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Pine Hill Dairy- Answering Your Questions

Q. Why is there a shortage of fresh pasteurized/ chilled milks on
supermarket shelves?
A. The shortage has arisen due to a record low intake of raw milk from
farms across Barbados, coupled with the current high demand for fresh
milk. The Pine Hill Dairy (PHD) owns no dairy herd and can only
process milk that it receives from farmers.
Q. Does the PHD add powdered milk to its fresh white milks?
A. No. Fresh pasteurized/chilled Full Cream and 2% Milks have always
and will always only contain 100% fresh milk.
The other categories (flavored and UHT long life milk) will, from time to
time, consist of varying percentages of fresh milk and reconstituted
powder, depending on the intake of raw milk from farmers. We wish to
assure our loyal customers that PHD products always comply with the
listed ingredients on the package label.
Q. How does the PHD use the fresh milk it receives from dairy
farmers?
A. PHD processes milk received from farming partners in the following
order of priority:
1. Fresh pasteurized/chilled Full Cream and 2% “White” Milks
2. Flavored Pasteurized milks, Yogurt and Ice Cream
3. UHT milk
4. Evaporated milk
We will not alleviate any shortage in supply by adding any powder to
fresh pasteurized chilled white milks.

Q. Why is there a quota system in place for farmers?
A. The quota system, which has been the topic of much debate over the
years, was designed to:
· Provide all farmers with an opportunity to sell milk to the PHD in
fixed ratios depending on market supply.
· Create a market for any milk in excess of the demand for fresh
pasteurized.
Under the quota system, the PHD pays its top price for milk processed as
fresh pasteurized (chilled), and under a tiered system, reduced prices for
milk used in its other milk products.
Through the quota system, the PHD has been successful in growing the
market for UHT milks, yogurt and ice cream in addition to supplying the
cruise ship industry and other exports. For this system to remain
effective it has to be dynamic in nature so as to respond to changing
demographics and taste as well as market demand; this has caused the
single largest level of debate. The PHD continues to work closely with
its farming partners with a view to ensuring that the concerns of all
parties are addressed in the redesign and application of the quota or
whichever system is identified as best suitable for the changed
environment.

Q. Given that there is a current shortage, will the quota system
remain?
A. The PHD is in discussion with the farming community (through their
representatives) to:
1. Suspend the quota and pay its top price for all milk received.
2. Use reconstituted powder in preparation of all milk based
offerings (with the exception of fresh pasteurized/chilled milks).
3. Consider, and if financially appropriate, import fresh milk to the
extent of the shortfall and until such time as the local supply
matches demand.
4. Assist farmers in improving yields from existing operations
through access to loans at preferential rates for upgrades to
parlors and other technical assistance as needed.
5. Support farmers in their requests for importation of new cattle
into the market.
6. To return to utilization of fresh milk across all milk products as
soon as the situation permits.

Q. If the PHD imports fresh milk during this time of shortage, will
there be a price increase?
A. We do not currently forecast an adjustment to the price of locally
produced milk. The price at which imported milk is sold is dependant on
factors entirely outside of the reach of the PHD. PHD recognizes that
milk is a vital commodity to our citizens, especially young children, and
will endeavor to do all within its control to ensure that if we import fresh
pasteurized/chilled milks that they will be affordable.

Q. Will there be price increases on any other PHD milk products
during the shortage?
A. The PHD will continue to do all it can to make this option its last
resort. There has not been an increase in the price of fresh
pasteurized/chilled milks since July 2001 and the PHD has continued to
absorb increases in the cost of fuel, ingredients and packaging. This is
becoming an increasing challenge for the Company.