California-based Western United Dairymen (WUD) has called for Cooperatives Working Together (CWT) to immediately activate a new round of herd retirements.
In a letter this week to the National Milk Producers Federation, which oversees the CWT program, WUD's chief executive officer Michael Marsh noted that while WUD appreciates the current herd retirement program, "It's clear that the markets are waiting on more. It is also clear that all the correct market indicators are in place to support further action.”
The current economic crisis is driving California dairy families to the breaking point, WUD said.
In its June 12 Weekly Update, WUD estimated June 2009's Class 1 prices to producers at $11.85/cwt., down from May 2009's $12.84/cwt. California's Class 1 category denotes milk used in fluid products, including whole, lowfat, extra light and nonfat milks.
WUD, a producer trade group, represents more than 60% of California's milk production.
California dairies "simply cannot sustain the economic losses they are facing,” said Marsh's letter. "Decades of equity and hard work are dissolving before their eyes. It is for times like these that the CWT program was designed. And it is for times like these that dairymen made the commitment to fund the CWT program. Because it is producer-driven and able to respond quickly, it is the primary tool that Western United Dairymen looks to as we all are struggling to bring balance back to the dairy marketplace. This valuable tool is the only thing standing ready and able to bring short-term relief.”
CWT's latest herd retirement, announced in May, marked its seventh and largest buyout since its efforts began in 2003.
The most recent program accepted 388 bids representing 102,898 cows and 2 billion pounds of milk. The regional distribution results were heavily weighted in Western States. The West and Southwest regions combined for 79% of cows removed and 81% of associated milk production.
"The number of cows bid in this round by producers in the West and Southwest is an indication that their financial stress is particularly acute given where their milk prices and input costs are,” CWT Chief Operating Officer Jim Tillison said May 20.
Catherine Merlo is Western editor for Dairy Today. You can reach her at email@example.com.