There are two market areas where independent producers make up a major portion of the milk production

Cooperatives Working Together (CWT) Info Page

The contact phone number for CWT is 1-888-INFO-CWT

CWT Program Web Site
National Milk Producer Federation's Web Site

CWT Expansion Set To Commence In July

CWT AWARDS EXPORT ASSISTANCE FOR CHEESE SALE TO SOUTH KOREA
Nov. 15, 2005 – Cooperatives Working Together announced Tuesday that it has accepted a bid from Dairy Farmers of America of Kansas City, MO, to export 126 metric tons (approximately 277,000 pounds) of cheddar cheese to South Korea. CWT will award the agreed-to export bonus to the bidder, once completion of the cheese shipment is verified.

This is the first export assistance bid accepted by CWT since this past August. This is the fourth CWT-assisted export in a row that is destined for South Korea.

This accepted bid increases CWT’s total cheese exports since it began operations two years ago to 4,314 tons (or 9.5 million pounds). Previous shipments facilitated by CWT’s export assistance program have gone to Algiers, Croatia, Egypt, Japan, Jordan, the Netherlands, Saudi Arabia and South Korea.

Through CWT’s Export Assistance program, exports occur as overseas buyers are found for the products, and as CWT’s members bid to be compensated for selling cheese and butter to those importers.

CWT EXTENDED FOR 18 MONTHS
(March 10, 2005) The dairy markets may be down from a few weeks ago but they are still good for this time of year and part of the credit goes to managing supply, a gospel that has long been preached in the producer community. One way of doing that was National Milk’s "Cooperatives Working Together" (CWT), a producer financed voluntary supply management program that is now in its second year.

This week the NMPF board voted to extend the CWT program for 18 months. NMPF’s, Chris Galen, reported in Thursday’s broadcast that the extension was made to synchronize CWT’s fiscal year with NMPF’s so they both run in the calendar year. The program will continue to be funded at the 5 cent per hundredweight assessment for the rest of 2005, through December 2006.

The CWT Committee is also engaging in a strategic planning process regarding membership and funding, as well as how to bring balance to supply and demand. Changes in the herd retirement program, the export program, or doing something completely new and different will be revealed, according to Galen, when the planning process is completed. He looks for a draft this summer and then "We will decide where to go from there."

NMPF RENEWS COOPERATIVES WORKING TOGETHER SELF-HELP DAIRY PROGRAM
Posted March 9, 2005

Innovative Economic Program To Continue Through December 2006

ARLINGTON, VA – The National Milk Producers Federation’s Board of Directors voted yesterday to reauthorize the industry-funded and managed price stabilization program Cooperatives Working Together (CWT) for another eighteen months of operations, beginning on July 1, 2005. The NMPF Board approval of the CWT renewal followed a similar vote on Monday by the CWT Committee, which helps direct the program.

By a unanimous vote, the NMPF membership agreed Tuesday to extend the program into a third year, until December 31^st, 2006. The principal reason for the 18-month extension was to align CWT’s fiscal calendar (July to June), with the NMPF fiscal year (Jan.-Dec.), thus allowing for more efficient management of the program.

“With nearly two years history behind us, we can say without equivocation that CWT is having a positive impact on the lives of all dairy farmers in this country,” said Jerry Kozak, President and CEO of the National Milk Producers Federation.

“Our herd retirements have removed more than 80,000 cows, impacting both immediate and long-term production, and our export program has been effective in strengthening cheese and butter prices. Our members have once again enthusiastically endorsed this historic program, and we are very optimistic about what the future holds for CWT,” Kozak said.

With a second successful round of herd retirements recently completed, CWT is now in the process of developing a long-term strategic plan for the future of the farmer-led and -funded organization. That plan, when it is complete later this year, will help guide CWT’s future operations, and sharpen its focus on the ongoing goal of helping align milk supplies and demand.

CWT will again be funded by a five-cent per hundredweight assessment on producers, either through their membership in a participating cooperative, or through their individual participation in CWT. Kozak said that another immediate focus will be increasing the current 71% participation level in the program, and that efforts will continue this spring and summer to involve more cooperatives and individual dairy producers.

Since 2003, the program has reduced milk supplies by nearly 1.7 billion pounds, through the combination of two herd retirement programs, a reduced production marketings program, and enhanced cheese exports. Farm-level milk prices have been consistently above-average since CWT’s operations began two summers ago, and government expenditures on dairy safety net programs have been minimal.

Cooperatives Working Together is being funded by dairy cooperatives and individual dairy farmers, who are contributing 5 cents per hundredweight assessment on their milk production through December 2006. The money raised by CWT’s investment is being apportioned among several supply reduction programs to improve the national all milk price. For more on CWT’s activities, visit www.cwt.coop.

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70% OF THE MILK REMOVED WILL COME OUT OF THE WEST
(January 26, 2005) National Milk, having completed its on farm audits, released details Monday of its second producer funded CWT herd retirement program. 363 dairies were accepted. 50,478 dairy cows will be culled representing about 908 million pounds of milk or just over one-half of one percent of the nation’s estimated 170 billion pounds in 2004. The total is 4 percent above the CWT’s initial goal of 870 million, pounds, according to NMPF. The first program in the fall of 2003 saw 299 bids accepted that retired 33,000 cows representing 608 million pounds of milk.

The average bid accepted in 2004 was $5.24 per hundredweight with none exceeding $7.63. The 363 accepted bids were selected from the 736 submitted. NMPF’s Chris Galen pointed out in Tuesday’s broadcast that the average bid in the first CWT program was about $4.00 so there was an increase in the present program but it wasn’t as great as some feared, considering that 2004 milk prices were so high. Galen also pointed out that they actually took out more cows and more milk than was originally budgeted in this the second CWT program.

Producers paying the 5 cent per hundredweight assessment to fund the program account for about 71 percent of the nation’s milk supply, according to Galen, and some just joined in the last couple months even though the fiscal year stared in July 2004, because they said they wanted to be a part of the program.

Galen also pointed out that, while 363 farms were removed and 150 of them came from the Upper Midwest region, only 8,000 of the 50,000 cows came out of the Upper Midwest. 70 percent of the milk that was removed is from the Western regions, according to Galen, including the Southern Plaines, the Southwest, the Pacific states, and the Northwest.

A lot of small herds came out of the Midwest, he said, averaging about 56 cows. The average herd size in the Western region, which included California and Idaho, was 363 cows, so some significantly larger farms were taken out of the West, Galen said, and, while there were fewer of them, a lot more cows came out of the Western part of the country.

While some raise the issue that, those who got accepted into the program can start dairying again once their present herd has gone to slaughter, Galen said NMPF’s goal has always been to "remove cows, not farmers." Most who have quit will stay out, he said, but all of the cows will quit and are no longer producing milk or calves and "That’s what drives milk production and affects prices, not the number of farms. It’s all about cows," he concluded. Press Release CWT website MP3 Audio of Press Conference

NEARLY 1 BILLION POUNDS OF MILK REMOVED THROUGH SECOND C.W.T. HERD RETIREMENT INITIATIVE

Farm Audits Now Complete; 363 Dairies Accepted Into Program

(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.

