This year's Cooperatives Working Together (CWT) herd retirement effort will remove the fewest dairy cows since the program began in 2003. It also will remove the lowest amount of potential milk production. Rounding out the triumvirate, it will also see the fewest herd buyout bids accepted.
CWT officials released the numbers for this fifth herd retirement last week. Dairy producers in 41 states submitted 609 bids, with 209 of them tentatively accepted.
Those 209 farms will sell to slaughter 25,474 cows. The projected one-year milk production that those cows will not put onto the market is 440.3 million pounds.
That 440.3 million pounds is just slightly more than two-tenths of one percent of this year's projected U.S. total. Last month, the USDA's Economic Research Service (ERS) predicted that the nation's milk production would total 189.3 billion pounds this year.
The second-fewest bids were accepted in 2003, at 299. CWT accepted the most bids in 2005, with 442.
When it comes to cows, CWT removed its second-smallest amount in 2003, at 32,724. The privately funded program removed 64,069 cows in 2005, the most in its six-year history.
When it comes to potential milk production, CWT removed its second-lowest amount in 2003, at 609.2 million pounds. In 2005 it removed its most potential milk production n 117.36 million pounds.
Bob Cropp, an emeritus professor of agricultural economics at UW-Madison, thinks this latest CWT round will have "some" impact, even though few bids were accepted and less cows are being removed.
"This will help keep milk prices up," he says. "How much, I can't say."
Cropp adds that he thought this latest version of CWT would draw more interest than it did, due to high feed costs. But, apparently, he says, strong milk prices trumped high feed costs.
The number of dairy farmers offering to sell their herds through CWT fell steadily until 2007. That year, 1,374 producers submitted bids, compared to 657 in 2005, 736 in 2004, and 2,038 in 2003.
This year, the highest number of "accepted" bids came from the Midwest, also called "region three." This area consists of Wisconsin, Minnesota, Iowa, Illinois, Michigan, Indiana, Ohio and both Dakotas.
Region two n the Southeast states n had 38 bids accepted, followed by 36 for the Southwest, 30 for the Northeast, and 29 for the West.
Most of the cows will be removed from the West n California, Idaho, Montana, Nevada, Oregon, Utah, Washington and Wyoming. Dairy farmers there will sell to slaughter 9,078 cows.
Their counterparts in the Southwest will sell 5,189 cows, while those in the Southeast will sell 4,228. The Midwest will get rid of 4,124 cows, and the Northeast will lose 2,855.
Most of the eliminated milk production will also come from the West. The CWT cows from those eight states were projected to produce 162 million pounds if they were not slaughtered.
The next-largest cut in milk production is from the Southwest n Arizona, Colorado, Kansas, Nebraska, New Mexico, Oklahoma and Texas. There, 84 million pounds of milk will not be produced.
Thanks to CWT, the Midwest will lose 70 million pounds, while the Southeast loses 68 million. Finally, the Northeast will lose 65 million pounds of milk.
New wrinkles
This year's CWT herd buyout has a couple of new wrinkles. First, round did not contain "regional safeguards." That is, CWT officials did not try to limit the amount of milk production any of its five regions would lose.
The second new wrinkle is the offer to buy bred heifers. Christopher Galen, a spokesman for the National Milk Producers Federation (NMPF), which administers CWT, told Agri-View that only farms whose herd buyout bids were accepted can also sell its bred heifers for slaughter through CWT.
However, bred heifers do not have to go to slaughter with cows. But a farm whose bid was accepted did have to sell all its bred heifers n not just some of them n if it was going to sell any.
In all, this year's CWT buyout will remove 358 bred heifers from participating farms. The Southeast leads with 172 bred heifers being sold, followed by the West with 101. Next come the Southwest with 36, the Midwest with 32, and the Northeast with 17.
Galen said there is no delay between the time a farm sells its cows through CWT and when it can begin milking again. Thus, a likely explanation for just 172 bred heifers going to slaughter.
"The price we offered (for bred heifers) was modest," Galen added. "It was a flat fee of $1,050 per animal. It's possible that a lot of people thought that was less than the market could return."
Auditors are expected to start visiting the 209 farms with accepted bids this week. They will examine milk production records, inspect the herds, and ear tag each cow and bred heifer.
When that is all done farmers have 15 days to send their CWT animals to slaughter. Farmers get to keep the money from the slaughter, along with being paid the amounts of their accepted bids. Last year the average accepted bid was $5.50 for every hundredweight of milk the slaughtered cows would have produced.
CWT says all farmers who offered bids will be notified by Aug. 12 as to whether their bids were accepted. The amounts of the bids will be released by around Labor Day or the end of August, according to Galen.
In a news release, CWT says, "This latest round of CWT's milk reduction program should help strengthen farm prices for milk at a time when dairy producers are suffering from rising feed and fuel costs."
airy Buyout
