Cooperatives Working Together Accepts 343 Herd Retirement Bids Totaling over 1 Billion Pounds of Milk

ARLINGTON, VA – The next herd retirement effort conducted by Cooperatives Working Together will remove more than one billion pounds of milk, or 0.6% of the nation’s dairy supply, in an effort to help strengthen and stabilize farm-level milk prices. USDA projects a 2.3 billion pound increase in milk production for 2007 and this action by CWT effectively reduces that projection by 45 percent.

CWT announced today that it is tentatively accepting 343 bids from 39 states, representing 54,000 cows which produced 1.03 billion pounds of milk last year. Beginning the week of March 19th, CWT auditors will begin visiting those farms to check their milk production records, inspect the herds, and tag each of the cows for slaughter. All farmers will be notified no later than April 15th as to whether their bids were accepted.

A total of 1,397 bids were submitted to CWT in this round, a larger sum than the combined number of bids submitted in rounds 2 in 2004 (736 bids) and 3 in 2005 (651 bids). Jerry Kozak, President and CEO of NMPF, which administers CWT, said that the response by so many bidders was an indication that the timing was right for this retirement effort.“The combination of economic indicators that we’ve been monitoring told us that this was the right time to act,” Kozak said. “As a result of the strong response to this next round, we were able to select bids at a much lower cost per hundred pounds of milk removed, and spend less of our overall budget, than we had anticipated. This will provide more funding going forward for future herd retirements, and for our very active export assistance program.”

“The next step is for our field auditors to visit each farm to verify the accuracy of the information submitted during the bidding process,” said Walt Wosje, Chief Operating Officer of CWT. “On-farm audits are critical to ensure the integrity of the program as we go forward.” Farmers must send their animals directly to slaughter shortly after the auditing process on their farm is complete, Wosje said.

Wosje also said that the program again applied its regional safeguard limits, so that no region of the country will suffer a disproportionate loss of milk supplies. Under CWT’s guidelines, safeguard thresholds have been established for five separate regions of the country, limiting the total milk withdrawals possible in each. The only safeguard limit reached was in Region 2, the Southeast. The two Western regions will contribute 68% of the milk removed in this round – a proportion similar to previous rounds.

Kozak noted that the average herd size, and average milk output per cow, for this round’s accepted bids were similar to national averages. He said that further bid information, including the average price of accepted bids, won’t be released until all the on-farm visits have been completed. The total number of bids accepted by region in this round includes:

Cooperatives Working Together is being funded by dairy cooperatives and individual dairy farmers,
who are contributing 10 cents per hundredweight assessment on their milk production through December 2007. 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.