FINAL DATA FOR CWT’S SECOND HERD RETIREMENT PROGRAM

TOTALS	Region 1	Region 2	Region 3	Region 3	Region 4	Totals
# of bids	53	39	150	72	49	363
Milk volume (000s)	68,928	62,063	141,906	284,043	351,470	908,412
Cow numbers	3,871	4,066	8,479	16,184	17,878	50,478
Avg. bid $ per hundredweight	5.32	4.76	5.22	5.47	5.42	5.24

      Region 1: (CT, DE, MA, MD, ME, NH, NJ, NY, PA, RI, VT)
        Region 2: (AL, AR, FL, GA, KY, LA, MO, MS, NC, SC, TN, VA, WV)
        Region 3: (IA, IL, IN, MI, MN, ND, OH, SD, WI)
        Region 4: (AZ, CO, KS, NE, NM, OK, TX)
        Region 5: (CA, ID, MT, NV, OR, UT, WA, WY)

CWT is being funded by dairy cooperatives and individual dairy farmers, who are contributing 5 cents per hundredweight assessment on their milk production from July 2004 through June 2005. The money raised by CWT’s assessment is being spent on the herd retirement program as well as an Export Assistance program to help remove supplies of cheese and butter from the U.S. market. For more on CWT’s activities, visit our Website at www.cwt.coop.

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01/04/05- CWT Retains Former Land O’Lakes Executive To Develop Plan For Future Efforts
12/13/04- CWT Awards Export Assistance For Cheese Sale To South Korea

http://www.cwt.coop/about/news_releases/news_release_111604.doc

CWT PROGRAM IS DOING ITS JOB, BUT CAN IT BE MADE MORE EFFECTIVE
(December 16, 2004) Cooperatives Working Together (CWT) announced Monday that it accepted a bid from Land O Lakes, of Arden Hills, Minnesota to export 110,000 pounds of Cheddar cheese to South Korea. This is the first bid accepted since August 9 and increases the CWT’s 2004 cheese exports to about 7.9 million pounds. The export program is triggered when the domestic market falls to $1.40 per pound.

Speaking on Thursday's DairyLine broadcast, National Milk’s Chris Galen said that a lot of the recent focus on the CWT has been on the herd retirement portion of the program but it’s important to remember that there are two supply management efforts being undertaken and that the export assistance portion can actually have a greater impact in the short term than the cow retirement program.

But what is being weighed right now, according to Galen, is how export assistance can be made more consistent and a regular player in the marketplace. When cheese prices rise above a certain level, Galen said, it’s not cost effective to provide export assistance so the CWT is not a participant in the market then. The goal is to find ways to be more consistent.

Galen also pointed out that, while we talk about $1.40 being a target floor price on cheese, the program works by providing bonuses to cheese sellers to make up the difference between the U.S. price and the world price.

And, while the U.S. price has dropped considerably the last two weeks, the world price is "extraordinarily high," at about $1.26 per pound, so Galen said it doesn’t require a lot of assistance from the CWT to be able to move the cheese overseas. What it does require, he said, is having ready buyers in foreign countries for the cheese and part of the challenge right now is finding people willing to take large quantities of U.S. produced cheese.

The two CWT programs compliment each other, Galen concluded, with one having more of a short term affect and the other a more long term impact. Both are needed, he said, to "Help adjust the supply when the time is right."

CWT Awards Export Assistance For Cheese Sale To South Korea
(December 13, 2004) The CWT announced Monday that it accepted a bid from Land O Lakes, of Arden Hills, Minnesota to export 110,000 pounds of Cheddar to South Korea. This is the first bid accepted since August 9, according to National Milk, and increases the CWT’s 2004 cheese exports to about 7.9 million pounds. The export program is triggered when the domestic market falls to $1.40 per pound. Read Press Release

(Dec. 2, 2004) National Milk's Chris Galen reported the Federation’s "CWT" supply management program have received a lot of inquiries from farmers who submitted bids whether they have been accepted. He said that they are using the same procedure as last year and don’t want to give too much advance notice because "It increases the possibility of shenanigans, in terms of moving cattle around," so they’ll get a short notice before the auditor goes on their farms to inspect the farms and tag the animals for slaughter. That process has started, he said, and by mid to late December "everyone will know their status."

(November 18, 2004) October was the fourth month in a row that milk production has been above a year ago but National Milk’s CWT program hopes to impact that. CWT announced this week that 378 bids have been accepted from farmers across the country offering to exit the dairy business. That’s a littler more than half of the 732 bids that were submitted last month, according to NMPF’s Chris Galen in Thursday’s DairyLine.

The retirements represent 931 million pounds of milk or about 0.55 percent of the nation’s milk supply, according to Galen, and about 51,700 cows. That’s about 2700 more cows than anticipated, he said, and “Even though we stayed within the budget that we set out with, we’re going to exceed our milk supply removal target by 7 percent.” Initially, NMPF had targeted a reduction of 870 million pounds, Galen said, but the program will remove about 60 million more than that, using the same budget laid out this summer.

That should help stabilize farm-level milk prices in 2005, according to Galen, and even though cash dairy product prices are good right now, he said “A freight train is coming on in terms of more milk output and more cows.”

Removals are also limited by region and Galen reported that nearly 70 percent of that milk will come from the two Western regions of the country. 15 percent will come out of the Eastern half and about 16 percent from the Upper Midwest .

“If you look at where the cows and where the milk is coming out, it’s almost all coming out from the Great Plains on over to the Pacific Coast,” Galen said, and that “Should allay any concerns that we’ll be shorting milk supplies in places of the country where milk supplies are already flat or declining.”

Specific bid information, including the range of accepted bids and the average bid, won't be released until mid-December, according to an NMPF press release.

The Agriculture Department announces the December Federal order Class I base milk price tomorrow (Friday). Market analyst, Alan Levitt, editor of the CME's Daily Dairy Report, predicts it will come in at $14.40 per cwt. That would be an increase of 11 cents from November, 56 cents above a year ago, and above the trigger for a MILC payment. He says the Class III advanced pricing factor will remain "the higher of." We will post complete details here as soon as possible.

COOPERATIVES WORKING TOGETHER ACCEPTS 378 HERD RETIREMENT BIDS TOTALING 931 MILLION POUNDS OF MILK
Herd Retirement Audits To Begin By December 1
(November 17, 2004) Cooperatives Working Together (CWT), the farmer-led economic self-help effort for America’s dairy producers, announced Wednesday that it has accepted 378 bids from farmers seeking to retire their milking herds, representing approximately 51,700 cows. Those retirements will remove 931 million pounds of milk, or 0.55% of the nation’s supply, helping to stabilize farm-level prices that have been declining in recent months.

CWT’s first Herd Retirement program was implemented in the fall of 2003, when 299 bids, representing 608 million pounds of milk, were accepted. A total of 732 bids were submitted last month as part of the second Herd Retirement program, meaning CWT will accept 52% of the bids sent in this fall.

Jerry Kozak, President and CEO of the National Milk Producers Federation, which is operating CWT, said that just like last year’s program, the 2004 Herd Retirement effort will surpass CWT’s initial goals for this year.

