SoutheastDairyExtension.org: Tip of the Month November 2003

NMPF Cooperatives Working Together (CWT) Program Launched
Kristy M. Hill
University of Tennessee

The CWT program was developed to address a 25-year low in the farm level price of milk in this country. It is a producer led and funded program that will help pare domestic milk production, better aligning it with demand, and raise farm level prices as a result. There are three parts to this initiative: an export assistance program for cheese, a herd retirement program and an incentive program for producers who agree to reduce milk marketings. Originally, the CWT program was to be funded by an 18 cent per 100 lb. assessment on the dairy farmer members of the cooperatives involved, and there was a target enrollment of 80 percent of the national milk supply before the program was to be launched. The program would have reduced the U.S. herd size by 125,000+ cows and U.S. milk production by 4.6 billion pounds (2.7 percent of current production) over a 12-month period. Sponsors were hoping the program would boost the all-milk price by $1.30 per hundredweight.

On July 3, the National Milk Producers Federation Board of Directors approved a modified version of the CWT program. In the scaled back version, the assessment on members would be 5 cents per hundredweight and requires a lower participation level. Over 70 percent of the nation’s milk volume is committed to participate in the program. With less money, the CWT program will have some impact, but not as dramatic as sponsors had originally hoped. With the new proposal, an estimated 36,000 cows will be culled and milk supplies will be reduced by 1.2 billion pounds over the next 12 months. The estimated net impact of the new version is 23 cents per hundredweight.