percent Change 10.7% 4.8% 4.4% -2.9%

2000 - 2004

With Promotion 206.51 30.49 4.48 3.33

No Promotion 188.43 29.05 4.28 3.40

Change 18.07 1.45 0.20 -0.07

Percent Change 9.6% 5.0% 4.7% -2.2%

2005 - 2009

With Promotion 202.95 32.4 4.81 3.30

No Promotion 187.09 31.07 4.54 3.34

Change 15.87 1.33 0.27 -0.05

Percent Change 8.5% 4.3% 6.0% -1.5%

2010 - 2013

With Promotion 196.4 33.28 5.33 2.91

No Promotion 182.55 31.952 5.01 2.94

Change 13.85 1.36 0.31 -0.02

Percent Change 7.6% 4.3% 6.3% -0.8%

1995 - 2013

With Promotion 205.8 30.84 4.72 3.22

No Promotion 188.49 29.49 4.48 3.29

Change 17.31 1.35 0.24 -0.06

Percent Change 9.2% 4.6% 5.4% -1.9%

Source: Calculations by the authors

Because no other exogenous variable in the model (e.g., levels of inflation, exchange rates, 

income levels, government policies, etc.) other than dairy promotion expenditures is allowed to 

change in either scenario, this process effectively isolates the effects of the dairy promotion 

program on U.S. dairy markets and exports. That is, the simulated differences between the 

values of the endogenous variables from the “promotion” scenario and those from the “no 

promotion” scenario in which those expenditures are set to zero provide direct measures of the 

historical effects of the dairy promotion expenditures (and only those expenditures) on U.S. dairy 

markets and exports.

Over the period 1995 to 2013, per capita consumption of cheese, butter, and fluid milk rose 4.6 

percent, 5.4 percent, and 9.2 percent respectively due to promotion efforts, all other factors held 
40

constant. The overall downward trend of per capita fluid milk consumption is mitigated as a 

result of National Programs. If promotion did not exist, then consumption would have been 

188.49 pounds per capita instead of 205.80 pounds per capita over the 1995-2013 period. Hence, 

the National Programs spending on fluid milk reduced the rate of decline. Per capita 

consumption of nonfat dry milk would have been 3.29 pounds per capita without promotion 

versus 3.22 pounds per capita with promotion over the 1995 to 2013 period (Table 3-3). 

In the 2000 to 2004 period, the dairy product markets had several factors at play that provide 

different results depending on the dairy product in question. First, remember that cheese and 

fluid milk received the largest portion of dairy promotion dollars. For these two products, 

consumption remained higher as a result of promotion. Butter promotion was modest over this 

particular period and increased consumption by 4.7 percent.

 

During the 2005 to 2009 period, a return to stronger butter promotional spending in 2004, 

following relatively low levels from 1998 to 2003, resulted in increased per capita consumption 

by 0.27 pounds when comparing the no-promotion to promotion levels. In the previous period 

(2000-2004), the per capita consumption only increased by 0.20 pounds when comparing the nopromotion to promotion levels.

Promotional spending in nominal terms on all dairy products increased in 2010 through 2013 to a 

level not seen previously, leading to increases of cheese and butter consumption. Actual cheese 

consumption was up 0.88 pounds per capita in the 2005-2009 period and actual butter 

consumption was up 0.33 pounds per capita.

Benefit-Cost Ratios

This section provides a benefit-cost analysis of the National Programs based on the results of the 

scenario analyses discussed in the previous section. As calculated, the producer profit BCR is the 

additional industry profits (additional cash receipts net of additional production costs and 

promotion assessments) earned by producers as a consequence of the promotion expenditures 

(as measured through the scenario analyses) divided by the historical level of promotion 

expenditures made to generate those additional profits. By using a profit BCR, a more complete 

and realistic analysis is conducted. This measure more accurately captures the additional net 

revenue gained from promotional expenditures.

 

Over the period 1995 to 2013, the gains in profit at the producer level were far larger than the 

expenditures on demand-enhancement programs. The BCRs for producers for fluid milk were 

calculated to be $3.98 for every dollar invested in demand-enhancing activities; for cheese –

$6.21 for every dollar invested; and for butter – $29.49 for every dollar invested. Dairy export 

promotion expenditures have increased the foreign demand for U.S. dairy products by $5.58 for 

every dollar invested. For an aggregate of all dairy products, the net profit BCR is approximately 

$5.53 for every dollar spent (Table 3-4). 
41

Table 3-4. Calculated Benefit-Cost Ratio (BCRs), in Net Profit at the Producer Level Attributed 

to the National Programs, 1995 to 2013

Producers

Product BCR

All Dairy 5.53

Fluid milk 3.98

Cheese 6.21

Butter 29.49

Exports 5.58

Source: Calculations by the authors

The fluid milk processor BCR cannot be calculated as completely as the producer BCR since the 

cost-of-production data are not available. To calculate the fluid milk BCR, the milk costs are 

used as a proxy for cost-of-production since milk would be the largest input cost. Over the 

period 1995 to 2013, the gains in profit at the fluid milk processor level were far larger than the 

expenditures on demand-enhancement programs. The BCRs for fluid milk were calculated to be 

$4.88 for every dollar invested in demand-enhancing activities for fluid milk processors 

(Table 3-5).

Table 3-5. Calculated Benefit-Cost Ratio (BCRs), in Net Profit at the Fluid Milk Processor 

Level Attributed to Fluid Milk Promotion Program, 1995 to 2013

Fluid Milk Processors

Product BCR

Fluid Milk 4.88

 Source: Calculations by the authors

Partnership Evaluation

This evaluation focuses on the partnership between DMI and McDonald’s regarding dairy 

product consumption of specialty coffee only. This partnership, which began in 2008, provides a 

portion of promotion program receipts for the promotion of dairy products in the quick serve 

restaurant (QSR) channel. Given that about 45 percent of consumers’ food expenditures are on 

food consumed away from home (USDA ERS), the utilization of promotion funds in the QSR 

channel potentially affects a large market. Subsequently, the report contains an overview of the 

specialty coffee market and the competition among specialty coffee providers in the QSR 

channel. The final section of the partnership evaluation is a presentation of the quantitative 

model methodology and explanation of the assumptions underlying the estimated partnershipspecific BCR. 
42

A large number of outlets added specialty coffee to the menu of McCafe. Those specialty drinks 

contained real dairy products (cream and fluid milk). It was reported that 11,000 McDonald’s 

restaurants participated in the 2009 national roll-out (Jennings, 2009). The launch of McCafe 

coincided with the 2008/2009 recession and offered a value position that was consistent with 

consumers’ constrained income. The consumption of lower priced specialty coffees at full-menu 

QSRs increased because of availability and promotional activities as well as income effects 

during the recession. 

Economic Trends and Food/Beverage Purchases for Consumption Away From Home

Over the last several decades, there has been a trend toward differentiation of food offerings on 

the basis of convenience. The QSR category thrived because these outlets offered speed and 

consistency to consumers. Differentiation of the meal items and meal occasions continues to 

grow, so distinct eating experiences and product mixes are available at a wide selection of QSR 

chains.

The Market for Specialty Coffee

Coffee shops are a subset within QSRs, and today, they are differentiated among purveyors of 

specialty coffee. Growth in the specialty coffee market from 2002 to 2013 was notable based on 

the number of coffee shops (Figure 3-13).

In addition to sales at coffee shops, coffee was sold in full-line restaurants. Some of the 

restaurants were QSRs. Based on NPD CREST data for the period March 2007 to December 

2013, the median monthly market shares for the leading national or regional brands of QSRs 

serving specialty coffee were: Starbucks, at 52 percent of the national market; Dunkin Donuts, 

13.3 percent; McDonald’s, 11.6 percent; and for all other brands, 23.1 percent. 

Figure 3-13. Number of Coffee Shops and Snack Bars, 2002 to 2013

Source: U.S. Census, various years
43

Economic Impact of the Recession 2008-2009

Inflation-adjusted consumer income on a monthly basis was nearly constant from 2007 through 

early 2010 (Figure 3-14, shown in the dashed line, right axis). Real monthly income did not 

recover to pre-recession levels until mid-2010. Sales in QSRs and drinking places declined by 

$3.3 billion in nominal terms for 2009 compared with 2008 (U.S. Census, see Figure 3-15). 

Consumers’ patronage of the gourmet coffee subcategory changed abruptly with the recession. 

There was a decline by 6 percent in the servings of gourmet specialty coffee sold in 2009 

compared with 2008, according to NPD CREST. Nevertheless, the specialty coffee category as a 

whole was more stable, with the number of servings holding roughly steady, around seasonal 

variations. Specialty coffee movement in QSRs ranged between approximately 150 million to 

235 million servings per month during 2007 through the end of 2009. 

In the industry press, explanations were offered to substantiate the different observed effects of 

the recession on specialty coffees. The 2008/2009 recession was a time when consumers were 

“trading down in restaurant selection” (Terry, 2009), but not eliminating food or beverage 

consumption away from home. In this view, specialty coffee remained an affordable indulgence 

that consumers would continue to purchase during the downturn (Jennings 2009). 

The data on the number of coffee shops and the number servings of specialty coffee items in 

QSRs support a conclusion that specialty coffee was moderately affected by the recession. 

Growth in the number of coffee shops was interrupted in 2008-2009 (Figure 3-13). The 

compound annual growth rate in coffee shop numbers for the entire period, 2003-2014, was 3 

percent per year. There was a 7.2 percent reduction in the number of coffee shops in the 

recession years between 2008 and 2009. Starbucks closed 800 outlets during the recession 

(Jennings, 2009).

During this time of considerable economic stress, the total number of servings of specialty coffee 

sold in all QSRs was virtually flat (NPD CREST). The fact that sales volume held steady, while 

the number of outlets fell, indicates the persistence of the demand for the product in spite of 

constraints on consumers’ income. These facts also are consistent with a shift among some 

consumers to purchase specialty coffee at full-menu QSR outlets rather than at gourmet coffee 

shops.

 

McCafe specialty coffee products became available in 11,000 McDonald’s restaurants beginning 

in early 2009, according to the trade press (Jennings, 2009). The nationwide launch was 

preceded by DMI partnership funding which supported the development of recipes and 

formulations. The number of McDonald’s outlets adding specialty coffee to the menu in 2009 

was roughly the same as the number of outlets in the entire Starbucks chain in the United States 

of America. The national rollout of McCafe represented the addition of over 20 percent more 

locations at which consumers were presented with a specialty coffee option.

 

During 2009, there were two simultaneous disruptive forces in the specialty coffee market: 

economic recession and the nationwide introduction of the McCafe line of products. There is no 

way to disentangle the two factors – income and a new brand. Between 2010 and 2012, specialty 
44

coffee consumption at QSRs rose by 7.8 percent. An upward trend in the specialty coffee 

category became apparent once consumer income growth resumed in 2010.

Figure 3-14. Servings of Specialty Coffee and Personal Disposable Income in the United States 

of America, by Month 2007 to 2013

Source: NPD Group, CREST database and calculations by the authors

Figure 3-15. Food At Home and Away From Home, Value of Sales in Food and Beverage 

Retail Outlets, Monthly 2000-2013, in Million Dollars

Source: U.S. Census, various years

Value of sales in restaurants and drinking 

places

Value of sales in groceries and 

supermarkets
45

Promotions Involving McCafe and Competitors

The DMI partnership program included expenditures to support personnel at McDonald’s 

company facilities, working on new product development. After the product formulations were 

developed, the new products were advertised. This analysis substantiates that promotional 

activities influenced the growth in the category.

At the time of its launch in 2009, McCafe was promoted as a quality coffee to be consumed as a 

beverage alone. The follow-up promotions highlighted new flavors to revive interest in the 

product varieties. Most of the new product promotions were for items containing cream or milk. 

For example, French vanilla latte was reportedly very successful in 2012, a year when sales of 

latte increased (Horovitz 2013). In spite of the success of the new flavor, in 2012 the number of 

specialty coffee servings at McDonald’s fell below the numbers sold in 2011 (NPD CREST)4

.

Quantitative Evaluation of the Impact of the Partnership

Methodology of the Quantitative Analysis of the Partnership

The quantitative analysis of the partnership between DMI and McDonald’s is estimated using a 

statistical/econometric model. The goal of the econometric analysis is to quantify the role of 

DMI expenditures in explaining the amount of McCafe specialty coffees sold, while controlling 

for the influence of other market forces to the extent possible. In the econometric analysis, 

servings of specialty coffee in McDonald’s outlets were hypothesized to be explained by: (1) 

expenditures by DMI on the McDonald’s partnership, contemporaneously and with various time 

lags; (2) coffee prices; (3) seasonality; (4) population; (5) inflation;( 6) a control variable for 

economic recession; and (7) inertia or habit persistence.

The model accounted for nearly 90 percent of the variation in monthly per capita McCafe coffee 

servings. The partnership was found to be effective in stimulating additional servings of 

specialty coffee, and the impacts of promotion were spread over a period of 7 months. The ownprice elasticity of demand was estimated to be -0.69, indicating a 1.0 percent reduction in price 

per serving was associated with 0.69 percent increase in the quantity sold of McCafe servings, all 

other factors held constant. 

Seasonality clearly was evident. Relative to December, McCafe servings were higher by 30 

percent in June, 20 percent higher in August, and 13 percent higher in September. McCafe 

coffee servings were significantly lower in October (by 14 percent), and in February (by 40 

percent). In addition, the trend variables were statistically significant, indicating that all other 

factors held constant, McCafe coffee servings on a per capita basis grew but at a decreasing rate. 

Further, during the recession from December 2007 to June 2009, McCafe servings per capita 

increased by roughly 11 percent relative to non-recessionary months. Several of the recession 

months coincided with the national roll-out of McCafe, so the variable employed as an indicator 

 4 There is some indication that the McDonald’s products encouraged other QSRs to adopt a similar strategy. 

Substitution between premium coffee outlets and McDonald’s products likely has been limited, therefore it is 

hypothesized that the servings of the McCafe line were largely additional consumption of cream and fluid milk, 

especially after income growth returned in 2010. 
46

of the business cycle was not a unique control variable.

The incremental servings of McCafe coffee attributed to the efforts of the partnership were 

estimated to be about 200 million, roughly 9.78 percent of cumulative McCafe servings over the 

period March 2007 to December 2013. 

Assumptions Made With the Econometric Analysis

The two factors not accounted for are: (1) this analysis only accounts for the effect on McCafe 

and (2) any spillover effects from rival QSRs. In the first assumption, if the McCafe promotion 

encouraged a purchase of a McCafe product plus another McDonald’s product with dairy, then 

the non-McCafe product’s impact would not be accounted for. And for the second assumption, 

spillover effects from rival QSR companies marketing specialty coffee and similar beverages that 

contained dairy as a direct result of the national roll-out of McCafe would not be accounted for. 

Overall, the econometric analysis likely provides a conservative estimate of the impact of the 

partnership. The quantitative results presented in the following section ultimately provide a 

conservative view of the BCR of the specialty coffee partnership program.

Connecting Incremental McCafe Coffee Servings to Fluid Milk

The sources used to calculate the amount of dairy in the McCafe products (for the purpose of this 

analysis) are limited to the published nutrition information and ingredients listings. The contents 

of McCafe coffee products include: heavy cream, whipped cream, or whole, skim, or nonfat 

milk, according to the company’s ingredients listing. Those products were used to arrive at an 

estimate of the quantity of fluid milk to be attributed to a serving of McCafe. 

In order to arrive at an estimate, it was necessary to convert a typical McCafe coffee serving to a 

corresponding volume of milk. It was assumed that dairy ingredients were the sole source of 

protein in the specialty coffee. This step was accomplished by using the protein content in 

McCafe items. Protein, by item, is available from public sources for the flavors and sizes of 

McCafe (McDonald’s Corporation). The conversion between grams of protein and whole milk 

was based on 0.9825 grams of protein per ounce of whole milk (source: 

http://milkfacts.info/Nutrition %20Facts/Nutrient%20Content.htm).

For example, the nutrition facts state the 12-ounce McCafe latte contains 9 grams of protein. 

Whole milk contains 7.9 grams of protein per 8 ounces, using the conversion of 0.9825 grams of 

protein per ounce of whole milk. In order for the coffee drink to have 9 grams of protein, a dairy 

equivalent of 8.8425 ounces of whole milk would have been blended in a 12-ounce coffee. 

According to the protein content listed in McDonald’s nutrition facts, the greatest amount of 

dairy per ounce of beverage is in the McCafe latte. The frappe and mocha drinks were prepared 

with considerable milk as well, containing 7.12 ounces of whole milk equivalent per 12-ounce 

coffee serving. Iced coffees contain relatively little dairy ingredients. There were 1.03 ounces of 

whole milk equivalent in the whipped cream topping on the iced coffee.

 

There is substantial variation in the amount of dairy contained in the McCafe specialty coffee 

items. The data available from public sources listed servings of specialty coffee, by the retail 
47

store brand, but not the breakdown among the various products. The product types are black 

coffee (with no dairy added), blends with modest amounts of dairy added, or blends with large 

amounts of dairy added. To account for this limitation, this study includes a sensitivity analysis 

on the unknown shares of these three classes of products.

 

It is reported in “Coffee Drinking Statistics” that 35 percent of coffee drinkers prefer black 

coffee (source: http://www.statisticbrain.com/coffee-drinking-statistics/, accessed June 16, 

2015). This information is used to infer the share of McCafe specialty coffees which contain 

larger quantities of dairy. Assuming that the 35-percent share for black coffee held for McCafe 

coffee sales, 5 percent of McCafe servings are classified as black coffee (Premium Roast) and 30 

percent were classified as black iced coffee drinks that had little dairy content. A larger share of 

McCafe servings were classified as blended specialty coffee, namely latte, frappe, or mocha. 

Among the products containing the most dairy, the shares are split into 20 percent latte and 45 

percent frappe/mocha beverages. Based on this set of assumed product shares, a weighted 

average of roughly 7.6 ounces of whole milk equivalent per serving of McCafe was obtained.

An alternative estimate of product shares within the McCafe lines was considered to provide a 

more conservative figure for dairy sales attributed to the partnership. When it was assumed that 

latte/frappe/mocha was 30 percent of McCafe sales rather than the 65 percent assumed in the 

aforementioned scenario, the resulting estimate of milk quantity was slightly more than 4 ounces 

per serving. Consequently, a range of results is provided herein on either 4 ounces or 7.6 ounces 

of whole milk equivalent per serving of McCafe.

Using the more conservative estimate of 4.0 ounces of milk, on average, in the specialty coffee 

drinks at McDonald’s, the BCR of the partnership to the dairy industry was estimated to be 1.75. 

For each dollar invested in the McDonald’s partnership, the incremental sales of milk associated 

are valued at $1.75. Using the more liberal estimate of 7.6 ounces of milk, on average, in the 

specialty coffee drinks at McDonald’s, the BCR of the partnership to the dairy industry was 

estimated to be 3.26. For each dollar invested in the McDonald’s partnership, the incremental 

sales of milk associated are valued at $3.26. The BCR calculation indeed was sensitive to the 

estimate of the amount of milk contained in the specialty coffee drinks at McDonald’s. These 

results correspond to revenue BCRs. Importantly, the producer-level cost of production has not 

been accounted for in the calculation of these ratios.

Given that the range of BCRs associated with this partnership exceeds 1.0, the benefits of the 

McCafe partnership exceed the program costs. Based on the estimates of milk in specialty coffee 

drinks at McDonald’s, the cumulative total value of the incremental sales due to the partnership 

was estimated to range from $10 million to $19 million, based on the monthly producer price of 

milk since the inception of the McCafe partnership. The total incremental pounds of milk 

consumed attributable to the DMI partnership with McDonald’s was 54 million pounds to 101 

million pounds. 

Conclusions About the Partnership

For the McCafe partnership, the launch of the new products provided an immediate effect on 

consumption, because these items were not available before the development under the 
48

partnership. After a national launch and associated promotion, the cumulative impact of the 

partnership on McCafe servings took 7 months. More servings of McCafe were sold for each 

dollar of expenditures under the McCafe portion of the partnership, over the period 2008 through 

2013. Assuming that 4.0 to 7.6 ounces of milk, on average, were contained in the specialty 

coffee drinks at McDonald’s, the cumulative total producer impact of incremental sales due to 

the partnership ranged from $10 million to $19 million.

Evidence suggests that the partnership between DMI and McDonald’s also is cost effective to the 

dairy industry. Indeed, the milk content was estimated based on ingredients and assumptions 

about market shares of black coffees and blended dairy beverages in the specialty coffee 

category. Further, it was not possible to quantify a number of potential factors which may 

influence the calculation of the return on investment associated with the McDonald’s 

partnership. For example, this analysis does not address the attraction of customers to 

McDonald’s resulting in spillover effects in that customers purchase additional dairy products 

(cheese and ice cream) beyond just the servings of McCafe. Moreover, it does not account for 

any substitution to real dairy from non-dairy ingredients.

Concluding Remarks

This report provides the independent evaluation of the effectiveness of the National Programs 

covering the period 1995-2013. The key findings regarding markets for milk and manufactured 

dairy products include:

• The National Programs have effectively increased the demand of promoted dairy 

products, especially for cheese and butter, while lessening the decline in per capita fluid 

milk consumption. The gains in profit at the producer and fluid milk processer level were 

far larger than the costs of the National Programs.

• The overall BCR (using profit over costs) of the National Programs was calculated to be 

5.53; that is for every $1 spent on demand-enhancing activities, dairy producers received 

an additional $5.53.

• The BCRs for producers for fluid milk were calculated to be $3.98 for every dollar 

invested in demand-enhancing activities; for cheese, $6.21 for every dollar invested; and 

for butter, $29.49 for every dollar invested. The BCR of export promotion was $5.58 per 

dollar invested.

• DMI was instrumental in positively affecting the number of McCafe servings. The 

incremental servings of McCafe coffee that were attributed to the efforts of the 

partnership were estimated to be about 200 million, roughly 9.78 percent of cumulative 

McCafe servings over the period March 2007 to December 2013. The producer impact 

of incremental sales due to the partnership ranged from $10 million to $19 million.

• The BCR for fluid milk processors attributed to the Fluid Milk Promotion Program were 

calculated to be $4.88.
49

• With regard to methodology, the structural econometric models that are presented in this 

report are statistically valid and largely consistent with prior studies in the literature on 

evaluation of generic commodity promotion. The simulation analysis was accomplished 

by aligning the AMAP Dairy Model with the observed data over the 1995 to 2013 period. 

The baseline period is 1995 to 2013, and the impact of promotion was obtained by 

removing demand-enhancing expenditures from the system (the counterfactual)5.

 5 A reference list is available upon request.
50

Chapter 4

Quantitative Evaluation of the Effectiveness of Marketing and Promotion 

Activities by the National Dairy Promotion and Research Program and the 

National Fluid Milk Processor Promotion Program – 2014 Activities

Introduction

The Dairy Act and Fluid Act require an annual independent analysis of the advertising and 

promotion programs that operate to increase consumer awareness and sales of fluid milk and 

dairy products. Texas A&M University researchers were awarded a competitive contract to 

complete the study. Chapter 4 summarizes the quantitative evaluation of the effectiveness of the 

dairy and fluid milk promotion programs.

Background on the Promotion Programs

The Dairy Promotion and Research Program is a coordinated research and promotion program 

that maintains and expands domestic and foreign markets for fluid milk and dairy products. To 

fund the program, U.S. dairy producers pay a 15-cent-per hundredweight assessment on milk 

marketing and importers pay 7.5-cent-per hundredweight assessment, or equivalent thereof, on 

dairy products imported into the United States. Dairy Management Inc. (DMI), a management 

and staffing corporation, is a joint undertaking between the National Dairy Promotion and 

Research Board (Dairy Board) and the United Dairy Industry Association (UDIA). UDIA is a 

federation of 19 of the 63 Qualified Programs under the direction of a board of directors. The 

mission of DMI is to drive increased sales of and demand for dairy products and ingredients, on 

behalf of dairy producers and dairy importers. DMI works proactively in partnership with 

leaders and innovators to increase and apply knowledge that leverages opportunities to expand 

dairy markets.

Qualified Dairy Product Promotion, Research, and Nutrition Educational Programs (QPs) are 

State, regional, local, or importer promotion programs certified annually by the U.S. Secretary of 

Agriculture to receive a portion of the funds generated under the National Dairy Promotion and 

Research Program.

 

The National Fluid Milk Processor Promotion Program, or Fluid Milk Promotion Program 

develops and finances generic advertising programs designed to maintain and expand markets 

and uses for fluid milk products produced in the United States. Fluid milk processors marketing 

more than 3 million pounds of fluid milk per month pay a 20-cent-per-hundredweight assessment 

on fluid milk processed and marketed in consumer-type packages in the United States. The Fluid 

Milk Processor Education Program (MilkPEP) is the staffing organization that carries out the 

promotion programs on behalf of the Fluid Milk Promotion Program.

The National Dairy Promotion and Research Program, funded by dairy producers and dairy 

importers, and the National Fluid Milk Processor Promotion program, funded by fluid milk 

processors, are hereinafter referred to as the National Programs.
51

Objectives of the Evaluation Study

The National Programs are evaluated with the key question in mind: have the demand-enhancing 

activities conducted by dairy producers, importers, and fluid milk processors actually increased 

the demand for fluid milk and manufactured dairy products? 

Historically, this question has been answered through econometric studies on the relationships 

between consumption of dairy products and promotion program demand-enhancing 

expenditures. These demand relationships are estimated in a structure that controls for the 

impacts of market forces. Economic returns to dairy producers, importers, and fluid milk 

processors that result from marketing and promotion activities and the associated changes in 

consumption are calculated using the parameters obtained from the demand models. The 

summary indicator of economic return on investment is a benefit-cost-ratio (BCR).

 

The objectives of this report are threefold: 

1. Determine the combined effects of the program activities of MilkPEP, DMI, and QPs on 

the consumption of fluid milk, cheese, butter, all dairy products, and dairy exports;

2. Develop and implement a simulation model to calculate BCRs for dairy producers and 

fluid milk processors; and

3. A qualitative and quantitative analysis of dairy product imports and import assessments.

This project covers the time period from 1995 to 2014 and captures the joint efforts of DMI, 

MilkPEP, and QPs.

Summary of the Findings

The overall finding of this evaluation is that the National Programs have effectively increased the 

demand (domestic and exports) for dairy products. The gains in profit at the farm level were far 

larger than the costs associated with the National Programs combined. The impacts on producers 

as well as on fluid milk processors’ spending are summarized with BCRs. The BCRs are based 

on the demand-enhancing expenditures only; therefore, they do not account for certain operating 

expenses such as overhead, technical support and industry relations.

The BCRs expressed in terms of producer profit at the farm level were calculated to be $3.93 for 

every dollar invested in demand-enhancing activities for fluid milk; $6.71 for every dollar 

invested in demand-enhancing activities for cheese; and $29.53 for every dollar invested in 

demand-enhancing activities for butter. The BCR of export promotion is $5.67 per dollar 

invested. Under both the aggregated-fat and skim-solids bases, a significant positive relationship 

exists between the demand for dairy and the National Programs expenditure, in both the short run 

and the long run. The aggregate, all-dairy BCR is 5.50, meaning that the producer profit 

increases by $5.50 for each $1.00 investment in demand-enhancing activities.

The United States imported between $2.5 billion and $3.5 billion in dairy products in each of the 

last 5 years. Cheese products accounted for slightly more than one-third, by value, of the dairy 

imports. Effective April 1, 2011, importers of dairy products paid assessments to the national 
52

dairy promotion and research program. Import assessment funds totaled between $3.41 million 

and $3.53 million dollars per year during 2012, 2013, and 2014. The import assessment has 

amounted to less than 1 percent of the total demand-enhancing expenditures.

Due to promotion funds collected from importers, imported cheese levels were higher by roughly 

1.0 million pounds to 1.5 million pounds. Unit values of cheese imports amounted to roughly 

$3.42 per pound on average over the period 2011 to 2014. Hence, incremental revenue to 

importers solely from cheese attributed to the import assessment totaled roughly $3.4 million to 

$5.3 million.

Since cost-of-production data are unavailable for fluid milk processors, the fluid milk processor 

BCR is calculated using the milk cost as a proxy for cost of production. The BCR in terms of a 

fluid milk processer is a $4.87 return to fluid milk processors for every dollar invested in 

demand-enhancing activities for fluid milk.

With regard to methodology, the structural econometric models that are the basis for these 

findings are statistically valid and consistent with prior studies in the literature on evaluation of 

generic commodity promotion. 

DMI, MilkPEP, and QP Promotion Program Expenditures

The data for this analysis were acquired from DMI, QPs, and MilkPEP. The demand-enhancing 

expenditures from all three entities were aggregated. 

The National Programs use advertising as well as other means to influence consumers. 

Advertising dollars are directed to media outlets, including television, outdoor, print, radio, and 

the internet. Marketing activities other than advertising are directed at the retail level of the 

marketing channel or at intermediaries. The non-advertising marketing expenditures include 

health and nutrition education programs; public relations; food service and manufacturing 

programs; sales promotion programs; school milk programs; school marketing activities; retail 

programs; child nutrition and fitness initiatives; and single-serve milk promotion. 

Certain promotion expenditures are not directed at the retail level of the marketing channel; these 

types of expenditures include crisis management, trade service communications, and strategic 

research activities. These expenditures are classified as demand-enhancing expenditures. 

Expenditures for overhead, technical support and industry relations are excluded from this 

analysis because they are not primarily demand enhancing. 

Over the past several years, the DMI Board of Directors changed its marketing strategies to focus 

more on partnerships within the dairy industry to increase demand for fluid milk, manufactured 

dairy products, and dairy ingredients. Currently, DMI’s strategies include working with and 

through specific partners to achieve sustainable, category-level sales impacts; attract partner coinvestment to fund demand-enhancing efforts; and maximize resources and impacts in 

increasingly competitive markets. These efforts include co-developing marketing information, 

research, business models, and best practices that can be used by the industry to increase sales of 
53

fluid milk and dairy products.

