Cooperatives Working Together (CWT) has generated an average return on investment of 71 cents per hundredweight so far in 2008, according to an independent economic analysis of the voluntary dairy farmer-funded and managed self-help program.
That evaluation was released Wednesday at the 2008 NMPF annual meeting in Nashville, Tenn., by Dr. Scott Brown of the University of Missouri, a nationally-known farm policy expert who is regularly called on by the U.S. Congress to assess agricultural economic issues. Brown evaluated the impact of CWT’s 2008 herd retirement initiated in June, and its export assistance program activities during the first nine months of 2008. His data also incorporates the lingering effect of CWT’s past activities, primarily its four herd retirement rounds prior to 2008.
Brown’s analysis showed that the combination of CWT’s programs helped raise farm- level milk prices by 71 cents per hundredweight this year. The average impact since 2004 has been 55 cents per hundredweight. CWT has been funded by a 10 cent/cwt. membership fee since 2007; prior to that, membership was 5 cents/cwt.
“At a time when other financial investments are fairing poorly, CWT continues to generate a handsome return on investment for all U.S. dairy farmers,” Brown said. He noted that his economic models account for the variety of supply and demand factors affecting farm-level milk prices, “including the fact that in response to CWT, some producers have added cows and produced more milk,” Brown said.
“When you separate out all the other factors affecting milk production, the fact remains that CWT has boosted the milk check of each farmer by 71 cents per hundredweight this year.”
Brown said the cumulative income total added to farmers’ milk checks since CWT’s creation in 2003 has been $4.6 billion. CWT has spent approximately $300 million on the two programs during that period.
CWT’s export assistance program has become very active during the past three years, exporting the equivalent of at least one billion pounds of milk each year in 2006 and 2007, and 1.3 billion pounds year to date in 2008.
“The exports of cheese, butter, whole milk powder and anhydrous milkfat have added 14 cents per hundredweight to farmers’ checks in 2008,” Brown said, adding that his analysis only incorporates exports from the first nine months of the year, and that the impact of the export program will grow if CWT assists more exports through December. The impact of the herd retirement conducted earlier this year, and those in past years, contributed 57 cents/cwt. to the impact, producing a total $0.71 return so far in 2008, Brown calculated.