“We set out with the intent of reducing milk supplies by 870 million pounds, and in fact, we will exceed that target by 7% without adding to the budget for the program. We also exceeded our target for cow removals by nearly 2,700. What’s more, we will again honor our regional safeguard limits, meaning that no region of the country will suffer a disproportionate loss of milk supplies,” Kozak said.

Under CWT’s guidelines, safeguard thresholds have been established for five separate regions of the country, limiting the total milk withdrawals possible in each. The limits are strictest in the Northeast, Southeast and Midwest, and looser in the Southwest and West.

The totals for each region in 2004 include:

Region	Pounds of milk	Farms accepted	% of total milk reduction	Number of cows
1 (Northeast)	73 million	57	8%	4,107
2 (Southeast)	65 million	40	7%	4,327
3 (Midwest)	149 million	157	16%	8,878
4 (Southwest)	291 million	76	31%	16,551
5 (West)	353 million	48	38%	17,894
TOTALS	931 million	378	100%	51,757

In order to ensure the integrity of the herd retirement process, those farms whose bids have been tentatively accepted will soon be contacted by CWT field auditors, shortly before those auditors visit each of the farms. That process will continue until all the farms have been audited, and the herds have been tagged for removal. Farmers must send their animals to slaughter shortly after that auditing and tagging process is complete.

Kozak said that specific bid information, including the range of accepted bids and the average bid, won’t be released until mid-December. By that point, all bidders will be notified of their status.

CWT is being funded by dairy cooperatives and individual dairy farmers, who are contributing a 5 cents per hundredweight membership assessment on their milk production from July 2004 through June 2005. More than 70% of the nation’s milk supply is contributing to the program. The money raised by CWT will be apportioned between the Herd Retirement program, and the Export Assistance program, which helps support the overseas sales of butter and cheese.

10/06/04- CWT Opens Bidding Period For Second Dairy Herd Retirement Program
9/21/04- CWT Awards Export Assistance for Cheese Sale to Israel
9/13/04- CWT To Initiate a Second Herd Retirement Program Starting Oct. 1

8/17/04- CWT Outlines Program Plans For 2004-05
8/14/04- The CWT Program in 2004-2005 Alliance of Western Milk Producers .pdf file
8/09/04- CWT Awards Export Assistance For Cheese Sale To Algiers
8/04/04- CWT Awards Export Assistance For Cheese Sale To Egypt
7/30/04- CWT Awards Export Assistance For Sales to E.U, Middle East
7/20/04- CWT Awards Export Assistance For Cheese Sale To Holland

July 2004: Alliance of Western Milk Producers Report to Dairymen

7/13/04- CONCERN OVER FALLING CHEESE PRICES PROMPTED NATIONAL MILK TO RAISE THE TRIGGER LEVEL OF IT'S CWT SUPPLY MANAGEMENT PROGRAM: An unexpected 4 1/2-cent jump in the cash block cheese price Monday produced some smiles. There’d been growing concern over the down turn, which even prompted the National Milk Producers Federation to raise its trigger levels for the export provision of its "CWT" supply management program. NMPF announced on July 9 that it was raising its trigger level on cheese to $1.40 per pound and butter to $1.30, up a dime on both.

Jim Tillison, Executive Director of the Alliance of Western Milk Producers and NMPF’s Vice President for Special Projects, reported to DairyLine that CWT-subsidized exports are possible within the next two months and he said that sources tell them that at least 10 million pounds can be exported and possibly as much as 20 million.

One of the reasons that cheese prices dropped is due to the increase in cheese inventory and Tillison said that the CWT committee raised the trigger levels to have an impact on those stocks and move some of them offshore. That should tighten the market, he said, and maintain producer milk prices at a "reasonable level," which is part of the reason that the CWT was developed.

A $1.40 cheese price equates to about a $12.00 Class 4b milk price in California, according to Tillison, and "Obviously that’s a lot better than a $9.00 4b price." CWT is not designed to take prices to "ridiculously high levels," he said, but to "maintain them in a price range where good businessmen can make a living milking cows." The CWT announcement Friday, establishing a floor at $1.40, "had an impact," Tillison concluded, "And the upturn indicates that there’s demand out there for product, especially in the export marketplace."

7/09/04- CWT’S Export Assistance Target Prices Raised 10 Cents...
7/01/04- CWT starts second round; milk prices readjust Sulphur Springs Country World News

3/11/04- NATIONAL MILK APPROVES ANOTHER YEAR OF CWT: The Cooperatives Working Together (CWT) program has been reauthorized for another year of operations by National Milk’s Board of Directors. CWT will again be funded by a five-cent per hundredweight assessment on producers, either through their membership in a participating cooperative, or through their individual participation in CWT.

This assessment will begin July 1, when the funding commitment for the first year of CWT ends, and continue through June 30, 2005 . The funds raised by this assessment will again be used to finance programs to reduce the supply of milk in the domestic market by approximately 1.2 billion pounds.

“Our members felt this has been a very successful program in its first eight months of operation,” Chris Galen reported to DairyLine. CWT’s goal “wasn’t for a quick fix,” he added, and needs to be in place to smooth out market volatility.

“Low prices don’t last forever, but either do high prices,” he said. “Eventually production and demand adjust to the point where there’s downward pressure on prices and that’s why we need to have a program like this in place over the longer term.” Hopefully that won’t be the case in 2004.

“We do know eventually that the higher prices probably won’t last forever, and we don’t want to be canceling the insurance policy that CWT represents,” Galen said. “It’s easier to ask a producer to cough up a nickel when the price is $15.00 as opposed to $10.00.” Galen added.

“What we really want to do with CWT is not just strengthen prices, which is important, but also provide more stability,” he said. The roller coaster ride makes for difficult planning. “It’s hard to budget, he said. “It’s hard to deal with your bankers and you’re other vendors.”

CWT will again conduct a Herd Retirement program in its second year of operations. In 2003, the national dairy herd was reduced by 33,000 head as a result of the first CWT herd retirement program. “My guess is we’ll do something of a similar scale to last years Herd Retirement program…but that’s still to be determined.”

Although there will not be a second Reduced Production Marketings program, the Board passed a motion to keep open the Export Assistance Bid process initiated in January 2004 under CWT. The export program will continue to accept bids from CWT members for bonus payments when the U.S. commodity prices for cheese and butter fall below $1.30 and $1.20 per pound, respectively.

3/09/04- CWT Renewed Until June 2005

3/09/04- NMPF AUTHORIZES SECOND YEAR FOR COOPERATIVES WORKING TOGETHER SELF-HELP DAIRY PROGRAM; Innovative Farmer Program To Continue Through June 2005:

ARLINGTON, VA – Recognizing the sizable impact that Cooperatives Working Together (CWT) has had on farm-level milk prices and dairy farm income, the National Milk Producers Federation’s Board of Directors voted today to reauthorize the program for another year of operations, beginning on July 1, 2004.

With an estimated return of nearly 60 cents per hundredweight for America's dairy farmers during the first year of operations for the program, NMPF has been working to build support for a second year of operations. Now that CWT has once again garnered commitments for participation from dairymen producing over 68 percent of the nation’s milk, the NMPF Board voted Tuesday to reauthorize the program for an additional 12 months.

