Missouri Dairy Business Update  
Volume 4, Number 11
November 2004

COOPERATIVES WORKING TOGETHER ACCEPTS 378 HERD RETIREMENT BIDS TOTALING 931 MILLION POUNDS OF MILK
Herd Retirement Audits To Begin By December 1

ARLINGTON, VA Cooperatives Working Together (CWT), the farmer-led economic self-help effort for Americas dairy producers, announced Wednesday that it has accepted 378 bids from farmers seeking to retire their milking herds, representing approximately 51,700 cows. Those retirements will remove 931 million pounds of milk, or 0.55% of the nations supply, helping to stabilize farm-level prices that have been declining in recent months.

CWTs first Herd Retirement program was implemented in the fall of 2003, when 299 bids, representing 608 million pounds of milk, were accepted. A total of 732 bids were submitted last month as part of the second Herd Retirement program, meaning CWT will accept 52% of the bids sent in this fall.

Jerry Kozak, President and CEO of the National Milk Producers Federation (NPMF), which is operating CWT, said that just like last years program, the 2004 Herd Retirement effort will surpass CWTs initial goals for this year.

We set out with the intent of reducing milk supplies by 870 million pounds, and in fact, we will exceed that target by 7% without adding to the budget for the program. We also exceeded our target for cow removals by nearly 2,700. Whats more, we will again honor our regional safeguard limits, meaning that no region of the country will suffer a disproportionate loss of milk supplies, Kozak said.

Under CWTs guidelines, safeguard thresholds have been established for five separate regions of the country, limiting the total milk withdrawals possible in each. The limits are strictest in the Northeast, Southeast and Midwest, and looser in the Southwest and West.

The totals for each region in 2004 include:
Region, Pounds of milk, Farms accepted, % of total milk reduction, Number of cows
1 (Northeast), 73 million, 57, 8%, 4,107
2 (Southeast), 65 million, 40, 7%, 4,327
3 (Midwest), 149 million, 157, 16%, 8,878
4 (Southwest), 291 million, 76, 31%, 16,551
5 (West), 353 million, 48, 38%, 17,894
TOTALS 931 million, 378, 100%, 51,757

In order to ensure the integrity of the herd retirement process, those farms whose bids have been tentatively accepted will soon be contacted by CWT field auditors, shortly before those auditors visit each of the farms. That process will continue until all the farms have been audited, and the herds have been tagged for removal. Farmers must send their animals to slaughter shortly after that auditing and tagging process is complete.

Kozak said that specific bid information, including the range of accepted bids and the average bid, wont be released until mid-December. By that point, all bidders will be notified of their status.

CWT is being funded by dairy cooperatives and individual dairy farmers, who are contributing a 5 cents per hundredweight membership assessment on their milk production from July 2004 through June 2005. More than 70% of the nations milk supply is contributing to the program. The money raised by CWT will be apportioned between the Herd Retirement program, and the Export Assistance program, which helps support the overseas sales of butter and cheese.

The NMPF, headquartered in Arlington, VA, develops and carries out policies that advance the well-being of U.S. dairy producers and the cooperatives they collectively own. The members of NMPFs 32 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of 60,000 dairy producers on Capitol Hill and with government agencies.

For more on CWTs activities, visit our Website at www.cwt.coop.

 


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