CWT Farm Audits Completed for Third Retirement Round

Retirements plan to remove 1.2 billion pounds of milk from the nation's dairy herd.

Published on: Dec 9, 2005

Cooperatives Working Together, the farmer-led economic self-help effort for America's dairy producers, announced Monday that it has completed processing 442 of the bids tentatively accepted from farmers seeking to retire their milking herds. Those retirements will remove 1.2 billion pounds of milk, or 0.7% of the nation's supply, by reducing the nation's dairy herd by more than 64,050 cows.

CWT's first Herd Retirement program was implemented in the fall of 2003, when 299 bids, representing 608 million pounds of milk, were accepted. This was followed by a second round of retirements in the fall of 2004, which retired 378 herds thereby removing 931 pounds of milk. A total of 657 bids were submitted late in the summer as part of this most recent Herd Retirement program. The average bid price of the 442 accepted bids was $6.75 per hundredweight, compared to $5.24 last year.

"Cow numbers and production per cow were both on the rise. Experience tells us that can be a formula for dramatic milk price drops. That's why we initiated this most recent herd retirement," says Jerry Kozak, President and CEO of NMPF, which manages CWT. "We are pleased with the size program we were able to execute. This is our biggest retirement to date,” Kozak adds.

CWT auditors were sent to each of the farms whose bids were accepted. Once the information submitted by the farmers was verified, each of the cows was tagged with a special CWT identifier, and the farmers were given a brief amount of time to sell their cows for slaughter. It is expected that nearly all cows will have been processed by the end of the year. 

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 less strict in the Southwest and West.

The totals for each region in 2005 include: 

Region

Pounds of milk

Farms accepted

% of total milk reduction

Number of cows

 Average bid

   1 (Northeast)

93 million

43

8%

4,798

$6.52

   2 (Southeast)

63 million

53

5%

3,803

$5.22

   3 (Midwest)

210 million

183

18%

12,345

$6.66

   4 (Southwest)

292 million

82

25%

16,130

$7.36

   5 (West)

 516 million

81

44%

26,993

$7.52

   TOTALS

1.2 billion

442

100%

64,069

$6.75


CWT is being funded by dairy cooperatives and individual dairy farmers, who are contributing a 5 cents per hundredweight membership assessment on their milk production from July 2005 through December 2006. More than 74% of the nation's milk supply is contributing to the program. The money raised by CWT will be apportioned between the Herd Retirement program, and the Export Assistance program, which helps support the overseas sales of butter and cheese.