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Notes to Consolidated Financial Statements
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21. Segment Information
The Company operates in six segments: Dairy Foods, Feed, Seed, Swine,
Agronomy and Layers.
The Dairy Foods segment produces, markets and sells products such
as butter, spreads, cheese, and other dairy related products. Products
are sold under well-recognized national brand names including LAND
O LAKES, the Indian Maiden logo and Alpine Lace, as well as under
regional brand names such as New Yorker.
The Feed segment is largely made up of a 92% ownership position in
Land O’Lakes Farmland Feed LLC (“Land O’Lakes Farmland
Feed”). Land O’Lakes Farmland Feed develops, produces,
markets and distributes animal feeds such as ingredient feed, formula
feed, milk replacers, vitamins and additives.
The Seed segment is a supplier and distributor of crop seed products
in the United States. A variety of crop seed is sold, including alfalfa,
soybeans, corn, forage and turf grasses.
The Swine segment has three programs: farrow-to-finish, swine aligned
and cost-plus. The farrow-to-finish program produces and sells market
hogs. The swine aligned program raises feeder pigs which are sold
to local member cooperatives. The cost-plus program provides minimum
hog price guarantees to producers in exchange for swine feed sales
and profit participation.
The Agronomy segment consists primarily of the Company’s 50%
ownership in Agriliance LLC (“Agriliance”), which is accounted
for under the equity method. Agriliance markets and sells two primary
product lines: crop protection (including herbicides and pesticides)
and crop nutrients (including fertilizers and micronutrients).
The Layers segment consists of the Company’s joint venture in
MoArk, which was consolidated as of July 1, 2003. MoArk produces and
markets shell eggs and egg products that are sold to retail and wholesale
customers for consumer and industrial use throughout the United States.
The Company allocates corporate administrative expense to all of its
business segments, both directly and indirectly. Corporate staff functions
that are able to determine actual services provided to each segment
allocate expense on a direct and predetermined basis. All other corporate
staff functions allocate expense indirectly based on each segment’s
percentage of total invested capital. A majority of corporate administrative
expense is allocated directly.
(See Segment
Information
)
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