“When we first developed the concept of CWT one year ago, we heard from many dairy producers that they wanted more than just a quick fix – they wanted a methodical, sustainable means of aligning supply and demand. The decision to go forward with CWT is evidence that America’s dairy farmers see the long-term value in helping to control the economic destiny of this industry,” said Jerry Kozak, President and CEO of the National Milk Producers Federation.

CWT will again be funded by a five-cent per hundredweight assessment on producers, either through their membership in a participating cooperative, or through their individual participation in CWT. This assessment will begin July 1, when the funding commitment for the first year of CWT ends, and continue through June 30, 2005. The funds raised by this assessment will again be used to finance programs to reduce the supply of milk in the domestic market by approximately 1.2 billion pounds.

CWT HOLDS PRESS CONFERENCE AT WORLD AG EXPO
(February 11, 2004) The National Milk Producers Federation held a press conference on the grounds of World Ag Expo today. The purpose was to update dairy producers on the "Cooperatives Working Together" program and provide a "halftime" update. DairyLine's Lee Mielke interviewed NMPF's Tony Mendez and Jim Tillison after the press conference.
Click here to listen to MP3 CEO's Corner: Halftime Update

NMPF HALFTIME REPORT: CWT A SUCCESS
(January 22, 2004) The National Milk’s Producers Federation’s CWT Export Assistance program awarded five more bid acceptances totaling another 3.4 million pounds of cheese. The two bidders were WestFarm Foods of Seattle on cheese to Japan and Dairy Farmers of America on sales to Saudi Arabia, Jordan, and Japan.

National Milk’s Chris Galen, in Thursday’s DairyLine, reported on an analysis of the first-ever voluntary supply management program, a "half-time report" as he put it, now that it’s been in operation for six months and ends in June.

"The milk reduction activities didn’t really start until the fall," he said, but "What we calculated is that the return to producers is an average increase in the All-Milk price of 59 cents per hundredweight from last October through September 2004."

CWT’s herd retirement program, reduced milk marketing, and export assistance will reduce either finished product supplies or raw milk, Galen said, and they calculated how that is affecting the commercial butter and cheese markets.

The net effect, according to the analysis, is about a 60 cent return and Galen said that will put about $1 billion more in the pockets of all U.S. dairy producers for the 12-month period.

"Putting out a nickel and getting 60 cents back has been a real win-fall for producers," Galen said, "Whether they’re involved in CWT or not."

NMPF’s Economic Policy Committee recommended that CWT be reauthorized at the same assessment of 5 cents per hundredweight, Galen concluded, because "It’s really an insurance policy. We need to have a mechanism in place to help manage supply and this has been a successful program so far."

CWT AWARDS EXPORT ASSISTANCE FOR MORE CHEESE SALES
(January 19, 2004) The National Milk’s Producers Federation’s CWT Export Assistance program awarded five more bid acceptances totaling another 3.4 million pounds of cheese. The two bidders were WestFarm Foods of Seattle on cheese to Japan and Dairy Farmers of America on sales to Saudi Arabia, Jordan, and Japan.
Read Complete Release: CWT Awards Export Assistance For More Cheese Sales

DAIRY PRODUCER -FINANCED CWT SUPPLY MANAGEMENT PROGRAM WILL BEGIN ITS EXPORT ASSISTANCE
(January 8, 2004) National Milk announced that the first bid has been accepted under its CWT Export Assistance Program. You’ll recall it is the third element of the Federation’s producer-financed supply management program, which has already removed almost 33,000 cows from the milking herd by sending them to slaughter, and is paying 77 remaining dairies to reduce their milk production.

The Federation estimates that 696 million pounds of annual milk production will be removed by those two elements of the CWT. 30 million pounds of cheese and 10 million of butter are also targeted for export, the equivalent of an additional 500 million pounds (butterfat basis) of milk.

NMPF’s Chris Galen reported Thursday that 40,000 pounds (one carload) of cheese will be exported to Japan. Dairy Farmers of America was the first cooperative to submit a bid to be accepted and has 70 days to ship the product.

Bidders are compensated for the difference in price between what they can sell it overseas versus here in the U.S., according to Galen, because U.S. prices are higher than world prices.

Galen would not say how many bids they have received or when the next round will be announced. The trigger price for cheese was set at $1.30 per pound for blocks, he said, and $1.10 for butter. Butter is currently trading at close to $1.40 so butter will not be exported at this time. Cheese is now at $1.30 so Galen said they will wait to see how prices respond in the next few days.

CWT'S IMPACT ON PRODUCTION
Excerpted from the Alliance of Western Milk Producers Weekly Newsletter
(December 22, 2003) There are still those who question the impact of the CWT program. Recently a university economist questioned the long term impact of the CWT program.
The CWT program took out 33,000 cows in October and November. Those cows won't be producing milk ever again. More importantly, those cows won't be producing heifer calves which become milking cows.

The table below shows the impact that the CWT program has had. In October, the number of cows in the national herd fell 125,000 head, 34,000 more than in September, In November, an additional 14,000 head left the herd. The table below shows that a change in cow numbers changes milk production. Change in cows numbers plus change in production per cow equals the change in milk production.

THE IMPACT OF COW NUMBERS ON MILK PRODUCTION

Change In	JAN	FEB	MAR	APR	MAY	JUN	JUL	AUG	SEP	OCT	NOV
Cow Numbers	0.4% +	0.5% +	0.5% +	0.0% +	-0.4% +	-0.7% +	-0.9% +	-1.0% +	-1.0% +	-1.4% +	-1.5% +
Production Per Cow	1.1% =	0.9% =	0.4% =	0.1% =	-0.4% =	0.4% =	0.9% =	-0.3% =	0.5% =	0.9% =	0.9% =
Milk Production	1.5%	1.4%	1.0%	0.2%	-0.8%	-0.3%	0.1%	-1.3%	-0.5%	-0.5%	-0.6%

PHASE III OF NATIONAL MILK'S CWT PROGRAM READY TO LAUNCH
(November 27, 2003) National Milk has announced that it will implement its CWT Export Assistance Program when and if cheese prices fall below $1.30 per pound or butter falls below $1.10. NMPF’s Chris Galen said in his Thursday broadcast that they expect to help clear the market of some 500 million pounds milk equivalent by exporting about 30 million pounds of cheese and 10 million of butter over the next few months, up through next summer if need be.

Cooperative members who are part of the CWT program will be eligible to submit bids to be compensated for purchasing and then exporting cheese and butter, based upon the difference in the domestic price and the world price. Currently, both cheese and butter prices are above NMPF’s trigger level but cheese prices have been slipping and Galen said they wanted to have the mechanisms ready.

In other legislative issues in Washington; Galen reported that the House and Senate will likely wrap up work this week but he discussed the so-called Specter Amendment to the Agriculture Appropriations bill, introduced by Pennsylvania Senator, Arlen Specter. The legislation calls on the USDA to enforce dairy’s price support at $9.90 per hundredweight. You’ll recall that I discussed this last week.

"Dairy producers know all too well," Galen said, "That during the past couple years, both the Class III and sometimes even the Class IV price dropped below the $9.90 level." The Specter provision tells USDA to "Do a better job enforcing the minimum classified price level of $9.90," he said, and called it an "important tool in our arsenal to pressure USDA to do things to shore up dairy farm income."