Annual promotion program expenditures made by DMI, MilkPEP, and QPs over the period 1995 

to 2014 are depicted in Table 4-1 and in Figure 4-1. On average, slightly more than $358 million 

in total was spent annually by the respective entities over this period and close to $400 million in 

each year from 2011 to 2014. Median DMI expenditures were close to $90 million per year, 

ranging from $65.3 million to $99.7 million. Similarly, median MilkPEP expenditures were 

about $95 million per year, ranging from $38.7 million to $101.9 million. Finally, median 

expenditures made by QPs were about $174 million per year. 

The data associated with the demand-enhancing activities initiated by DMI and MilkPEP are also 

available on a quarterly basis. QP data are only available on an annual basis. To estimate 

quarterly data for the QPs, the seasonal nature of DMI and MilkPEP expenditure data is assumed 

to be similar to the QP expenditure data. Consequently, the seasonal factors associated with 

DMI and MilkPEP data are obtained and applied to the annual QP data to arrive at quarterly 

expenditures. The estimation of these data on a quarterly basis is important in allowing for 

sufficient observations to conduct the econometric analysis of demand for dairy products. 

Table 4-1. Annual Dairy Management, Inc., Milk Processor Education Program, and Qualified 

Program Promotion Program Expenditures, 1995 to 2014*

Year DMI MilkPEP QPs Total

1995 $88,105 $43,654 $160,832 $292,592

1996 $99,674 $38,690 $159,600 $297,964

1997 $93,859 $101,850 $160,379 $356,088

1998 $97,570 $100,901 $158,348 $356,819

1999 $90,055 $97,023 $161,161 $348,238

2000 $88,068 $95,158 $169,654 $352,880

2001 $96,185 $95,112 $169,967 $361,264

2002 $92,012 $93,511 $174,857 $360,380

2003 $87,301 $95,688 $165,973 $348,962

2004 $82,871 $97,167 $172,667 $352,705

2005 $76,125 $83,527 $175,081 $334,733

2006 $65,296 $92,030 $182,443 $339,768

2007 $74,623 $101,125 $190,289 $366,037

2008 $99,051 $97,003 $181,091 $377,145

2009 $94,071 $95,109 $187,992 $377,172

2010 $87,512 $98,316 $166,459 $352,287

2011 $88,456 $91,289 $214,758 $394,503

2012 $82,360 $91,893 $216,484 $390,736

2013 $93,184 $89,633 $216,844 $399,662

2014 $95,010 $83,426 $211,348 $395,100 *

Thousands of dollars 

Source: Dairy Management, Inc., Milk Processor Education Program, and U.S. Department of Agriculture 
54

Nominal seasonally adjusted demand-enhancing expenditures by DMI, MilkPEP, and QPs for all 

dairy products (fluid and manufacturing) combined on a quarterly basis from 1995 to 2014 are 

exhibited in Figure 2. These demand-enhancing expenditures varied from $42.9 million to $96.7 

million per quarter, averaging $66.4 million.

Nominal seasonally adjusted demand-enhancing expenditures for fluid milk from DMI, 

MilkPEP, and QPs on a quarterly basis from 1995 to 2014 are exhibited in Figure 3. From 1995 

to 2014, nominal seasonally adjusted quarterly promotion program expenditures for fluid milk 

ranged from roughly $24.2 million to $62.9 million per quarter. On average over the period

from 1995 to 2014, nominal seasonally adjusted demand-enhancing expenditures for fluid milk 

were $34.5 million per quarter.

As exhibited in Figure 4-4, nominal seasonally adjusted demand-enhancing expenditures for 

cheese ranged from $12.8 million to $27.6 million from 1995 to 2004, averaging $21.5 million 

per quarter. From 2005 to the third quarter of 2008, promotion expenditures associated with 

cheese were much smaller compared to the period from 1995 to 2004. On average, expenditures 

on cheese marketing and promotion were $12.0 million during the period. Expenditures on 

cheese increased from the fourth quarter of 2008 to the end of 2014. During this latter timeframe, 

nominal quarterly expenditures on cheese marketing and promotion activities ranged from $8.3 

million to $18.9 million, averaging $12.4 million per quarter. Over the period 1995 to 2014, 

nominal seasonally adjusted demand-enhancing expenditures for cheese averaged $16.9 million 

per quarter.

Figure 4-1. Annual Dairy Management, Inc., Milk Processor Education Program, and Qualified 

Program Promotion Expenditures, 1995 to 2014

 Source: Dairy Management, Inc., Milk Processor Education Program, and U.S. Department of Agriculture 
55

Figure 4-2. Nominal Seasonally Adjusted Demand-Enhancing Dairy Management, Inc., Milk 

Processor Education Program, and Qualified Program Expenditures for All Dairy Products, 

1995.1 to 2014.4*

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

100,000,000

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

*Includes expenditures not only for advertising and promotion but also for dairy foods and nutrition research, 

nutrition education, and market and economic research.

Source: Dairy Management, Inc., Milk Processor Education Program, and U.S. Department of Agriculture 

Figure 4-3. Nominal Seasonally Adjusted Demand-Enhancing Dairy Management, Inc., Milk 

Processor Education Program, and Qualified Program Expenditures for Fluid Milk, 1995.1 to 

2014.4

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Source: Dairy Management, Inc., Milk Processor Education Program, Qualified Programs, and calculations 

by the authors.

Dollars Dollars
56

Figure 4-4. Nominal Seasonally Adjusted Demand-Enhancing Dairy Management, Inc., Milk

Processor Education Program, and Qualified Program Expenditures for Fluid Milk, 1995.1 to 

2014.4

8,000,000

12,000,000

16,000,000

20,000,000

24,000,000

28,000,000

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Source: Dairy Management, Inc., Qualified Programs, and calculations by the authors.

As shown in Figure 4-5, nominal seasonally adjusted demand-enhancing quarterly expenditures 

on marketing and promotion of butter ranged from close to $60,000 to $6 million, averaging 

slightly more than $1 million per quarter over the period 1995 to 2014. Marketing and 

promotion expenditures for butter are a fraction of comparable expenditures for fluid milk and 

cheese.

Figure 4-5. Nominal Seasonally Adjusted Demand-Enhancing Dairy Management, Inc., and 

Qualified Program Expenditures for Butter, 1995.1 to 2014.4

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Source: Dairy Management, Inc., Qualified Programs, and calculations by the authors.

Dollars Dollars
57

Beginning in 2006, DMI transitioned from featuring milk, cheese, and butter in product-specific 

promotions to broader campaigns that relate to a number of dairy products. As a result of an 

increasing number of campaigns affecting multiple products, it is important to assess demand 

enhancements for the aggregate of dairy products as well as within specific product markets.

Global dairy markets are another area in which promotion program funds are invested. The 

export promotion programs as analyzed by this analysis are shown in Figure 4-6a. Nominal 

seasonally adjusted DMI expenditures directed to dairy exports on a quarterly basis ranged from 

just under $800 to approximately $4.6 million. The trend in these DMI expenditures has been 

upward from 1995 to 2014, averaging about $2.2 million per quarter over this period. As 

exhibited in Figure 4-6b, nominal seasonally adjusted funds awarded through USDA’s Foreign 

Agricultural Service (FAS) directed to exports of dairy products on a quarterly basis varied from 

just under $310,000 to about $1.8 million over the period of 1997 to 2014. On average, FAS 

funds were nearly $1 million per quarter. As presented in Figure 4-6c, nominal seasonally

adjusted DMI as well as USDA FAS expenditures ranged from $881 to $6.1 million per quarter, 

averaging $3.2 million on a quarterly basis from 1995 to 2014.

Figure 4-6a. Nominal Seasonally Adjusted Dairy Management Inc., Expenditures Directed to 

Exports of Dairy Products, 1995.1 to 2014.4

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Source: Dairy Management, Inc., and calculations by the authors. Dollars
58

Figure 4-6b. Nominal Seasonally Adjusted U.S. Department of Agriculture Foreign 

Agricultural Service Funds Awarded to be directed to Exports of Dairy Products, 1997.1 to 

2014.4*

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 *

Data were not available prior to 1997. Also, only annual data were available for 1997 and 1998. 

Quarterly interpolations were made for these years.

Source: U.S. Department of Agriculture, Foreign Agricultural Service and calculations by the authors.

Figure 4-6c. Nominal Seasonally Adjusted Dairy Management, Inc., and U.S. Department of 

Agriculture, Foreign Agricultural Service Funds Directed to Exports of Dairy Products, 1995.1 

to 2014.4

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Source: Calculations by authors.

Dollars

Dollars
59

Trends in Consumption

On average, over the 1995-2014 period, quarterly per capita consumption (measured by 

combining domestic commercial disappearance and imports) of butter, cheese, and fluid milk 

were 1.2 pounds, 7.9 pounds, and 46.5 pounds, respectively. The range of quarterly 

consumption for butter was from 0.9 pounds to 1.8 pounds, for cheese from 6.5 pounds to 9.5 

pounds, and for fluid milk from 38.0 pounds to 53.3 pounds. Fluid milk consumption has been 

trending down over the period, on a per capita basis. Cheese consumption per capita has grown 

modestly (Figures 4-7 to 4-11). Recent research found that declining consumption reflects 

changes in the frequency of fluid milk intake, rather than changes in portions (Stewart, Dong, 

and Carlson, 2013). The majority of Americans born in the 1990s tend to consume fluid milk 

less often than those born in the 1970s, who in turn consume fluid milk less often than those born 

in the 1950s. U.S. milk consumption has declined 25 percent since 1975 due to changing 

consumption habits as well as increased competition from other beverages. 

Total U.S. dairy exports over the 1995-2014 period grew strongly. On a milk-equivalent-skimsolids basis, the growth in U.S. dairy exports has been manifestly exponential, from 5.2 billion 

pounds annually in 1995 to just over 39.0 billion pounds in 2014 (Figure 4-12). Over the same 

period, measured on a milk-equivalent-fat basis, average quarterly U.S. dairy exports followed a 

positive but less robust trend from 3.1 billion pounds in 1995 to 12.4 billion pounds in 2014 

(Figure 4-12).

Figure 4-7. Per Capita U.S. Consumption of Fluid Milk, 1995.1 to 2014.4

36

40

44

48

52

56

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Source: U.S. Department of Agriculture.

Pounds
60

Figure 4-8. Per Capita U.S. Consumption of Cheese, 1995.1 to 2014.4

6.4

6.8

7.2

7.6

8.0

8.4

8.8

9.2

9.6

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Source: U.S. Department of Agriculture.

Figure 4-9. Per Capita U.S. Consumption of Butter, 1995.1 to 2014.4

0.8

1.0

1.2

1.4

1.6

1.8

2.0

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Source: U.S. Department of Agriculture.

Pounds Pounds
61

Figure 4-10. Per Capita U.S. Consumption of All Dairy Products on a Milk-Equivalent-Fat 

Basis, 1995.1 to 2014.4

136

140

144

148

152

156

160

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Source: U.S. Department of Agriculture and calculations by the authors.

Figure 4-11. Per Capita U.S. Consumption of All Dairy Products on a Skim-Solids Basis, 

1995.1 to 2014.4

128

130

132

134

136

138

140

142

144

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Source: U.S. Department of Agriculture and calculations by the authors.

Pounds

Pounds
62

Figure 4-12. U.S. Dairy Commercial Exports on a Milk-Equivalent-Fat Basis and Skim-Solids 

Basis, 1995.1 to 2014.4

0

2,000

4,000

6,000

8,000

10,000

12,000

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Source: U.S. Department of Agriculture and calculations by the authors.

Overall, the long-run trend of declining consumption of fluid milk is continuing, while per capita 

consumption of other dairy products has been growing. Given this setting, the analysis must 

address whether consumers responded to the demand-enhancing expenditures associated with 

dairy promotion programs. Structural economic models were developed to isolate the sensitivity 

of consumers to the demand-enhancing expenditures from the effects of fundamental economic 

forces such as price and income. The results are reported in the next section. 

Findings on Impacts of Demand-Enhancing Expenditures for Dairy Products

This evaluation study indicates a significant positive association between promotion program 

expenditures and consumer demand. This association holds for all dairy products in the 

aggregate and for fluid milk, cheese, butter, and the activities of the Dairy Research and 

Promotion Program and the Fluid Milk Processor Promotion Program individually. The impact 

is modest during the quarter in which expenditures are made, while the cumulative impact is over 

time measurably larger. 

The key indicator of the impact of marketing and promotion expenditures is a measure of the 

relative sensitivity of consumer demand to demand-enhancing expenditures. This measure, also 

known as elasticity, is defined as the percentage change in consumption given a 1-percent 

change in demand-enhancing expenditures, while holding all other variables constant. 

Attention is centered on the retail level of the marketing chain, and the economic model provides 

structural parameter estimates that are statistically valid and consistent with prior studies in the 

literature on evaluation of generic commodity promotion. This analysis allows the promotion 

elasticities to vary over time, with variation in expenditures. Some of the key findings of the Million Pounds

Skim-Solids 

Basis

Fat Basis
63

economic analysis are as follows: 

• Demand-enhancing expenditures have a significant positive impact on domestic 

consumption of dairy products. (Domestic consumption is defined as domestic 

commercial disappearance plus imports.)

• The dairy markets were more responsive to demand-enhancing expenditures in 

comparison to last year.

The demand responsiveness to promotion was allowed to vary over time. Further, the cumulative 

impact of promotion was also identified. It was found that demand-enhancing expenditures affect 

the market for cheese for up to six quarters. The lagged effect on fluid milk was over 16 quarters, 

and for butter, the lagged effect was over 11 quarters. For the aggregate of all dairy products, the 

lagged effect persisted for 9 quarters on a fat basis and for 12 quarters on a skim-solids basis.

To measure the effects of DMI export promotion enhancement expenditures on U.S. dairy 

commercial exports, two U.S. dairy export demand models were specified and estimated using 

two different measures of dairy exports: (1) the measure of dairy exports on milk-equivalentskim-solids basis (SSB) supplied by USDA; and (2) the measure of dairy exports on a milkequivalent-fat basis (FB) supplied by USDA. Simply put, when U.S. prices are low (high) 

relative to Oceania export prices, more (less) is exported.6

Table 4-2. Estimates of the Sensitivity of Demand to Promotion, Prices, and Income, 1995 to 

2014

Promotion 

Elasticity

1995 to 2014

Promotion 

Elasticity

2014 only

Own-Price 

Elasticity

Income 

Elasticity

Butter1 0.057 0.064 -0.274 0.545

Cheese1 0.037 0.027 -0.124 0.241

Fluid milk1 0.089 0.073 -0.051 0.111

All dairy1

 Skim solids basis 0.062 0.053 -0.097 0.251

 Fat basis 0.035 0.031 -0.044 0.370

Exports1

 Skim solids basis 0.060 0.060 -0.270 0.742

 Fat basis 0.073 0.073 -0.239 0.968

1

Over the time period 1995.1 to 2014.4.

 6 Drivers of demand included lags of the ratio of the Oceania export butter price to the U.S. butter price on a fat 

basis; lags of the ratio of the Oceania export price for skim milk powder (SMP) to the U.S. nonfat dry milk (NDM) 

price on a skim-solids basis; lags of the measure of world income calculated as the trade-weighted, real gross 

domestic products of major importing countries; and inertia or stickiness of dairy exports in world markets.
64

The lag length for export promotion expenditures on an SSB was estimated to be 9 quarters. The 

export promotion expenditure elasticity was calculated to be 0.060 in the sample period, 

indicative of a statistically significant effect of promotion.

The lag length for the export promotion expenditures on a milk-fat basis was estimated to be six 

quarters. The export promotion expenditure elasticity was calculated to be 0.073, indicative once 

again of a statistically significant effect of promotion. 

Estimation of Consumption Changes Attributed to Promotion Program Expenditures

The primary objective of the analysis provided in this section is to answer the key question 

regarding the National Programs over time: what have been the effects of dairy promotion 

programs on the domestic consumption of fluid milk, dairy products, and exports? In answering 

the key question, the focus is on the effects of the dairy promotion program on the U.S. demand 

and exports of fluid milk and dairy products. Once these market effects have been determined, a 

benefit-cost analysis of the dairy program at the producer level and at the fluid milk processor 

level can be done. In the analysis, the producer BCR of the dairy promotion program is 

calculated as the additional net producer revenues (profit) generated by the promotion program 

divided by the cost of the promotion programs. By using profit over costs, a more complete and 

realistic BCR is calculated for producers. The fluid milk processors’ BCR is calculated similarly 

to the producers; the cost of milk is used as a proxy for the cost of production since data for fluid 

milk processors’ cost of production are not available. The analysis covers the period of 1995 to 

2014 and also decomposes the results for comparison purposes into four similar time periods: (1) 

1995-1999, (2) 2000-2004, (3) 2005-2009, and (4) 2010-2014.

This analysis is partially accomplished by aligning the annual model of the U.S. dairy industry 

maintained at the University of Missouri Agricultural Markets and Policy Group Dairy Model 

(AMAP Dairy Model) with the observed data over the 1995-2014 period. The impact of 

promotion is obtained by removing demand-enhancing expenditures from the system. There is a 

simulated “demand-enhancement” scenario representing the actual history, contrasted with a 

simulated “no demand-enhancement” scenario (the counterfactual) to reflect the levels of prices 

and quantities expected in the absence of the dairy promotion programs.

This analysis uses the AMAP Dairy Model as modified to account for dairy promotion to answer 

the question posed above regarding the effects of dairy promotion on U.S. dairy markets and 

exports. For this analysis, the AMAP structural dairy model was simulated over the 1995-2014 

period to identify how dairy markets would have functioned in the absence of promotion. The 

results for selected key variables in the model for the “promotion” and “no promotion” scenarios 

are presented in Table 4-3.

Table 4-3 provides a comparison of the “promotion” levels of each variable (actual historical 

data) to the “no promotion” levels (simulated levels without promotion) to show the effects 

across time from dairy promotion spending. There are many factors at play in the year-by-year 

results including the level of promotion expenditures each year and the supply dynamics built 

into the AMAP structural dairy model. In order to provide some insight into these model 

dynamics, Table 3 shows four sub-periods of results as well as the entire period for selected 
65

endogenous variables. This analysis starts in 1995 and ignores any promotion effects that would 

have occurred prior to 1995. 

Because no other exogenous variable in the model (e.g., levels of inflation, exchange rates, 

income levels, government policies, etc.) other than dairy promotion expenditures is allowed to 

change in either scenario, this process effectively isolates the effects of the dairy promotion 

program on U.S. dairy markets and exports. That is, the simulated differences between the 

values of the endogenous variables from the “promotion” scenario and those from the “no 

promotion” scenario in which those expenditures are set to zero provide direct measures of the 

historical effects of the dairy promotion expenditures (and only those expenditures) on U.S. dairy 

markets and exports.

Over the period 1995-2014, per capita consumption of fluid milk, cheese, and butter rose by 9.0 

percent, 4.6 percent, and 5.5 percent respectively due to promotion efforts, all other factors held 

constant. The overall downward trend of per capita fluid milk consumption is mitigated as a 

result of National Programs. If promotion did not exist, then consumption would have been 

187.79 pounds per capita instead of 204.69 pounds per capita over the 1995-2014 period. Hence, 

the National Programs spending on fluid milk reduced the rate of decline. Per capita 

consumption of nonfat dry milk would have been 3.28 pounds per capita without promotion 

versus 3.21 pounds per capita with promotion over the 1995 to 2014 period. 

In the 2000-2004 period, the dairy product markets had several factors at play that provide 

different results depending on the dairy product in question. First, remember that cheese and 

fluid milk received the largest portion of dairy promotion dollars. For these two products, 

consumption remained higher as a result of promotion. Butter promotion was modest over this 

particular period and increased consumption by 4.7 percent.

In the period 2005 to 2009, a return to stronger butter promotional spending in 2004, following 

relatively low levels from 1998 to 2003, resulted in increased per capita consumption by 0.27 

pounds when comparing the no-promotion to promotion levels. In the previous period (2000-

2004), the per capita consumption only increased by 0.20 pounds when comparing the nopromotion to promotion levels. 

Promotional spending in nominal terms on all dairy products increased in 2010 through 2014 to a 

level not seen previously, leading to increases of cheese and butter consumption. Actual cheese 

consumption in this period was up 1.10 pounds per capita from the 2005-2009 period. Actual 

butter consumption was up 0.57 pounds per capita from the 2005-2009 period.
66

Table 4-3. Effects of Dairy Promotion on U.S. Dairy Markets Based on Simulation of Supply 

Fluid Milk Per 

Capita 

Consumption

Cheese Per 

Capita 

Consumption

Butter Per 

Capita 

Consumption

Nonfat Dry Milk 

Per Capita 

Consumption

(pounds)

Period

1995 - 1999

With Promotion 215.46 27.69 4.38 3.30

No Promotion 194.71 26.41 4.19 3.40

Change 20.75 1.27 0.19 -0.10

Percent Change 10.7% 4.8% 4.4% -2.9%

2000 - 2004

With Promotion 206.51 30.49 4.48 3.33

No Promotion 188.43 29.05 4.28 3.40

Change 18.07 1.45 0.20 -0.07

Percent Change 9.6% 5.0% 4.7% -2.2%

2005 - 2009

With Promotion 202.95 32.4 4.81 3.30

No Promotion 187.09 31.07 4.54 3.34

Change 15.87 1.33 0.27 -0.05

Percent Change 8.5% 4.3% 6.0% -1.5%

2010 - 2014

With Promotion 193.57 33.24 5.33 2.94

No Promotion 180.16 31.91 5.01 2.97

Change 13.4 1.33 0.31 -0.02

Percent Change 7.4% 4.2% 6.3% -0.8%

1995 - 2014

With Promotion 204.69 30.76 4.73 3.21

No Promotion 187.79 29.42 4.49 3.28

Change 16.9 1.34 0.24 -0.06

Percent Change 9.0% 4.6% 5.5% -1.9%

Source: Calculation by the authors.

Benefit-Cost Ratios

Based on a comparative analysis of the promotion and no-promotion scenarios as summarized in 

the previous section and illustrated in Table 4-4, the answer to the key question posed earlier 

regarding the National Programs, as it relates to the analyzed products, is that they have

effectively increased the demand of promoted dairy products.

This section provides a benefit-cost analysis of the National Programs based on the results of the 

scenario analyses discussed in the previous section. As calculated, the producer profit BCR is the 

additional industry profits (additional cash receipts net of additional production costs and 

promotion assessments) earned by producers as a consequence of the promotion expenditures (as 

measured through the scenario analyses) divided by the historical level of promotion 

expenditures made to generate those additional profits. By using a profit BCR, a more complete 

and realistic analysis is conducted. This measure more accurately captures the additional net 
67

revenue gained from promotional expenditures.

 

Over the period 1995-2014, the gains in profit at the producer level were far larger than the 

expenditures on demand-enhancement programs. The BCRs for producers for fluid milk were 

calculated to be $3.93 for every dollar invested in demand-enhancing activities; for cheese, $6.21 

for every dollar invested; and for butter, $29.53 for every dollar invested. Dairy export 

promotion expenditures have increased the foreign demand for U.S. dairy products by $5.67 for 

every dollar invested. For an aggregate of all dairy products, the net profit BCR is 

approximately $5.50 for every dollar spent. 

The fluid milk processor BCR cannot be calculated as completely as the producer BCR since the 

cost-of-production data are not available. To calculate the fluid milk BCR, the milk costs are 

used as a proxy for cost-of-production since milk would be the largest input cost. Over the 

period 1995-2014, the gains in profit at the fluid milk processor level were far larger than the 

expenditures on demand-enhancement programs. The BCRs for fluid milk were calculated to be 

$4.87 for every dollar invested in demand-enhancing activities for fluid milk processors 

(Table 4-5).

Table 4-4. Calculated Benefit-Cost Ratio (BCRs), in Net Profit at the Producer Level Attributed 

to the National Programs, 1995 to 2014

Producers

Product BCR

All Dairy 5.50

Fluid milk 3.93

Cheese 6.71

Butter 29.53

Exports 5.67

Source: Calculations by the authors.

Table 4-5. Calculated Benefit-Cost Ratio (BCRs), in Net Profit at the Fluid Milk Processor 

Level Attributed to Fluid Milk Promotion Program, 1995 to 2014

Fluid Milk Processors

Product BCR

Fluid Milk 4.87

 Source: Calculations by the authors.
68

Dairy Product Imports and the Import Assessment

The United States imported between $2.5 billion and $3.5 billion in dairy products in each of the 

last 5 years (Table 4-6). Cheese products accounted for slightly more than one-third, by value, 

of the dairy imports (Figure 13). Cheese imports as a percent of total dairy imports were highest 

in 2010 at 39 percent and lowest in 2012 at 36 percent. Cheese imports grew faster in value 

terms than in tonnage between 2010 and 2014, indicating that imports have increasingly been 

comprised of higher value product types.

USDA’s Economic Research Service publishes a widely used series on dairy imports which 

includes only cheese, milk products, yogurt, and fluid milk. By that definition of dairy products, 

cheese has been between 93 percent and 96 percent of the value of U.S. dairy imports.

Effective April 1, 2011, importers of dairy products paid assessments to the national dairy 

marketing and promotion programs. The amount collected is based on milk content as follows: 

“This rule requires importers to calculate assessments due based upon documentation 

concerning the cow’s milk solids content of the imported products. Products shall be 

assessed at the rate of $0.01327 per kilogram of cow’s milk solids.” (Agricultural 

Marketing Service, in Federal Register, p. 14479).

Two-thirds of the import assessment is allocated to the National Dairy Board, and the remaining 

amount can be designated to be used by one of three QPs: (1) Cheese Importers Association of 

America; (2) Global Dairy Platform; and (3) the Wisconsin Milk Marketing Board, Inc.

Table 4-6. U.S. Dairy Product Imports and Import Assessment Funds, 2010-2014

2010 2011 2012 2013 2014

Imports All Dairy Value 

$1,000 $2,489,935 $2,814,200 $3,059,069 $3,051,985 $3,454,336

Value of Cheese Imports, 

$1,000 $967,031 $1,072,952 $1,093,017 $1,145,000 $1,274,723

Quantity of Cheese Imports, 

metric ton (MT) 138,539 142,166 153,964 147,196 164,777

Unit value of Cheese Imports 

in $ per MT $6,980 $7,547 $7,099 $7,779 $7,736

Import Assessment funds in $ $1,057,003 $3,522,145 $3,415,218 $3,411,353

Import Assessment in $ per 

$1,000 of dairy imports $1.15 $1.12 $0.99

1

2011 - The import assessment went into effect April 1, 2011. Funds were collected in each month from September 

2011 to present.

Sources: Import Assessment data from U.S. Department of Agriculture, Agricultural Marketing Service. Trade data 

from U.S. Department of Agriculture, Foreign Agricultural Service. 
69

Figure 4-13. U.S. Dairy Imports and Share of Cheese in Dairy Import Value, 2010-2014

Source: U.S. Department of Agriculture, Foreign Agricultural Service

Import assessment funds totaled between $3.41 million and $3.53 million per year during the 3 

full years of 2012, 2013, and 2014, in which the import assessment has been in effect. The total 

funds collected declined modestly in each year from 2012 to 2014. The cumulative import 

assessment funds totaled $11,405,718 from September 2011 to December 2014. The import 

assessment has amounted to less than 1.0 percent of the total demand-enhancing expenditures by 

DMI and the QPs in each year between 2012 and 2014.

Economic Factors Affecting Imports

The combination of relatively high producer prices recently for dairy products and a reduction in 

the cost of feed contributed to production growth among most of the leading dairy exporting 

countries (FAS, USDA). Dairy production rose between 3.0 percent and 7.0 percent in 2014 

relative to 2013 in the European Union, New Zealand, and Australia (FAS, USDA). The 

increase in production contributed to the reduction in world prices of dairy products. This 

general trend was borne out in U.S. import data for cheese products. The quantity of cheese 

imported increased substantially, from 147,196 metric tons in 2013 to 164,777 metric tons in 

2014. Over the same year, unit values of the cheese imported fell marginally (by 0.5 percent). 

In addition to the economic fundamentals, there were two events that influenced world dairy 

trade: (1) Russia’s import ban; and (2) a reduction in China’s demand for whole milk powder. 

In August 2014, Russia announced a ban on imports of food from the European Union and from 
70

the United States (The Guardian). The United States has not been a major dairy supplier to 

Russia. However, the EU was a major supplier of dairy products to Russia (Figure 4-14), and the 

greater availability of product on the world market tended to stimulate more imports to the 

United States.

 

In light of these positive trends for imports, particularly for imported cheese, dairy import 

assessment funds have not demonstrated a similar trend. The month-to-month trend has been 

somewhat variable but basically flat, as shown in Figure 4-15. As exhibited in Figure 4-15, on a 

monthly basis, funds from the dairy import assessment ranged from $210,086 to $465,976, 

averaging $290,860 over the period September 2011 to May 2014. Further, on an annual basis, 

the funds collected under the import assessment fell in each of the 3 full years of the program, 

2012 through 2014 (Table 4-6).

 

The rising imports yet lower import assessment might be explained by reference to the milk 

solids content in the imported goods. In cheese, for example, the milk solids content (nonfat) 

varies across the product types. Dry milk powder is nearly 100 percent milk solids. Other foods 

that contain dairy products also may have varying amounts of milk solids according to the 

recipes that may be proprietary or can be changed by the manufacturer. Dairy importers may 

have been adjusting the assessments due by clarifying the exact milk-solid component over the 

course of implementing the program. Alternatively, the mix of products imported may have 

changed in favor of those having less milk solids due to pricing or demand or availability. Recall 

that imported dairy products are assessed at the rate of $0.01327 per kilogram of cow’s milk 

solids.

