Members of Cooperatives Working Together (CWT), the dairy farmer-funded self-help program, have voted to focus the seven year-old program exclusively on building export markets after 2010.
At the annual meeting of the National Milk Producers Federation (NMPF) – which manages CWT – CWT’s management committee determined that an export-centered program was the most appropriate course to follow in the future. This means that CWT will no longer fund any herd retirement rounds, through which CWT member farms are paid to reduce their herds. CWT conducted its 10th and final herd retirement this past summer.
“CWT has undergone several shifts in how it has been operated since it started in 2003,” said Jerry Kozak, President and CEO of NMPF. “The decision to drop the herd retirement program, but to maintain the basic structure of CWT with an exclusive focus on helping sell U.S.-made dairy products in foreign markets, allows CWT to continue making positive contributions to dairy farmers’ bottom lines.”
NMPF’s Board of Directors voted Tuesday to support a CWT program that will be funded at two cents per hundredweight, starting Jan. 1, 2011, and running through 2012 (the program currently collects 10 cents/cwt. on its members’ milk volume). Members also determined this week that 75% of the nation’s milk supply must be contributing at that level in order for the program to continue. They also voted to take the remaining funds not allocated so far in 2010, and shift those to the export assistance program in 2011.
A presentation by Dr. Scott Brown of the University of Missouri showed that the Export Assistance program has provided an excellent return on investment. For every one dollar spent assisting CWT member cooperatives in making export sales, U.S. dairy farmers received $15.53 in additional revenue. CWT’s export activity in 2010 has returned 18 cents per hundredweight, according to Brown’s analysis.
“The analysis shows that refocusing CWT’s efforts to maintaining U.S. participation in export markets will positively impact U.S. dairy producer margins,” said Kozak. “While reducing the milk supply through herd retirements has positively impacted producer prices, utilizing funds going forward in the export assistance program will allow CWT to respond more positively and more quickly to market conditions that can negatively impact producer margins.”
Kozak said that the membership commitment will be 24 months for both cooperatives and individual dairy farmers. This will allow CWT to develop an export assistance strategic plan as to how and when to best utilize the funds committed, he noted.
Source: Cooperatives Working Together