FOCUS ON AG SERVICES

Debbie DuChamp, a Co-General Manager at Plummer Cooperative Creameries, has been part of the Land O’Lakes system since 1979. The Plummer Cooperative is a full- service cooperative that operates as a Class A creamery, a feed blending facility, and also sells fertilizer, bulk petroleum, and bag feed.

In 2003, producers, member cooperatives and Land O’Lakes Ag Services business units faced a challenging environment, shaped by low commodity and animal prices early in the year, continuing consolidation among customers and competitors, and significant geographic shifts in livestock and dairy production.

In the face of these challenges, Feed, Layers, Seed, Swine and Agronomy each took aggressive steps to sharpen their focus on the execution of key strategies and sound operational practices.

Overall, Feed was well positioned to respond to challenging market conditions last year,
primarily due to the ambitious integration of Purina Mills. Product and geographic diversity, along with business synergies realized since the late-2001 acquisition of Purina Mills helped offset market conditions. While volumes and earnings were impacted by market conditions, particularly in the livestock/commodity feed segment, there was positive momentum in the fourth quarter. Key areas of strength were companion animals, beef feed, horse feed and animal milk replacers.

On the research side, Feed made a significant investment in the dairy industry this year, breaking ground on a new dairy research facility at the LongView Animal Nutrition Center in Missouri. Feed also launched new products such as Cow’s Match™ milk replacer and Rally™ dairy feed. Both products were well received in the marketplace.

Looking ahead, the number-one priority for Feed is member and customer service. Feed is committed to strengthening its focus on members and customers, adding value through its high-performing employees, customer support and structure, products and services, and cutting-edge research and development.

Finally, 2003 marked the second year of the three-year integration of Purina Mills. Capturing gains in operational productivity and efficiency, while providing customers with high-quality service, remain priorities.

MoArk, Land O’Lakes joint venture in layers/eggs, took advantage of a dramatic upswing in egg prices this past year. Many factors contributed to record-level egg prices. Primary drivers included lower egg supplies, due to smaller flock numbers and regional flock health issues, and the low-carb trend, which spurred millions of dieters to search for an inexpensive source of protein.

AG Services continued -->