Plan to Reduce Milk Supply Detailed, Criticized
The National Milk Producers Federation (NMPF) appears to be moving ahead with a plan to boost raw milk prices by removing milk from the U.S. market. The Arlington, Va.-based dairy producer organization has given some new specifics on how the program would work. Meanwhile, the International Dairy Foods Assn. has mildly objected to the program, while suggesting that a dismantling of the Federal Milk Order system would do more to help farmers without being counter productive.
Late last month NMPF announced that its membership had voted in favor of the Cooperatives Working Together (CWT) program. The three-pronged program is designed to decrease the U.S. milk market by about 4.6 billion pounds during a 12-month period. The voluntary effort involves farmers being assessed 18 cents per hundredweight to fund a bid-driven reimbursement for farmers who reduce per-head production, cull herds, or increase exports.
"This undertaking has received broad-based support because the price problem is a challenge facing all farmers, large and small, in the East, the Midwest, and out West," said Jerry Kozak, NMPF's president and CEO. "Everyone is suffering, and that's why we need everyone's commitment to be part of the solution."
The price for raw milk, now below $11 a hundredweight, has hovered around a 25-year-low for the past 12 months, the organization says. It is hoped that a significant tightening of the market will result in about a dollar-per-hundredweight increase in prices during the coming year, NMPF says.
But IDFA's Executive V.P. Connie Tipton says the proposal is a short-term solution at best.
"Recent efforts by NMPF to find ways to prop up farm milk prices show broad agreement that current federal dairy programs are not working," Tipton said. "Our approach to finding a solution, however, would differ from the proposed CWT program. Instead, we believe it would be in the best interest of producers and processors to work together to fix the underlying problems with current policies rather than taking the band-aid approach of adding yet another program."
Tipton also noted that that the long term prosperity of the industry will depend on "growing markets rather than restricting supplies."
A detailed planWhether it's in the best interest of the overall industry or not is yet to be seen, but the CWT plan appears to be quite detailed and well planned, for something that has emerged rather swiftly.
Chris Galen, v.p. of communications for NMPF, says the incentives would include herd culling and in some cases herd retirement, but NMPF has been quick to point out that the culling would not have a major impact on the U.S. beef market. This is due in part to its timing to coincide with a slowdown in beef production. And the removal of a targeted 125,000 cows is not very significant in a beef market where 35 million cattle are slaughtered each year, the group says.
Producers will also be able to participate by reducing per-head production. Galen says this could involve things like changes in feed mix, suspension of the use of RBST, or switching from three-a-day milkings to two-a-day. Those farmers participating will have to prove a 10% reduction in output.
The program would also work to increase imports of cheese and butter. And an element that may be most crucial to processors is the creation of five different program zones. These would be coordinated so that cuts in the milk supply will not worsen the situation in areas like the upper Midwest where processors are already struggling with a decreasing milk supply.
Galen said NMPF has the support of most major cooperatives and that it will work to make the program available to small co-ops and independent producers.
"We have about 70% of our membership committed to the program," Galen says. "We're sort of in a building phase. Our board set up the structure, and from a practical standpoint we need to set up the administration." Two weeks after the program was voted on, Walter W. Wosje, the former general manager of one of the Michigan Milk Producers Assn., was hired as the CWT chief administrator.