Figure 4-14. Source Countries of U.S. Dairy Imports, 2014, in $1,000

Source: U.S. Department of Agriculture, Foreign Agricultural Service
71

Figure 4-15. Funds From Dairy Import Assessments, by Month, September 2011 to May 2014

Source: U.S. Department of Agriculture.

Impact of the Import Assessment

During the first 3 full years of the import assessment program (2012-2014), the assessment in 

terms of the total value of dairy imports has been around $1 per $1,000 of imported dairy 

products (Figure 4-16). The majority of the import assessment is distributed to the national 

promotion programs implemented by DMI. Funds from the import assessments constituted a 

small addition to the total pool of promotion funding. In 2014, for example, total demandenhancing expenditures were $395 million of which $3.4 million, or less than 1.0 percent, was 

from the import assessment.

 

An analysis of the cumulative effect of the import assessment was completed using a simulation 

model of the dairy industry. To address the impact of the import assessment, we simulate the 

impact of the dairy promotion program with the import assessment and the impact of the dairy 

promotion program without the import assessment. All import assessment funds are assumed to 

be spent on demand-enhancing activities. The analysis uses the same AMAP Dairy Model 

described previously.

The change in quantity demanded for cheese attributed to import assessments is based upon the 

same level of demand shift estimated for cheese. This step provided the “shock” in the AMAP 

Model which yielded corresponding interactions between dairy product demand, prices, and 

subsequent production and import levels. The reason to apply the shift to cheese is that import 
72

assessments flow through QPs oriented toward cheese and to the National Dairy Board and not 

through the fluid milk promotion efforts. 

Figure 4-1. Ad Valorem Calculation of the Import Assessment, All Dairy (in $ per $1,000 

imported)

Source: Data on import assessment from the U.S. Department of Agriculture, Agricultural Marketing Service and 

trade data from the U.S. Department of Agriculture, Foreign Agricultural Service. Calculations by the authors. 

Cheese occupies about one-third of total imported dairy products, by value, and also has 

adequate data to conduct a thorough analysis; therefore, cheese is the focus of this section. Due 

to promotion funds collected from importers, imported cheese levels were higher by roughly 1.0 

million pounds to 1.5 million pounds. Further, unit values of cheese imports amounted to 

roughly $3.42 per pound on average over the period 2011 to 2014. Hence, incremental revenue 

to importers solely from cheese attributed to the import assessment totaled $3.4 million to $5.3 

million. 

Concluding Remarks

This report provides the independent evaluation of the effectiveness of the dairy producer, dairy 

importer, and fluid milk processor promotion programs, covering the period 1995-2014. The key 

findings regarding markets for milk and manufactured dairy products include:

• The National Programs have effectively increased the demand of promoted dairy 

products, especially for cheese and butter, while lessening the decline in per capita fluid 

milk consumption. The gains in profit at the producer and fluid milk processer level were 

far larger than the costs of the National Programs. 
73

• The overall BCR (using profit over costs) of the dairy producer promotion program was 

calculated to be 5.50; that is, for every $1 spent on demand-enhancing activities, dairy 

producers received an additional $5.50.

• The BCRs for producers for fluid milk were calculated to be $3.93 for every dollar 

invested in demand-enhancing activities; for cheese, $6.71 for every dollar invested; and 

for butter, $29.53 for every dollar invested. The BCR of export promotion was $5.67 per 

dollar invested. 

• The United States imported between $2.5 billion and $3.5 billion in dairy products in 

each of the last 5 years. Cheese products accounted for slightly more than one-third, by 

value, of the dairy imports. Import assessment funds totaled between $3.41 million and 

$3.53 million dollars per year during 2012, 2013, and 2014. The import assessment has 

amounted to less than 1.0 percent of the total demand-enhancing expenditures by DMI 

and the QPs.

• Due to promotion funds collected from importers, imported cheese levels were higher by 

roughly 1.0 million pounds to 1.5 million pounds. Unit values of cheese imports 

amounted to roughly $3.42 per pound on average over the period 2011 to 2014. Hence, 

incremental revenue to importers solely from cheese attributed to the import assessment 

totaled roughly $3.4 million to $5.3 million. 

• The BCR for fluid milk processors attributed to the fluid milk promotion program was 

calculated to be $4.87.

• With regard to methodology, the structural econometric models that are presented in this 

report are statistically valid and largely consistent with prior studies in the literature on 

evaluation of generic commodity promotion. The simulation analysis was accomplished 

by aligning the annual AMAP Dairy Model with the observed data over the 1995-2014 

period. The baseline period is 1995 to 2014 and the impact of promotion was obtained 

by removing demand-enhancing expenditures from the system (the counterfactual)7

.

 7 A reference list is available upon request.
74

Chapter 5 

National Dairy Promotion and Research Board 

2013 & 2014 Financial Information

National Dairy Board activities are funded by U.S. dairy producers and dairy importers. U.S. 

dairy producers pay a mandatory 15-cent-per-hundredweight assessment on their milk, and 

importers pay 7.5 cents per hundredweight, or the equivalent thereof, on dairy products imported 

into the United States.

The Dairy Board’s revenue for 2013 and 2014 was $102.5 and $109.7 million, respectively. The 

Dairy Board’s administrative budget continued to be within the 5-percent of revenue limitation 

required by the Dairy Order. Actual income and expenses for 2013 and 2014 are provided in this 

chapter as well as the following information: approved Dairy Board budgets; DMI and USDEC 

contracts reviewed by USDA; a description of the National Dairy Foods Research Centers; 

active competitive research activity in the areas of dairy foods, nutrition, and sustainability; and 

the independent audits of the Dairy Board. 
75

National Dairy Promotion and Research Board 2013 Income and Expenses
76

National Dairy Promotion and Research Board 2014 Income and Expenses
77

National Dairy Promotion and Research Board – 2014 Approved Budget 

(Thousands)

 

Unified Marketing Program Budget 

Butter $750

Communications 18,803

Dairy Research Institute 10,516

Fuel Up to Play 60 9,990

National Dairy Council: Nutrition Affairs 4,441

Planning & Facilitation 3,385

Strategic Initiatives 38,259

Strategy, Insights and Planning 3,784

Supplemental Regional Programs 6,665

USDEC: Export & Ingredients 18,590

Subtotal $115,184

UDIA/Unallocated Expense Share $30,721

Board Expense Share $84,463

Total Budget Expenditures $115,184

Source: Budgets received and approved by the USDA from the National Dairy Promotion and Research Board.
78

National Dairy Promotion and Research Board – 2015 Approved Budget 

(Thousands)

Unified Marketing Program Budget 

Butter $1,000

Communications 15,597

Fuel Up to Play 60 9,630

National Dairy Council: Nutrition Affairs 5,227

Planning & Facilitation 3,465

Research 7,416

Resource Recovery 500

Strategic Initiatives 48,434

Strategy, Insights and Planning 3,766

Supplemental Regional Programs 7,100

Sustainability 3,061

USDEC: Export & Ingredients 18,124

Subtotal $123,320

UDIA/Unallocated Expense Share $32,934

National Dairy Promotion and Research Board Share 90,396

Total Budget Expenditures $123,320

Source: Budgets received and approved by the USDA from the National Dairy Promotion and Research Board
79

2013 National Dairy Promotion and Research Board, Dairy 

Management Inc., and U.S. Dairy Export Council Contracts 

Reviewed by USDA 

2013 ADVERTISING AND MARKETING SERVICES

American Butter Institute Butter Promotion Partnership

Blue Trellis, LLC Cookbook Development Services

Diggins, Skylar Promotion Services

Domino’s Pizza Inc. Cheese Promotion Partnership

D S Simon Productions National Dairy Month Media

Edelman Public Relations Worldwide Fuel Up To Play 60; Dairy Image Services; 

Strategic Consulting and Coordination

Florida Dairy Farmers, Inc. Unified Marketing Plan Support; Caribbean 

Dairy Promotions 

Food Marketing Support Services Fluid Milk Promotion

Intech Integrated Marketing Services Distribution Services

Integrated Program Management Company, 

Inc. Project Management Support

McDonald’s Dairy Promotion Partnership 

Media Management Services, Inc. Fuel Up To Play 60 Support 

Natural Marketing Institute Database Management 

Nestle USA Dairy Promotion Partnership 

New England Dairy & Food Council Unified Marketing Plan Support

New England Dairy Promotion Board Unified Marketing Plan Support 

NPD Group, Inc. Consumer Surveys

Pizza Hut, Inc. Cheese Promotion Partnership 

Prevail Strategic Marketing and 

Communications, LLC Partner Innovation Development Services

Quaker Oats Company Dairy Promotion Partnership

Ruby–Do Special Projects Industry Image and Relations 

Shamrock Foods Company Refuel Innovation Partnership

Slate LLC Conference Sponsorship 

Southeast United Dairy Industry 

Association, Inc. Unified Marketing Plan Support 

Symphony/IRI Group, Inc. Lactose Free Milk Initiative

Taco Bell Dairy Promotion Partnership
80

The Washington Post Company Conference Sponsorship 

2013 COMMUNICATIONS, NUTRITION EDUCATION, AND PUBLIC RELATIONS

Action for Healthy Kids, Inc. Fuel Up To Play 60 Support 

Academy of Nutrition and Dietetics Nutrition and Food Safety

American Academy of Pediatrics Health and Nutrition

ASK-Comm Strategies, LLC Farm Smart Communications Support

Bader Rutter & Associates

Innovation Center; Health and Wellness 

Nutrition Education; Lactose Intolerance 

Communication 

Battelle Energy Alliance, LLC Operations, Energy and Environmental 

Analysis

Baxter Communications Video and Communication Services

Burson–Marsteller Dairy Framework Communications 

Demeter Communications Cow of the Future Program Activities 

Direct Image & Design, LLC Communication Support Services

Family Room Strategic Consulting Group Fuel Up To Play 60 Promotion Support 

Feeding America Program Sponsorship 

Fleishman-Hilliard, Inc. Communication Planning and Services 

FoodMinds, LLC Cheese & Sodium, Lactose Intolerance, 

Nutrient Rich Foods and Whey Protein 

Communications

Food Research and Action Center School Breakfast and Fuel Up To Play 60

Fresh Approach Commodity Roundtable

Health & Nutrition Network Industry Image and Relations

Heinrich Marketing Research Dairy-Based Breakfast Concepts Study

Hillstrom Communications Communication Planning and Services

Leveraging Nutrition Research Project Development

Magnet360, LLC Portal and Communications Project

MMS Education, Inc. Fuel Up To Play 60 Support 

National Dairy Shrine Program Sponsorship 

National Football League Players 

Incorporated Fuel Up To Play 60 Support 

National Football League Properties Fuel Up To Play 60 Support 
81

National Fluid Milk Processor Promotion 

Board Shared Research and Consulting Services

National Research Council Dairy Cattle Nutrition Report

Nutrition Impact, LLC Nutrition Project Services

Nutrition Strategies Nutrition Project Services

Olson Communications Meals Innovation Project

Planet Technologies Fuel Up To Play 60 Web Site Services

Results Direct Dairy Web Site Support 

Richter Studios Dairy Farming Today Web Site Support 

School Nutrition Association Fuel Up To Play 60 & School Nutrition 

School Nutrition Foundation Fuel Up To Play 60 & School Nutrition 

Team Services, LLC Fuel Up To Play 60 Support 

Universal McCann Worldwide Lactose Intolerance Communications

Weber Shandwick, Inc. Crisis Readiness Program and MyDairy 

Program 

World Wildlife Federation Strategic Coordination Services

2013 EXPORT AND INGREDIENTS

American–Mexican Marketing Mexican Market Expansion

Arab Marketing Finance, Inc. Middle East Market Expansion

Baccigaluppi, Roger USDEC Consulting Services

Berjaya Papa John’s Pizza S/B Pacific Rim Cheese Program

Blue Flame Partners, LLC USDEC Web Site

Bovina Mountain Consulting Nutrition Market Report

Bryant Christie, Inc. International Food Additive Database

Canadean Limited Global Dairy Ingredients Database 

Center for Food Safety USDEC Consulting Services

Cocker Consulting Limited USDEC Consulting Services

Contacts International Consulting, Ltd. South American Market Expansion

Cserwonka, Kelly USDEC Consulting Services

Dairy Australia Limited Elderly Dairy Consumption Study

David Steifer Consulting USDEC Consulting Services

D.H. Business USDEC Consulting Services

Domino’s Pizza Enterprises Cheese Export Promotion 

Domino’s Pizza Australia and New Zealand Pacific Rim Cheese Program
82

Domino’s Pizza Japan Pacific Rim Cheese Program

Exponent, Inc. Meta-Analysis of Whey Protein

Fabrizio & Friends Global Dairy Market Outlook, Market 

Analysis Report & News Center Web Site

Food Automation, LLC Traceability Pilots

Forum One Communications Strategic Analysis

Fritz, Richard USDEC Consulting Services

Futureau Consulting Foodservice Report

Gerdes, Sharon Ingredients Consulting Services

Global Food and Nutrition, Inc. USDEC Consulting Services

IntNet Korea Program Activities

Global Research Solutions Research and Analysis

Natalie Hotrum Food Science, LLC USDEC Consulting Services

International Dairy Foods Association International Dairy Trade Shows 

JDG Consulting USDEC Consulting Services

Mel Jolly International Consulting USDEC Consulting Services

Kentucky Fried Chicken Japan Pacific Rim Cheese Program 

Koski, Shannon Ingredients Consulting Services

Locraft, Lauren USDEC Consulting Services

Mathews Project Services USDEC Consulting Services

Market Makers Inc. Japanese Market Expansion

Market Tree, LLC Sweetener Research

McCully Group Dairy Market Metrics, Strategies and 

Analysis

Midwest Dairy Association Unified Marketing Plan; Ingredient 

Development 

MSB Agrifood United Kingdom and European Dairy 

Market Metrics and Analysis

MSB Research Limited Columbia and Venezuela Market Research

NIZO US Milk Powder Program Activities

Novak Birch Professional Services 

Orrani Consulting, Ltd. China, Egypt, Korea and Saudi Arabia 

Cheese and Dairy Ingredient Research 

Pacrim Associates Southeast Asia Program Activities 
83

Papa John’s Philippines Pacific Rim Cheese Program

Papa John’s Bejing Pacific Rim Cheese Program

Papa John’s Korea Pacific Rim Cheese Program

Papa John's Shenzhen Bangyuehang 

Catering Management Co., Ltd Pacific Rim Cheese Program

Parker, Hilary USDEC Consulting Services

Parody, Kristen USDEC Consulting Services

Peryam and Kroll Research Corporation Product Shelf Life Test

Pizza Hut Hong Kong Pacific Rim Cheese Program

Pizza Hut Indonesia Pacific Rim Cheese Program

Pizza Hut Korea Pacific Rim Cheese Program

Pizza Hut Philippines Pacific Rim Cheese Program

Pizza Hut Singapore Pacific Rim Cheese Program

PR Consultants Chinese Program Activities

Promar Consulting Vietnam Market Study

Quadrant Nutrition Ingredient Consulting Services

Rempfer Consulting, Inc. Menu Development

Rogers, Paul USDEC Consulting Services

Siam Professionals, LLC Common Food Names Project

Schonrock Consulting USDEC Consulting Services

Science Solutions USDEC Consulting Services

Shainwright Consulting Oceana Market Research Services 

Shanghai Bangyuehang Catering 

Management Co. LTD Pacific Rim Cheese Program

Sheldon, Gerald USDEC Consulting Services

Snyman, Merle USDEC Consulting Services

Sorenson, Carla USDEC Consulting Services

Storlietelling Dairy Protein Initiative

Story Consulting USDEC Consulting Services 

TradeMoves, LLC Import Export Trade Strategies

Turim Innovation & Ideation, Inc. Product Ingredient Consulting 

Value Engineers Ltd. Web Site Research Project

Weppler, Audrey USDEC Consulting Services 

Woosley, Michael Market Access and Regulatory Affairs

Yum! Restaurants Consulting (Shanghai) 

Company Limited Pacific Rim Cheese Program

Zenith International Global Cheese Varietal Demand Study
84

2013 MARKET AND ECONOMIC RESEARCH, CONSULTING SERVICES 

Acuity Consulting, LLC Monitoring Consulting Services

Albert, Roger Accounting Services

Ann Ocana Consulting, LLC Communication Consulting Services

Arms, Susan Human Resources Consulting Services 

Biofortis Provident Clinical Research Effects of Dairy Beverages on Insulin 

Sensitivity

Carr Consulting Scientific Review

CFE Solutions, Inc. Dairy Consumption Consulting Services

Clifton Larson Allen LLP Accounting Services

C&R Research Services Dairy-Based Breakfast Concepts

Concept Green Sustainability Progress Report

Culinary Sales Support Dairy Menu Product Development

Engleman, Beth Marketing Consulting Services

EnSave, Inc. Farm Energy Services

Exponent, Inc. Consumption Meta-Analysis

Fairlife, LLC Market Research

Fiorenza, Karen FleetSmart Consulting

GFK Custom Research Future of Dairy Research 

Girag S.A. Business Intelligence Services

Hale Group Food Waste Solutions

Harrigan-Bodick, Inc. Future of Dairy Research 

Hartman Group Purchase Behavior Research

Hatch, Lisa Lactose Intolerance Consulting Services

HDR Engineering Sustainability Framework Services

Hentges, Kahn and Strauss, LLC Sustainability Framework Services

Holmes, Brian FarmSmart Consulting Services

Hurley Health & Medical Data Briefs Consulting Services

Jenkinson, Thomas Image Consulting Services

Joe Bavido Consulting Tactical Consulting Services

Illustra Design Design and Graphic Services

Informa Economics Anaerobic Digesters Research

Irish-Design Dairy Sustainability Report

Keenan, Judy Cheese and Sodium Consulting Services

Lawrence-Weiss, Sharon Marketing Consulting Services
85

Lee, Maureen Media Consulting Services

Lipof, Juli Marketing Consulting Services

Margherio, Martin Innovation Consulting

Manomet Center for Conservation Sciences Sustainability Framework and Metrics 

Marketecture Consumer Confidence Tracking 

Marketing Concepts Research Coordination 

McLeod, Watkinson & Miller Legal Services

Michaelian, Britt Marketing Consulting Services

National Milk Producers Federation Animal Health and Wellbeing Services 

NTT Data Inc. (formerly Revere Group) Information Technology Support

Nutter Consulting, Inc. PlantSmart Development 

Olson, Kenneth Crisis Management Consulting Services

Podbial, Agnes Accounting Consulting Services

Quantis Carbon Footprint Calculator Development

Results Direct Web Site Support Services

Smith, Kristen Nutrition Guidance Consulting Services

Splitstone, Anne Marie Cheese and Sodium Consulting Services

Strategic Conservation Consulting Services

Strategy One Dairy Consumers Research Services

Technomic, Inc. Consumer Cheese Consumption Trends

Texas AgriLife Research Quantitative Program Evaluation

TNS Custom Research (Kantar) Dairy Beverage Usage Development 

Vela Environmental Dairy Sustainability Framework 

Watson Green, LLC Strategic Communications Support

Webb, Teresa Innovations Consulting
86

2014 National Dairy Promotion and Research Board, Dairy 

Management, Inc., and U.S. Dairy Export Council Contracts 

Reviewed by USDA

2014 ADVERTISING AND MARKETING SERVICES

American Butter Institute Butter Promotion Partnership

Blue Trellis, LLC Cookbook Development Services

Diggins, Skylar Promotion Services 

Domino’s Pizza, Inc. Cheese Promotion Partnership 

D S Simon Productions National Dairy Month Media 

Edelman Public Relations Worldwide Fuel Up To Play 60; Dairy Image Services; 

Strategic Consulting and Coordination 

Fair Oaks Adventure Dairy Promotion Partnership 

Florida Dairy Farmers, Inc. Unified Marketing Plan Support; Caribbean 

Dairy Promotions 

Food Marketing Support Services Fluid Milk Promotion 

HP Hood LLC Lactose Free Milk Promotion Partnership 

Information Resources, Inc. Promotion Research Services

Intech Integrated Marketing Services Distribution Services

Integrated Program Management Company, 

Inc.

Project Management Support

Intersport, Inc. Media Services

Marketecture Consumer Confidence Tracking 

Marketing Concepts Research Coordination 

McDonald’s Dairy Promotion Partnership 

Media Management Services, Inc. Fuel Up To Play 60 Support 

Natural Marketing Institute Database Management 

Nestle USA Dairy Promotion Partnership 

New England Dairy & Food Council Unified Marketing Plan Support

New England Dairy Promotion Board Unified Marketing Plan Support 

NPD Group, Inc. Consumer Surveys

Pizza Hut, Inc. Cheese Promotion Partnership 

Prevail Strategic Marketing and 

Communications, LLC

Partner Innovation Development Services

Quaker Oats Company Dairy Promotion Partnership
87

Ruby–Do Special Projects Industry Image and Relations 

Select Milk Producers, Inc. Dairy Promotion Partnership

Shamrock Foods Company Refuel Innovation Partnership

Slate, LLC Conference Sponsorship 

Southeast United Dairy Industry 

Association, Inc.

Unified Marketing Plan Support 

SRW Marketing, Inc. Breakfast Lab Support

Taco Bell Dairy Promotion Partnership

The Washington Post Company Conference Sponsorship 

2014 COMMUNICATIONS, NUTRITION EDUCATION AND PUBLIC RELATIONS 

451 Marketing Lactose Intolerance Communications

Action for Healthy Kids, Inc. Fuel Up To Play 60 Support 

Academy of Nutrition and Dietetics Nutrition and Food Safety 

American Academy of Pediatrics Health and Nutrition

American Dairy Association Indiana Dairy Communications

ASK-Comm Strategies, LLC Farm Smart Communications Support

Bader Rutter & Associates

Innovation Center; Health and Wellness 

Nutrition Education; Lactose Intolerance 

Communication 

Battelle Energy Alliance, LLC Operations, Energy and Environmental 

Analysis

Baxter Communications Video and Communication Services 

Bovina Mountain Consulting Nutrition Market Report

Burson–Marsteller Dairy Framework Communications 

College & Professional Sports Dieticians 

Association Nutrition Communications

Demeter Communications Cow of the Future Program Activities 

EpidStat Institute Nutrition Research

Feeding America Program Sponsorship 

Fleishman-Hilliard, Inc. Communication Planning and Services

 FoodMinds, LLC Cheese & Sodium, Lactose Intolerance, 

Nutrient Rich Foods and Whey Protein 

Communications 

Food Research and Action Center School Breakfast and Fuel Up To Play 60 
88

Foundation for the National Institutes of 

Health

Nutrition Research

Fresh Approach Commodity Roundtable 

GenYouth Foundation Nutrition Project Services

Geura, Lisa Communications Services

Health & Nutrition Network Industry Image and Relations

Hillstrom Communications Communication Planning and Services

MMS Education, Inc. Fuel Up To Play 60 Support 

National Dairy Shrine Program Sponsorship 

National Football League Players 

Incorporated Fuel Up To Play 60 Support 

National Football League Properties Fuel Up To Play 60 Support 

National Fluid Milk Processor Promotion 

Board 

Shared Research and Consulting Services

National Research Council Dairy Cattle Nutrition Report

Nutrition Impact, LLC Nutrition Project Services

Nutrition Strategies Nutrition Project Services

Planet Technologies Fuel Up To Play 60 Website Services

R.A.M. Production Services, Inc. Media Production Services

Results Direct Dairy Website Support 

Sandstorm Design, Inc. Website Support 

Sivak, Cathy Website Support 

School Nutrition Association Fuel Up To Play 60 & School Nutrition 

School Nutrition Foundation Fuel Up To Play 60 & School Nutrition 

Share Our Strength Program Sponsorship 

Storlietelling Dairy Protein Initiative

Strategic Growth Partners, Inc. Strategic Plan Services

Team Services, LLC Fuel Up To Play 60 Support 

Universal McCann Worldwide Lactose Intolerance Communications

Watson Green, LLC Strategic Communications Support

Weber Shandwick, Inc. Crisis Readiness Program and My Dairy 

Program 

World Food Prize Foundation Program Sponsorship 

World Wildlife Federation Strategic Coordination Services
89

2014 EXPORT AND INGREDIENTS

Agribusiness-Connect Asia Southeast Asia Market Services

American–Mexican Marketing Mexican Market Services

Arab Marketing Finance, Inc. Middle East Market Services

Baccigaluppi, Roger USDEC Consulting Services

Berjaya Papa John’s Pizza S/B Pacific Rim Cheese Program

Bluedog Design, LLC Market Consulting Services

Blue Flame Partners, LLC USDEC Website 

Bryant Christie, Inc. International Food Additive Database

Cameron Burris Economic Research Services

Canadean Limited Global Dairy Ingredients Database 

Catalyst International Professional Services 

Center for Food Safety USDEC Consulting Services

Contacts International Consulting, Ltd. South American Market Services

Cserwonka, Kelly USDEC Consulting Services

Dairy Australia Limited Elderly Dairy Consumption Study

David Steifer Consulting USDEC Consulting Services

Domino’s Pizza Enterprises Cheese Export Promotion 

Domino’s Pizza Australia and New Zealand Pacific Rim Cheese Program

Domino’s Pizza Japan Pacific Rim Cheese Program

Exponent, Inc. Meta-Analysis of Whey Protein 

Fabrizio & Friends

Global Dairy Market Outlook, Market 

Analysis Report & News Center Website

Flint Group Economic Research Services

Food Automation, LLC Traceability Pilots

Fritz, Richard USDEC Consulting Services

Gerdes, Sharon Ingredients Consulting Services

Global Food and Nutrition, Inc. USDEC Consulting Services

IntNet Korea Program Activities

Natalie Hotrum Food Science, LLC USDEC Consulting Services

International Dairy Foods Association International Dairy Trade Shows 

JDG Consulting USDEC Consulting Services

Kentucky Fried Chicken Japan Pacific Rim Cheese Program 

Koski, Shannon Ingredients Consulting Services

Locraft, Lauren USDEC Consulting Services
90

Mathews Project Services USDEC Consulting Services

Market Makers, Inc. Japanese Market Expansion

McCully Group Dairy Market Metrics, Strategies and 

Analysis

Midwest Dairy Association Unified Marketing Plan; Ingredient 

Development 

MSB Agrifood United Kingdom and European Dairy 

Market Metrics and Analysis

MSB Research Limited Columbia and Venezuela Market Research

NIZO US Milk Powder Program Activities

Novak Birch Professional Services 

Orrani Consulting, Ltd. China, Egypt, Korea and Saudi Arabia 

Cheese and Dairy Ingredient Research 

Pacrim Associates Southeast Asia Program Activities 

Papa John’s Philippines Pacific Rim Cheese Program

Papa John’s Bejing Pacific Rim Cheese Program

Papa John’s Korea Pacific Rim Cheese Program

Papa John’s Malaysia Pacific Rim Cheese Program

Papa John's Shenzhen Bangyuehang 

Catering Management Co., Ltd Pacific Rim Cheese Program

Parker, Hilary USDEC Consulting Services

Parody, Kristen USDEC Consulting Services

Peryam and Kroll Research Corporation Product Shelf Life Test

Peters, Roeland U.S. Equipment & Processing Standards

Pizza Hut Hong Kong Pacific Rim Cheese Program

Pizza Hut PT. Sarimelati Kencana Indonesia Pacific Rim Cheese Program

Pizza Hut Japan Pacific Rim Cheese Program

Pizza Hut Jardine Food Services Pacific Rim Cheese Program

Pizza Hut Korea Pacific Rim Cheese Program

Pizza Hut Philippines Pacific Rim Cheese Program

Pizza Hut Singapore Pacific Rim Cheese Program

PR Consultants Chinese Program Activities

Quadrant Nutrition Ingredient Consulting Services

Raymond, Carl Cookbook Consulting Services

Rempfer Consulting, Inc. Menu Development
91

Rogers, Paul USDEC Consulting Services

Siam Professionals, LLC Common Food Names Project

Schiver, Don Strategic Consulting

Schonrock Consulting USDEC Consulting Services

Science Solutions USDEC Consulting Services

Shainwright Consulting Oceana Market Research Services 

Shanghai Bangyuehang Catering 

Management Co. LTD

Pacific Rim Cheese Program

Sheldon, Gerald USDEC Consulting Services

Snyman, Merle USDEC Consulting Services

Sorenson, Carla USDEC Consulting Services

Story Consulting USDEC Consulting Services 

TradeMoves, LLC Import Export Trade Strategies

Turim Innovation & Ideation, Inc. Product Ingredient Consulting 

Value Engineers Ltd. Website Research Project

Weber Shandwick China USDEC Consulting Services 

Weppler, Audrey USDEC Consulting Services 

Woosley, Michael Market Access and Regulatory Affairs

World Perspectives, Inc. USDEC Consulting Services

Yum! Restaurants Consulting (Shanghai) 

Company, Ltd. Pacific Rim Cheese Program

Zenith International Global Cheese Varietal Demand Study

2014 MARKET AND ECONOMIC RESEARCH, CONSULTING SERVICES 

Acuity Consulting, LLC Monitoring Consulting Services

Albert, Roger Accounting Services

Almanac Systems, LLC FarmSmart Consulting

Ann Ocana Consulting, LLC Communication Consulting Services

Bamsey, Craig Dairy Industry Forum

Center for Creative Leadership Training Consulting Services

CFE Solutions, Inc. Dairy Consumption Consulting Services

Cline Consulting Fluid Milk Consulting Services

C&R Research Services Dairy-Based Breakfast Concepts

Concept Green Sustainability Progress Report

Culinary Sales Support Dairy Menu Product Development

EnSave, Inc. Farm Energy Services
92

Esser, John Consulting Services

Exponent, Inc. Consumption Meta-Analysis

Fairlife, LLC Market Research

Fiorenza, Karen FleetSmart Consulting

GFK Custom Research Future of Dairy Research 

Hatch, Lisa Lactose Intolerance Consulting Services

Holmes, Brian FarmSmart Consulting Services

Illustra Design Design and Graphic Services

Informa Economics Anaerobic Digesters Research

Irish-Design Dairy Sustainability Report

Jenkinson, Thomas Consulting Services

KED Consulting Animal Health Consulting Services

Keenan, Judy Cheese and Sodium Consulting Services

Kemps, LLC Fluid Milk Consulting Services

Knechtel, Inc. Fluid Milk Consulting Services

Margherio, Martin Innovation Consulting

MBL Marketing Consulting, LLC Fluid Milk Consulting Services

McLeod, Watkinson & Miller Legal Services

Meyer, James FarmSmart Consulting

Michaelian, Britt Marketing Consulting Services

National Milk Producers Federation Animal Health and Wellbeing Services 

New Earth Dairy Sustainability Consulting Services

Notre Dame University Executive Leadership Program

NTT Data Inc. (formerly Revere Group) Information Technology Support

Parodox Nutrition, LLC Dairy Sustainability Consulting Services

Tom Quaife Consulting Services

Quantis Carbon Footprint Calculator Development

RB International Program Services

Ready Ink Communications Crisis Planning Support Services

Research Resources Research & Writing Services

Resilience Services Life Cycle Assessment Consulting

Resolve, Inc. Consulting Services

Results Direct Website Support Services

Shelman, Mary Consulting Services

Smith, Kristen Nutrition Guidance Consulting Services

Stoerman, Aaron Resource Recovery Consulting Services
93

Strategic Conservation Consulting Services

Strategy One Dairy Consumers Research Services

Technomic, Inc. Consumer Cheese Consumption Trends

Texas AgriLife Research Quantitative Program Evaluation

The Flint Group Dairy Sustainability Consulting Services

The Prasino Group Resource Recovery Consulting Services

TNS Custom Research (Kantar) Dairy Beverage Usage Development 

Vela Environmental Dairy Sustainability Framework 

Webb, Teresa Innovations Consulting
94

NATIONAL DAIRY FOODS RESEARCH CENTERS

California Dairy Research Center

The California Dairy Foods Research Center, located at the Dairy Products Technology Center at 

California Polytechnic State University at San Luis Obispo, supports the dairy industry from 

farm to table. Working with the California Dairy Research Foundation and the University of 

California, Davis, the California Dairy Foods Research Center conducts applied and strategic 

dairy research and development in the areas of product technology and utilization, ingredient 

technology and utilization, products for health enhancement, food quality, and food safety. For 

additional information see link: www.dptc.calpoly.edu.

