Apr 01, 2009
If you’ve read any news lately, (or here, or here), you know that dairy farmers are facing a winter of great discontent. Prices are very low, and with input costs still high, the cost of milk production is at one of the lowest points in history. All the 1930s-era comparisons when talking about today’s economy are certainly true for dairy farmers right now.
That’s why Cooperatives Working Together announced Wednesday the latest in its series of herd retirement programs. Some may have thought it was an April Fool’s prank, but given where the economics of dairying are right now, the situation is in fact very serious.
This is the second bit of good news farmers have received in the past week. Last Thursday, Agriculture Secretary Tom Vilsack announced that USDA was going to use 200 million pounds of surplus nonfat dry milk in domestic feeding programs. The main benefit of that decision was to keep the powder from being resold to the commercial market by USDA, which could have retarded the rebound in farm-level milk prices. The other good news about the announcement was, frankly, just the fact that USDA recognized the gravity of the dairy problem, and did something about it.
And that’s basically what CWT’s announcement means today: it’s a sign of spring blooming, not April fooling. The futures markets are pricing in stronger milk prices in the last 4-5 months of the year. CWT will help farmers get there.