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Effective October 1, 2009, CWT is implementing its third herd retirement of the year. All bids submitted must be postmarked no later than Thursday, October 15. This is the fifth herd retirement that CWT has conducted in the past 18 months.

The two herd retirements in the second half of 2008, plus the two herd retirements so far in 2009, have removed 250,000 cows from the nation’s dairy herds, helping to bring the supply of milk more in line with demand. This third herd retirement of 2009, along with an improving domestic economy and a stabilizing global economy, should further accelerate the recovery in dairy farmers’ prices.

As with past herd retirements, producers wishing to submit bids into the program must be members of CWT, either through their membership in a CWT member cooperative, or as an individual, as of January 2009. Producers whose bids were selected in previous herd retirements will not be eligible to bid again. This round will once again include a bred heifer option.

The maximum bid CWT will consider is again $5.25 per hundredweight of milk. CWT will select bids beginning with the lowest bid with consistent milk production. However, given budgetary considerations, there is no guarantee that every producer submitting a bid up to the maximum $5.25 bid level will be accepted.

Once again, producers whose bids are accepted in this herd retirement will be paid in two installments: 90% of the amount bid times the producer’s milk production from September 1, 2008, through August 31, 2009, when it is verified that all cows have gone to processing plants. The remaining 10% plus interest will be paid at the end of 12 months if neither the producer nor the dairy facility – whether owned or leased – go back into in the commercial production and marketing of milk during that period.

Farm audits should begin the first week of November and be completed by early December.

The table below shows the total number of cows and the pounds of milk production that CWT has removed since June of 2008 by acting decisively in a timely way to aggressively drive supply into balance with demand.

In addition to the actual milk production CWT removed, additional future milk production is impacted by reducing the number of new animals entering the milking herd. The bred heifers removed would have produced another 100 million pounds of milk and their heifer calves as well as the heifer calves of the dry cows removed raise the total to another 140 million pounds per year.