University of California, Davis California Dairy Research Foundation

Daniela Barile, Ph.D. Gonca Pasin, Ph.D.

392 Old Davis Road 501 G Street, Suite 203

Davis, CA 95616-21234 Davis, CA 95616

California Polytechnic State University, San Luis Obispo 

A. Charles Crabb, Ph.D. 

Dairy Products Technology Center

San Luis Obispo, CA 93407

Midwest Dairy Foods Research Center

The Midwest Dairy Foods Research Center conducts research to support the dairy industry, 

utilizing resources within the University of Minnesota (St. Paul), South Dakota State University 

(Brookings), and Iowa State University (Ames). Research focuses on improving and controlling 

flavor development and functionality in cheese; improving the performance of cheese starter 

cultures through genetics; adding value to milk-based products with probiotics and 

nutraceuticals; improving shelf life of flavored milks; reducing undesirable taste attributes of 

milk; improving functionality and controlling flavor attributes of milk fractionation components; 

and developing methods for effective and profitable uses of whey. For additional information 

see link: www.midwestdairy.umn.edu.

South Dakota State University University of Minnesota, St. Paul

Lloyd Metzger, Ph.D. Peggy Lehtola

Midwest Dairy Foods Research Center, Midwest Dairy Foods Research Center, 

Box: 2104 1334 Eckles Avenue

Brookings, SD 57007 St. Paul, MN 55108

Iowa State University, Ames

Stephanie Clark

Midwest Dairy Foods Research Center, 

2312 Food Sciences Building

Ames, IA 50011
95

Northeast Dairy Foods Research Center

The Northeast Dairy Foods Research Center located at Cornell University, Ithaca, NY, was 

formed to: conduct fluid milk and dairy ingredient research; conduct dairy microbiology and 

safety research; provide applications and technical support for the improvements in milk powder 

quality, casein, and whey protein research; and help establish the next generation of dairy 

ingredients. For additional information, see link: www.foodscience.cornell.edu.

Cornell University

Kathryn J. Boor, Ph.D.

Dean of Agriculture and Life Sciences

David M. Barbano, Ph.D.

Director Northeast Dairy Center

118 Stocking Hall

Ithaca, NY 14853-7201

Southeast Dairy Foods Research Center

The Southeast Dairy Foods Research Center, with facilities and support at North Carolina State 

University (Raleigh) and Mississippi State University (Starkville), has been operating since 1988 

and actively participates in national research planning and execution on behalf of the dairy 

industry. The center also hosts a Food Rheology Laboratory, Nutrition Technical Services 

Laboratory, and a Sensory Applications Laboratory, conducting analytical, qualitative, and 

affective sensory tests and flavor chemistry analyses tailored to meet specific needs of the food 

industry. For additional information see link: www.cals.ncsu.edu.

North Carolina State University Mississippi State University

Todd Klaenhammer, Ph.D., Director Sam Chang, Ph.D.

Southeast Dairy Foods Research Center Food Science, Nutrition and Health Promotion

100 Schaub Hall, Box 7624 240 Wise Center Drive

Raleigh, NC 27695-7624 Starkville, MS, 39762

Western Dairy Center 

The Western Dairy Center’s primary location is Utah State University in Logan, with additional

resources available at Oregon State University. The faculty has extensive expertise in dairy 

processing/production, microbiology, chemistry, and sensory analysis. Research focus includes 

cheese flavor and functionality; cheese technology; fermented products, including cheese and 

yogurt; ultra-high-temperature and extended-shelf-life fluid milk beverages; milk protein 

chemistry, including coagulation, denaturation, and separation; milk fractionation and use of 

membrane separation in dairy foods; anaerobic digestion of dairy processing waste; whey protein 

extrusion; application of genetics, genomics, and metabolomics to lactic acid bacteria; whey and 

milk utilization; and microstructure of dairy. For additional information see link: 

www.usu.edu/westcent.
96

Utah State University Oregon State University

Center for Dairy Research Lisbeth Goddik

Donald J. McMahon, Ph.D., Director Food Science & Technology

Western Dairy Center Wiegand Hall

8700 Old Main Hill, 750 N 1200 E 3051 SW Campus Way

Logan, Utah 84322-8700 Corvallis, OR 97331

Wisconsin Center for Dairy Research

The Wisconsin Center for Dairy Research is located within a licensed, operating dairy plant on 

the University of Wisconsin-Madison campus. Building on Wisconsin’s tradition as the “Dairy 

State,” the center explores functional, flavor, and physical properties of cheese/cheese products 

and other milk components used as ingredients and as finished products. The center researches 

cheese making and dairy protein processing/separation procedures, use of dairy ingredients in 

foods, and technologies for product safety and quality. For additional information see link: 

www.cdr.wisc.edu.

University of Wisconsin-Madison

Wisconsin Center for Dairy Research

John Lucey, Ph.D., Director

Wisconsin Center for Dairy Research 

1605 Linden Drive

Madison, WI 53706-1565
97

COMPETITIVE RESEARCH PROJECTS ACTIVE IN 2013

Principal Investigator, Institution, Project Title and Status 

2013 Dairy Foods

Jayendra K. Amamcharla, Ph.D. (Kansas State University) and Lloyd Metzger, Ph.D. (South 

Dakota State University): Understanding the effects of electromagnetic fluid conditioning on 

physical, chemical, and functional properties of milk and dairy products [initiated 2013].

Jayendra K. Amamcharla, Ph.D. (Kansas State University), Sanjeev Anand, Ph.D. (South Dakota 

State University), Lloyd Metzger, Ph.D. (South Dakota State University), and Julie M. Goddard, 

Ph.D. (University of Massachusetts Amherst): Use of novel surface modification techniques to 

reduce biofilms on plate heat exchanger plates [initiated 2013].

Irma Amelia and David M. Barbano, Ph.D. (Cornell University), MaryAnne Drake, Ph.D. (North 

Carolina State University), Brandon Nelson, Ph.D. (Daisy Brand, LLC): A new method for the 

production of low-fat Cheddar cheese [concluded 2013].

Sanjeev Anand, Ph.D. (South Dakota State University): Modifications of CIP Protocol to 

Prevent and Control Biofilms in Dairy Processing Environment [ongoing 2013].

Sanjeev Anand, Ph.D. and Lloyd Metzger, Ph.D. (South Dakota State University): Role of 

Thermoduric and Thermophilic Sporeformers and the Biofilms in Cheese Spoilage [concluded 

2013]; Improve the Microbial Quality of Milk Powders by Controlling Thermally Resistant Spore 

Formers and Spores [ongoing 2013].

Stephanie Clark, Ph.D. (Iowa State University): Feasibility of Integrating Ultrasound into High 

Temperature Short Time Processing for Extended Shelf Life Milk [ongoing 2013].

Stephanie Clark, Ph.D. and Buddhi Lamsal, Ph.D. (Iowa State University): Application and 

Evaluation of Modified Milk Protein Concentrates in High Protein Nutrition Bars [ongoing 

2013]; Characterization of extruded and toasted milk protein concentrates [concluded 2013].

Rachael E. Campbell, Ph.D. and MaryAnne Drake, Ph.D. (North Carolina State University): The 

effect of native and nonnative enzymes on the flavor of dried dairy ingredients [concluded 2013].

Christopher R. Daubert, Ph.D. (North Carolina State University): Rheological and Tribological 

Evaluation of Creaminess in Model Dairy Systems [ongoing 2013].

MaryAnne Drake, Ph.D. (North Carolina State University): Hydrolysis of Milk Powder Permeate 

and/or Milk for No Sugar Added Flavored Milk [ongoing 2013]; Influence of Spray-drying 

Parameters and the Lactoperoxidase System to Minimize Flavor Formation in Spray-dried Whey 

Protein [ongoing 2013]; The Influence of Processing Parameters on SMP Quality [ongoing 

2013].
98

MaryAnne Drake, Ph.D., Mina K. Kim, Ph.D. and Kannapon Lopetcharat, Ph.D. (North Carolina 

State University): Influence of packaging information on consumer liking of chocolate milk 

[concluded 2013].

Mark R. Etzel, Ph.D. (University of Wisconsin-Madison/Center for Dairy Research): Charged 

Ultrafiltration Membranes for Fractionation of Milk Proteins [ongoing 2013].

Nana Y. Farkye, Ph.D. (University of California-Davis): Effects of Salt Substitutes and AntiMicrobial Intervention Methods on Functionality and Shelf Life of Low Sodium String Cheese 

and the Survival of Pathogenic Bacteria [ongoing 2013].

Nana Y. Farkye, Ph.D. (California Polytechnic State University – San Luis Obispo), Donald 

McMahon, Ph.D., Jeff Broadbent, Ph.D., and Balasubramanian Ganesan, Ph.D. (Utah State 

University), MaryAnne Drake, Ph.D. (North Carolina State University), and James L. Steele, 

Ph.D. (University of Wisconsin-Madison): Effect of Sodium, Potassium, Magnesium, and 

Calcium Salt Cations on pH, Proteolysis, Organic Acids, and Microbial Populations During 

Storage of Full-Fat Cheddar Cheese [ongoing 2013].

Allen E. Foegeding, Ph.D. (North Carolina State University), and Rafael Jiménez-Flores, Ph.D. 

(California Polytechnic State University – San Luis Obispo): Developing Milk-protein-based 

Structures for New Dairy Products [ongoing 2013].

Allen E. Foegeding, Ph.D. (North Carolina State University) and Bongkosh Vardhanabhuti, 

Ph.D. (University of Missouri): Developing Milk-protein-based Structures for New Dairy 

Products [ongoing 2013].

Kathleen Glass, Ph.D. (University of Wisconsin-Madison/Center for Dairy Research): 

Enhancing the Microbiological Safety and Quality of Reduced Sodium Cheese with Natural 

Preservatives or Adjunct Cultures [ongoing 2013]; Inhibition of Clostridium Botulinum in 

Reduced-Sodium Pasteurized Cheese Products [ongoing 2013].

Julie M. Goddard, Ph.D. (University of Massachusetts-Amherst): Nonfouling Stainless Steel for 

Dairy Processing [ongoing 2013].

Selvarani Govindasamy-Lucey, Ph.D., Mark Johnson, Ph.D., John A. Lucey, Ph.D., and John 

Jaeggi Ph.D. (University of Wisconsin-Madison/Center for Dairy Research): Manufacture of a 

Low-sodium, Mild-flavored Cheese Suitable for Ingredient Purposes by a Curd Heating Process

[ongoing 2013].

Federico Harte, Ph.D. (University of Tennessee): Manufacturing of Low Spores, Low-heat Milk 

Powders for Various Food and Beverage Applications [ongoing 2013].
99

Richard Hartle, Ph.D. (University of Wisconsin-Madison/Center for Dairy Research): ProCream/DLP Blends: Functionality and Applications [ongoing 2013].

Mark Johnson, Ph.D. (University of Wisconsin-Madison/Center for Dairy Research): 

Development and Removal of Biofilms in a Pasteurizer [ongoing 2013].

Kerry Kaylegian, Ph.D. (Pennsylvania State University): Reduction of the Saturated Fat Content 

of Milk Fat Fractions by Dry Crystallization of Anhydrous Milk Fat made from Small and Large 

Milk Fat Globules Obtained by Microfiltration [ongoing 2013].

Todd Klaenhammer, Ph.D. (North Carolina State University): Southeast Dairy Center 

Application Laboratory Program [ongoing 2013].

Smaro Kokkinidou, Ph.D. and Devin G. Peterson, Ph.D. (University of Minnesota): Response 

surface methodology as optimization strategy for reduction of reactive carbonyl species in foods 

by means of phenolic chemistry [concluded 2013].

Theodore P. Labuza, Ph.D. (University of Minnesota): Develop Rapid and Simple Detection 

Methods for Dairy Proteins [ongoing 2013].

John A. Lucey, Ph.D. (University of Wisconsin-Madison/Center for Dairy Research): Wisconsin 

Center for Dairy Research Applications Laboratory [ongoing 2013]; Impact of processing on 

Milk Protein Concentrate Functionality [ongoing 2013].

Donald McMahon, Ph.D. (Utah State University): Western Dairy Center Technology Innovation 

Laboratory Program [ongoing 2013]; Adapt Terbium Measurement of Spores for use during 

Milk Processing [ongoing 2013].

Lloyd Metzger, Ph.D. (South Dakota State University): Development of Modified Milk Protein 

Concentrates as an Alternative to Rennet Casein [ongoing 2013]; 2013 Midwest Dairy Foods 

Applications Laboratories Program [ongoing 2013].

Lloyd Metzger, Ph.D. (South Dakota State University) and Donald McMahon, Ph.D. (Utah State 

University): Concentration, Storage Stability and Functionality of Highly Concentrated Micellar 

Casein [ongoing 2013]. 

Carmen Moraru, Ph.D. (Cornell University): Development of Pulsed Light Based Combination 

Surface Treatments as a Non-thermal Strategy for Microbial Inactivation on Cheese Surface

[ongoing 2013].

Mustafa Ozturk, Ph.D., John A. Lucey, Ph.D., Mark Johnson, Ph.D., John Jaeggi, Ph.D., and 

Selvarani Govindasamy-Lucey, Ph.D. (University of Wisconsin-Madison/Center for Dairy 

Research): The influence of high hydrostatic pressure on regular, reduced, low and no salt added 

Cheddar cheese [concluded 2013].
100

Hasmukh Patel, Ph.D. and Lloyd Metzger, Ph.D. (South Dakota State University): To Improve 

the Quality of Milk Powder by Developing Strategies to Minimize the Increase in Viscosity of 

Milk Concentrate with High Total Solids Milk [ongoing 2013].

Tonya Schoenfuss, Ph.D. (University of Minnesota): Evaluating the Efficiency of the Production 

of Intrinsically Labeled Milk Protein Products [ongoing 2013].

Josip Simunovic, Ph.D. (North Carolina State University): Microwave heating & rapid cooling 

for shelf stable whole milk [ongoing 2013]. 

Karen Smith, Ph.D. (University of Wisconsin-Madison/Center for Dairy Research): 

Fractionating Acid Whey into Value-added Ingredients for U.S. in Cultured Dairy Products

[ongoing 2013].

Phillip S. Tong, Ph.D. (California Polytechnic State University – San Luis Obispo): California 

Dairy Center Application Laboratory Program [ongoing 2013]; Improving SMP/NFDM 

Processing, Microbiological Quality and Functionality Through Process and Ingredient 

Technologies That Change Mineral Composition and Activity [ongoing 2013].

Phillip S. Tong, Ph.D., and Amy Lammert, Ph.D. (California Polytechnic State University – San 

Luis Obispo), Ammar Olabi and Loulwa Kalache (American University of Beirut): 

Characterization of the sensory properties of whey protein concentrates [concluded 2013].

Michael Tunnick, Ph.D. (USDA-Agricultural Research Service): Long-term Shelf Life Studies of 

Whey Protein Concentrates (WPC 34 and WPC 80) Under Adverse Storage Conditions [ongoing 

2013].

Martin Wiedmann, Ph.D., D.V.M. (Cornell University): Survey of Mesophilic and Thermophilic 

Sporeformers in Dairy Powders and Raw Milk Across the U.S. [ongoing 2013]; A Systems 

Approach to Reducing Spore Contamination in Dairy Powders [ongoing 2013].

Martin Wiedmann, Ph.D., D.V.M., and Robin Dando, Ph.D. (Cornell University): Consumer 

Sensory Perception of Pasteurized Fluid Milk over Shelf-life [ongoing 2013].

Qixin Zhong, Ph.D. (University of Tennessee): Creating Novel Structures to Stabilize Whey 

Proteins during Heating Nearby Isoelectric Points [ongoing 2013]; Dairy Protein-based 

Antimicrobial Delivery System to Improve the Microbial Safety of Dairy Products [ongoing 

2013]; Hydrocolloids for Improved Recovery and Utilization of Lactose [ongoing 2013]; 

Physical Removal of Annatto in Cheddar Cheese Whey by Inert Absorbents [ongoing 2013].

Qixin Zhong, Ph.D. (University of Tennessee), and MaryAnne Drake, Ph.D. (North Carolina 

State University): Shelf-stable Whey-protein-based High-protein Beverages [ongoing 2013].
101

2013 Nutrition

Sean Adams, Ph.D. (USDA-Agriculture Research Service): Evaluation of the Role of Dairy 

Protein and Branched Chain Amino Acids on Optimal Mitochondrial Function through 

Induction of BCKD Enzyme [ongoing 2013].

Lacy Alexander Ph.D. (Pennsylvania State University): Milk and cheese consumption and 

human microvascular function [initiated 2013].

Jonathan Allen, Ph.D. (North Carolina State University): Fortifying vitamins A&D in low-fat 

foods [ongoing 2013].

Bradley W. Bolling, Ph.D. (University of Connecticut): Reduction of Obesity-Associated 

Intestinal Inflammation by Low-Fat Dairy Yogurt [ongoing 2013].

Richard Bruno, Ph.D. (Ohio State University): Vasoprotective Activities of Low-fat Milk in 

Individuals with Metabolic Syndrome [ongoing 2013]; Dairy Fat as a Mediator of Vitamin E 

Adequacy in Individuals With Metabolic Syndrome [ongoing 2013].

Wayne Campbell, Ph.D. (Purdue University): Impact of Fluid Milk of Post-Meal Glycemia and 

Insulinemia in Overweight/Obese Adults with Normal or Impaired Glucose Tolerance or Type 2 

Diabetes [initiated 2013]. 

Wayne Campbell, Ph.D., Ulrike Dydak, Ph.D., Travis Conley, Ph.D., Jamie Case, Ph.D., and 

Author Rosen, M.D. (Purdue University): Effects of milk protein concentrate on blood pressure, 

inflammation, muscle composition, and metabolic health during weight loss in overweight/obese 

adults [ongoing 2013].

Wayne Campbell, Ph.D., Arthur Rosen, M.D., Jung Eun Kim, Ph.D. (Purdue University), and 

Douglas Paddon-Jones Ph.D. (University of Texas Medical Branch at Galveston): Effects of 

dietary protein patterning on weight loss and resistance training-induced changes in body 

composition, skeletal muscle, and indices of metabolic syndrome [initiated 2013].

In-Young Choi, M.D. (University of Kansas): Dairy Intake and Brain Health in Aging

[concluded 2013].

Sharon Donovan, Ph.D., and Barbara Fiese, Ph.D. (University of Illinois at Urbana -

Champaign): STRONG Kids 2: A Cells-to-Society Approach to Nutrition in Early Childhood

[ongoing 2013].

Mark R. Etzel, Ph.D., John A. Lucey, Ph.D., and Franziska H. Böttger, Ph.D. (University of 

Wisconsin-Madison/Center for Dairy Research): In Vitro Infant Digestion of Whey Protein–

Dextran Glycates [concluded 2013].

Maria Luz Fernandez, Ph.D. (University of Connecticut): Beneficial effects of low-fat dairy 

products on lipoprotein metabolism and inflammation in subjects classified with metabolic 

syndrome [ongoing 2013].
102

Arny Ferrando, Ph.D. (University of Arkansas): Effect of Dietary Protein Intake Pattern on 

Skeletal Muscle in Older Individuals [ongoing 2013]; Dairy Macronutrient Effects on the 

Metabolic Syndrome [ongoing 2013]; Effect of dietary protein intake distribution on protein 

metabolism and skeletal muscle [initiated 2013]. 

Michael Fenech, Ph.D. (Commonwealth Scientific and Industrial Research Organisation): Whey 

protein isolate as a source of Vitamin B12 and to lower homocysteine and methylmalonic acid in 

the elderly [initiated 2013].

Rafael Jiménez-Flores, Ph.D. and Andrea Laubscher, Ph.D. (California Polytechnic State 

University-San Luis Obispo), Angela Cánovas, Ph.D., Gonzalo Rincón ,Ph.D., and Juan F. 

Medrano, Ph.D. (University of California-Davis): RNA sequencing to study gene expression and 

single nucleotide polymorphism variation associated with citrate content in cow milk [concluded

2013].

Bruce German, Ph.D. (University of California-Davis): Characterization and Function of Milk 

Glycopeptides [concluded 2013].

Mathew Hayes, Ph.D. (University of Pennsylvania): Effects of Dairy Macronutrients on 

Glucogo-like-Peptide-1 Receptor Mediated Suppression of Food Intake and Blood Glucose 

Regulation [ongoing 2013].

Kevin Heffernan, Ph.D. (Syracuse University): Efficacy of Whey Protein to Improve 

Cerebrovascular and Cognitive Function in Older Adults [ongoing 2013].

Rachel Johnson, Ph.D., RD (University of Vermont): Evaluating the Acceptance of Reformulated 

Flavored Milk in Schools [ongoing 2013].

Samual Klein, M.D. (Washington University School of Medicine): Diet and exercise 

intervention in Type 2 Diabetes [initiated 2013].

Jana Kraft, Ph.D. and Lawrence Kien, M.D., Ph.D. (University of Vermont): Effects of milk fat 

on Insulin Sensitivity, Postprandial Lipid Metabolism, Circulating Inflammatory Markers in 

mildly obese female subjects [initiated 2013].

Ronald M. Krauss, Ph.D. (Children’s Hospital Oakland Research Institute): Effect of a modified 

lower carbohydrate, high fat DASH diet plan on plasma lipids, lipoprotein particle size and 

blood pressure in healthy adults [initiated 2013]; Effects of replacing sugar sweetened beverages 

with milk on metabolic risk factors in overweight and obese adolescents [initiated 2013].

Benoit Lamarche, Ph.D. (Laval University): Investigation of the impact of cheese consumption 

on HDL function [initiated 2013].

Kevin C. Maki, Ph.D. (Biofortis-Provident Clinical Research): The effects of dairy beverages on 

insulin sensitivity and B-cell function in men and women at risk for diabetes [concluded 2013]. 
103

Maria Marco, Ph.D. (University of California-Davis): Does Milk Matter? The Importance of 

Milk for Probiotics Lactobacillus casei Performance in the Gut [concluded 2013].

Kim Fleischer Michaelsen, M.D., Ph.D. (University of Copenhagen): Whey permeate in the 

treatment of moderate acute malnutrition [initiated 2013]; Modified content of F-75 to control 

diarrhea in treatment of children with severe acute malnutrition [initiated 2013].

Benjamin F. Miller, Ph.D. (Colorado State University): Activation of Nrf2 by conjugated linoleic 

acid to decrease oxidative stress and inflammation and thereby increase muscle building effects 

of milk proteins [initiated 2013].

Lynn L. Moore, D.Sc. (Boston University School of Medicine): Protein Effects on Metabolic 

Outcomes in Older Men [ongoing 2013].

Lynn L. Moore, D.Sc., Martha R. Singer, M.Ph., RD and Loring Bradlee, MS (Boston University 

School of Medicine): Beverage intake in early childhood and change in body fat from preschool 

to adolescence [ongoing 2013].

Sabita Soedamah-Muthu, Ph.D. (Wageningen University): Meta-analysis on Effects of Cheese 

Consumption on Blood Lipids and Lipoproteins [ongoing 2013].

Sharon Nickols-Richardson, Ph.D. (Pennsylvania State University): Does a Dairy-rich Diet 

Modify Indicators of Inflammatory and Oxidative Stress in Adults with Excess Adiposity 

[ongoing 2013].

Douglas Paddon-Jones, Ph.D. (University of Texas Medical Branch at Galveston): Whey Protein, 

Aging and Physical Inactivity [initiated 2013].

Peggy Papathakis, Ph.D. (California Polytechnic State University – San Luis Obispo): 

Randomized controlled trial of the impact of treating moderately malnourished women in 

pregnancy with sub studies [initiated 2013].

Stefan M. Pasiakos, Ph.D. (U.S. Army Research Institute of Environmental Medicine): 

Comparative Effects of Milk- and Soy-based Diets on Musculoskeletal Health and Glucose 

Homeostasis during Prolonged Energy Restriction in Rats [concluded 2013].

Robert F. Roberts, Ph.D. (Pennsylvania State University): Influence of Delivery System on the 

Efficacy of a Probiotic Intervention [ongoing 2013].

Michael J. Saunders, Ph.D. (James Madison University): Tolerance to Intensified Cycle Training 

and Subsequent Adaptations: Influence of Chocolate Milk Dairy Protein Supplementation

[ongoing 2013].

Mary Beth Spitznagel, Ph.D., and John Gunstad, Ph.D. (Kent State University): Is Milk the Drink 

that Helps You Think? Dairy, Acute Glycemic Control, and Cognitive Function [ongoing 2013].
104

Hirofumi Tanaka, Ph.D. (University of Texas): Hypotensive Effects of Conventional Dairy 

Products: Role of Arterial Stiffness [ongoing 2013]; Effects of Fluid Milk in Attenuating 

Hyperglycemia and Hypertriglyceridemia for Meal [initiated 2013].

Laura L. Tosi, M.D. (Children's Research Institute): A Systems Biology Analysis of the Impact of 

Dairy and Calcium Intake on Type 2 Diabetes Associated Phenotypes [ongoing 2013].

Marta Van Loan, Ph.D. (USDA-Agricultural Research Service): Milk Versus Calcium Citrate 

and Vitamin D Supplements for Bone Health in Postmenopausal Women [concluded 2013].

Jeff Volek, Ph.D. (University of Connecticut): Effect of Incremental Increases in Dietary 

Carbohydrate on Saturated Fat Levels in Blood Borne Risk Markers for Cardiovascular Disease

[ongoing 2013]. 

Jeff Volek, Ph.D., RD, Brittanie Volk, MA, RD, and Ana L. Gómez, Ph.D. (University of 

Connecticut): Whey Protein Supplementation During Resistance Training Augments Lean Body 

Mass [concluded 2013].

Elena Volpi, M.D., Ph.D. (University of Texas Medical Branch at Galveston): Whey protein and 

exercise to accelerate recovery of muscle mass and function after acute hospitalization in 

previously independent older adults [initiated 2013].

Marie Walsh, Ph.D., Balasubramanian Ganesan, Ph.D., and Silvana Martini, Ph.D. (Utah State 

University): Use of Sonification to study impact on physiochemical properties of concentrated 

milk, and impact on fouling and milk powder quality [ongoing 2013].

Rosemary L Walzem, Ph.D. (Texas A&M University): Effects of dairy ingredients on gut 

microbiome and gut health [ongoing 2013].

Robert Ward, Ph.D. (Utah State University): Effects of Consuming Bioactive Yogurt on 

Endotoxemia and Markers of Metabolic Syndrome [ongoing 2013].

Connie Weaver, Ph.D. (Purdue University): Does High Calcium Exacerbate Atherosclerosis 

[concluded 2013].

Brian Wrotniak, Ph.D. (D’Youville College): Dairy intake in Pediatric Obesity Prevention and 

Treatment Interventions: Secondary analyses of existing data from two randomized trials

[initiated 2013].

Qixin Zhong, Ph.D., and Wan Wang, Ph.D. (University of Tennessee): Improved Thermal 

Stability of Whey Protein–Maltodextrin Conjugates at pH 5.0 by d-Glucose, Sucrose, dCellobiose, and Lactose [ongoing 2013].

