Friday, January 2, 2009

Dairy farms out of buisness: CWT announcement

The Cooperatives Working Together (CWT) Program has recently announced that 184 bids were accepted in the second round of acceptances in 2008, and those bids account for over 60,000 cows. This announcement and the regional distribution of the herds was profiled in a recent World Dairy Diary blog posting.

This program has announced that it will continue in 2009, which will likely be needed given the current economic conditions both broadly, but especially for the dairy industry.

Dairy producers in milk marketing cooperatives that belong to the umbrella organization, National Milk Producers Federation, contributed 10 cents US for every 100 lbs (22 kg) of raw milk sold to the milk marketing cooperative. These producers represent about 70% of the milk sold in the US.

Dr. Scott Brown of the Food and Agriculture Policy Research Institute at the University of Missouri did an independent analysis of the impact of the CWT program. He found that the 10 cents per 100 pounds of milk invested in the program resulted in 75 cents US return in higher milk prices.

While the industry should feel positive about the CWT Program and its benefits, it should also be recognized that the dairy producers who represent 30% of the milk produced in the US also receive the benefit of the program, without having to contribute the 10 cents. Using US averages, that's about 20,000 herds that each get an extra $2,400 or so each year because of the work of the 70% of the industry.

Not fair is it? Guess not. I remember my father fretting over those kinds of decisions when he was a leader in his milk marketing cooperative. The more things change, the more they stay the same.

Hope that helps.


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