One quick "housekeeping" reminder; dairy producers need to evaluate the start date for the Milk Income Loss Contract payments which will begin when the Federal order Class I base milk price falls to the Congressionally-mandated trigger level. The start date must be selected by the 15^th of the month prior to the month you have selected. Herd size will determine how long it will take to reach the 2.4 million pound cap. Visit your local Farm Service Agency office for details

CWT PLAYS ROLE IN MILK PRODUCTION DECLINE
(November 21, 2003) Dairy Profit Weekly editor, Dave Natzke, reminded us in Friday’s broadcast that milk production is impacted by a lot of factors but "This year we have the unique situation with Canada and BSE, leading to historically high cull cow prices."

He said that Minnesota and Wisconsin illustrate the difficulty of picking out one factor to analyze production changes. Both states saw cow numbers decline by about 15,000 compared to last year, he said, and both saw similar increases in output per cow. But, while both states had similar numbers of herds enrolled in the CWT, Minnesota’s October production declined by about one-half percent, while Wisconsin’s went up by almost 1. Taken by themselves, Natzke said, critics and proponents of CWT have ammunition for their argument.

Natzke said there isn’t any question that CWT played a role in the milk decline by removing cows and the reduced marketing contracts offset seasonal increases in milk per cow. Herd retirements, combined with historically high cull cow prices, led to the largest single-month decline in cow numbers since April 1993, he said, and nationally, October cow numbers were down 32,000 from September.

In contrast, over the previous nine months, cow numbers had been declining by about 9,000 per month, he said, "So we’ll never know for sure, but hypothetically if those cows had not been retired, and at average milk per cow, U.S. milk production could have increased by about 34 million pounds in October."

Under the CWT’s Reduced Marketing’s program, herd owners pledged to reduce annual production by about 7.5 million pounds per month. Add those up and Natzke said it means about 40 million pounds per month or more than 2% of U.S. production, and "We all know what a percent here or there can do to milk prices."

CWT MAY HAVE HAD AN IMPACT ON OCTOBER MILK PRODUCTION, BUT DON'T EXPECT THAT TO REVERSE FALLING CHEESE PRICES
(November 19, 2003) When asked if the CWT program had any impact on the October data, dairy economist Bill Brooks, of the Downes-O’Neill Dairy Team in Chicago, said on Wednesday's DairyLine. "Yes, probably to a certain extent." He suggested that about a third of the drop in U.S. cow numbers was due to the CWT and he added that "We don’t have the available replacements out of Canada to help fill that void."

When asked if the report would have any positive impact on the cash cheese market, Brooks said it might but, probably not, because "We’re already a couple of weeks into November and this is October data." He said the impact will likely be reflected in the first and second quarter 2004 futures market.

Analyzing the fall in the cheese market, Brooks blamed "uneven demand recovery" and, "With production holding kind of steady compared to a year ago, we’re seeing demand-supply imbalances as we go along here, after we had such stability, that it’s probably psychological to a certain extent." He also pointed out that milk component yields of the milk are increasing and, "Demand is just bouncing around enough to cause this fluctuation in cheese and butter prices."

A few weeks ago, you may recall DairyLine reported that Brooks predicted the block price could fall to $1.30 per pound and he still believes that, saying "It’s nothing outside of the normal range of prices" but he said it may even go lower because "Many people are talking about the $1.30 level being the low point and usually if everybody starts talking the same story, markets have a tendency to go further than what we expect so you would anticipate at least maybe another nickel or dime below that before we see things turn back around and start moving higher."

THIRD PHASE OF CWT DISCUSSED
(November 13, 2003) The weakness in the cheese market has prompted the National Milk Producers Federation (NMPF) to begin ramping up the third phase of its CWT supply management program, which deals with export assistance. NMPF’s Chris Galen, in his weekly Thursday discussion, said the committee met at last week’s annual meeting in New Orleans to discuss how and when to activate it.

Bids will be called for from processors who have the capability to export cheese and butter to overseas markets, according to Galen, and would be patterned much like USDA’s Dairy Export Incentive Program (DEIP). He said that when cheese was $1.60 per pound, it didn’t make much sense to try to buy and export it but now, with prices below $1.40, NMPF staff, working with CWT people, will provide recommendations and parameters about when to start the process.

“$1.40 is still a fairly strong cheese price,” Galen said, “Certainly stronger than $1.05 or $1.10,” but NMPF doesn’t want to give “A hard and fast price target at which we would buy up and export cheese and butter because, of course, the market would react to that and become sort of a trigger point.”

He added that “We’re looking at a price range in which we would then go forward and begin the export activities.” They will have about $20 million to use to provide the export bonuses, he said.

“We’re not buying the entire pound of cheese,” he explained, “what we’re doing is simply providing the difference between the world price which, depending on the commodity, is about 80 cents per pound, and the U.S. price, whether it’s $1.20 or $1.40 or somewhere in there.”

And, while the CWT Export Assistance program will be structured much like the DEIP, it won’t have what Galen termed, “The mismanagement like what we’ve seen with the USDA,” and he said it will not be subject to WTO limitations, like the DEIP is, because this is a private enterprise. “We are going to one-up and improve on the operations of the DEIP,” he concluded.

CWT TO LAUNCH EXPORT PROGRAM
Taken from the Alliance of Western Milk Producers Weekly Update newsletter
(November 10, 2003) The CWT Program Committee met recently at the National Milk Producers Federations annual meeting in New Orleans. Walt Wosje, CWT COO, said there were 2014 bids in herd retirement, and 538 in production reduction. 299 of those bids were accepted in herd retirement, and 77 in production reduction. A total of 696 million pounds of annual milk production will be removed over the 12 month period which began October 1st.

The Herd Retirement program will account for 608 million pounds of the reduction while the production reduction program will account for 88 million pounds.

CWT had estimated that it would take out 660 million pounds of annual milk production at a cost of $35 million assuming an estimated average bid of $5.30. Following its guiding principle of taking g out the most milk for the least money, removing 696 million pounds of production (36 million more than targeted) cost 30.5 million, $4.5 million less than estimated.

CWT staff also told committee members that administrative costs will be $500,000 less than originally estimated. At $2.5 million, administration will cost less than 5% of the total money invested.

The CWT committee gave staff the go ahead to develop and implement specific recommendations regarding allocating money to assist in the exporting of cheese and butterfat. Approximately $18 million is available to make US cheese and butterfat competitive with subsidized products on the world market, The goal is to begin accepting bids for assistance by December 1. With current world cheese prices at approximately 93 cents a pound ant the CME, at $1.43m approximately 30 million pounds of cheese could be exported.

