NFO Offers Milk Price Solution

July 26, 2009 07:00 PM
 At the National Milk Producers Federation Strategic Task Force Meeting in Chicago July 21, National Farmers Organization proposed a new Cooperative Marketing Initiative designed to help relieve the current producer milk price crisis.

"Our Cooperative Marketing Initiative (CMI) takes a non-governmental approach, where farmers themselves would take the initiative to alter the dairy marketing and pricing landscape,” said National Farmers Organization Dairy Director Bradley Rach.

The Initiative would have three functions:
  • It would set national production levels consistent with national usage
  • Each cooperative would be assigned a production base level consistent with their share of national production
  • CMI would set target prices at levels that would enable their members to profitably produce milk

"NMPF would determine how much milk should be marketed to maintain the target price,” Rach said. That amount of milk would be expressed as a percentage of base, called the Cooperative Full Value Production Level (CFVPL), for each cooperative.”

Once the full production level was assigned to all cooperatives for a marketing period, each co-op would then in turn assign a full production level value to each of its members. Each co-op would then agree to pay each member the target price minus marketing expenses, on all milk marketed up to the member's Full Value Production Level.

If a producer exceeded his or her assigned production level, they would receive the target price for the assigned production level and a lesser price for the excess.

When base production levels required adjustment because farmers changed the size of their operations—or for those producers entering or exiting the industry, individual cooperatives would handle those developments in a way that maintained their initial base.

"CMI would definitely complement the CWT program, and help producers get their arms around achieving a profitable price for their production,” emphasized Rach.

NMPF's Task Force is now in the process of conducting a more detailed analysis of the price stabilization plan discussed in Chicago, and will meet again in August to review that, and other ideas to reform the milk pricing system.

National Farmers is a group marketing and bargaining organization for the nation's farmers, ranchers and dairymen.

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