Important Tax Benefit Notice to Member Patrons Of

IMPORTANT TAX BENEFIT NOTICE TO MEMBER PATRONS OF

DAIRY FARMERS OF AMERICA, INC. (DFA)

September 12, 2011

Tax Name

Tax Name 2

Address

City, St Zip

The purpose of this notice1 is to inform you of your allocable share of the special manufacturing tax deduction, the Domestic Production Activities Deduction2 (DPAD). The pass-through deduction will be reflected in your 2011 Form 1099-PATR. Your deduction amount is detailed below:

Div: XXMember: XXXXXXPayee: XXEquity ID Number: XXXXXXXXXXX

Member Name: XXXXXXXXXXXXXXXXXXXXXXX

Patron’s Share of DFA’s Domestic Production Activities Deduction: $XXX.XX

We strongly recommend that you consult with your tax advisor immediately to maximize your 2011 tax benefit. Please contact your Area office or Kevin Cody at 816-801-6588 if you have any questions.

Domestic Production Activities Deduction Allocated to Patron

Created by Congress, the Domestic Production Activities Deduction has been in effect since 2005. It was designed to benefit businesses like DFA that have income from domestic production and/or manufacturing activities. The Tax Code contains special rules governing how cooperatives and their members must compute the deduction, and it permits cooperatives to elect to pass through to members all or a portion of their Domestic Production Activities Deduction. Cooperatives typically pass through to members the portion of the Domestic Production Activities Deduction that they can not themselves use.

For the year ending December 31, 2010, DFA is passing through to its member patrons its Domestic Production Activities Deduction. The amount listed above represents your allocation, which is based on actual 2010 volume and will be reported on your 2011 Form 1099-PATR.

This deduction can be used to reduce members’ taxable income. In order to claim this pass-through deduction, a member must enter the amount from Form 1099-PATR on the appropriate line of Form 8903 - Domestic Production Activities Deduction - to be filed with the member’s 2011 income tax return. The total deduction on Form 8903 is then carried to page 1 of the member’s Form 1040 or other tax return and or form as applicable.

We are required to include our payments to you for milk marketed in determining the amount of the Domestic Production Activities Deduction which we can claim and pass through to you and other members. As a consequence, you should not also include any portion of your DFA milk payments as qualifying revenue (domestic production gross receipts) in your own Domestic Production Activities Deduction computation.

1 This notice is issued pursuant to Section 199(d)(3) of the Internal Revenue Code.

2 See Section 199 of the Internal Revenue Code.