Cooperatives Working Together (CWT), the economic self-help program conducted by America’s dairy producers in an effort to help stabilize farm-level prices, announced today that it has tentatively accepted 448 bids from farmers to retire their milking herds. There will be approximately 66,000 cows removed, thereby eliminating 1.2 billion pounds of milk, or 0.7 percent of the nation’s annual supply.

Bids were selected from a total of 651 bids submitted. This is the third herd retirement program CWT has conducted. In its first herd retirement program in 2003, CWT accepted 299 of the 2,038 bids submitted.  Last year, it accepted 363 of the 736 bids submitted.  Jerry Kozak, President and CEO of the National Milk Producers Federation, which operates CWT, said that although there were fewer bids submitted in 2005, the quality of the bids was sufficient for CWT to reach its goals.

“The bottom line question for this program is whether we can reduce future milk production in a cost effective manner and maximize the investment our members are making,” Kozak said.  “I’m happy to report that we will again achieve those objectives.” While there will be fewer cows retired than initially anticipated, the actual volume of milk represented by those cows is in line with CWT’s target for this year’s retirement program.

Through the herd retirement program, if a farmer’s bid is accepted, CWT pays that farmer for the milk-production value of his or her cows.  This year, any dairy that had a bid accepted in either of the past two rounds, and subsequently re-entered the business, was not eligible to participate again. Also, those producers who have a financial interest in more than one farm were required to submit the milk production records for each of their dairy operations.

“The next step in the program 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,” Wosje says. That process will continue until all the farms have been inspected, and herds have been tagged for removal.  Farmers must send their animals to slaughter shortly after that auditing and tagging process is complete.

The program will again honor 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 limits are strictest in the Northeast, Southeast and Midwest, and looser in the Southwest and West. The two Western regions will contribute 70 percent of the milk removed this year.

The totals for each region in 2005 include: 
Region       Pounds of milk  farms      % of total       # cows
milk reduction 1 (Northeast) 93 million 43 8% 4,798 2 (Southeast) 63 million 54 5% 3,803 3 (Midwest) 208 million 184 17% 12,286 4 (Southwest) 300 million 83 25% 16,730 5 (West) 536 million 84 45% 28,027 TOTALS 1.2 billion 448 100% 65,644

Kozak said that specific bid information, including the average price of accepted bids, won’t be released until all the on-farm visits have been completed. All bidders will be notified of their status by the end of October.

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.

Cooperatives Working Together