Angela Zivkovic, Ph.D., and Jennifer Smilowitz, Ph.D. (University of California-Davis): Effects 

of Dairy Fat on Postprandial Inflammation [concluded 2013].
105

2013 Sustainability

Beate Crossley, DVM, Ph.D. (University of California-Davis): Rapid High-throughput Milk 

Assay Adaptable to Foot and Mouth Disease and Other Pathogens [concluded 2013].

Andrew Henderson, Ph.D. (University of Texas Health Science Center at Houston): 

Modification of the U.S. Milk Extended Life Cycle Assessment for watershed-based impacts: 

water use and eutrophication [initiated 2013]; Environmental performance of dairy as part of a 

sustainable diet [initiated 2013].

Olivier Jolliet, Ph.D. (University of Michigan): U.S. Fluid Milk Comprehensive Life Cycle Study

[concluded 2013]; Nutritional benefits and environmental performance of dairy products 

[initiated 2013].

Olivier Jolliet, Ph.D. (University of Michigan) and Greg Thoma, Ph.D. (University of Arkansas): 

A biophysical approach to allocation of life cycle environmental burdens for fluid milk supply 

chain analysis [concluded 2013].

Changsheng Li, Ph.D. (University of New Hampshire): Applications of Manure–DNDC at site 

and watershed scales for U.S. dairy environmental services [initiated 2013].

Marty Matlock, Ph.D., Greg Thoma, Ph.D., Mansoor Leh, Ph.D., Eric Cummings Ph.D., Jackson 

Cothren, Ph.D., and John P. Wilson, Ph.D. (University of Arkansas): Geospatial Analysis of 

potential water use, water stress, and eutrophication impacts from U.S. dairy production 

[concluded 2013].

Marina Moses, Ph.D. (National Academy of the Sciences): Considerations for the Future of 

Animal Science Research [initiated 2013].

Greg Thoma, Ph.D. (University of Arkansas): Life Cycle Assessment of Cheese and Whey 

Production in the U.S.A. [concluded 2013].
106

COMPETITIVE RESEARCH PROJECTS ACTIVE IN 2014

Principal Investigator, Institution, Project Title and Status 

2014 Dairy Foods

Jayendra K. Amamcharla, Ph.D. (Kansas State University): Use of Nano-scale aqueous ozone to 

remove biofilms from selected dairy product contact surfaces [initiated 2014].

Jayendra K. Amamcharla, Ph.D. (Kansas State University), and Lloyd Metzger, Ph.D. (South 

Dakota State University): Understanding the effects of electromagnetic fluid conditioning on 

physical, chemical and functional properties of milk and dairy products [ongoing 2014]. 

Jayendra K. Amamcharla, Ph.D. (Kansas State University), Sanjeev Anand, Ph.D. (South Dakota 

State University), Lloyd Metzger, Ph.D. (South Dakota State University), and Julie M. Goddard, 

Ph.D. (University of Massachusetts Amherst): Use of novel surface modification techniques to 

reduce biofilms on plate heat exchanger plates [ongoing 2014].

Sanjeev Anand, Ph.D., and Lloyd Metzger, Ph.D. (South Dakota State University): Improve the 

Microbial Quality of Milk Powders by Controlling Thermally Resistant Spore Formers and 

Spores [ongoing 2014].

Bradley Boling, Ph.D. (University of Wisconsin-Madison/Center for Dairy Research): Reduction 

of obesity-associated intestinal inflammation by low-fat dairy yogurt [initiated 2014].

Stephanie Clark, Ph.D. (Iowa State University): Feasibility of Integrating Ultrasound into High 

Temperature Short Time Processing for Extended Shelf Life Milk [ongoing 2014].

Stephanie Clark, Ph.D., and Buddhi Lamsal, Ph.D. (Iowa State University): Application and 

Evaluation of Modified Milk Protein Concentrates in High Protein Nutrition Bars [concluded 

2014].

Dennis D’Amico, Ph.D. (University of Connecticut) Utilization of GRAS compounds as 

antimicrobial dip and coating treatments for controlling Listeria monocytogenes on high 

moisture cheese [initiated 2014].

Christopher R. Daubert, Ph.D. (North Carolina State University): Rheological and Tribological 

Evaluation of Creaminess in Model Dairy Systems [concluded 2014].

MaryAnne Drake, Ph.D. (North Carolina State University): Hydrolysis of Milk Powder Permeate 

and/or Milk for no Sugar Added Flavored Milk [ongoing 2014]; Influence of Spray-drying 

Parameters and the Lactoperoxidase System to Minimize Flavor Formation in Spray-dried Whey 

Protein [ongoing 2014]; The Influence of Processing Parameters on SMP Quality [ongoing 

2014], Sensory analysis and preference mapping of Gouda Cheese [ongoing 2014].
107

MaryAnne Drake, Ph.D. (North Carolina State University) and Lloyd Metzger, Ph.D. (South 

Dakota State University): Exploring consumer perception of permeate-based sodium reduction 

with different permeate sources [initiated 2014].

Susan E. Duncan, Ph.D. (Virginia Polytechnic Institute and State University): Milk packaging 

options for light protection of milk flavor from processing through retail purchase [initiated 

2014].

Mark R. Etzel, Ph.D. (University of Wisconsin-Madison/Center for Dairy Research): Charged 

Ultrafiltration Membranes for Fractionation of Milk Proteins [ongoing 2014].

Nana Y. Farkye, Ph.D. (University of California-Davis): Effects of Salt Substitutes and AntiMicrobial Intervention Methods on Functionality and Shelf Life of Low Sodium String Cheese 

and the Survival of Pathogenic Bacteria [ongoing 2014].

Nana Y. Farkye, Ph.D. (California Polytechnic State University – San Luis Obispo), Donald 

McMahon, Ph.D., Jeff Broadbent, Ph.D., and Balasubramanian Ganesan, Ph.D. (Utah State 

University), MaryAnne Drake, Ph.D. (North Carolina State University), and James L. Steele, 

Ph.D. (University of Wisconsin-Madison): Effect of Sodium, Potassium, Magnesium, and 

Calcium Salt Cations on pH, Proteolysis, organic acids, and microbial populations during 

storage of full-fat Cheddar cheese [ongoing 2014].

Allen E. Foegeding, Ph.D. (North Carolina State University), Rafael Jiménez-Flores, Ph.D. 

(California Polytechnic State University – San Luis Obispo), and Bongkosh Vardhanabhuti, 

Ph.D. (University of Missouri): Developing Milk-protein-based Structures for New Dairy 

Products [ongoing 2014].

Allen E. Foegeding, Ph.D. (North Carolina State University): Functional Whey Protein 

Ingredients Based on Designed Aggregates [ongoing 2014].

Foundation for the National Institutes of Health: Outcome Measures for Sarcopenia [ongoing 

2014]; The Performance of Novel Cardiac Biomarkers in the General U.S. Population [initiated 

2014].

Kathleen Glass, Ph.D. (University of Wisconsin-Madison/Center for Dairy Research): 

Enhancing the Microbiological Safety and Quality of Reduced Sodium Cheese with Natural 

Preservatives or Adjunct Cultures [ongoing 2014]; Inhibition of Clostridium Botulinum in 

Reduced-Sodium Pasteurized Cheese Products [initiated 2014].

Julie M. Goddard, Ph.D. (University of Massachusetts-Amherst): Nonfouling Stainless Steel for 

Dairy Processing [ongoing 2014].

Lisbeth Goddik, Ph.D. (Oregon State University): Impact of Milk Hauling and Receiving on 

Microbial Content in Raw Milk [initiated 2014].
108

Selvarani Govindasamy-Lucey, Ph.D. (University of Wisconsin-Madison/Center for Dairy 

Research): Increasing the shelf-life of export cheeses by prolonged low temperature storage

[ongoing 2014].

Federico Harte, Ph.D. (University of Tennessee): Manufacturing of Low Spores, Low-heat Milk 

Powders for Various Food and Beverage Applications [concluded 2014].

Richard Hartel, Ph.D. (University of Wisconsin-Madison/Center for Dairy Research): ProCream/DLP Blends: Functionality and Applications [concluded 2014].

Mark Johnson, Ph.D. (University of Wisconsin-Madison/Center for Dairy Research): 

Development and Removal of Biofilms in a Pasteurizer [ongoing 2014].

Todd Klaenhammer, Ph.D. (North Carolina State University): Southeast Dairy Center 

Application Laboratory Program [ongoing 2014].

Theodore P. Labuza, Ph.D. (University of Minnesota): Develop Rapid and Simple Detection 

Methods for Dairy Proteins [concluded 2014].

John A. Lucey, Ph.D. (University of Wisconsin-Madison/Center for Dairy Research): Wisconsin 

Center for Dairy Research Applications Laboratory [ongoing 2014]. 

Donald McMahon, Ph.D. (Utah State University): Western Dairy Center Technology Innovation 

Laboratory Program [ongoing 2014]; Adapt Terbium Measurement of Spores for use during 

Milk Processing [concluded 2014].

Lloyd Metzger, Ph.D. (South Dakota State University): Development of Modified Milk Protein 

Concentrates as an Alternative to Rennet Casein [ongoing 2014]; Midwest Dairy Foods 

Applications Laboratories Program [ongoing 2014].

Lloyd Metzger, Ph.D. (South Dakota State University), and Donald McMahon, Ph.D. (Utah State 

University): Concentration, Storage Stability and Functionality of Highly Concentrated Micellar 

Casein [concluded 2014]. 

Carmen Moraru, Ph.D. (Cornell University): Development of Pulsed Light Based Combination 

Surface Treatments as a Non-thermal Strategy for Microbial Inactivation on Cheese Surface

[concluded 2014].

NIZO Food Research B.V. (Netherlands): Reduction of spore count in milk powder production 

[completed 2014].

Hasmukh Patel, Ph.D., Lloyd Metzger, Ph.D. (South Dakota State University), and Cordelia 

Selomulya, Ph.D. (Monash University (Australia)): To Improve the Quality of Milk Powder by 

Developing Strategies to Minimize the Increase in Viscosity of Milk Concentrate with High Total 

Solids Milk [ongoing 2014].
109

Hasmukh Patel, Ph.D., and Lloyd Metzger, Ph.D. (South Dakota State University) Scale-up and 

implementation of strategies to improve quality and process efficiency during manufacturing of 

dairy ingredients [initiated 2014]; Single droplet drying technology for optimization of dairy 

ingredients for best quality and functionality [initiated 2014].

Tonya Schoenfuss, Ph.D. (University of Minnesota): Evaluating the Efficiency of the Production 

of Intrinsically Labeled Milk Protein Products [ongoing 2014]; Evaluation of cheese with 

desirable fat and sodium attributes for school lunch snack choices [initiated 2014].

Karen Smith, Ph.D. (University of Wisconsin-Madison/Center for Dairy Research): 

Fractionating Acid Whey Into Value-added Ingredients for U.S. in Cultured Dairy Products 

[ongoing 2014].

Phillip S. Tong, Ph.D. (California Polytechnic State University – San Luis Obispo): California 

Dairy Center Application Laboratory Program [ongoing 2014]; Improving SMP/NFDM 

Processing, Microbiological Quality and Functionality Through Process and Ingredient 

Technologies That Change Mineral Composition and Activity [ongoing 2014].

Michael Tunnick, Ph.D. (USDA-Agricultural Research Service): Long-term Shelf Life Studies of 

Whey Protein Concentrates (WPC 34 and WPC 80) Under Adverse Storage Conditions 

[concluded 2014].

Martin Wiedmann, Ph.D., D.V.M. (Cornell University): Survey of Mesophilic and Thermophilic 

Sporeformers in Dairy Powders and Raw Milk Across the U.S. [ongoing 2014]; A Systems 

Approach to Reducing Spore Contamination in Dairy Powders [concluded 2014]. 

Martin Wiedmann, Ph.D., D.V.M., and Robin Dando, Ph.D. (Cornell University): Consumer 

Sensory Perception of Pasteurized Fluid Milk over Shelf-life [ongoing 2014]; Control of postpasteurization contamination of Pasteurized Fluid Milk through improved sanitation. [initiated 

2014].

Qixin Zhong, Ph.D. (University of Tennessee): Dairy Protein-based Antimicrobial Delivery 

System to Improve the Microbial Safety of Dairy Products [concluded 2014]; Hydrocolloids for 

Improved Recovery and Utilization of Lactose [ongoing 2014]. 

Qixin Zhong, Ph.D. (University of Tennessee) and MaryAnne Drake, Ph.D. (North Carolina 

State University): Shelf-stable Whey-protein-based High-protein Beverages [ongoing 2014].
110

2014 Nutrition 

Sean Adams, Ph.D. (USDA-Agriculture Research Service): Evaluation of the health benefits of a 

high-quality diet in persons at-risk for development of metabolic disease: rapidity and weightindependent effects [initiated 2014].

Lacy Alexander, Ph.D. (Pennsylvania State University): Milk and cheese consumption and 

human microvascular function [ongoing 2014].

Dominik Alexander, Ph.D., MSPH (EpidStat Institute): Meta-analysis of Dairy Consumption and 

Body Composition [initiated 2014]. 

Dominick D. Alexander, Ph.D., MSPH; Paige E. Miller, Ph.D., MPH, RD; Vanessa Perez, Ph.D. 

(Exponent Inc.): Effects of whey protein and resistance exercise on body composition: a metaanalysis of randomized controlled trials [completed 2014]. 

David M. Barbano, Ph.D. (Cornell University) and MaryAnne Drake, Ph.D. (North Carolina 

State University) The role of protein, protein ratio and fat content on consumer acceptance

[initiated 2014].

Bradley W. Bolling, Ph.D. (University of Connecticut): Reduction of Obesity-Associated 

Intestinal Inflammation by Low-Fat Dairy Yogurt [ongoing 2014].

Richard Bruno, Ph.D. (Ohio State University): Vasoprotective Activities of Low-fat Milk in 

Individuals with Metabolic Syndrome [concluded 2014]; Dairy Fat as a Mediator of Vitamin E 

Adequacy in Individuals With Metabolic Syndrome [ongoing 2014].

Wayne Campbell, Ph.D. (Purdue University): Impact of Fluid Milk of Post-Meal Glycemia and 

Insulinemia in Overweight/Obese Adults with Normal or Impaired Glucose Tolerance or Type 2 

Diabetes [ongoing 2014]; Dietary protein intake and source and body composition in U.S. adults 

aged 50 years and older [initiated 2014]. 

Wayne Campbell, Ph.D., Ulrike Dydak, Ph.D., Travis Conley, Ph.D., Jamie Case, Ph.D., and 

Author Rosen, M.D. (Purdue University): Effects of milk protein concentrate on blood pressure, 

inflammation, muscle composition, and metabolic health during weight loss in overweight/obese 

adults [ongoing 2014].

Wayne Campbell, Ph.D., Arthur Rosen, M.D., Jung Eun Kim, Ph.D. (Purdue University), and 

Douglas Paddon-Jones Ph.D. (University of Texas Medical Branch at Galveston): Effects of 

dietary protein patterning on weight loss and resistance training-induced changes in body 

composition, skeletal muscle, and indices of metabolic syndrome [ongoing 2014].

Sharon Donovan, Ph.D., and Barbara Fiese, Ph.D. (University of Illinois at Urbana -

Champaign): STRONG Kids 2: A Cells-to-Society Approach to Nutrition in Early Childhood

[ongoing 2014].
111

Maria Luz Fernandez, Ph.D. (University of Connecticut): Beneficial effects of low-fat dairy 

products on lipoprotein metabolism and inflammation in subjects classified with metabolic 

syndrome [concluded 2014].

Arny Ferrando, Ph.D. (University of Arkansas): Effect of Dietary Protein Intake Pattern on 

Skeletal Muscle in Older Individuals [ongoing 2014]; Effect of dietary protein intake distribution 

on protein metabolism and skeletal muscle [ongoing 2014]. 

Michael Fenech, Ph.D. (Commonwealth Scientific and Industrial Research Organisation 

(Australia)): Whey protein isolate as a source of Vitamin B12 and to lower homocysteine and 

methylmalonic acid in the elderly [ongoing 2014].

Rafael Jiménez-Flores, Ph.D. (California Polytechnic State University – San Luis Obispo): 

Developing Milk Protein- Based Structures for New Dairy Products [ongoing 2014]; Measuring 

Kinetics of Milk [ongoing 2014].

Mathew Hayes, Ph.D. (University of Pennsylvania): Effects of Dairy Macronutrients on 

Glucogo-like-Peptide-1 Receptor Mediated Suppression of Food Intake and Blood Glucose 

Regulation [ongoing 2014]; Milk protein concentrate improves the metabolic effects of GLP-1-

based pharmacotherapy in diabetic rat models [initiated 2014]

Kevin Heffernan, Ph.D. (Syracuse University): Efficacy of Whey Protein to Improve 

Cerebrovascular and Cognitive Function in Older Adults [ongoing 2014].

Rachel Johnson, Ph.D., RD (University of Vermont): Evaluating the Acceptance of Reformulated 

Flavored Milk in Schools [ongoing 2014].

Samual Klein, M.D. (Washington University School of Medicine): Diet and exercise 

intervention in Type 2 Diabetes [continued 2014].

Jana Kraft, Ph.D., and Lawrence Kien, M.D., Ph.D. (University of Vermont): Effects of milk fat 

on Insulin Sensitivity, Postprandial Lipid metabolism, Circulating Inflammatory Markers in 

mildly obese female subjects [ongoing 2014]; Researching the effects of consuming a diet 

comprising of milk fat on metabolic health markers [ongoing 2014].

Mario Krantz, Ph.D. (Fred Hutchinson Cancer Research Center - University of Washington): The 

impact of Low-fat and Full-fat Dairy Consumption on Glucose Homeostasis [initiated 2014].

Ronald M. Krauss, Ph.D. (Children’s Hospital Oakland Research Institute): Effect of a modified 

lower carbohydrate, high fat DASH diet plan on plasma lipids, lipoprotein particle size and 

blood pressure in healthy adults [ongoing 2014]; Effects of replacing sugar sweetened beverages 

with milk on metabolic risk factors in overweight and obese adolescents [ongoing 2014].

Benoit Lamarche, Ph.D. (Laval University (Canada)): Investigation of the impact of cheese 

consumption on HDL function [ongoing 2014].
112

Luc J.C. van Loon, Ph.D. (Maastricht University (Netherlands)): Casein in milk as a functional 

ingredient for the prevention of sarcopenia [ongoing 2014].

Kevin C. Maki, Ph.D. (Midwest Center for Metabolic and Cardiovascular Research): A 

randomized, controlled crossover trial of acute cognitive, appetite, glucose and insulin responses 

to five milk or juice beverages or water in men and women [initiated 2014]. 

Maria Marco, Ph.D. (University of California-Davis): Does Milk Matter? The Importance of 

Milk for Probiotics Lactobacillus casei Performance in the Gut [concluded 2014].

Kim Fleischer Michaelsen, M.D., Ph.D. (University of Copenhagen (Denmark)): Whey permeate 

in the treatment of moderate acute malnutrition [ongoing 2014]; Modified content of F-75 to 

control diarrhea in treatment of children with severe acute malnutrition [ongoing 2014].

Benjamin F. Miller, Ph.D. (Colorado State University): Activation of Nrf2 by conjugated linoleic 

acid to decrease oxidative stress and inflammation and thereby increase muscle building effects 

of milk proteins [ongoing 2014].

Lynn L. Moore, D.Sc. (Boston University School of Medicine): Protein Effects on Metabolic 

Outcomes in Older Men [ongoing 2014]; Yogurt, Blood Pressure and Cardiovascular Risk in 

Three Prospective Cohorts [ongoing 2014].

Lynn L. Moore, D.Sc., Martha R. Singer, M.Ph., RD, and Loring Bradlee, MS (Boston 

University School of Medicine): Beverage intake in early childhood and change in body fat from 

preschool to adolescence [ongoing 2014].

Sabita Soedamah-Muthu, Ph.D. (Wageningen University (Netherlands)): Meta-analysis on 

Effects of Cheese Consumption on Blood Lipids and Lipoproteins [concluded 2014].

Sharon Nickols-Richardson, Ph.D. (Pennsylvania State University): Does a Dairy-rich Diet 

Modify Indicators of Inflammatory and Oxidative Stress in Adults with Excess Adiposity

[concluded 2014].

Douglas Paddon-Jones, Ph.D. (University of Texas Medical Branch at Galveston): Whey Protein, 

Aging and Physical Inactivity [ongoing 2014].

Peggy Papathakis, Ph.D. (California Polytechnic State University – San Luis Obispo): 

Randomized controlled trial of the impact of treating moderately malnourished women in 

pregnancy with sub studies [ongoing 2014].

Robert F. Roberts, Ph.D. (Pennsylvania State University): Influence of Delivery System on the 

Efficacy of a Probiotic Intervention [concluded 2014].

Michael J. Saunders, Ph.D. (James Madison University): Tolerance to Intensified Cycle Training 

and Subsequent Adaptations: Influence of Chocolate Milk Dairy Protein Supplementation

[ongoing 2014].
113

Ego Seemen, M.D. (University of Melbourne (Australia) Study into improved health for elderly 

through increased dairy consumption [ongoing 2014].

Mary Beth Spitznagel, Ph.D., and John Gunstad, Ph.D. (Kent State University): Is Milk the Drink 

that Helps You Think? Dairy, Acute Glycemic Control, and Cognitive Function [ongoing 2014].

Hans H. Stein, Ph.D. (University of Illinois, Urbana-Champaign): Amino acid digestibility and 

DIAAS values in dairy proteins and other sources of protein used in human consumption 

[initiated 2014].

Hirofumi Tanaka, Ph.D. (University of Texas): Effects of Fluid Milk in Attenuating 

Hyperglycemia and Hypertriglyceridemia for Meal [ongoing 2014].

Hirofumi Tanaka, Ph.D., Mohammed Alkatan Ph.D., Melissa Mouton, MS, RDN, LD 

(University of Texas), Daniel R. Machin Ph.D. (University of Utah), and Wonil Park, Ph.D. 

(University of North Carolina Chapel Hill): Hypotensive effects of solitary addition of 

conventional nonfat dairy products to the routine diet: a randomized controlled trial [concluded 

2014].

Laura L. Tosi, M.D. (Children's Research Institute): A Systems Biology Analysis of the Impact of 

Dairy and Calcium Intake on Type 2 Diabetes Associated Phenotypes [ongoing 2014].

Jeff Volek, Ph.D. (University of Connecticut): Effect of Incremental Increases in Dietary 

Carbohydrate on Saturated Fat Levels in Blood Borne Risk Markers for Cardiovascular Disease

[concluded 2014]. 

Elena Volpi, M.D., Ph.D. (University of Texas Medical Branch at Galveston): Whey protein and 

exercise to accelerate recovery of muscle mass and function after acute hospitalization in 

previously independent older adults [ongoing 2014].

Marie Walsh, Ph.D., Balasubramanian Ganesan, Ph.D., and Silvana Martini, Ph.D. (Utah State 

University): Use of Sonification to study impact on physiochemical properties of concentrated 

milk, and impact on fouling and milk powder quality [ongoing 2014].

Rosemary L Walzem, Ph.D. (Texas A&M University): Effects of dairy ingredients on gut 

microbiome and gut health [concluded 2014].

Robert Ward, Ph.D. (Utah State University): Effects of Consuming Bioactive Yogurt on 

Endotoxemia and Markers of Metabolic Syndrome [ongoing 2014].

Brian Wrotniak, Ph.D. (D’Youville College): Dairy intake in Pediatric Obesity Prevention and 

Treatment Interventions: Secondary analyses of existing data from two randomized trials

[ongoing 2014].
114

Qixin Zhong, Ph.D., and Wan Wang, Ph.D. (University of Tennessee): Improved Thermal 

Stability of Whey Protein–Maltodextrin Conjugates at pH 5.0 by d-Glucose, Sucrose, dCellobiose, and Lactose [ongoing 2014].

Angela Zivkovic, Ph.D., and Jennifer Smilowitz, Ph.D. (University of California-Davis): Effects 

of Dairy Fat on Postprandial Inflammation [concluded 2014].

2014 Sustainability

Battelle Energy Alliance, LLC: Dairy Industry Operations, Energy and Environmental Analysis

[concluded 2014].

Manuel Margni Ph.D. (Polytechnique Montreal), Alice Heth, Ph.D., and Steven Murphy (Cornell 

University): Critical Review of Yogurt Life Cycle Assessment [ongoing 2014].

Andrew Henderson, Ph.D. (University of Texas Health Science Center at Houston): 

Environmental performance of dairy as part of a sustainable diet [ongoing 2014]; National 

Nutrient Optimization & Dairy (NaNO-Dairy) [initiated 2014].

Brian Holmes, Ph.D. (University of Wisconsin-Madison): Farm Smart research [concluded 

2014].

Olivier Jolliet, Ph.D. (University of Michigan): Nutritional benefits and environmental 

performance of dairy products [concluded 2014].

Ermias Kebreab, Ph.D. (University of California and California Dairy Research Foundation) 

Developing better prediction equations for enteric methane emissions by U.S. dairy cattle

[initiated 2014].

Informa Economics (United Kingdom): Markets for recovered nitrogen, recovered phosphorous 

and nutrient enriched fiber produced by dairy digesters [concluded 2014].

Changsheng Li, Ph.D. (University of New Hampshire): Applications of Manure–DNDC at site

and watershed scales for U.S. dairy environmental services [concluded 2014].

Marina Moses, Ph.D. (National Academy of the Sciences): Considerations for the Future of 

Animal Science Research [ongoing 2014].

National Research Council: Nutrient Requirements of Dairy Cattle [ongoing 2014].

Greg Thoma, Ph.D. (University of Arkansas): Life cycle environmental assessment of yogurt 

production and consumption in the USA [initiated 2014].






























115

Chapter 6

National Fluid Milk Processor Promotion Program 

2013 and 2014 Financial Information 

The Fluid Board 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 consumer residences. 

The Fluid Milk Board’s revenue for 2013 and 2014 was $100.3 million and $97.3 million, 

respectively. The Fluid Milk Order requires the Fluid Milk Board return 80 percent of the funds 

received from California processors to the California Milk Processor Board. The amount 

returned to California from 2013 assessments was $9.3 million, and the amount returned from 

2014 assessments was $9.2 million. The California fluid milk processor promotion program uses 

funds to conduct its promotion activities which include the got milk?® advertising campaign. 

