Globalization Performance Metrics Becoming a Consistent Exporter Short Deck and Supporting Data Data as of 4Q 2013

Increasing global competitiveness 1. Is the U.S. becoming more competitive internationally and domestically? Is the U.S. becoming more competitive internationally and domestically? 2. Is the U.S. dairy industry filling the latent demand gap? Is the U.S. dairy industry filling the latent demand gap? 3. Is the U.S. moving beyond commodity surplus disposal, supplier of last resort? Is the U.S. moving beyond commodity surplus disposal, supplier of last resort? Strengthening domestic market 4. Is U.S. becoming more competitive domestically? Is U.S. becoming more competitive domestically? Providing value to producers 5. Is global market providing higher returns to U.S. producers? Is global market providing higher returns to U.S. producers? Improving commercial focus 6. Is the U.S. better fulfilling the needs of customers? Is the U.S. better fulfilling the needs of customers? 1 Stakeholder performance indicators

Consistent Exporter goal: Increasing global competitiveness 2 Back to: Stakeholder QuestionsStakeholder Questions

U.S. milk solids exported exceeded trend growth during the 12 months ending Mar 2014 after being below trend during the 12 months ending Mar 2013  During the baseline period, the U.S. growth rate of M lbs/mo represented 64% of global growth (Chart A2A)  U.S. milk solid exports averaged 18 M lbs/mo greater than the trend during the 12 months ending Mar 2014 compared with an average of 24 M lbs less than the trend during the 12 months ending Mar 2013 (Chart A2A) U.S. increases cheese market competitiveness and is leading SMP/NDM exporter  U.S. cheese market share increased from 4.8% to 16.5%  U.S. SMP/NDM market share increased from 25.6% to 30.0% (+4.4 points)…  …however, the EU is a challenging competitor as its market share has also increased from 14.7% to 24% (+9.3 points) 3 1) Is U.S. becoming more competitive internationally? Back to: Stakeholder QuestionsStakeholder Questions

4 Global milk solid exports fluctuate around an upward trend; increasing 2.8 M lbs/mo during the baseline and 9.1 M lbs/mo since Jan 2010 Back to: Stakeholder Questions / Metrics ListStakeholder QuestionsMetrics List Chart: A1A

5 U.S. milk solid exports averaged 18 M lbs over trend during 12 months ending Mar 2014 compared with 24 M lbs under trend during 12 months ending Mar 2013 Back to: Stakeholder Questions / Metrics ListStakeholder QuestionsMetrics List Chart: A2A

6 Cheese Quantity: U.S. accounted for 54% of incremental growth over 2005–07 average, increasing share from 4.8% to 16.5% Total Growth: B lbs U.S. Growth: B lbs Chart: B7C Back to: Stakeholder Questions / Metrics ListStakeholder QuestionsMetrics List

7 Skim Milk Powder Quantity: U.S. accounted for 36% of incremental growth over 2005–07 average, increasing share from 25.6% to 30.0% Total Growth: B lbs U.S. Growth: B lbs Chart: B3S Back to: Stakeholder Questions / Metrics ListStakeholder QuestionsMetrics List

Global milk solids exports for the 12 months ended Mar 2014 were 49% greater than the baseline annual average Global growth totaled B lbs U.S. growth totaled 2.01 B lbs U.S. accounted for 27% of global growth in milk solids exported… …increasing U.S. market share from 13.6% to 18.1% U.S. market share (most recent 12 months) has increased for 13 consecutive months from Mar 2013 through Mar 2014 and has exceeded 17% for five consecutive months starting in Nov ) Is U.S. filling global latent demand gap? Back to: Stakeholder QuestionsStakeholder Questions

9 Primary Dairy Product Exports, Total Solids: U.S. accounted for 27% of incremental growth Total Growth: 7.34 B lbs U.S. Growth: 2.01 B lbs Chart: B1A Back to: Stakeholder Questions / Metrics ListStakeholder QuestionsMetrics List

Historically, U.S. SMP/NDM exports were the last into the market and first out of the market  During the baseline period (2005–07), U.S. NDM/SMP exports decreased nearly 250,000 lbs/mo while exports from ROW increased 162,400 lbs/mo (Chart A8S) U.S. SMP/NDM exports have grown more slowly than ROW SMP/NDM exports since Jan 2010  U.S. SMP exports increased by 750,000 lbs/mo (34.1% of total) while ROW exports increased 1.45 M lbs/mo (65.9% of total) (Chart A8S) U.S. SMP/NDM exports have been above trend  SMP/NDM exports averaged 7 M lbs/mo more than the trend for the 12 months ending Mar 2014 versus 10 M lbs/mo less than the trend for 12 months ending Mar 2013 (Chart A8S)  U.S. market share increased (25.6% to 30.0%), though the EU is a challenging competitor (14.7% to 24.0%) (Chart B3S) 10 3) Is U.S. moving beyond commodity surplus disposal and supplier of last resort? Back to: Stakeholder QuestionsStakeholder Questions

11 U.S. SMP exports averaged 7 M lbs/mo over trend during the 12 months ending Mar 2014 compared with 10 M lbs/mo below trend during the 12 months ending Mar 2013 Back to: Stakeholder Questions / Metrics ListStakeholder QuestionsMetrics List Chart: A8S

Consistent Exporter goal: Strengthening domestic market 12 Back to: Stakeholder QuestionsStakeholder Questions

U.S. competitiveness in the domestic market increased during the baseline period (2005–07)  U.S. milk solids imported decreased 46,000 lbs/mo during baseline period (Chart C1A)  Average milk solids imported during the 12 months ending Mar 2014 were 25% less than during the baseline period U.S. milk solids are supplying a larger share of the domestic market  Imports accounted for 3.8% of apparent domestic consumption during the baseline period versus 2.8% during the 12 months ending Mar 2014  Apparent consumption grew by 2.8% between the baseline period and the 12 months ending Mar ) Is U.S. becoming more competitive domestically? Back to: Stakeholder QuestionsStakeholder Questions

14 Milk solids exported increased at 2.03 M lbs/mo while imports increased at only 5,000 lbs/mo since Jan 2010 Back to: Stakeholder Questions / Metrics ListStakeholder QuestionsMetrics List Chart: C1A

Consistent Exporter goal: Providing value to producers 15 Back to: Stakeholder QuestionsStakeholder Questions

The export equivalent of the Class III milk price demonstrates that exports contribute to higher U.S. domestic milk prices  The Class III export equivalent averaged $1.89/cwt greater than the actual Class III price during the 12 months ending Mar 2014 Class III price and export equivalent trends continue to convergence  The actual Class III price is trending upward at the rate of 11.4 cents/mo while the export equivalent is trending upward at the rate of 8.7 cents/mo The export equivalent is calculated by inserting export unit values for cheese, butter, NDM/SMP, and dry whey into the Class III price formula 16 5) Does global market increase returns for U.S. producers? Back to: Stakeholder QuestionsStakeholder Questions

17 Trends continue to converge as domestic and international markets become more integrated Back to: Stakeholder Questions / Metrics ListStakeholder QuestionsMetrics List Chart: D1P2

Consistent Exporter goal: Improving commercial focus 18 Back to: Stakeholder QuestionsStakeholder Questions

Measure: Global Dairy Buyer Survey Summary of Baseline Data:  U.S. viewed as an important source of future supply  Long-term consistent commitment to the export market is needed  Improvement wanted in product specs, quality and pricing stability 19 6) Is the U.S. better fulfilling the needs of customers? Back to: Stakeholder QuestionsStakeholder Questions