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CWT 2.0

11:24AM Nov 17, 2010

 

Bonus Content


Cooperatives Working Together

AgDairy Market Update by Robin Schmahl

The revised version of the Cooperatives Working Together (CWT) program will focus solely on enhancing U.S. dairy exports.

The decision was made at the annual meeting of the National Milk Producers Federation (NMPF) in late October. Throughout its seven-year history, CWT has funded 10 herd buyouts, culling 510,000 cows. But critics of the program point out that culling cows from the herd only temporarily slows milk production.

In addition, critics say, the larger of the herd retirements had the potential to actually short the U.S. domestic market, which could be back-filled by imports. “The new focus on exports allows us to fully supply our domestic markets while building export sales,” says Jim Tillison, chief operating officer of CWT.

 

The new program will ask participants for only a 2¢/cwt. commitment for 2011 and 2012. CWT members will also require that 75% of the nation’s milk supply be involved in order for the program to continue.

CWT currently has a $30 million reserve, which will be split evenly between 2011 and 2012. If the 75% participation threshold is reached, CWT will have about $40 million to spend on export bonuses in each of the next two years.

It remains to be seen whether the 75% level will be reached, however. California Dairies, Inc., the nation’s second largest dairy coop, producing more than 9% of the nation’s milk, did not support the new version of CWT at the NMPF annual meeting.

Economic analysis by the University of Missouri shows that $15.53 in revenue is gained for every $1 spent on export bonuses. The return for herd retirements was $19.12 for every $1 spent.