National Milk Producers Federation

Release Date: January 24, 2005

ARLINGTON, VA – Cooperatives Working Together has completed a two month-long process of auditing farms that were tentatively accepted last fall into CWT's second herd retirement program, and officials today released the final tally of farms, cows, and milk involved in the second round of the program.

After completing all of the on-farm audits, CWT has finally accepted bids from 363 farms that had offered to retire their dairy herds. The audits confirmed that there were 50,478 dairy cows being retired from those farms, all of which will be sold promptly by the participating farmers for conversion into beef. The cows being retired had produced approximately 908 million pounds of milk on an annual basis, which represents a little more than one-half of one percent of the estimated 170 billion pounds of milk produced in the U.S. in 2004.

There were 15 fewer farms accepted in the program than had initially been accepted last November at the end of the bidding process.

“Our field auditors visited each of the 378 farms we had tentatively accepted,” said Jerry Kozak, President and CEO of National Milk Producers Federation, which manages CWT. “I am pleased to report that we had excellent cooperation from all the farmers, which allowed us to complete our auditing process ahead of schedule. That process screened out a small number of bids that, it turned out, didn't meet our program's criteria,” he said.
     
“The dairy farmers and cooperatives that support CWT can be assured that we have a rigorous system in place to make certain that their money is being spent wisely and appropriately,” Kozak added.

The average bid accepted in the second herd retirement program was $5.24/cwt, with no bid accepted above $7.63. The 363 accepted bids were selected from a total of 736 submitted. The 908 million pounds of milk removed is 4% higher than CWT's initial goal of 870 million pounds. In the first herd retirement program in the fall of 2003, CWT accepted bids from 299 farms that retired 33,000 cows representing 608 million pounds of milk.

“This program is a win-win for all of America's dairy producers,” Kozak said. “Producers who wished to retire their herds were able to do so through a bidding process that assured they received fair market value their milk production capacity, while those dairy farmers who remain in business will benefit because of a better balance between supply and demand.”

Under CWT's program, farmers bid to be paid for the volume of milk that their herds produced, and they also recovered the market price for those herds when they were sold for beef.