Tuesday, October 14, 2003

What's New - CWT Update Cooperatives Working Together is swinging into high gear with its two dairy producer-oriented milk reduction programs well underway. A total of 2,552 bids were submitted for both the Reduced Production Marketing program and the Herd Retirement program, representing approximately 3% of all U.S. dairy operations. CWT's third supply reduction tool, the Export Assistance program, has not yet been activated. Speaking to reporters at last week's World Dairy Expo, National Milk Producers Federation President and CEO, Jerry Kozak said, "We've moved very quickly to reduce milk supplies. We're now on track to exceed our goals for milk reduction activities from the two producer programs. This will help not only those whose bids were accepted, but every producer in America." After carefully reviewing each of 514 bids submitted for the Reduced Production Marketing program, 77 bids were accepted. The average bid accepted under the RPM program was $4.00 per cwt., while the maximum accepted bid was $5.00/cwt. And, the average pledged reduction across the 77 bids is 17%. Started October 1st, this program will run through Sept. 30th, 2004 and is expected to reduce the nation's milk supply by 88 million pounds. A complete list of the farms participating in the RPM program is posted at the www.cwt.coop website. An auditor applies a CWT ear tag to a cow in West Virginia, one of 33,000 animals expected to be retired this fall. In the Herd Retirement program, 2,038 bids were submitted from producers seeking payment for selling their entire herds of milk cows. Approximately 300 herds will be removed through the program, representing about 33,000 cows and 613 million pounds of milk production. The average accepted bid was $4.03, and no bids above $4.99/cwt. were accepted from any region. Additional information on the herds accepted will be made available via the website when all the herds have been retired. Farms whose bids have been tentatively accepted are now being contacted by CWT field auditors. This process will continue until all the farms have been audited, and the herds have been tagged for removal. To date, nearly half the 300 farms have been audited, and are now being liquidated.	News from the Market Milk prices received by U.S. dairy farmers have seen significant improvement during the three months since the CWT program was launched. Market expectations of the impact of the program's forthcoming operations have been one factor contributing to that price improvement. The chart above shows the monthly average price received by farmers this year for all milk marketed in the U.S. compared with the 25-year average for the all-milk price each month. During this spring's string of record low monthly prices, the all-milk price was $1.73 per cwt. below the 25-year average for those same months. By this August, the all-milk price had risen to the 25-year average level for August, while the September preliminary all-milk price is about 40 cents a hundredweight above the average. Based on the current milk futures, prices should stay above the 25-year monthly averages for the rest of the year, buoyed by declining milk production, and by stable, though still large dairy product stocks. Milk production and marketing reductions brought about by the CWT program will tighten milk supplies beginning this month and continuing through the remainder of the current program, which ends next June. Meet CWT Administrator, Shahnna Williams If you've called the CWT Hotline with questions or comments, odds are you've spoken to Shahnna. Not only does she handle all administrative duties for CWT's Chief Operating Officer, Walt Wosje, she's also the friendly voice and ready advice many farmers came to depend on during the bid application and notification process. Shahnna will continue to play an important role in the month's to come as she and Walt manage the distribution of funds to program participants. A native Washingtonian, Shahnna recently moved back to the District of Columbia after studying law and working for State Farm Insurance in Georgia. She's also lived in Minnesota. Shahnna can be reached through the National Milk Producers Federation at (888).463.6298 or info@cwt.coop.
The National Milk Producers Federation is proud to bring you this newsletter regarding the dairy industry's groundbreaking program to better align dairy supply and demand, Cooperatives Working Together (CWT). Look for other issues charting CWT's progress. For more information please visit www.cwt.coop, or call 888-INFO-CWT.

Dairyline Poll: CWT Poll Final Results/Comments

CWT UPDATE....August 20, 2003

CWT BIDS DUE BY END OF WEEK
News from the National Milk Producers Federation
(August 20, 2003) Bids in the new Cooperatives Working Together (CWT) milk reduction program are due by Aug. 22^nd, for producers interested in either retiring their dairy herds or reducing their milk output for 12 months.

Bid submissions in both the Herd Retirement and Reduced Production Marketings programs must be postmarked by the end of this week. To date, several hundred bid forms have been submitted to CWT, and are being registered and evaluated by an independent auditor.

All bid forms must be accompanied by milk production records for the period July 2002 through June 2003. Those producers whose bids are accepted by CWT will be notified starting in mid-September.

Bid forms and related information materials are available at the CWT website here: www.cwt.coop/join/join_index.html.

August 5, 2003 UPDATE....

UPCOMING CALIFORNIA "CWT" PRODUCER INFO MEETINGS:
Aug. 5
10:00 am Chino Fairgrounds, 5410 Edison Ave. Chino

Aug. 7
1:00 pm Stockton Inn, Waterloo Road & HWY 99, Stockton
7:00 pm SES Hall, 10427 E. Stockton Blvd.,
Elk Grove

Aug. 12
9:00 am Two Rock Fire Hall, 7620 Valley Ford Rd., Petaluma
2:00 pm Kountry Kitchen, 729 4th St., Orland

Cooperatives Working Together Bid Forms Available Now To Farmers
(August 4, 2003) Cooperatives Working Together (CWT), the dairy industry's new voluntary, producer-funded effort to strengthen and stabilize farm milk prices, has begun accepting farmer bids for participation in the herd retirement and market reduction programs. Producers have until Aug. 22^nd to submit their bid forms.

CWT will use the proceeds from a 5 cent per hundredweight assessment on participating producers' milk output – starting with their July production – to implement a multi-dimensional program to reduce milk supplies by 1.2 billion pounds. The money raised by the program – estimated at $60 million over 12 months – will be apportioned among three supply reduction programs. The three include a herd retirement program, a milk production reduction program, and a dairy product export assistance program.

"By offering all three programs, CWT gives us maximum flexibility, both with respect to the choices available to farmers, and in consideration of changing market circumstances," said Jerry Kozak, President and CEO of NMPF. "We're going to stay with our initial plan to make 45% of the milk supply reductions through herd retirements, 10% through other marketing reductions and 35% through product exports." The remaining 10% will be allocated among the previous three programs as conditions warrant.

Because of recent improvements in the wholesale price of cheese and butter, plans are to implement the export program later in the 12-month CWT cycle, when such export activities will be most effective for producers, according to Kozak.

He said that successful bidders in both producer programs will be decided on or about September 12th. The herds of the accepted bidders in the retirement program are expected to be liquidated by mid- to late October. The reduced production marketings program, meanwhile, will begin its first quarter on October 1st, and run through September 2004.

Further details regarding the implementation of these three programs, including bid application forms, are available on the Cooperatives Working Together website www.cwt.coop.¨

"CWT" FORMS ARE IN THE MAIL........WILL HIGHER MILK CHECKS FOLLOW?
(July 31, 2003) National Milk’s “CWT” supply management program is off and running. Forms were distributed this week, according to NMPF’s Chris Galen in Thursday’s broadcast. Assessments will be collected on July milk, he said, and will be spent on two programs to reduce milk supplies.

One is the herd retirement program where entire dairy herds will be eliminated and the second is the reduced production program where producers will be compensated for scaling back their milk output over the next 12 months.

The bid forms are available from participating dairy cooperatives or interested producers can call the NMPF office at 1-888-infocwt or download them from the website at www.cwt.coop. Galen quickly reminded listeners that they have to pay the voluntary nickel assessment in order to be eligible to submit a bid.

When asked if rising cheese prices and Class III futures will hurt participation, Galen replied, “I think the participation is still going to be there.” The cheese prices are impacting the third element of the CWT, he said, which is the export assistance program. Collected monies will be used to purchase butter and cheese from the market and export it but Galen said they will hold off on that because “It doesn’t make much sense to buy cheese at over $1.50 per pound.”

