What timing!
By Dairy Herd staff
| Friday, May 15, 2009
Michael Barcellos, of Monster Dairy in Turlock, Calif., is counting his blessings for the Cooperatives Working Together herd-retirement program. The bid he submitted for his 260-cow herd was accepted in one of the herd-retirement rounds held last year.
“I’m thankful my bid got accepted, because otherwise I would have been broke,” says Barcellos. Barcellos says he didn’t know at the time just how lucky he would get. Although milk prices weren’t too bad at the end of last year, Barcellos submitted his bid in November 2008 because of the exorbitant feed prices he was facing — $280 per ton for hay. The cost of feed was causing Barcellos to start racking up large amounts of debt.
If Barcellos’ bid had not been accepted, he would have tried to sell his cows to other dairy producers — and that might have been problematic, given the steep drop in milk prices that has occurred since that time. At the time he submitted his bid, Barcellos says he didn’t know that economic conditions would be as bad as they are now. “I realize now that I couldn’t have timed this more perfectly,” he says. The timing allowed Barcellos to avoid some of the lowest milk prices in history.
Barcellos learned that his bid had been accepted in December and the cows left in January.
Since 2003, the CWT program has culled 285,717 cows. This past week, officials announced they would be culling another 102,898 cows in the latest herd-retirement round. Citing confidentiality agreements, officials cannot release the names of the current participants at this time. CWT officials expect those names to be released the early part of July.
Barcellos had been paying into the CWT program through an assessment on his milk check, and always considered it an insurance policy to get out of the business if the need arose.
Yes, he misses the cows. It’s the toughest thing about the program and has taken an emotional toll, he acknowledges. “I knew every single cow by name and could recognize them from far away — of course I miss them. But, it’s a business and they can’t be pets.”
He didn’t stay out of business for long. The heifers he kept have already started to calve, and soon he will be at full capacity again. “It may seem crazy to get back in, but I was able to pay everything off because I participated in the program and am starting debt-free.”
Since the time Barcellos participated, CWT officials have imposed tighter restrictions on people going back into business. CWT officials hope these tighter restrictions increase the effectiveness of the herd-retirement program.
Participants in the most recent program, which closed May 1, will receive 90 percent of what they bid per hundredweight of milk produced during the period of March 2008 through February 2009. The remaining 10 percent, plus interest, will be paid after CWT has verified that neither the producer nor the dairy facility have been involved in the production and marketing of milk during a 12-month period.
Barcellos admits the tighter restrictions would make his decision to participate in future programs difficult. But, if the bid is high enough — and CWT officials are willing to accept it — he might consider it.
