It appears that the latest round of dairy herd reductions will remove about 103,000 head over the summer months under the Cooperatives Working Together effort to reduce U.S. milk supplies by encouraging exports and paying producers to remove cows from production.
CWT had conducted six previous dairy herd reductions with the first being in 2003 and the most recent two in 2008. Previous reductions removed from 24,000 to 64,000 head from production. The current one, like those before, is funded by a 10-cents/cwt of milk checkoff paid by dairy producers. The funds are pooled and producers interested in reducing their cow numbers place bids to be considered for reduction with the lowest bids being chosen.
Of 538 bids for herd retirement received by the May 1 deadline, 388 were accepted, which represents 72% of total bids.
"The high percentage of bids CWT selected this time around is an indication that producers understood that CWT would only be able to accept reasonable bids per hundred pounds of milk in order to adjust the nation’s dairy herd and better align supply and demand," said Jerry Kozak, President and CEO of the National Milk Producers Federation, which administers CWT.
Audits of those farms whose bids were accepted will begin next week and are expected to be completed by early July. Producers whose bids are accepted in this herd retirement will be paid in two installments: 90% of the amount bid times the producer’s 12 months of milk production when it is verified that that all cows have gone to slaughter, and the remaining 10% plus interest at the end of 12 months following the farm audit, provided both the producer and his dairy facility do not become involved in the commercial production and marketing of milk during that period.