Actual income and expenses for 2013 and 2014 are provided in this chapter as well as the 

following information: approved Fluid Milk Board budgets; contracts reviewed by USDA; and 

the independent audits of the Fluid Milk Board.
116

National Fluid Milk Processor Promotion Board 2013 Income and Expenses 
117

National Fluid Milk Processor Promotion Board 2014 Income and Expenses
118

National Fluid Milk Processor Promotion Board 2014 Approved Budget

(Thousands)

Revenues

Assessments $97,200

Total Income $97,200

Expenses

General and Administrative $2,855

USDA Oversight 500

California Refund 9,500

Subtotal $12,855

Program Budget

General Market $53,780

Hispanic Target 7,650

Chocolate Milk 17,878

Strategy and Market Research 2,877

Unallocated/Opportunistic 2,110

Independent Evaluation & Measurement 50

Subtotal $84,395

Total Budget Expenditures $97,200

Source: Budgets received and approved by USDA from the National Fluid Milk Processor Promotion Board.
119

National Fluid Milk Processor Promotion Board 2015 Approved Budget

(Thousands)

Revenues

Assessments $95,100

Carry-forward Funds 1,121

Total Income $96,221

Expenses

General and Administrative $2,356

USDA Oversight 525

California Refund 8,735

Subtotal $11,616

Program Budget

General Market $68,035

Chocolate Milk 13,600

Strategy and Market Research 2,970

Subtotal $84,605

Total Budget Expenditures $96,221

Source: Budgets received and approved by USDA from the National Fluid Milk Processor Promotion Board
120

National Fluid Milk Processor Promotion Board

2013 Contracts Reviewed by USDA 

ADVERTISING, PROMOTION, AND PUBLIC RELATIONS

 Deutsch (Interpublic Group) Advertising and Promotion Services; 

 Industry Communications; Strategic

 Planning 

 

 FCB (Interpublic Group) Advertising and Promotion Services;

 Industry Communications; Strategic

 Planning 

Inland Label and Marketing Services, LLC Storage, Labels and Promotional Giveaways

InTech Integrated Marketing Services Marketing and Graphic Design Services

 

 Kellogg North America Company Fluid Milk Promotions

 Lowe Campbell Ewald (Interpublic Group) Advertising and Promotion Services; 

Industry Communications; Strategic 

Planning

MGSCOMM Hispanic Advertising and Promotion 

Services

Outloud, LLC Flavored Milk Marketing and Research

Team Services Promotion Services

Ventura Associates International, LLC Advertisement Services

Weber Shandwick (Interpublic Group) Advertising and Promotion Services; 

Industry Communications; Strategic 

Planning 

MARKET RESEARCH AND EVALUATION, AND CONSULTING SERVICES 

Ann Ocana Consulting, LLC Communication Consulting Services

Applied Thinking, LLC Marketing Mix Consulting 

Artemis Strategy Group Market Research and Tracking Services 

Balvor, LLC Retail Advisory Services 

Beverage Marketing Corporation Competitive Strategy Consulting

Bonner and Associates, Inc. Project Management

Communicus, Inc. Communications Management
121

Doextra CRM Solutions, LLC Salesforce Software Application

Food For Though Consulting, Inc. Scientific and Regulatory Research

Fresh Approach Communications and Roundtable

International Dairy Foods Association Professional Consulting and 

Communication Services 

Kaley Warner Klemp Consulting Services

Light Industries Service Group Database Support

M+ Advisors Digital Metrics and Strategy

Paradigm Sample, LLC Market Research Database

Prime Consulting Group

Flavored Milk Marketing and Research: 

Segmentation and Communications 

Channels

Protagonist, LLC Advertising and Promotion Services

Radius Global Market Research

Breakfast Beverage Segmentation Research; 

Consumer Attitudes, Consumption and 

Advertising Tracking; Fluid Milk Market 

Research

Ruby Do Inc. Dairy Crisis Management Team tactical 

support

OTHER AGREEMENTS 

Abrams, Dr. Steven Medical Advisory Board Member Services

Barr, Dr. Susan Medical Advisory Board Member Services

Bridgewater Wealth and Financial 

Management Management Services

Dairy Management Inc. Shared Research and Consulting Services

Economos, Dr. Christina Medical Advisory Board Member Services

Godfrey, Vivian Management Services

Heaney, Dr. Robert Medical Advisory Board Member Services

Hill, Dr. James Medical Advisory Board Member Services

Johnson, Dr. Rachael Medical Advisory Board Member Services

McLeod, Watkinson & Miller Legal Services

Rubin, Ronald J. Management Services

Saunders, Dr. Michael Medical Advisory Board Member Services

Snyder, Cohn, Collyer, Hamilton & 

Associates, P.C. Accounting Services

Spectrum Group Productions Audio Visual Services

Zaborsky, Victor Consulting Services
122

National Fluid Milk Processor Promotion Board

2014 Contracts Reviewed by USDA

ADVERTISING, PROMOTION, AND PUBLIC RELATIONS 

Deutsch (Interpublic Group)

Advertising and Promotion Services; 

Industry Communications; Strategic 

Planning

DraftFCB (Interpublic Group)

Advertising and Promotion Services; 

Industry Communications; Strategic 

Planning

Feeding America Program Sponsorship 

General Mills Promotion Partnership

InTech Integrated Marketing Services Marketing and Graphic Design Services

Lowe Campbell Ewald (Interpublic Group)

Advertising and Promotion Services; 

Industry Communications; Strategic 

Planning

MGSCOMM Hispanic Advertising and Promotion 

Services

News America Marketing Digital and Print Media

The Quaker Oats Company Promotion Partnership

Team Services Promotion Services

Ventura Associates International, LLC Advertisement Services

Weber Shandwick (Interpublic Group)

Advertising and Promotion Services; 

Industry Communications; Strategic 

Planning 

MARKET RESEARCH AND EVALUATION, AND CONSULTING SERVICES 

Ann Ocana Consulting, LLC Communication Consulting Services

Applied Thinking, LLC Marketing Mix Consulting 

Crimson Hexagon Market Metrics and Research

Communicus, Inc. Communications Management

Doextra CRM Solutions, LLC Salesforce Software Application

Food For Though Consulting, Inc. Scientific and Regulatory Research

Fresh Approach Communications and Roundtable

International Dairy Foods Association Professional Consulting and 

Communication Services 

Kaley Warner Klemp Consulting Services

Paradigm Sample, LLC Market Research Database

Prime Consulting Group Flavored Milk Marketing and Research: 

Segmentation and Communications 
123

Channels

Protagonist, LLC Advertising and Promotion Services

Radius Global Market Research

Breakfast Beverage Segmentation Research; 

Consumer Attitudes, Consumption and 

Advertising Tracking; Fluid Milk Market 

Research

Red Spark Consulting Advertising and Promotion Services

OTHER AGREEMENTS 

Barr, Dr. Susan Medical Advisory Board Member Services

Bridgewater Wealth and Financial 

Management Management Services

Conference Direct Meeting Services

Dairy Management Inc. Shared Research and Consulting Services

Economos, Dr. Christina Medical Advisory Board Member Services

Godfrey, Vivian Management Services

Heaney, Dr. Robert Medical Advisory Board Member Services

Hill, Dr. James Medical Advisory Board Member Services

Johnson, Dr. Rachael Medical Advisory Board Member Services

McLeod, Watkinson & Miller Legal Services

Rubin, Ronald J. Management Services

Saunders, Dr. Michael Medical Advisory Board Member Services

Snyder, Cohn, Collyer, Hamilton & 

Associates, P.C. Accounting Services

Spectrum Group Productions Audio Visual Services

The Troyanos Group, Ltd. Human Resource Services

Zaborsky, Victor Consulting Services
National Fluid Milk Processor

Promotion Board

Financial Statements

and

Independent Auditor's Report

Years Ended December 31, 2013 and 2012

1250 H Street, N.W., Suite 950

Washington, D.C. 20005
Parti

Financial Statements and Independent Auditor's

Report for the Years Ended December 31, 2013 and

2012

Part

Independent Auditor's Report on Internal Control Over

Financial Reporting and on Compliance and Other

Matters Based on an Audit of Financial Statements

Performed in Accordance with Government Auditing

Standards

Part

Independent Auditor's Comments on Compliance with

Government Auditing Standards
PARTI
Table of Contents

Independent Auditor's Report 1-2

Financial Statements:

Statements of Financial Position 3

Statements of Revenues, Expenses and Changes in Net Assets 4

Statements of Cash Flows 5

Notes to Financial Statements 6-14

Supplementary Information:

Schedules of Actual Compared to Budget:

Revenues and Expenses (Budget Basis) 16

Program Expenses (Budget Basis) 17

Administrative Expenses (Budget Basis) 18

Schedule of Cash Receipts and Disbursements 19
SNYDERCOHN

CPAs and Business Advisors

Independent Auditor's Report

To the Board of Directors

National Fluid Milk Processor

Promotion Board

Washington, D.C.

Report on the Financial Statements

We have audited the accompanying financial statements of the National Fluid Milk Processor Promotion

Board, which comprise the statements of financial position as of December 31, 2013 and 2012, and the

related statements of revenues, expenses and changes in net assets, and cash flows for the years then

ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in

accordance with accounting principles generally accepted in the United States of America; this includes the

design, implementation, and maintenance of internal control relevant to the preparation and fair presentation

of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

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 of America and the

standards applicable to financial audits contained in Government Auditing Standards, issued by the

Comptroller General of the United States. Those standards require that we plan and perform the audits to

obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

financial statements. The procedures selected depend on the auditor's judgment, including the assessment of

the risks of material misstatement of the financial statements, whether due to fraud or error. In making those

risk assessments, the auditor considers internal control relevant to the entity's preparation and fair

presentation of the financial statements in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal

control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of

accounting policies used and the reasonableness of significant accounting estimates made by management,

as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial

position of the National Fluid Milk Processor Promotion Board as of December 31, 2013 and 2012, and the

results of its operations and its cash flows for the years then ended in conformity with accounting principles

generally accepted in the United States of America.

11200RockvillePike, Suite 415, North Bethesda, MD 20852 • Phone 301-652-6700 • Fax 301-986-1028 • www.snydercohn.com

Snyder Cohn is an independent member of Jj JV K Firms in principal cities worldwide.

W
To the Board of Directors

National Fluid Milk Processor

Promotion Board

Page two

Report on Supplementary Information

Our audits were conducted for the purpose of forming an opinion on the financial statements taken as a whole.

The accompanying supplementary information shown on pages 16 through 19 is presented for purposes of

additional analysis and is not a required part of the financial statements. Such information is the responsibility

of management and was derived from and relates directly to the underlying accounting and other records used

to prepare the financial statements. The information, other than the budget amounts, has been subjected to

the auditing procedures applied in the audit of the financial statements and certain additional procedures,

including comparing and reconciling such information directly to the underlying accounting and other records

used to prepare the financial statements or to the financial statements themselves, and other additional

procedures in accordance with auditing standards generally accepted in the United States of America. In our

opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

Budget amounts have not been subjected to the auditing procedures applied in the audits of the financial

statements and, accordingly, we do not express an opinion or provide any assurance on these amounts.

Report Issued in Accordance with Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued a report dated March 27, 2014 on

our consideration of the National Fluid Milk Processor Promotion Board's internal control over financial

reporting and on our tests of its compliance withcertain provisions of laws, regulations, contracts, agreements,

and other matters. The purpose of this report is to describe the scope of our testing of internal control over

financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal

control over financial reporting or on compliance. This report is an integral part of an audit performed in

accordance with Government Auditing Standards and should be considered in assessing the results of our

audits.

tU^ Orh^(?C^

SNYDER COHN, PC

North Bethesda, Maryland

March 27, 2014
National Fluid Milk Processor Promotion Board

Statements of Financial Position

December 31 2013 2012

Assets

Current assets:

Cash and cash equivalents $ 16,404,665 $ 11,532,679

Assessments receivable, net 9,567,578 9,283,839

Future year costs 1,240,848 3,695,277

Prepaid expenses 37,214 40,444

Other receivables 74,413 1,998

Total current assets 27,324,718 24,554,237

Property and equipment, net 56,557 85,477

Total assets $ 27,381,275 $ 24,639,714

Liabilities and net assets

Current liabilities:

Accounts payable and accrued expenses $ 14,227,903 $ 9,894,364

Deferred compensation, related party 21,750 19,250

Capital lease, current portion 6,480 5,760

Total current liabilities 14,256,133 9,919,374

Other liabilities:

Capital lease, net of current portion 7,939 14,419

Total liabilities 14,264,072 9,933,793

Commitments

Net assets:

Board designated for contingencies 2,500,000 2,500,000

Undesignated 10,617,203 12,205,921

Total net assets 13,117,203 14,705,921

Total liabilities and net assets $ 27,381,275 $ 24,639,714

See Accompanying Notes

3
National Fluid Milk Processor Promotion Board

Statements of Revenues, Expenses and Changes in Net Assets

For the years ended December 31

Revenues:

Assessments

Late payment charges

Interest income

Other

Total revenues

Expenses:

Program expenses:

Meals at home - general market

Refuel

Meals at home - Hispanic

Market research

Business development

Program measurement

Total program expenses

Other expenses:

California grant

Administrative

USDA oversight

USDA compliance audit

Loss on disposal of property and equipment

Interest expense

Total other expenses

Total expenses

Excess of expenses over revenues

Net assets - beginning

Net assets - ending

2013 2012

100,273,305 $ 103,341,981

54,719 97,082

19,801 32,354

41,280 6,261

100,389,105 103,477,678

53,396,385 52,721,233

16,235,618 17,616,527

7,867,284 7,811,452

3,657,732 4,025,153

8,437,480 9,693,682

38,706 24,549

89,633,205 91,892,596

9,319,585 9,668,033

2,543,510 2,442,369

397,216 351,606

79,069 104,439

3,153 15,229

2,085 2,230

12,344,618 12,583,906

101,977,823 104,476,502

(1,588,718) (998,824)

14,705,921 15,704,745

$ 13,117,203 $ 14,705,921

See Accompanying Notes

4
National Fluid Milk Processor Promotion Board

Statements of Cash Flows

Forthe years ended December 31 2013 2012

Cash flows from operating activities:

Excess of expenses over revenues $ (1,588,718) $ (998,824)

Adjustments to reconcile excess of

expenses over revenues to net cash

provided by (used in) operating activities:

Depreciation

Loss on disposal of property and equipment

Changes in assets and liabilities:

Decrease (increase) in assessments receivable

Decrease in future year costs

Decrease in prepaid expenses

Increase in other receivables

Increase (decrease) in accounts payable and

accrued expenses

Increase in deferred compensation

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Proceeds from sale of property and equipment

Payments made for property and equipment

Net cash used in investing activities

Cash flows from financing activities:

Payments made on capital lease

Net increase (decrease) in cash and

cash equivalents

Cash and cash equivalents - beginning

Cash and cash equivalents - ending

31,017 40,563

3,153 15,229

(283,739) 716,219

2,454,429 755,555

3,230 963

(72,415) (1,863)

4,333,539 (895,693)

2,500 951

4,882,996 (366,900)

500

(5,250) (52,603)

(5,250) (52,103)

(5,760) (4,307)

4,871,986 (423,310)

11,532,679 11,955,989

$ 16,404,665 $ 11,532,679

Supplemental disclosure of cash flow information:

Cash paid during the year for:

Interest $ 2,085 $ 2,230

Supplemental schedule of noncash investing

and financing activities:

Capital lease obligation incurred

in exchange for copier - 24,486

See Accompanying Notes

5
National Fluid Milk Processor Promotion Board

Notes to Financial Statements

December 31, 2013 and 2012

Note 1: Summary of significant accounting policies:

The National Fluid Milk Processor Promotion Board (the Board) was established

pursuant to the authority of the Fluid Milk Promotion Act (the Act) of 1990, Subtitle H of

the Title XIX of the Food, Agriculture, Conservation and Trade Act of 1990. The purpose

of the Board is to administer the provisions of the Fluid Milk Promotion Order (the Order)

established pursuant to the Act which establishes an orderly procedure for the

development, and the financing through an assessment, of a coordinated program of

advertising, promotion, and education for fluid milk products.

The Act required that a referendum be conducted among processors to determine if a

majority favored implementing the fluid milk program. In the October 1993 initial

referendum, the majority of processors voted to approve the implementation of the fluid

milk program. A continuation referendum was held in February-March 1996. Of the

processors voting in that referendum, the majority favored continuation of the fluid milk

program. In November 1998, another continuation referendum was held at the request

of the Board and processors voted to continue the fluid milk program as established by

the Order. The Act and Order state that the United States Department of Agriculture

(USDA) will hold future referenda upon the request of the Board, processors

representing 10% or more of the volume of fluid milk products marketed by those

processors voting in the last referendum, or when called by the U.S. Secretary of

Agriculture.

For financial reporting purposes, the Board is considered a quasi-governmental agency

of the U.S. government. As such, it is exempt from income taxes under the Internal

Revenue Code. The USDA and its affiliated agencies operate in an oversight capacity

of the Board.

The financial statements of the Board are prepared in conformity with accounting

principles generally accepted in the United States of America. To facilitate the

understanding of data included in the financial statements, summarized below are the

more significant accounting policies.

Assessments - Assessments are generated from any person who processes and

markets commercially more than 3,000,000 pounds of fluid milk per month by a 20-cent

per hundred weight assessment on fluid milk products processed and marketed

commercially in consumer-type packages in the 48 contiguous United States and the

District of Columbia. Assessment revenue is recognized in the month in which the fluid

milk product is processed. Late payment charges are assessed, as provided under the

Act, to processors who do not remit monthly assessments within 30 days following the

month of assessment.
National Fluid Milk Processor Promotion Board

Notes to Financial Statements

December 31, 2013 and 2012

Note 1: Summary of significant accounting policies: (continued)

Assessments (continued) - The late payment charge is equal to 1.5% of unpaid

assessments and accrues monthly. For both 2013 and 2012, an allowance for doubtful

accounts of $-0- has been established for those amounts where the late charges are

being appealed.

California grant - In accordance with the Act, the Board is required to provide a grant to a

third party equal to 80% of the assessments collected from Regions 14 and 15 to

implement a fluid milk promotion campaign. Disbursements under these provisions are

recorded as "California grant" in the accompanying financial statements.

Cash equivalents - For purposes of the statements of cash flows, the Board considers all

highly liquid investments with an original maturity of three months or less to be cash

equivalents.

Future year costs - Future year costs represent costs incurred for the next budget year's

projects.

Assessments receivable - An allowance for uncollectible accounts has been established

for those assessments which management has determined as uncollectible. The total

allowance for uncollectible accounts at December 31, 2013 and 2012 was $275,515 and

$189,000, respectively.

Property and equipment - Property and equipment are stated at cost. Depreciation is

provided over the estimated useful lives of the related assets on a straight-line basis.

Expenditures for repairs and maintenance are charged to expense as incurred.

Use of estimates - The Board has made certain estimates and assumptions that affect

the reported amounts of assets and liabilities and the disclosure of contingent assets

and liabilities at the date of the financial statements, and the reported amounts of

revenue and expenses during the period. Actual results could differ from those

estimates.

Investments - The Board is required to follow the Agricultural Marketing Service (AMS)

investment policy. Accordingly, the Board is authorized to invest in securities consisting

of obligations issued or fully insured or guaranteed by the U.S. or any U.S. government

agency, including obligations of government-sponsored corporations that mature within

one year or less from the date of purchase.
National Fluid Milk Processor Promotion Board

Notes to Financial Statements

December 31, 2013 and 2012

Note 1: Summary of significant accounting policies: (continued)

Fair value measurements - The FASB Accounting Standards Codification (ASC) 820,

Fair Value Measurements and Disclosures, provides the framework for measuring fair

value. That framework provides a fair value hierarchy that prioritizes the inputs to

valuation techniques used to measure fair value. The hierarchy gives the highest priority

to unadjusted quoted prices in active markets for identical assets or liabilities (level 1

measurements) and the lowest priority to unobservable inputs (level 3 measurements).

The three levels of the fair value hierarchy under FASB ASC 820 are described as

follows:

Level 1 - inputs to the valuation methodology are unadjusted quoted prices for identical

assets or liabilities in active markets that the Board has the ability to access.

Level 2 - inputs to the valuation methodology include:

- quoted prices for similar assets or liabilities in active markets;

- quoted prices for identical or similar assets or liabilities in inactive markets;

- inputs other than quoted prices that are observable for the asset or liability;

- inputs that are derived principally from or corroborated by observable market data

by correlation or other means.

Ifthe asset or liability has a specified (contractual) term, the level 2 input must be

observable for substantially the full term of the asset or liability.

Level 3 - inputs to the valuation methodology are unobservable and significant to the fair

value measurement.

The asset or liability's fair value measurement level within the fair value hierarchy is

based on the lowest level of any input that is significant to the fair value measurement.

Valuation techniques used need to maximize the use of observable inputs and minimize

the use of unobservable inputs.

The preceding methods described may produce a fair value calculation that may not be

indicative of net realizable value or reflective of future fair values. Furthermore, although

the Board believes its valuation methods are appropriate and consistent with other

market participants, the use of different methodologies or assumptions to determine fair

value of certain financial instruments could result in a different fair value measurement at

the reporting date.

Advertising - In accordance with its mission, the Board has approved the development of

direct and nondirect response advertising and promotional activities. All costs related to

these activities are charged to expense as incurred.
National Fluid Milk Processor Promotion Board

Notes to Financial Statements

December 31, 2013 and 2012

Note 2: Cash and cash equivalents:

At December 31, 2013 and 2012, the bank balance of the Board's cash deposits was

entirely covered by federal depository insurance or was covered by collateral held by the

Board's agent in the Board's name. Included in cash and cash equivalents is

$2,500,000 of Board designated cash reserves (unrestricted net assets) at December

31, 2013 and 2012.

Note 3: Property and equipment:

Property and equipment consist of the following as of December 31:

2013 2012

Furniture and fixtures

Leasehold improvements

Office equipment

Less: accumulated depreciation

$ 30,261 $ 33,261

130,324 130,324

112,797 161,891

273,382 325,476

(216,825) (239,999)

$ 56,557 $ 85,477

Depreciation expense for the years ended December 31, 2013 and 2012 was $31,017

and $40,563, respectively.

Note 4: Capital lease:

In January 2012, the Company entered into a new capital lease for a copier at an

effective interest rate of 11.85%. Beginning March 17, 2012, the terms of the lease

require 47 monthly payments of $653, plus additional usage charges as outlined in the

agreement. The lease is effective through January 17, 2016.

Future minimum lease payments under the capital lease are as follows:

2014

2015

2016

Total minimum lease payments

Less amount representing interest

Present value of minimum lease payments

$ 7,844

7,844

655

16,343

(1,924)

14,419
National Fluid Milk Processor Promotion Board

Notes to Financial Statements

December 31, 2013 and 2012

Note 5: Line of credit:

During December 2011, the Board obtained a revolving line of credit for up to

$2,500,000. The line provides for advances from time to time, but must be paid down to

$-0- and remain at $-0- for 90 consecutive days at least once every 12 months. Interest

is accrued on outstanding balances at prime minus 0.25% with an interest floor of

3.75%. The line is secured by all the assets of the Board including cash, assessments,

furniture, fixtures, equipment and personal property. The Board is also subject to

reporting requirements and financial covenants as outlined in the line of credit

agreement. The line of credit agreement expires in December 2014. The amount

outstanding on the line of credit at December 31, 2013 and 2012 was $-0-.

Note 6: Compliance matters:

In accordance with the Act and the Order, effective one year after the date of the

establishment of the Board, the Board shall not spend in excess of 5% of the

assessments collected for the administration of the Board. For the years ended

December 31, 2013 and 2012, the Board did not exceed this limitation.

Note 7: Program administration:

During 2013 and 2012, the Board entered into agreements with various organizations to

develop programs for advertising, promotion, consumer education and certain minority

initiatives in connection with the national fluid milk campaign. The funding levels vary for

the various organizations and are subject to approval. The organizations and the

expiration dates of the agreements are as follows:

Agency Expiration

Draftfcb, Inc. Until Terminated

Deutsch, Inc.* Until Terminated

Machado/Garcia-Serra, LLC Until Terminated

CMGRP, Inc. d/b/a Weber Shandwick Until Terminated

*Effective January 1, 2014 Lowe & Partners Worldwide, Inc. and the Campbell-Ewald

Company merged operations and certain clients of the New York office of Deutsch were

moved to the newly formed entity. The Board was one of these clients.

10
National Fluid Milk Processor Promotion Board

Notes to Financial Statements

December 31, 2013 and 2012

Note 7: Program administration: (continued)

To assist the above organizations in the development of advertising, promotion,

consumer education and certain minority initiatives in connection with the national fluid

milk campaign, the Board has also entered into numerous other smaller contracts

throughout the years ended December 31, 2013 and 2012. in addition, the Board has

two master service agreements with two contractors which allow for scopes of work to be

attached on an as needed basis by the Board.

In October 2007, the Board entered into two agreements, an office services and a

professional services agreement, with the International Dairy Foods Association (IDFA).

The duration of the office services agreement was from October 1, 2007 through

September 30, 2008 and was subsequently extended multiple times through December

31, 2014. Under this agreement, IDFA provides certain administrative services and

resources to the Board. Fees for these services are based on predetermined amounts

totaling $4,370 per month plus out-of-pocket costs and hourly charges for additional

services. During the years ended December 31, 2013 and 2012, the Board incurred

$57,051 and $63,868, respectively, under this agreement.

The duration of the professional services agreement was from October 1, 2007 through

September 30, 2009 and was subsequently extended multiple times. The current

agreement is effective until terminated. The agreement allows for IDFA to assist the

Board in performing general services pursuant to its responsibility under the Fluid Milk

Promotion Act of 1990. General services are set forth in greater detail in the agreement,

but include areas such as:

Medical and nutritional

Communications and public relations

Sales and econometric analysis

In house legal services

Specialized IT services

Other services as requested

Fees for these services are based on hourly rates ranging from $240 to $360 plus out-ofpocket costs. Total costs incurred under this agreement were $116,162 and $128,925

for the years ended December 31, 2013 and 2012, respectively.

11
National Fluid Milk Processor Promotion Board

Notes to Financial Statements

December 31, 2013 and 2012

Note 8: Commitments:

In 2009, the Board entered into an employment agreement with the Chief Executive

Officer (CEO). The agreement ran from March 1, 2009 to February 28, 2011, extended

through February 28, 2014, and provided for annual compensation, benefits, and

increases based upon the CEO's annual performance evaluation. The CEO resigned in

November 2013 and is entitled to receive severance compensation and other benefits as

outlined in the agreement.

In 2013, the Company entered into a severance agreement with a vice president of

marketing. The agreement provided for severance compensation and other benefits as

described in the agreement. The agreement was fulfilled before year end.

During February 2012, the Board entered into a one-year contract with Phalanx

Technology Group. The contract has been extended on a month to month basis since

expiration. The contract requires monthly payments of $750 for standard information

technology support as outlined in the contract. All other work is billed at predetermined

hourly rates.

Note 9: Operating leases:

In October 2007, the Board entered into a 20-month sublease agreement with IDFA,

which has been extended through December 31, 2015. Under the terms of the sublease,

the Board is required to pay escalating monthly base rent plus additional monthly

charges equal to a pro rata portion of the building's operating expenses and other

charges as defined in the sublease agreement. The Board may terminate the sublease

agreement effective June 30 of any year by providing six months advance notice. In the

event of termination, monthly rent payments will increase up to the termination date as

outlined in the agreement.

The Board incurred $140,781 and $136,680 of rental expense during the years ended

December 31, 2013 and 2012, respectively.

The future minimum payments under this sublease for the years ending December 31

are as follows:

2014 $ 145,004

2015 149,359

Total $ 294,363

12
National Fluid Milk Processor Promotion Board

Notes to Financial Statements

December 31, 2013 and 2012

Note 10: Transactions with the United States Department of Agriculture:

Under the provisions of the Act and the Order, the Board is required to pay the United

States Department of Agriculture certain fees for oversight and evaluation costs. These

costs were $476,285 and $456,045 during 2013 and 2012, respectively.

Note 11: Related party activity:

Accounting services for the Board are performed by Bridgewater Wealth & Financial

Management, LLC (Bridgewater). The agreement is effective through December 31,

2013. The costs of these services were $443,500 and $400,000 during 2013 and 2012,

respectively. A principal of Bridgewater serves as the Chief Financial Officer of the

Board and receives compensation for services performed. At December 31, 2013 and

2012, the total amount due to Bridgewater was $43,500 and $-0-, respectively.

Note 12: Retirement plan:

In October 2007, the Board adopted a safe harbor 401 (k) plan. An employee is eligible

to participate in the plan once the service requirement is completed as defined in the

plan document. If an employee was employed by the Board on October 1, 2007, the

service requirement was waived and those employees were immediately eligible to

participate. Participants may elect to defer a portion of their salary and contribute it to

the retirement plan. Additionally, the Board will make a safe harbor matching

contribution equal to 100% of deferrals that do not exceed 3% of the employees'

compensation plus a 50% match for deferrals between 3% - 5% of employees'

compensation. However, for any plan year when the plan is not a "safe harbor" plan, the

contribution is at the Board's discretion. The Board's contribution totaled $118,362 and

$130,631 for the years ended December 31, 2013 and 2012, respectively.

Note 13: Concentration:

Payments to three agencies represented approximately 78% of total program expenses

for the year ended December 31, 2013. Accounts payable to three agencies represented

approximately 76% of total accounts payable at December 31, 2013.

Payments to three agencies represented approximately 83% of total program expenses

for the year ended December 31, 2012. Accounts payable to two agencies represented

approximately 48% of total accounts payable at December 31, 2012.

13
National Fluid Milk Processor Promotion Board

Notes to Financial Statements

December 31, 2013 and 2012

Note 14: Subsequent events:

Subsequent events have been evaluated through March 27, 2014, which is the date the

financial statements were available to be issued.

14
SUPPLEMENTARY

INFORMATION
National Fluid Milk Processor Promotion Board

Schedule of Revenues and Expenses

Actual Compared to Budget

(Budget Basis)

For the year ended December 31, 2013

Unexpended/ Actual

Amended Current Year Over (Under)

Budget Actual Budget

(Unaudited)

Revenues:

Assessments $ 101,000,000 $ 100,273,305 $ (726,695)

Late payment charges - 54,719 54,719

Interest income 20,000 19,801 (199)

Other -41,280

100,389,105

41,280

Total revenues 101,020,000 (630,895)

Expenses:

Program expenses:

Program - current year 92,006,100 87,988,237 (4,017,863)

Program - prior years 2,892,999 1,644,968 (1,248,031)

Total program expenses 94,899,099 89,633,205 (5,265,894)

Other expenses:

California grant 9,750,000 9,319,585 (430,415)

Administrative 2,463,050 2,543,510 80,460

USDA oversight 500,000 476,285 (23,715)

Loss on disposal of property - 3,153 3,153

Interest expense 2,100 2,085 (15)

Total other expenses 12,715,150

107,614,249

12,344,618 (370,532)

Total expenses 101,977,823 (5,636,426)

Unallocated budget _ - -

Excess of expenses over revenues $ (6,594,249) $ (1,588,718) $ (5,005,531)

See Independent Auditor's Report

16
For the year ended December 31, 2013

National Fluid Milk Processor Promotion Board

Schedule of Program Expenses

Actual Compared to Budget

(Budget Basis)

Current Year Expended Actual Prior Year Expended Actual Total

Amended Current Year Over (Under) Unexpended Prior Year Over (Under) Program

Budget Actual Budget Budget Actual Budget Activity

(Unaudited) (Unaudited)

Meals at home - general market $ 53,500,000 $ 52,946,831 $ (553,169) $ 601,619 $ 449,554 $ (152,065) $ 53,396,385

Refuel 17,116,000 15,987,239 (1,128,761) 640,086 248,379 (391,707) 16,235,618

Meals at home - Hispanic 8,000,000 7,875,322 (124,678) 296,360 (8,038) (304,398) 7,867,284

Market research 4,000,000 3,380,911 (619,089) 440,217 276,821 (163,396) 3,657,732

Business development 9,345,100 7,759,228 (1,585,872) 834,268 678,252 (156,016) 8,437,480

Program measurement 45,000 38,706 (6,294) 80,449 - (80,449) 38,706

Total program expenses $ 92,006,100 $ 87,988,237 $ (4,017,863) $ 2,892,999 $ 1,644,968 $ (1,248,031) $ 89,633,205

See Independent Auditor's Report

17
National Fluid Milk Processor Promotion Board

Schedule of Administrative Expenses

Actual Compared to Budget

(Budget Basis)

For the year ended December 31, 2013

Current Year Actual

Amended Current Year Over (Under)

Budget Actual Budget

(Unaudited)

Board meeting expenses $ 288,000 $ 298,665 $ 10,665

Staff salaries and benefits:

Staff salaries and benefits 1,880,500 1,735,785 (144,715)

Program management salary

allocation (1,675,000) (1,415,470) 259,530

Total staff salaries and benefits 205,500 320,315 114,815

Finance and administration:

Contract staff 160,000 160,000 -

Consultants - HR, IT, strategic 43,750 40,005 (3,745)

Financial services 443,500

647,250

443,500

643,505

-

Total finance and administration (3,745)

Other operating expenses:

Audits 65,000 67,562 2,562

Depreciation 33,400 31,017 (2,383)

Employee development 40,000 38,521 (1,479)

Insurance 40,000 33,581 (6,419)

Legal 500,000 500,000 -

Miscellaneous 22,000 20,610 (1,390)

Office facilities 140,800 140,781 (19)

Office supplies and expense 35,000 16,822 (18,178)

Payroll service and

pension administration 9,000 7,998 (1,002)

Postage and delivery 12,500 7,754 (4,746)

Staff travel 343,600 311,045 (32,555)

Support and maintenance 51,000 82,551 31,551

Telephone 30,000 22,783 (7,217)

Total other operating expenses 1,322,300 1,281,025 (41,275)

Total administrative expenses $ 2,463,050 $ 2,543,510 $ 80,460

See Independent Auditor's Report

18
National Fluid Milk Processor Promotion Board

Schedule of Cash Receipts and Disbursements

For the year ended December 31, 2013

Cash receipts from operations:

Assessments

Late payment charges

Interest income

Other

Cash receipts from operations

Cash disbursements for operations

Cash receipts and disbursements from investing activities:

Purchase of property and equipment

Cash disbursements for financing activities:

Payments made on capital lease

Excess of receipts over disbursements

Cash and cash equivalents - beginning

Cash and cash equivalents - ending

See Independent Auditor's Report

19

$ 99,917,151

54,719

19,801

41,280

100,032,951

(95,149,955)

(5,250)

(5,760)

4,871,986

11,532,679

$ 16,404,665
PART II
SNYDERCOHN

CPAs and Business Advisors

Independent Auditor's Report on Internal Control

Over Financial Reporting and on Compliance and Other Matters

Based on an Audit of Financial Statements Performed in Accordance

with Government Auditing Standards

To the Board of Directors

National Fluid Milk Processor

Promotion Board

Washington, D.C.

