New Study Finds CWT Enhanced Milk Checks $1.54 in 2009

November 16, 2009 06:00 PM
Cooperatives Working Together has generated a return on investment of $1.54 /cwt so far in 2009, according to an independent economic analysis of the voluntary dairy farmer-funded and managed self-help program.
That evaluation was released last week at the 2009 NMPF annual meeting in Grapevine, TX, 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 two completed herd retirements in 2009, along with the lingering effect of the two conducted in 2008, as well as the herd retirement in 2007. He also noted positive contributions to price because of the bred heifer option that CWT has offered in recent years, along with CWT's Export Assistance program, which while dormant this year, was active in 2007 and 2008.
Brown's analysis showed that the combined effect of CWT's cow-removal programs, as well as its export assistance program, helped raise farm-level milk prices by $1.54/cwt this year, and added $2.4 billion to farm-level milk receipts in a year when dairy income is expected to shrink by more than $10 billion because of the global recession.
The program has produced an average return of $0.67/cwt. since 2004, Brown reported. CWT has been funded by a 10 cents/cwt. membership fee since 2007; prior to that, membership was 5 cents/cwt.
"Government safety net programs have helped dairy farmers to an extent, but CWT has had the most noticeable positive contribution to the balance sheets of producers this year,” Brown said. In calculating the impact of CWT, Brown said that his economic models account for the variety of supply and demand factors that affect farm-level milk prices, including the potential production response of some farmers due to the higher prices generated by CWT.
Brown noted that his estimate of the 2009 CWT impact will likely change again, since CWT is in the middle of executing its third herd retirement of 2009. This current round is in the middle of removing an additional 26,000 cows, but the final results of that effort have yet to be tallied.  Brown said that each herd retirement has an impact that lasts several years, and that the two herd retirements of 2008, and the three this year, will continue to produce significant gains for farmers into 2010.
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