1. FACTORS DRIVING FUTURE PLANT SITES AND EXPANSION Minnesota-Wisconsin Dairy Policy Conference April 3, 2013 Rochester, MN

2. Started in 1950 as a corner store in Denver, CO Privately held and innovation driven Today, Leprino Foods: Is the largest producer of mozzarella in the world Holds over 50 patents for mozzarella cheese- making technologies Also make provolone, reduced-fat cheddar, reduced-fat Monterey jack, and Mexican cheese blends Is the largest producer of lactose in the world and leading supplier of whey protein and sweet whey WHO IS LEPRINO FOODS?

3. LOCATIONS

4. PLANT SITING CONSIDERATIONS Milk supply – Ability to develop desired milk volumes – Long-term viability of milkshed Ability to service target market – Logistics – Competitive landed all-in costs Regulatory & business environment – Current – Future Risk Workforce considerations

5. MILK SUPPLY Ability to develop desired milk volumes – Scale efficiencies significantly impact cost of manufacturing, particularly for bulk commodities – Scale efficiencies less of a factor with small batch processing

6. SCALE EFFICIENCIES IMPORTANT FOR COMMODITY PRODUCTS Source: Stephenson Testimony, Class III/IV Hearing (9/16/2006)

7. MILK SUPPLY Long-term Viability of Milkshed – What is the health of the producer sector? – Absent milk price and other government programs, would fundamentals favor milk production in the area? Resource availability (feed, water, etc) Climate conducive to efficient milk production

8. DECEMBER 2011: U.S. MILK MARKETINGS BY COUNTY

9. ABILITY TO SERVICE TARGET MARKET Logistics – Can you deliver product within customer expectations of: Remaining shelf life Responsiveness Competitive landed all-in costs – Combined cost of inputs (including milk) and costs of manufacturing, transportation and distribution

10. REGULATORY & BUSINESS ENVIRONMENT Current – Supportive (or at least, accepting) of animal agriculture and manufacturing – Tax & fee structures – Business development incentives Future Regulatory Risk – Science-based approach to environmental issues – Economic-based approach to pricing Safety valves in regulated pricing system

11. WORKFORCE CONSIDERATIONS Sufficient pool of potential employees within reasonable commuting distance Is there a dairy (or food production) culture? Is the quality of life in the area going to aid or challenge recruiting?