We have audited, in accordance with auditing standards generally accepted in the United States of

America and the standards applicable to financial audits contained in Government Auditing

Standards, issued by the Comptroller General of the United States, the financial statements of the

National Fluid Milk Processor Promotion Board (the Board) which comprise the statements of

financial position as of December 31, 2013 and 2012, and the related statements of revenues,

expenses and changes in net assets, and cash flows for the years then ended, and the related

notes to the financial statements and have issued our report thereon dated March 27, 2014.

Internal Control Over Financial Reporting

In planning and performing our audits of the financial statements, we considered the Board's internal

control over financial reporting (internal control) to determine the audit procedures that are

appropriate in the circumstances for the purpose of expressing our opinion on the financial

statements, but not for the purpose of expressing an opinion on the effectiveness of the Board's

internal control. Accordingly, we do not express an opinion on the effectiveness of the Board's

internal control.

A deficiency in internal control exists when the design or operation of a control does not allow

management or employees, in the normal course of performing their assigned functions, to prevent,

or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or

combination of deficiencies, in internal control, such that there is a reasonable possibility that a

material misstatement of the Board's financial statements will not be prevented, or detected and

corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies,

in internal control that is less severe than a material weakness, yet important enough to merit

attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of

this section and was not designed to identify all deficiencies in internal control that might be material

weaknesses or significant deficiencies. Given these limitations, during our audits we did not identify

any deficiencies in internal control that we consider to be material weaknesses. However, material

weaknesses may exist that have not been identified.

11200RockvillePike, Suite 41 5, North Bethesda, MD 20852 • Phone 301-652-6700 • Fax 301-986-1028 • www.snydercohn.com

Snyder Cohn is an independent member of Jj J\_ -IV Firms in principal cities worldwide.

w
To the Board of Directors

National Fluid Milk Processor

Promotion Board

Page two

During the course of the audit, we noted that the employee who is responsible for releasing the wire

payments maintained their login information (username and password) for the bank account on an

index card with the bank token in an unlocked desk drawer. Controls over cash disbursements

would be improved ifthis information was separated and maintained in a more secure fashion. Upon

being notified of the deficiency, the employee indicated they would maintain this information in a

locked drawer from this point forward.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Board's financial statements are free

of material misstatement, we performed tests of its compliance with certain provisions of laws,

regulations, contracts, and agreements, noncompliance with which could have a direct and material

effect on the determination of financial statement amounts. However, providing an opinion on

compliance with those provisions was not an objective of our audits, and accordingly, we do not

express such an opinion.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and

compliance and the results of that testing, and not to provide an opinion on the effectiveness of the

Board's internal control or on compliance. This report is an integral part of an audit performed in

accordance with Government Auditing Standards in considering the Board's internal control and

compliance. Accordingly, this communication is not suitable for any other purpose.

This report is intended solely for the information of the Board of Directors of the National Fluid Milk

Processor Promotion Board, management, and the Dairy Programs, Promotion and Research

Branch of the Agricultural Marketing Service Agency of the United States Department of Agriculture,

and is not intended to be and should not be used by anyone other than these specified parties.

y^rujdcx Crir^ t"Pc

SNYDERCOHN, PC

North Bethesda, Maryland

March 27, 2014
PART III
SNYDERCOHN

CPAs and Business Advisors

To the Board of Directors

National Fluid Milk Processor

Promotion Board

Washington, D.C.

We have audited, in accordance with auditing standards generally accepted in the United States of

America and the standards applicable to financial statement audits contained in Government

Auditing Standards issued by the Comptroller General of the United States, the statements of

financial position of the National Fluid Milk Processor Promotion Board as of December 31, 2013

and 2012, and the related statements of revenues, expenses and changes in net assets and cash

flows for the years then ended, and the related notes to the financial statements and have issued

our report thereon dated March 27, 2014. The financial statements were prepared in conformitywith

accounting principles generally accepted in the United States of America.

In connection with our audits, nothing came to our attention, insofar as it relates to accounting

matters, that causes us to believe that the National Fluid Milk Processor Promotion Board:

• Failed to comply with laws and regulations applicable to the National Fluid Milk Processor

Promotion Board;

• Failed to comply with Section 1160.212 of the Fluid Milk Promotion Order, relating to the

use of assessment funds for the purpose of influencing governmental policy or action;

• Expended assessment funds for purposes other than those authorized by the Fluid Milk

Promotion Act and the Fluid Milk Promotion Order;

• Expended or obligated assessment funds on any projects prior to the fiscal year in which

those funds were authorized to be expended by the National Fluid Milk Processor

Promotion Board's approved Budget and Marketing Plan;

• Did not adhere to the original or amended Budget and Marketing Plan for the years ended

December 31, 2013 and 2012;

• Did not obtain a written contract or agreement with any person or entity providing goods or

services to the National Fluid Milk Processor Promotion Board;

• Failed to comply with Section 1999H, paragraph (g) of the Fluid Milk Promotion Order,

relating to the limitations on the types of investments which may be purchased by the

National Fluid Milk Processor Promotion Board and the insurance or collateral that must be

obtained for all National Fluid Milk Processor Promotion Board deposits and investments;

11200RockvillePike, Suite 415, North Bethesda, MD20852 • Phone 301-652-6700 • Fax 301-986-1028 • www.snydercohn.com

Snyder Cohnisan independent memberof _D JV. IV Firms in principal cities worldwide.

w
To the Board of Directors

National Fluid Milk Processor

Promotion Board

Page two

Failed to comply with internal controls other than described below;

Failed to comply with disclosure requirements for lease commitments;

Failed to comply with standards established requiring signed contracts, USDA approval

letters (if necessary), contract term documentation within the file, and CFO's signature on

the Board approval letter;

Failed to comply with the by-laws of the National Fluid Milk Processor Promotion Board or

any other policy of the National Fluid Milk Processor Promotion Board, specifically as they

relate to all financial matters, including time and attendance, and travel; or

Failed to comply with USDA guidelines for AMS Oversight of Commodity Research and

Promotion Programs other than described below.

During the course of our audits, the following compliance matters came to our attention, insofar as

they relate to internal controls.

While testing cash disbursements, we noted the following:

• One instance totaling $732,807 in which a wire request did not contain the appropriate

documentation indicating who prepared the wire request. In addition, we noted one

instance totaling $53,362 where a wire disbursement did not include appropriate

documentation indicating that the wire request was reviewed and was released by the

designated individual.

• One instance totaling $4,500 in which a check was issued to an incorrect vendor. This

matter was subsequently corrected by having the incorrect check returned, voided, and

management issuing a new check to the correct vendor.

• One employee's reimbursement totaling $111 did not include appropriate documentation

that the reimbursement had been reviewed prior to it being processed for payment;

however, the payment voucher for the employee's reimbursement did show indication of it

being reviewed prior to payment.
To the Board of Directors

National Fluid Milk Processor

Promotion Board

Page three

In addition, we noted several transactions in which the agency was erroneously reimbursed for costs

incurred either due to improper receipt documentation and/or personal expenses as described

below:

• Dramamine for $8;

• 12 spouses' meals totaling $117; and

• In-room dining without a detail receipt totaling $115.

These items were brought to management's attention during the course of the audit and as a result

the next wire payment was reduced by the above amounts except the in-room dining charge. This

credit was limited to $90 as it is the Board's policy to limit reimbursements without a receipt to $25.

While employees are allowed to have alcohol as part of their meal, the Board does require that it be

consumed with a meal rather than with an appetizer or stand alone. During the course of our audit,

we noted one situation where an employee was reimbursed for alcohol that was consumed with an

appetizer rather than with a meal. This was brought to management's attention and the employee

was reminded of the Board's policy by the CFO.

Additionally, we noted one instance in which one of the agencies was erroneously paid twice due to

the fact that the cover memo billing report was not correctly updated from the prior month. This was

caught by management the following day and the funds were returned to the Board (totaling

$329,186).

During the course of our audits, the following compliance matters came to our attention, insofar as it

relates to the USDA guidelines for AMS Oversight of Commodity Research and Promotion

Programs. However, our audits were not directed primarily toward obtaining knowledge of such

noncompliance.

Business credit cards are used for personal expenses on certain occasions. When this occurs, the

Board is reimbursed for the personal expenses by the respective employee within a reasonable time

period. The Board believes it is impractical to use two different credit cards to split one bill which

includes both business and personal charges. In addition, there is a strict approval and review

process of each employee's expense report and its supporting receipt documentation to verifythere

are no personal expenses charged that are not being reimbursed by the employee.

The Board also pays for spouses' dinners at Board meetings and feels it is reasonable to do so as

Board members volunteer their time away from home. Additionally, we noted one instance as

described above which included payment for spouses' meals.

The Board's policy regarding donations utilizing funds derived from assessments is not a written

policy.
To the Board of Directors

National Fluid Milk Processor

Promotion Board

Page four

This report is intended solely for the information and use of the National Fluid Milk Processor

Promotion Board, management, and the Dairy Programs, Promotion and Research Branch of the

Agricultural Marketing Service Agency of the United States Department of Agriculture and is not

intended to be and should not be used by anyone other than these specified parties.

SNYDER COHN, PC

North Bethesda, Maryland

March 27, 2014
National Fluid Milk Processor

Promotion Board

Financial Statements

and

Independent Auditor's Report

Years Ended December 31, 2014 and 2013

1250 H Street, N.W., Suite 950

Washington, D.C. 20005
Parti

Financial Statements and Independent Auditor's

Report for the Years Ended December 31, 2014 and

2013

Part II

Independent Auditor's Report on Internal Control Over

Financial Reporting and on Compliance and Other

Matters Based on an Audit of Financial Statements

Performed in Accordance with Government Auditing

Standards

Part

Independent Auditor's Comments on Compliance with

Government Auditing Standards
PARTI
Table of Contents

Independent Auditor's Report 1-2

Financial Statements:

Statements of Financial Position 3

Statements of Revenues, Expenses and Changes in Net Assets 4

Statements of Cash Flows 5

Notes to Financial Statements 6-14

Supplementary Information:

Schedules of Actual Compared to Budget:

Revenues and Expenses (Budget Basis) 16

Program Expenses (Budget Basis) 17

Administrative Expenses (Budget Basis) 18

Schedule of Cash Receipts and Disbursements 19
SNYDERCOHN

CPAs and Business Advisors

Independent Auditor's Report

To the Board of Directors

National Fluid Milk Processor

Promotion Board

Washington, D.C.

Report on the Financial Statements

We have audited the accompanying financial statements of the National Fluid Milk Processor Promotion

Board, which comprise the statements of financial position as of December 31, 2014 and 2013, and the

related statements of revenues, expenses and changes in net assets, and cash flows for the years then

ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in

accordance with accounting principles generally accepted in the United States of America; this includes the

design, implementation, and maintenance ofinternal control relevant to the preparation and fairpresentation

of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

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 UnitedStates ofAmerica and the

standards applicable to financial audits contained in Government Auditing Standards, issued by the

Comptroller General of the United States. Those standards require that we plan and perform the audits to

obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

financial statements. The procedures selected depend on the auditor's judgment, including the assessment of

the risksof material misstatement ofthe financial statements, whether due to fraud or error. Inmaking those

risk assessments, the auditor considers internal control relevant to the entity's preparation and fair

presentation of the financial statements in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal

control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of

accounting policies used and the reasonableness ofsignificant accounting estimates made bymanagement,

as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial

position of the National Fluid Milk Processor Promotion Board as of December 31, 2014 and 2013, and the

results of its operations and its cash flows for the years then ended in conformity with accounting principles

generally accepted in the United States of America.

11200RockvillePike.Suite 415, North Bethesda, MD 20852 • Phone 301-652-6700 • Fax 301-986-1028 • www.snydercohn.com

Snyder Cohn is an independent member of JL> JV JK. Firms in principal cities worldwide. a a
To the Board of Directors

National Fluid Milk Processor

Promotion Board

Page two

Report on Supplementary Information

Our audits were conducted for the purpose of forming an opinion on the financial statements taken as a whole.

The accompanying supplementary information shown on pages 16 through 19 is presented for purposes of

additional analysis and is not a required part of the financial statements. Such information is the responsibility

of management and was derived from and relates directly to the underlying accounting and other records used

to prepare the financial statements. The information, other than the budget amounts, has been subjected to

the auditing procedures applied in the audit of the financial statements and certain additional procedures,

including comparing and reconciling such information directly to the underlying accounting and other records

used to prepare the financial statements or to the financial statements themselves, and other additional

procedures in accordance with auditing standards generally accepted in the United States of America. In our

opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

Budget amounts have not been subjected to the auditing procedures applied in the audits of the financial

statements and, accordingly, we do not express an opinion or provide any assurance on these amounts.

Report Issued in Accordance with Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued a report dated March 27, 2015 on

our consideration of the National Fluid Milk Processor Promotion Board's internal control over financial

reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, agreements,

and other matters. The purpose of this report is to describe the scope of our testing of internal control over

financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal

control over financial reporting or on compliance. This report is an integral part of an audit performed in

accordance with Government Auditing Standards and should be considered in assessing the results of our

audits.

jliA, Cfrksn, f*CSNYDERCOHN, PC

North Bethesda, Maryland

March 27, 2015
National Fluid Milk Processor Promotion Board

Statements of Financial Position

December 31 2014 2013

Assets

Current assets:

Cash and cash equivalents

Assessments receivable, net

Future year costs

Prepaid expenses

Other receivables

Total current assets

Property and equipment, net

Total assets

Liabilities and net assets

Current liabilities:

Accounts payable and accrued expenses $ 8,923,378 $ 14,227,903

Coupon liability 278,700

Deferred compensation, related party - 21,750

Capital lease, current portion 5,264 6.480

Total current liabilities 9,207,342 14,256,133

Other liabilities:

Capital lease, net of current portion 26,290 7.939

Total liabilities 9,233,632 14,264.072

Commitments

Net assets:

Board designated for contingencies 2,500,000 2,500,000

Undesignated 12,073.716 10.617,203

Total net assets 14,573.716 13.117.203

Total liabilities and net assets $ 23,807,348 $ 27,381,275

$ 14,620.286

9,058.779

19,825

49.192

$

$

16,404,665

9,567.578

1.240,848

37,214

74,413

23,748,082

59.266

$ 23,807,348

27,324,718

56,557

27,381,275

See Accompanying Notes

3
National Fluid Milk Processor Promotion Board

Statements of Revenues, Expenses and Changes in Net Assets

For the years ended December 31

Revenues:

Assessments

Late payment charges

Interest income

Other

Total revenues

Expenses:

Program expenses:

Meals at home

Built with chocolate milk

Strategy and market research

Total program expenses

Other expenses:

California grant

Administrative

USDA oversight

USDA compliance audit

Loss on disposal of property and equipment

Interest expense

Total other expenses

Total expenses

Excess of revenues over expenses

(expenses over revenues)

Net assets - beginning

Net assets - ending

2014 2013

$ 97,271,778

28,225

16,540

9,228

$ 100,273,305

54,719

19,801

41,280

97,325.771 100,389,105

62,860,280

17,760,303

2,805,609

83,426,192

66.913.738

18,923,294

3.796.173

89,633.205

9,221,339

2,881,420

243,641

93,896

1,004

1.766

12,443,066

9,319,585

2,543,510

397,216

79,069

3,153

2,085

12,344.618

95,869,258 101,977,823

1,456,513 (1,588,718)

13,117,203 14,705,921

$ 14,573.716 $ 13,117,203

See Accompanying Notes

4
National Fluid Milk Processor Promotion Board

Statements of Cash Flows

For the years ended December 31 2014 2013

Cash flows from operating activities:

Excess of revenues over expenses (expenses over revenues) $

Adjustments to reconcile excess of revenues over expenses

(expenses over revenues) to net cash

provided by (used in) operating activities:

Depreciation

Loss on disposal of property and equipment

Changes in assets and liabilities:

Decrease (increase) in assessments receivable

Decrease in future year costs

Decrease (increase) in prepaid expenses

Decrease (increase) in other receivables

Increase (decrease) in accounts payable and

accrued expenses

Increase in coupon liability

Increase (decrease) in deferred compensation

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Payments made for property and equipment

Cash flows from financing activities:

Payments made on capital lease

Net increase (decrease) in cash and

cash equivalents

Cash and cash equivalents - beginning

Cash and cash equivalents - ending

$ 1,456.513 $ (1,588,718)

31,075

1,004

31,017

3,153

508,799

1,221,023

(11,978)

74,413

(283,739)

2,454,429

3,230

(72,415)

(5,304,525)

278,700

(21,750)

(1,766,726)

4,333,539

2.500

4,882,996

(11,484) (5,250)

(6.169) (5.760)

(1.784.379) 4,871,986

16,404.665 11,532,679

$ 14,620,286 $ 16,404,665

Supplemental disclosure of cash flow information:

Cash paid during the year for:

Interest $ 1,766 $ 2,085

Supplemental schedule of noncash investing

and financing activities:

Capital lease obligation incurred

in exchange for copier 32,378

Forgiveness of debt for copier (Note 4) 9,074

See Accompanying Notes

5
National Fluid Milk Processor Promotion Board

Notes to Financial Statements

December 31, 2014 and 2013

Note 1: Summary of significant accounting policies:

The National Fluid Milk Processor Promotion Board (the Board) was established

pursuant to the authority of the Fluid Milk Promotion Act (the Act) of 1990, Subtitle H of

the Title XIX of the Food, Agriculture, Conservation and Trade Act of 1990. The purpose

ofthe Board is to administer the provisions ofthe Fluid Milk Promotion Order (the Order)

established pursuant to the Act which establishes an orderly procedure for the

development, and the financing through an assessment, of a coordinated program of

advertising, promotion, and education for fluid milk products.

The Act required that a referendum be conducted among processors to determine if a

majority favored implementing the fluid milk program. In the October 1993 initial

referendum, the majority of processors voted to approve the implementation of the fluid

milk program. A continuation referendum was held in February-March 1996. Of the

processors voting in that referendum, the majority favored continuation of the fluid milk

program. In November 1998, another continuation referendum was held at the request

of the Board and processors voted to continue the fluid milk program as established by

the Order. The Act and Order state that the United States Department of Agriculture

(USDA) will hold future referenda upon the request of the Board, processors

representing 10% or more of the volume of fluid milk products marketed by those

processors voting in the last referendum, or when called by the U.S. Secretary of

Agriculture.

For financial reporting purposes, the Board is considered a quasi-governmental agency

of the U.S. government. As such, it is exempt from income taxes under the Internal

Revenue Code. The USDA and its affiliated agencies operate in an oversight capacity

of the Board.

The financial statements of the Board are prepared in conformity with accounting

principles generally accepted in the United States of America. To facilitate the

understanding of data included in the financial statements, summarized below are the

more significant accounting policies.

Assessments - Assessments are generated from any person who processes and

markets commercially more than 3,000,000 pounds of fluid milk per month by a 20-cent

per hundred weight assessment on fluid milk products processed and marketed

commercially in consumer-type packages in the 48 contiguous United States and the

District of Columbia. Assessment revenue is recognized in the month in which the fluid

milk product is processed. Late payment charges are assessed, as provided under the

Act, to processors who do not remit monthly assessments within 30 days following the

month of assessment.
National Fluid Milk Processor Promotion Board

Notes to Financial Statements

December 31, 2014 and 2013

Note 1: Summary of significant accounting policies: (continued)

Assessments (continued) - The late payment charge is equal to 1.50% of unpaid

assessments and accrues monthly. For both 2014 and 2013, an allowance for doubtful

accounts of $-0- has been established for those amounts where the late charges are

being appealed.

California grant - In accordance with the Act, the Board is required to provide a grant to a

third party equal to 80% of the assessments collected from Regions 14 and 15 to

implement a fluid milk promotion campaign. Disbursements under these provisions are

recorded as "California grant" in the accompanying financial statements.

Cash equivalents - For purposes of the statements of cash flows, the Board considers all

highly liquid investments with an original maturity of three months or less to be cash

equivalents.

Future year costs - Future year costs represent costs incurred for the next budget year's

projects.

Assessments receivable - An allowance for uncollectible accounts has been established

for those assessments which management has determined as uncollectible. The total

allowance for uncollectible accounts at December 31,2014 and 2013 was $764,664 and

$275,515, respectively.

Property and equipment - Property and equipment are stated at cost. Depreciation is

provided over the estimated useful lives of the related assets on a straight-line basis.

Expenditures for repairs and maintenance are charged to expense as incurred.

Use of estimates - The Board has made certain estimates and assumptions that affect

the reported amounts of assets and liabilities and the disclosure of contingent assets

and liabilities at the date of the financial statements, and the reported amounts of

revenue and expenses during the period. Actual results could differ from those

estimates.

Investments - The Board is required to followthe Agricultural Marketing Service (AMS)

investment policy. Accordingly, the Board is authorized to invest in securities consisting

of obligations issued or fully insured or guaranteed by the U.S. or any U.S. government

agency, including obligations of government-sponsored corporations that mature within

one year or less from the date of purchase.

Reclassifications - Certain accounts in the prior year Statement of Revenues, Expenses

and Changes in Net Assets have been reclassified for comparative purposesto conform

with the presentation in the current year statement. Total net assets and excess of

expenses over revenues are unchanged due to these reclassifications.
National Fluid Milk Processor Promotion Board

Notes to Financial Statements

December 31, 2014 and 2013

Note 1: Summary of significant accounting policies: (continued)

Fair value measurements - The FASB Accounting Standards Codification (ASC) 820,

Fair Value Measurements and Disclosures, provides the framework for measuring fair

value. That framework provides a fair value hierarchy that prioritizes the inputs to

valuation techniques used to measure fair value. The hierarchy gives the highest priority

to unadjusted quoted prices in active markets for identical assets or liabilities (level 1

measurements) and the lowest priority to unobservable inputs (level 3 measurements).

The three levels of the fair value hierarchy under FASB ASC 820 are described as

follows:

Level 1 - inputs to the valuation methodology are unadjusted quoted prices for identical

assets or liabilities in active markets that the Board has the ability to access.

Level 2 - inputs to the valuation methodology include:

- quoted prices for similar assets or liabilities in active markets;

- quoted prices for identical or similar assets or liabilities in inactive markets;

- inputs other than quoted prices that are observable for the asset or liability;

- inputs that are derived principally from or corroborated by observable market data

by correlation or other means.

If the asset or liability has a specified (contractual) term, the level 2 input must be

observable for substantially the full term of the asset or liability.

Level 3 - inputs to the valuation methodology are unobservable and significant to the fair

value measurement.

The asset or liability's fair value measurement level within the fair value hierarchy is

based on the lowest level of any input that is significant to the fair value measurement.

Valuation techniques used need to maximize the use of observable inputs and minimize

the use of unobservable inputs.

The preceding methods described may produce a fair value calculation that may not be

indicative of net realizable value or reflective of future fair values. Furthermore, although

the Board believes its valuation methods are appropriate and consistent with other

market participants, the use of different methodologies or assumptions to determine fair

value of certain financial instruments could result in a different fair value measurement at

the reporting date.

Advertising - In accordance with its mission, the Board has approved the development of

direct and nondirect response advertising and promotional activities. All costs related to

these activities are charged to expense as incurred.
National Fluid Milk Processor Promotion Board

Notes to Financial Statements

December 31, 2014 and 2013

Note 2: Cash and cash equivalents:

At December 31, 2014 and 2013, the bank balance of the Board's cash deposits was

entirely covered by federal depository insurance or was covered by collateral held bythe

Board's agent in the Board's name. Included in cash and cash equivalents is

$2,500,000 of Board designated cash reserves (unrestricted net assets) at December

31, 2014 and 2013.

Note 3: Property and equipment:

Property and equipment consist of the following as of December 31

2014 2013

Furniture and fixtures

Leasehold improvements

Office equipment

Less: accumulated depreciation

$ 30,261 $ 30,261

134,790 130,324

117,437 112,797

282,488 273,382

(223,222) (216,825)

$ 59,266 $ 56,557

Depreciation expense for the years ended December 31, 2014 and 2013 was $31,075

and $31,017, respectively.

Note 4: Capital lease:

In January 2012, the Company entered into a capital lease for a copier at an effective

interest rate of 11.85%. Beginning March 17, 2012, the terms of the lease required 47

monthly payments of $653, plus additional usage charges as outlined in the agreement.

The lease was effective through January 17, 2016.

In October 2014, the Company exchanged its 2012 copier for a new copier by entering

into a new capital lease with an effective interest rate of 10.73%. The terms of the lease

require 60 monthly payments of $700, plus additional usage charges as outlined in the

agreement. The lease is effective through October 1, 2019.
National Fluid Milk Processor Promotion Board

Notes to Financial Statements

December 31, 2014 and 2013

Note 4: Capital lease: (continued)

Future minimum lease payments under the capital lease are as follows:

2015

2016

2017

2018

2019

$ 8,395

8,395

8,395

8,395

6,996

40,576

(9,022)

$ 31,554

Total minimum lease payments

Less amount representing interest

Present value of minimum lease payments

Note 5: Line of credit:

During December 2011, the Board obtained a revolving line of credit for up to

$2,500,000. The line provides for advances from time to time, but must be paid down to

$-0- and remain at $-0- for 90 consecutive days at least once every 12 months. Interest

is accrued on outstanding balances at prime minus 0.25% with an interest floor of

3.75%. The line is secured by all the assets of the Board including cash, assessments,

furniture, fixtures, equipment and personal property. The Board is also subject to

reporting requirements and financial covenants as outlined in the line of credit

agreement. The line of credit agreement expires in December 2016. The amount

outstanding on the line of credit at December 31, 2014 and 2013 was $-0-.

Note 6: Compliance matters:

In accordance with the Act and the Order, effective one year after the date of the

establishment of the Board, the Board shall not spend in excess of 5% of the

assessments collected for the administration of the Board. For the years ended

December 31, 2014 and 2013, the Board did not exceed this limitation.

10
National Fluid Milk Processor Promotion Board

Notes to Financial Statements

December 31, 2014 and 2013

Note 7: Program administration:

During 2014 and 2013, the Board entered into agreements with various organizations to

develop programs for advertising, promotion, consumer education and certain minority

initiatives in connection with the national fluid milkcampaign. The funding levels vary for

the various organizations and are subject to approval. The organizations and the

expiration dates of the agreements are as follows:

Agency Expiration

FCB Worldwide, Inc. Until Terminated

Lowe Campbell Ewald UntilTerminated

Commonground/MGS UntilTerminated

CMGRP, Inc. d/b/a Weber Shandwick Until Terminated

To assist the above organizations in the development of advertising, promotion,

consumer education and certain minorityinitiatives in connection with the national fluid

milk campaign, the Board has also entered into numerous other smaller contracts

throughout the years ended December 31, 2014 and 2013. In addition, the Board has

two masterservice agreements with two contractors which allowforscopes ofworkto be

attached on an as needed basis by the Board.

In October 2007, the Board entered into two agreements, an office services and a

professional services agreement, with the International Dairy Foods Association (IDFA).

The duration of the office services agreement was from October 1, 2007 through

September 30,2008 and was subsequently extended multipletimes through December

31, 2015. Under this agreement, IDFA provides certain administrative services and

resources to the Board. Fees for these services are based on predetermined amounts

totaling $4,370 per month plus out-of-pocket costs and hourly charges for additional

services. During the years ended December 31, 2014 and 2013, the Board incurred

$55,118 and $57,051, respectively, under this agreement.