“The value of CWT,” he said, “Is not only in strengthening milk prices which, depending on who you talk to, we’re already helping, but it will also help avoid the crashing lows we’ve been experiencing the past year and a half.” And, by keeping money in reserve, he concluded, “We can see what happens to cheese prices the rest of this year and on into 2004 and then enter the market if and when we need to.”

CWT BID SUBMISSION FORMS WILL BE AVAILABLE NEXT WEEK
(July 24, 2003) National Milk’s Policy Committee worked out more details of its "CWT" supply management program this week. NMPF’s Chris Galen, on Thursday's Dairyline, said they will begin accepting bids for both the herd retirement and the reduced production marketing programs at the end of July.

Forms will be available the week of July 28, Galen reported, so as soon as producers calculate what they think their herds or production is worth, they can submit their bids but they must be post marked by August 22.

It will take about two weeks to evaluate the bids, he said, "And then we are going to remove as much milk production as we can, within our budget, at the lowest possible price to get those herds out of production." October 1 is when the reduced production marketing’s program starts and it will run for 12 months.

All of the forms and details will be available from participating coops. Those not collecting the CWT assessment may have the forms but if not, producers can call the CWT hotline at, 1-800-INFOCWT or visit the website at www.cwt.coop.

Producers submitting bids should know whether they’ve been accepted or not by about September 12, according to Galen, and auditors will be sent to those farms as soon as possible to begin moving those cows to slaughter.

Galen said they’re "keeping their powder dry" on CWT’s export assistance program because, with cheese prices at around $1.50 a pound, they want to see what happens with market prices this fall and winter. "We’ll still have money to devote to buying cheese and butter and exporting those," he said.

Another reason to hold off perhaps is the failure again by USDA to optimally use the Dairy Export Incentive Program as mandated by Congress. The new DEIP year began July 1 and the Agriculture Department has still not announced its allocations. In the mean time, bulging stocks of nonfat dry continue to grow.

Additionally, Galen told Dairyline they were "gravely disappointed" that USDA, in the just completed DEIP year, did not use all of the GATT-allowable butter allocation. A lot more butter could have been exported, he said, so NMPF will have to press USDA to maximize the use of all aspects of the DEIP this year.

CWT UPDATE...JULY 23, 2OO3:
NEW DAIRY FARMER SELF-HELP PROGRAM TO BEGIN AUGUST 1st

Cooperatives Working Together To Accept Producers’ Bids Starting Next Month

ARLINGTON, VA – Cooperatives Working Together (CWT), the dairy industry’s new voluntary, producer-funded effort to strengthen and stabilize farm milk prices, will begin accepting farmer bids for participation in the herd retirement and market reduction programs starting August 1^st.

“Dairy producers are eager to get this historic initiative underway in order to improve the return they receive for their milk,” said Jerry Kozak, NMPF President and CEO. America’s dairy farmers have been faced with a prolonged period of unfavorable economic conditions, with farm level milk prices reaching 25-year lows this past spring.

CWT will use the proceeds from a 5 cent per hundredweight assessment on participating producers’ milk output – starting with their July production – to implement a multi-dimensional program to reduce milk supplies by 1.2 billion pounds. The money raised by the program – estimated at $60 million over 12 months – will be apportioned among three supply reduction programs. The three include a herd retirement program, a milk production reduction program, and a dairy product export assistance program.

“By offering all three programs, CWT gives us maximum flexibility, both with respect to the choices available to farmers, and in consideration of changing market circumstances,” Kozak said. “And, we’re going to stay with our initial plan to make 45 percent of the milk supply reductions through herd retirements, 10 percent through other marketing reductions and 35 percent through product exports.” The remaining 10 percent will be allocated among the previous three programs as conditions warrant.

He said that the two programs in which individual producers can participate will begin immediately. Bid forms for the herd retirement and production programs will be made available to farmers by the end of July, and completed forms must be received by CWT (or be postmarked by) August 22^nd. Successful bidders in both programs will be announced on or about September 12^th. The herds of the accepted bidders in the retirement program are expected to be liquidated by mid- to late October. The reduced production marketings program, meanwhile, will begin its first quarter on October 1^st, and run through September 2004.

“We’re very excited to get these programs underway. Dairy farmers have been struggling under crippling conditions for too long. But producers now have a mechanism allowing them to have some control over their own destinies without expecting or needing government involvement,” Kozak said.

Further details regarding the implementation of these three programs, and bid application forms, will be available by the end of July on the Cooperatives Working Together website (www.cwt.coop), and through participating cooperatives throughout the country.

In order to be eligible to participate in the bidding process, producers must either belong to a cooperative fully supporting CWT, or have submitted an independent producer membership application in CWT.

The National Milk Producers Federation, headquartered in Arlington, VA, develops and carries out policies that advance the well-being of U.S. dairy producers and the cooperatives they collectively own. The members of NMPF’s 35 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of 60,000 dairy producers on Capitol Hill and with government agencies.

For more on NMPF’s activities, visit our Website at www.nmpf.org.

###

CWT UPDATE...July 21, 2003:
Cooperatives Working Together To Begin This Month

The dairy industry’s new voluntary, producer-funded program to strengthen farm milk prices will begin this summer, following action July 8^th by the National Milk Producers Federation Board at its summer meeting in Washington, DC.

"Now that we’ve reached the critical mass needed to move forward with this innovative program, Cooperatives Working Together, we are eager to finalize specific program details and implement the plan as quickly as possible," said Jerry Kozak, NMPF President and CEO.

The Board determined that participating producers, both individually and collectively through their cooperatives, will begin their investment by contributing the 5 cents per hundredweight assessment on their July milk production. These contributions will be used to implement a multi-dimensional program to reduce milk supplies by 1.2 billion pounds over a 12-month period, running through June 2004.

The money raised by the program – estimated at $60 million over the 12 months – will be apportioned among three supply reduction programs to maximize the program’s effectiveness. The three include a dairy product export assistance program, a herd retirement program, and a milk production reduction program.

While the exact apportionment among those programs won’t be determined until after NMPF’s Economic Policy Committee meets later this week, Kozak said that "it is very important to still offer all three programs. This approach offers the greatest flexibility to producers who want to reduce supply, and it will maximize the program’s effectiveness."

CWT’s goal is to achieve an average 400% net return on investment for farmers. The program’s activities are targeting an average increase in the all milk price of 36 cents per cwt., which would result in a net return of 23 cents per cwt., when factoring in the cost of the assessment and lower government Milk Income Loss Contract (MILC) payments.

The program will continue to solicit participation from interested farmers and dairy cooperatives. Enrollment information, and related details, can be obtained by calling the new toll-free CWT hotline (888-INFO-CWT [463-6298]) or at www.cwt.coop. ¨

July 11, 2003:
IMPLEMENTATION UNDERWAY FOR HISTORIC DAIRY FARMERSELF-HELP PROGRAM

ARLINGTON, VA -- The dairy industry’s new voluntary, producer-funded program to strengthen farm milk prices will begin this summer, following action this week by the National Milk Producers Federation Board at their summer meeting in Washington, DC.

