Cooperatives Working Together (CWT) tentatively accepted 388 bids representing 102,898 dairy cows and 2 billion pounds of milk production capacity in the first of a series of herd retirements planned over the next 12 months.
That represents the largest single herd retirement carried out in the six-year history of CWT, a producer-funded national program developed by National Milk Producers Federation (NMPF). Its goal: to strengthen and stabilize milk prices by balancing supply with demand.
Dairy farmers in 41 states submitted a total of 538 herd retirement bids by the May 1 deadline. The 388 bids tentatively accepted represent 72% of the total bids received. The number of cows now scheduled to be removed account for 64% of the total number of cows offered and the 2 billion pounds of milk account for 67% of the milk production offered.
“The high percentage of bids CWT selected this time around is an indication that producers understood that CWT would only be able to accept reasonable bids per hundred pounds of milk in order to adjust the nation’s dairy herd and better align supply and demand,” says Jerry Kozak, president and CEO of NMPF.
CWT field auditors are beginning to visit the farms whose bids were accepted, checking milk production records, inspecting herds and tagging each cow for processing. All farms should be audited by early July and cows should begin moving off dairies by late May. All bidders will be notified no later than June 12 as to whether their bids were accepted.
“The bids selected ranged from farms with fewer than 50 cows to dairies with over 5,000, demonstrating that farms of all sizes in all areas are facing a very difficult year in 2009,” Kozak says. Herd retirements will help reduce the amount of milk coming to market and strengthen prices, he adds.
“CWT, thanks to the commitment of 36 cooperative members and over 500 individual dairy farmer members, has the resources to carry out additional herd retirements in the coming months. That is why CWT will not announce the average level of the bids accepted until all the herd retirements are completed,” Kozak notes. “We will continue to monitor key economic indicators in order to determine the right time to implement the next herd retirement.”
Once CWT’s field auditors inspect and accept the herds offered as part of the bidding process, farmers have 15 days to send animals to a processing plant.
Producers will be paid 90% of the amount bid times the producer’s 12 months of milk production when it is verified that all cows have gone to slaughter. The remaining 10% plus interest will be paid at the end of 12 months following the farm audit, if both the producer and his dairy facility – whether owned or leased – do not become involved in the commercial production and marketing of milk during that period.