The duration ofthe professional services agreement wasfrom October 1,2007 through

September 30, 2009 and was subsequently extended multiple times. The current

agreement is effective until terminated. The agreement allows for IDFA to assist the

Board in performing general services pursuant to its responsibility under the Fluid Milk

Promotion Act of 1990. General services are setforth in greater detail in the agreement,

but include areas such as:

Medical and nutritional

Communications and public relations

Sales and econometric analysis

In house legal services

Specialized IT services

Other services as requested

11
National Fluid Milk Processor Promotion Board

Notes to Financial Statements

December 31, 2014 and 2013

Note 7: Program administration: (continued)

Feesfor these services are based on hourly rates ranging from $240 to $360 plus out-ofpocket costs. Total costs incurred under this agreement were $63,102 and $116,162 for

the years ended December 31, 2014 and 2013, respectively.

Note 8: Commitments:

In 2009, the Board entered into an employment agreement with the Chief Executive

Officer (CEO). The agreement ran from March 1,2009 to February 28,2011, extended

through February 28, 2014, and provided for annual compensation, benefits, and

increases based upon the CEO's annual performance evaluation. The CEO resigned in

November 2013 and is entitled to receive severance compensation and other benefits as

outlined in the agreement. The agreement was fulfilled in 2014.

In 2013, the Company entered into a severance agreement with a vice president of

marketing. The agreement provided for severance compensation and other benefits as

described in the agreement. The agreement was fulfilled in 2013.

During February 2012, the Board entered into a one-year contract with Phalanx

Technology Group. The contract has been extended on a month to month basis since

expiration. The contract requires monthly payments of $750 for standard information

technology support as outlined in the contract. All other work is billed at predetermined

hourly rates.

Note 9: Operating leases:

In October 2007, the Board entered into a 20-month sublease agreement with IDFA,

which has been extended through December 31,2015. Underthe terms ofthe sublease,

the Board is required to pay escalating monthly base rent plus additional monthly

charges equal to a pro rata portion of the building's operating expenses and other

charges as defined in the sublease agreement. The Board may terminate the sublease

agreement effective June 30 of any year by providing six months advance notice. In the

event of termination, monthly rent payments will increase up to the termination date as

outlined in the agreement.

The Board incurred $145,004 and $140,781 of rental expense during the years ended

December 31, 2014 and 2013, respectively.

The future minimum payment under this sublease for the year ended December 31,

2015 is $149,359.

12
National Fluid Milk Processor Promotion Board

Notes to Financial Statements

December 31, 2014 and 2013

Note 10: Transactions with the United States Department of Agriculture:

Under the provisions of the Act and the Order, the Board is required to pay the United

States Department of Agriculture certain fees for oversight and evaluation costs. These

costs were $337,537 and $476,285 during 2014 and 2013, respectively.

Note 11: Related party activity:

Accounting services for the Board are performed by Bridgewater Wealth & Financial

Management, LLC (Bridgewater). The agreement is effective through December 31,

2015. The costs of accounting services were $395,965 and $443,500 during 2014 and

2013, respectively. A principal of Bridgewater serves as the Chief Financial Officer of

the Board, for which Bridgewater is compensated. At December 31,2014 and 2013, the

total amount due to Bridgewater was $-0- and $43,500, respectively.

Note 12: Retirement plan:

In October 2007, the Board adopted a safe harbor 401 (k) plan. An employee is eligible

to participate in the plan once the service requirement is completed as defined in the

plan document. If an employee was employed by the Board on October 1, 2007, the

service requirement was waived and those employees were immediately eligible to

participate. Participants may elect to defer a portion of their salary and contribute it to

the retirement plan. Additionally, the Board will make a safe harbor matching

contribution equal to 100% of deferrals that do not exceed 3% of the employees'

compensation plus a 50% match for deferrals between 3% - 5% of employees'

compensation. However, for any plan year when the plan is not a "safe harbor" plan, the

contribution is at the Board's discretion. The Board's contribution totaled $113,504 and

$118,362 for the years ended December 31, 2014 and 2013, respectively.

Note 13: Concentration:

Payments to three agencies represented approximately 90% of total program expenses

for the year ended December 31, 2014. Accounts payable to these three agencies

represented approximately 58% of total accounts payable at December 31, 2014.

Payments to three agencies represented approximately 78% of total program expenses

for the year ended December 31, 2013. Accounts payable to these three agencies

represented approximately 76% of total accounts payable at December 31, 2013.

13
National Fluid Milk Processor Promotion Board

Notes to Financial Statements

December 31, 2014 and 2013

Note 14: Subsequent events:

Subsequent events have been evaluated through March 27, 2015, which is the date the

financial statements were available to be issued.

14
SUPPLEMENTARY

INFORMATION
National Fluid Milk Processor Promotion Board

Schedule of Revenues and Expenses

Actual Compared to Budget

(Budget Basis)

For the year ended December 31, 2014

Unexpended/ Actual

Amended Current Year Over (Under)

Budget Actual Budget

(Unaudited)

Revenues:

Assessments $ 97.200,000 $ 97.271.778 $ 71,778

Late payment charges - 28.225 28,225

Interest income - 16,540 16,540

Other - 9.228

97.325.771

9.228

Total revenues 97.200.000 125.771

Expenses:

Program expenses:

Program - current year 84,170,000 81,452,514 (2,717,486)

Program - prior years 3,773.601 1.973.678 (1.799.923)

Total program expenses 87.943,601 83.426.192 (4.517.409)

Other expenses:

California grant 9,500.000 9.221,339 (278,661)

Administrative 3.030,000 2,881,420 (148.580)

USDA expenses 500,000 337.537 (162,463)

Loss on disposal of property - 1,004 1,004

Interest expense 1.400 1,766 366

Total other expenses 13.031,400 12,443,066 (588.334)

Total expenses 100,975,001 95,869,258 (5,105,743)

Unallocated budget _ - -

Excess of revenues over expenses

(expenses over revenue) $ (3,775.001) $ 1,456,513 $ (5,231,514)

See Independent Auditor's Report

16
National Fluid Milk Processor Promotion Board

Schedule of Program Expenses

Actual Compared to Budget

(Budget Basis)

For the year ended December 31, 2014

Current Year

Amended

Budget

(

Expended

Current Year

Actual

Actual

Over (Under)

Budget

Prior Year

Unexpended

Budget

Expended

Prior Year

Actual

Actual

Over (Under)

Budget

Total

Program

Activity

Meals at home

Built with chocolate milk

Strategy and market research

Unallocated/opportunistic

(Unaudited)

$ 62.800,470

17,877.530

2,927,000

565.000

$ 84,170.000

$ 62.279.813

16.656,134

2.516.567

$ (520,657)

(1,221.396)

(410,433)

(565.000)

$ (2,717.486)

(Unaudited)

$ 1,718,678

1,725.196

329,727

$ 580,467

1,104.169

289,042

$ (1,138,211)

(621.027)

(40,685)

$ 62,860,280

17,760,303

2.805,609

Total program expenses $ 81.452.514 $ 3,773,601 $ 1,973.678 $ (1,799.923) $ 83,426,192

See Independent Auditor's Report

17
National Fluid Milk Processor Promotion Board

Schedule of Administrative Expenses

Actual Compared to Budget

(Budget Basis)

For the year ended December 31, 2014

Current Year Actual

Amended Current Year Over (Under)

Budget Actual Budget

(Unaudited)

Board meeting expenses $ 295,000 $ 246,340 $ (48,660)

Staff salaries and benefits:

Staff salaries and benefits 1,805,900 1,912.198 106,298

Program management salary

allocation (1,200,000) (1.235.330) (35,330)

Total staff salaries and benefits 605,900 676,868 70,968

Finance and administration:

Contract staff 160,000 160,000 -

Consultants - HR, IT, strategic 95,000 86,485 (8,515)

Financial services 400,000 395,965 (4,035)

Total finance and administration 655,000 642.450 (12,550)

Other operating expenses:

Audits 69,000 65,957 (3,043)

Depreciation 31,000 31,075 75

Dues and memberships 26,440 26,440 -

Employee development 40,000 20,930 (19,070)

Insurance 35,000 37,170 2,170

Legal 470,000 435,791 (34,209)

Miscellaneous 6,200 2,640 (3,560)

Office facilities 145,000 145,004 4

Office supplies and expense 16,500 22,906 6,406

Payroll service and

pension administration 9,500 7,437 (2,063)

Postage and delivery 8,000 6,744 (1,256)

Recruiting expense 85,000 85,357 357

Relocation expense - 20,000 20,000

Staff travel 360,000 332,282 (27,718)

Support and maintenance 51,000 53,081 2,081

Telephone 22,500 22.948 448

Unallocated administrative 97,560

1,472.700

- (97,560)

Total other operating expenses 1,315.762 (156,938)

Total administrative expenses $ 3,028.600

See Independent Auditor's Report

18

$ 2,881,420 $ (147,180)
National Fluid Milk Processor Promotion Board

Schedule of Cash Receipts and Disbursements

For the year ended December 31, 2014

Cash receipts from operations:

Assessments

Late payment charges

Interest income

Other

Cash receipts from operations

Cash disbursements for operations

Cash receipts and disbursements from investing activities:

Purchase of property and equipment

Cash disbursements for investing activities:

Payments made on capital lease

Excess of disbursements over reciepts

Cash and cash equivalents - beginning

Cash and cash equivalents - ending

See Independent Auditor's Report

19

$ 97,854,990

28,225

16,540

9.228

97.908,983

(99,675,710)

(11,483)

(6,169)

(1,784,379)

16,404,665

$ 14,620,286
PART II
SNYDEF£OHN

CPAs and Business Advisors

Independent Auditor's Report on Internal Control

Over Financial Reporting and on Compliance and Other Matters

Based on an Audit of Financial Statements Performed in Accordance

with Government Auditing Standards

To the Board of Directors

National Fluid Milk Processor

Promotion Board

Washington, D.C.

We have audited, in accordance with auditing standards generally accepted in the United States of

America and the standards applicable to financial audits contained in Government Auditing

Standards, issued by the Comptroller General of the United States, the financial statements of the

National Fluid Milk Processor Promotion Board (the Board) which comprise the statements of

financial position as of December 31, 2014 and 2013, and the related statements of revenues,

expenses and changes in net assets, and cash flows for the years then ended, and the related

notes to the financial statements and have issued our report thereon dated March 27, 2015.

Internal Control Over Financial Reporting

In planning and performing our audits of the financial statements, we considered the Board's internal

control over financial reporting (internal control) to determine the audit procedures that are

appropriate in the circumstances for the purpose of expressing our opinion on the financial

statements, but not for the purpose of expressing an opinion on the effectiveness of the Board's

internal control. Accordingly, we do not express an opinion on the effectiveness of the Board's

internal control.

A deficiency in internal control exists when the design or operation of a control does not allow

management or employees, in the normal course of performing their assigned functions, to prevent,

or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or

combination of deficiencies, in internal control, such that there is a reasonable possibility that a

material misstatement of the Board's financial statements will not be prevented, or detected and

corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies,

in internal control that is less severe than a material weakness, yet important enough to merit

attention by those charged with governance.

Ourconsideration of internal control was for the limited purpose described in the first paragraph of

this section and was not designed to identify all deficiencies in internal control that might be material

weaknesses or significant deficiencies. Given these limitations, during our audits we did not identify

any deficiencies in internal control that we consider to be material weaknesses. However, material

weaknesses may exist that have not been identified.

11200 Rockville Pike, Suite 415, North Bethesda. MD 20852 • Phone 301-652-6700 • Fax 301-986-1028 • www.snydercohn.com

Snyder Cohn isan independent memberof tj Ix. t\_ Firms in principal cities worldwide. m 4

OK., W
To the Board of Directors

National Fluid Milk Processor

Promotion Board

Page two

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Board's financial statements are free

of material misstatement, we performed tests of its compliance with certain provisions of laws,

regulations, contracts, and agreements, noncompliance with which could have a direct and material

effect on the determination of financial statement amounts. However, providing an opinion on

compliance with those provisions was not an objective of our audits, and accordingly, we do not

express such an opinion.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and

compliance and the results of that testing, and not to provide an opinion on the effectiveness of the

Board's internal control or on compliance. This report is an integral part of an audit performed in

accordance with Government Auditing Standards in considering the Board's internal control and

compliance. Accordingly, this communication is not suitable for any other purpose.

This report is intended solely for the information of the Board of Directors of the National Fluid Milk

Processor Promotion Board, management, and the Dairy Programs, Promotion and Research

Branch of the Agricultural Marketing Service Agency of the United States Department of Agriculture,

and is not intended to be and should not be used by anyone other than these specified parties.

cUa, CjtK^( pc^

SNYDER COHN, PC

North Bethesda, Maryland

March 27, 2015
PART
SNYDERCOHN

CPAs and Business Advisors

To the Board of Directors

National Fluid Milk Processor

Promotion Board

Washington, D.C.

We have audited, in accordance with auditing standards generally accepted in the United States of

America and the standards applicable to financial statement audits contained in Government

Auditing Standards issued by the Comptroller General of the United States, the financial statements

of the National Fluid Milk Processor Promotion Board which comprise the statements of financial

position as of December 31, 2014 and 2013, and the related statements of revenues, expenses and

changes in net assets, and cash flows for the years then ended, and the related notes to the

financial statements and have issued our report thereon dated March 27, 2015. The financial

statements were prepared in conformity with accounting principles generally accepted in the United

States of America.

In connection with our audits, nothing came to our attention, insofar as it relates to accounting

matters, that causes us to believe that the National Fluid Milk Processor Promotion Board:

• Failed to comply with laws and regulations applicable to the National Fluid Milk Processor

Promotion Board;

• Failed to comply with Section 1160.212 of the Fluid Milk Promotion Order, relating to the

use of assessment funds for the purpose of influencing governmental policyor action;

• Expended assessment funds for purposes other than those authorized by the Fluid Milk

Promotion Act and the Fluid Milk Promotion Order;

• Expended or obligated assessment funds on any projects prior to the fiscal year in which

those funds were authorized to be expended by the National Fluid Milk Processor

Promotion Board's approved Budget and Marketing Plan;

• Did not adhere to the original or amended Budget and Marketing Plan forthe years ended

December 31, 2014 and 2013;

• Did not obtain a written contract or agreement with any person or entityproviding goods or

services to the National Fluid Milk Processor Promotion Board;

• Failed to comply with Section 1999H, paragraph (g) of the Fluid Milk Promotion Order,

relating to the limitations on the types of investments which may be purchased by the

National Fluid Milk Processor Promotion Board and the insurance or collateral that must be

obtained for all National Fluid Milk Processor Promotion Board deposits and investments;

11200RockvillePike, Suite 415, North Bethesda, MD 20852 • Phone 301-652-6700 • Fax 301-986-1028 • www.snydercohn.com

Snyder Cohn is an independent member of _D JX. JV Firms in principal cities worldwide.

o
To the Board of Directors

National Fluid Milk Processor

Promotion Board

Page two

• Failed to comply with internal controls other than described below;

• Failed to comply with disclosure requirements for lease commitments;

• Failed to comply with standards established requiring signed contracts, USDA approval

letters (if necessary), contract term documentation within the file, and CFO's signature on

the Board approval letter;

• Failed to comply with the by-laws of the National Fluid MilkProcessor Promotion Board or

any other policy of the National Fluid Milk Processor Promotion Board, specifically as they

relate to all financial matters, including time and attendance, and travel; or

• Failed to comply with USDA guidelines for AMS Oversight of Commodity Research and

Promotion Programs other than described below.

During the course of our audits, the following compliance matters came to our attention, insofar as

they relate to internal controls.

While testing cash disbursements, we noted the following:

• The Board's travel policy requires detailed receiptsfor all out of pocket expenses inexcess

of $25. If an appropriate receipt is not provided the reimbursement amount is limited to

$25. We noted one employee, totaling $189, and one contractor, totaling $190, who

received reimbursement without the appropriate detailed invoices and whose

reimbursements were not limited to $25. The controller received a waiverfrom the CFO for

both instances before processing and paying the reimbursement.

• We noted one instance totaling $7 in which a contractor was erroneously reimbursed for

alcohol. This was brought to management's attention and the amount was withheld from

the next reimbursement.

• We also noted one instance totaling $19 where an employee was erroneously reimbursed

for a personal expense. The amount was withheld from the employee's reimbursement

after bringing it to management's attention.

• While employees are allowed to have alcohol as part of their meal, the Board does require

that it be consumed with a meal rather than with an appetizer or stand alone. During the

course of our audit we noted six instances totaling $369 in which employees were

reimbursed using non-detailed receipts. Accordingly we were unable to determine ifthe

Board's policy regarding alcohol consumption was properly followed.
To the Board of Directors

National Fluid Milk Processor

Promotion Board

Page three

During the course ofour audits, the following compliance matters came to our attention, insofar as it

relates to the USDA guidelines for AMS Oversight of Commodity Research and Promotion

Programs. However, our audits were not directed primarily toward obtaining knowledge of such

noncompliance.

Business credit cards are used for personal expenses on certain occasions. When this occurs, the

Board is reimbursed for the personal expenses by the respective employee within a reasonable time

period. The Board believes it is impractical to use two different credit cards to split one bill which

includes both business and personal charges. In addition, there is a strict approval and review

process of each employee's expense report and its supporting receipt documentation to verify there

are no personal expenses charged that are not being reimbursed by the employee.

The Board also pays for spouses' dinners at Board meetings and feels it is reasonable to do so as

Board members volunteer their time away from home.

The Board's policy regarding donations utilizing funds derived from assessments is not a written

policy.

During the course of our audits, the following matters came to our attention, insofar as it relates to

the daily operations of the Board.

We noted that the Board hires independent contractors to assist in its daily operations. It is critical

that a business properly analyze and categorize its employees versus independent contractors to

ensure that all applicable employment laws are being followed and that all appropriate payroll taxes

are being withheld and paid. We suggest that the Board evaluate contractor scenarios to ensure

they have been properly identified as independent contractors.

This report is intended solely for the information and use of the National Fluid Milk Processor

Promotion Board, management, and the Dairy Programs, Promotion and Research Branch of the

Agricultural Marketing Service Agency of the United States Department of Agriculture and is not

intended to be and should not be used by anyone other than these specified parties.

cUas GrKrx Pc

SNYDER COHN, PC

North Bethesda, Maryland

March 27, 2015
124

Chapter 7

Qualified Dairy Product Promotion, Research, or Nutrition Education 

Programs 

Qualified Programs are State, regional, or importer organizations that conduct a dairy product 

promotion, research, or nutrition education program, authorized by Federal or State law, or that 

were active programs prior to the Dairy Production Stabilization Act of 1983 (Dairy Act). 

The Secretary annually certifies Qualified Programs. 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 or dairy importers; 

(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). 

The aggregate revenue from the assessment directed to the Qualified Programs in 2013 was $206 

million and approximately $212 in 2014 (approximately 10 cents of the 15-cent producer 

assessment and 2.5 cents of the importer 7.5-cent assessment). 

Some 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 for more effective and efficient 

management of promotion dollars through larger, broad-based projects. For example, to support 

the unified marketing plan, UDIA coordinates nationally through DMI the programs and 

resources of 19 federation members and their affiliated units.
125

2013 Aggregate Income and Expenditure Data Reported to USDA by 

Qualified Programs (Thousands)

 

Income

Carryover from Previous Year 1 $76,680

Producer Remittances 206,052 

Transfers from Other Qualified Programs 2 62,430

Transfers to Other Qualified Programs (58,313)

Other Income 5,666

Total Adjusted Annual Income $292,515

Expenditures

General and Administrative $11,279

 Fluid Milk Advertising and Promotion $17,978

 Cheese Advertising and Promotion 31,812

 Butter Advertising and Promotion 4,765

 Frozen Dairy Products Advertising and Promotion 6,624

 Other 3 Advertising and Promotion 6,054

Advertising and Promotion Subtotal 67,235

Unified Marketing Plan 4 88,990

Dairy Foods and Nutrition Research 7,507

Public and Industry Communications 17,441

Nutrition Education 20,242

Market and Economic Research 1,697

Other 4,486

Total Annual Expenditures $218,877

Total Available for Future Year Programs $73,640

1 Differences can occur because of audit adjustments and varying accounting periods.

2 Payments transferred between Qualified Programs differ due to different accounting methods and accounting 

periods.

3 Other includes “Real Seal,” holiday, multi-product, calcium, foodservice, product donation at State fairs, and other 

promotional activities.

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.

Source: Data reported by qualified dairy product promotion, research, and nutrition education programs.
126

2014 Aggregate Income and Expenditure Data Reported to USDA by 

Qualified Programs (Thousands)

 

Income

Carryover from Previous Year 1 $74,315

Producer Remittances 212,457

Transfers from Other Qualified Programs 2 62,931

Transfers to Other Qualified Programs (60,243)

Other Income 3,711

Total Adjusted Annual Income $293,171

Expenditures

General and Administrative $10,136

 Milk Advertising and Promotion $16,461

 Cheese Advertising and Promotion 26,120

 Butter Advertising and Promotion 6,288

 Frozen Dairy Products Advertising and Promotion 8,644

 Other 3 Advertising and Promotion 3,919

Advertising and Promotion Subtotal 61,432

Unified Marketing Plan 3 77,512

Dairy Foods and Nutrition Research 5,713

Public and Industry Communications 31,741

Nutrition Education 18,800

Market and Economic Research 1,748

Other 4,266

Total Annual Expenditures $211,348

Total Available for Future Year Programs $79,618

1 Differences can occur because of audit adjustments and varying accounting periods. 2 Payments transferred between Qualified Programs differ due to different accounting methods and accounting 

periods.

3 Other includes “Real Seal,” holiday, multi-product, calcium, foodservice, product donation at State fairs, and other 

promotional activities.

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.

Source: Data reported by qualified dairy product promotion, research, and nutrition education programs
127

LIST OF QUALIFIED STATE, REGIONAL, OR IMPORTER DAIRY PRODUCT

PROMOTION, RESEARCH, OR NUTRITION EDUCATION PROGRAMS

PURSUANT TO SECTION 1150.153

OF THE DAIRY PROMOTION AND RESEARCH ORDER

ALABAMA

American Dairy Association of Alabama, Inc. c/o SUDIA

5340 W. Fayetteville Road, Atlanta, GA 30349-5416

ARIZONA

United Dairymen of Arizona

510 S. 52nd Street #101, Tempe, AZ 85281 

CALIFORNIA

California Milk Producers Advisory Board 

400 Oyster Point Boulevard, Suite 211, South San Francisco, CA 94080 

California Manufacturing 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

 

COLORADO

Western Dairy Association

12000 N. Washington Street, Suite 175, Thornton, CO 80241 

CONNECTICUT

Connecticut Milk Promotion Board 

c/o Connecticut Department of Agriculture

165 Capitol Avenue, Hartford, CT 06106 

FLORIDA

Florida Dairy Farmers

1003 Orienta Avenue, Altamonte Springs, FL 32701 

GEORGIA

Georgia Agricultural Commodity Commission for Milk 

c/o Georgia Department of Agriculture

19 Martin Luther King Jr. Drive, SW, Room 328, Atlanta, GA 30334 
128

Southeast United Dairy Industry Association, Inc. (SUDIA)

5340 W. Fayetteville Road, Atlanta, GA 30349-5416

American Dairy Association of Georgia, Inc. c/o SUDIA

5340 W. Fayetteville Road, Atlanta, GA 30349-5416

Dairy Food Nutrition Council c/o SUDIA

5340 W. Fayetteville Road, Atlanta, GA 30349-5416

IDAHO

Idaho Dairy Products Commission

743 North Touchmark Avenue, Meridian, ID 83642 

ILLINOIS

Illinois Milk Promotion Board

1701 Towanda Avenue, Bloomington, IL 61701

 

INDIANA

Indiana Dairy Industry Development Board

9360 Castlegate Drive, Indianapolis, IN 46256 

Milk Promotion Services of Indiana, Inc.

9360 Castlegate Drive, Indianapolis, IN 46256 

KANSAS

Kansas Dairy Commission 

2545 294th Road, Muscotah, KS 66058

 

KENTUCKY

American Dairy Association of Kentucky, Inc. c/o SUDIA

5340 W. Fayetteville Road, Atlanta, GA 30349-5416

 

LOUISIANA

Louisiana Dairy Industry Promotion Board 

c/o Louisiana Department of Agriculture and Forestry

P.O. Box 3334, Baton Rouge, LA 70821-3334

MAINE

Maine Dairy and Nutrition Council

333 Cony Road, Augusta, ME 04330 

Maine Dairy Promotion Board

333 Cony Road, Augusta, ME 04330

 
129

MASSACHUSETTS

Massachusetts Dairy Promotions Board

251 Causeway Street, Suite 500, Boston, MA 02114 

New England Dairy and Food Council, Inc. 

1034 Commonwealth Avenue, Boston, MA 02215 

New England Dairy Promotion Board

1034 Commonwealth Avenue, Boston, MA 02215 

MICHIGAN 

American Dairy Association of Michigan

2163 Jolly Road, Okemos, MI 48864 

Dairy Council of Michigan, Inc. 

2163 Jolly Road, Okemos, MI 48864

Michigan Dairy Market Program

P.O. Box 8002, Novi, MI 48376-8002

 

MINNESOTA

Midwest Dairy Association

2015 Rice Street, St. Paul, MN 55113

Midwest Dairy Council 

2015 Rice Street, St. Paul, MN 55113

Minnesota Dairy Research & Promotion Council

2015 Rice Street, St. Paul, MN 55113 

MISSISSIPPI

American Dairy Association of Mississippi, Inc. c/o SUDIA

5340 W. Fayetteville Road, Atlanta, GA 30349-5416

MISSOURI

Dairy Promotion, Inc. & Promotion Services, Inc.

10220 NW Ambassador Drive, Kansas City, MO 64190-9700

St. Louis District Dairy Council

325 North Kirkwood Road, Suite 222, St. Louis, MO 63122

NEBRASKA

Nebraska Dairy Industry Development Board

2015 Rice Street, St. Paul, MN 55113
130

NEVADA

Nevada Farm Bureau Dairy Producers Committee

2165 Green Vista Drive, Suite 205, Sparks, NV 89431

 

NEW HAMPSHIRE

Granite State Dairy Promotion 

c/o New Hampshire Department of Agriculture

25 Capitol Street, Box 2042, Concord, NH 03302-2042 

 

NEW JERSEY

New Jersey Dairy Industry Advisory Council 

c/o New Jersey Department of Agriculture

P.O. Box 330, Trenton, NJ 08625-0330 

NEW YORK

American Dairy Association & Dairy Council, Inc.

100 Elwood Davis Road, North Syracuse, NY 13212

Milk for Health on the Niagara Frontier, Inc.

4185 Seneca Street, West Seneca, NY 14224

New York State Department of Agriculture,

Division of Milk Control and Dairy Services

10 B Airline Drive, Albany, NY 12235-0001 

Rochester Health Foundation, Inc. 

c/o American Dairy Association & Dairy Council, Inc.

100 Elwood Davis Road, North Syracuse, NY 13212

 

NORTH CAROLINA

American Dairy Association of North Carolina c/o SUDIA

5340 W. Fayetteville Road, Atlanta, GA 30349-5416

 

NORTH DAKOTA

North Dakota Dairy Promotion Commission 

c/o Midwest Dairy Association

2015 Rice Street, St. Paul, MN 55113

OHIO

American Dairy Association Mideast

5950 Sharon Woods Boulevard, Columbus, OH 43229 

OREGON

Oregon Dairy Products Commission

10505 SW Barbur Boulevard, Portland, OR 97219 
131

PENNSYLVANIA

Allied Milk Producers' Cooperative, Inc.

1360 Eisenhower Boulevard, Johnstown, PA 15904-3307 

Mid Atlantic Dairy Association

325 Chestnut Street, Suite 600, Philadelphia, PA 19106 

Pennsylvania Dairy Promotion Program c/o Mid Atlantic Dairy Association

325 Chestnut Street, Suite 600, Philadelphia, PA 19106

 

PUERTO RICO, COMMONWEALTH OF

Milk Industry Development Fund of Puerto Rico

PO Box 360454, San Juan, PR

00936-0454

 

SOUTH CAROLINA

American Dairy Association of South Carolina c/o SUDIA 

5340 W. Fayetteville Road, Atlanta, GA 30349-5416

SOUTH DAKOTA

American Dairy Association of South Dakota 

c/o Midwest Dairy Association

2015 Rice Street, St. Paul, MN 55113

TENNESSEE

American Dairy Association of Tennessee c/o SUDIA 

5340 W. Fayetteville Road, Atlanta, GA 30349-5416 

Tennessee Dairy Promotion Committee c/o SUDIA

5340 W. Fayetteville Road, Atlanta, GA 30349-5416

 

TEXAS

Dairy MAX, Inc.

2214 Paddock Way Drive, Suite 600, Grand Prairie, TX 75050 

Southwest Dairy Museum, Inc.

P.O. Box 936, Sulphur Springs, TX 75483

 

UTAH

Dairy Council of Utah and Nevada

1213 East 2100 South, Salt Lake City, UT 84106 

VERMONT

Vermont Dairy Promotion Council c/o Agency of Agriculture, Foods & Markets

116 State Street, Drawer 20, Montpelier, VT 05620-2901 
132

VIRGINIA

American Dairy Association of Virginia, Inc. c/o SUDIA

5340 W. Fayetteville Road, Atlanta, GA 30349-5416

WASHINGTON

Washington State Dairy Council

4201 198th Street SW, Lynnwood, WA 98036-6751 

Washington Dairy Products Commission

4201 198th Street SW, Lynnwood, WA 98036-6751

 

WISCONSIN

Wisconsin Milk Marketing Board, Inc.

8418 Excelsior Drive, Madison, WI 53717 

QUALIFIED IMPORTER PROGRAMS

Cheese Importers Association of America (Importer)

204 E Street, NE, Washington, DC 20002 

Global Dairy Platform (Importer)

10255 West Higgins, Suite 800, Rosemont, IL 60018 

Wisconsin Milk Marketing Board, Inc. (Importer)

8418 Excelsior Drive, Madison, WI 53717