Missouri Dairy Business Update  
Volume 6, Number 3
March 2006

Cwt to Increase Resources Through 10 Cent Assessment
Larger CWT Program Will Address Growing U.S. Milk Production

ARLINGTON, VA – The members of Cooperatives Working Together voted this week to double the program’s current five-cent per hundredweight assessment, in order to accumulate the additional financial resources necessary to address the surge in U.S. milk production that is beginning to depress farm-level prices. The higher assessment will begin on July 1st, 2006, and run through 2007.

“We’ve demonstrated in the past three years that CWT can help dairy farmers address a supply and demand imbalance, but we need more leverage as we look ahead into 2006 and 2007,” said Jerry Kozak, President and CEO of the National Milk Producers Federation, which manages CWT. Milk production was up 3.5% last year, he noted, and continues to grow rapidly in 2006. Kozak said that the farmer-funded self-help program “risks being irrelevant in the marketplace if we don’t have sufficient resources to do what farmers expect of us.”

CWT’s current budget does not contain sufficient revenue to fund additional herd retirement rounds, Kozak said. The higher assessment, to be collected starting in July, will bring in the additional money needed over 18 months to continue both the herd retirement program, and the ongoing export assistance program.
“We’ve seen increased growth in milk output recently, with both overall cow numbers, and milk production per cow, reaching significant levels,” Kozak said.

“The additional nickel gives us more money to address the supply situation that is threatening farmers’ prices,” he said.

Kozak said that once the new assessment begins, he expects that the level of overall participation in CWT will remain at the 74% level of the nation’s milk supply that it presently enjoys.

“Every one of CWT’s 49 member cooperatives, along with the hundreds of individual farmers paying into the program, recognizes that the stakes have gotten higher as the extent of the supply/demand imbalance has grown. The more money we are able to collect, the more effective we can be in meeting the goals of our members,” he said.

In addition to voting for a higher assessment, CWT’s members also modified several other of the program’s features.

First, the regional safeguard levels in the Northeast, Southeast and Midwest were raised to ¾ of one percent of each region’s annual milk production, up from ½ of one percent.

Second, Whole Milk Powder was added to the list of dairy products eligible for export using CWT bonuses. Additionally, Mexico, a major market for WMP, was added to the list of eligible destinations for that specific product.

Third, the target price for cheese under the export assistance program was moved from $1.40 per pound, to $1.30. The target butter price remains at $1.30 per pound.

Cooperatives Working Together is being funded by dairy cooperatives and individual dairy farmers, who are contributing 5 cents per hundredweight assessment on their milk production through December 2006. The money raised by CWT’s investment is being apportioned among several supply reduction programs to improve the national all milk price. For more on CWT’s activities, visit www.cwt.coop.

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