“Now that we’ve reached the critical mass needed to move forward with this innovative program, Cooperatives Working Together, we are eager to finalize specific program details and implement the plan as quickly as possible,” said Jerry Kozak, NMPF President and CEO.

Participating producers will begin their investment by contributing the 5 cents per hundredweight assessment on their July milk. These contributions will be used to implement a multi-dimensional program to reduce milk supplies by 1.2 billion pounds over a 12-month period.

The money raised by the program - estimated at $60 million over 12 months - will be apportioned among three supply reduction programs to maximize the program’s effectiveness. The three include a dairy product export assistance program, a herd retirement program, and a milk production reduction program. “We feel it is very important to still offer all three programs. This approach offers the greatest flexibility to producers who want to reduce supply, and it will maximize the program’s effectiveness,” Kozak said.

Further details regarding the implementation of these three supply reduction programs will be devised by the NMPF Economic Policy Committee by the end of July. “We realize farmers are ready to get started with supply reduction efforts. So are we. But, we want to be sure those efforts give us the biggest bang for the buck. That means designing them so they’re efficient and effective,” Kozak added.

While the program was created by NMPF, Cooperatives Working Together has also received the backing of other dairy cooperatives not part of the NMPF membership, and from individual dairy producers not affiliated with a dairy cooperative. CWT’s goal is to achieve an average 400% net return on investment for farmers. The program’s activities are targeting an average increase in the all milk price of 36 cents per cwt., which would result in a net return of 23 cents per cwt., when factoring in the cost of the assessment and lower government Milk Income Loss Contract (MILC) payments.

The program will continue to solicit participation from interested farmers and dairy cooperatives. Enrollment information, and related details, can be obtained through NMPF or on the Web at www.cwt.coop <http://www.cwt.coop>.

The National Milk Producers Federation, headquartered in Arlington, VA, develops and carries out policies that advance the well-being of U.S. dairy producers and the cooperatives they collectively own. The members of NMPF’s 34 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of 60,000 dairy producers on Capitol Hill and with government agencies.

For more on NMPF’s activities, visit our Website at www.nmpf.org <http://www.nmpf.org/>.

July 8, 2003: Milk group to proceed with plan on prices (Milwaukee Journal Sentinel)

July 3, 2003: HISTORIC MILESTONE IN DAIRY SECTOR REACHED AS CWT PROGRAM LAUNCHES WITH NECESSARY PARTICIPATION LEVEL

NMPF Prepares For Immediate Launch Of Cooperatives Working Together

ARLINGTON, VA -- The National Milk Producers Federation announced Thursday that, with more than 70% of the nation’s milk volume committed to participate, it now has reached the critical threshold necessary to start its new voluntary, producer-funded program to better align dairy supply and demand, Cooperatives Working Together (CWT).

After discussions earlier this week, the NMPF Board of Directors approved a modified version of the original CWT concept, one that would collect 5 cents per hundredweight from participating dairy cooperatives and/or individual producers. On Tuesday, the level of participation in CWT was slightly under the 70% level necessary to launch the program. Subsequently, additional commitments have been received, pushing the membership level above the 70% threshold, allowing NMPF to begin the program.

“We’re thrilled to be able to move forward with CWT. This groundbreaking program is tremendously important for the dairy producer community,” said Jerry Kozak, NMPF President and CEO. “It not only offers relief to dairy farmers facing record low prices; it also allows them to begin to improve marketing conditions by helping to balance supply with demand.”

Beginning immediately, CWT will use the proceeds from the 5 cent per hundredweight contribution by participating dairy producers to implement a multi-dimensional program to reduce milk supplies by 1.2 billion pounds over a 12-month period.

The money raised by the program - estimated at $60 million in the coming 12 months - will be apportioned among three supply reduction programs to maximize the program’s effectiveness. The three include a dairy product export assistance program, a herd retirement program, and a milk production reduction program.

"We’ve revised the CWT concept, lowering the assessment to a nickel, to encourage as many farmers to participate as possible,” Kozak said. “CWT’s goal is to achieve an average 400% net return on investment for farmers,” he added. The program’s activities are targeting an average increase in the all milk price of 36 cents per cwt., which would result in a net return of 23 cents per cwt., when factoring in the cost of the assessment and lower government Milk Income Loss Contract (MILC) payments.

“We’ve witnessed enormous volatility in the past seven or eight years, which has really made it difficult for dairy farmers to plan and budget. This program’s benefits include not only strengthened prices, but better price stability in the future,” Kozak said. “Many people said it was an impossible task to get producers to work together; CWT proves them wrong.”

While the program was designed by NMPF, Cooperatives Working Together has also received the backing of other dairy cooperatives not part of the NMPF membership, and from individual dairy producers not affiliated with a dairy cooperative. The program will continue to solicit participation from interested farmers and dairy cooperatives. Enrollment information, and related details, can be obtained through NMPF or on the Web at www.cwt.coop.

The National Milk Producers Federation, headquartered in Arlington, VA, develops and carries out policies that advance the well-being of U.S. dairy producers and the cooperatives they collectively own. The members of NMPF’s 34 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of 60,000 dairy producers on Capitol Hill and with government agencies.

For more on NMPF’s activities, visit their Website

Previous CWT Related Stories....

(July 2, 2003) The vote on the nation’s first, voluntary, producer-driven supply management program for the dairy industry has been postponed. The Board of Directors of the National Milk Producers Federation met Friday, June 27 and again on Monday, June 30, but could not reach agreement on the plan as originally proposed.

Discussion was held again Tuesday, July 1, with tentative approval given to a modified version, according to NMPF’s Chris Galen. Speaking in Wednesday’s Dairyline, Galen reported that the 17.9-cent assessment was reduced to a nickel but they remain committed to having 70 percent of the nation’s milk supply in the program. The final vote is expected Tuesday, July 8.

The reduced assessment means less of a bite in producer’s pockets, Galen said, but it means less money will be spent on the program, though they still estimate that they will be able to remove over a billion pounds of milk from the market.

"We’re still talking an overall gross return of about 36 cents in a higher All-Milk price," Galen said. "When you net out the nickel assessment and the reduced MILC payments, the average return would be about 23 cents, so you’re still giving up a nickel and getting more than 20 cents back, a 400 percent return."

The program retains the same basic components, according to Galen; herd retirement, export assistance, and reduced production, but there’ll be less money spent on the three, he concluded.

DAIRY SUPPLY MANAGEMENT PLAN REVISED FOR FURTHER REVIEW, CONSIDERATION BY NMPF MEMBERSHIP.
The following is a news release from the National Milk Producers' Federation:
(July 1, 2003) The National Milk Producers Federation Board of Directors today passed a motion approving a modified Cooperatives Working Together program, which would require participation by 70% of the nation’s milk supply. A final vote on the revised CWT proposal will be held at NMPF’s regularly scheduled Board meeting Tuesday, July 8^th.

As currently proposed, CWT would use the proceeds from a 5 cent per hundredweight assessment on participating dairy producers to reduce milk supplies by 1.2 billion pounds over the next 12 months. The money raised by the assessment would be used to pay a certain number of farmers for their efforts to pare surplus milk from the market through dairy herd retirements, other production reductions, and an export assistance program.

The CWT program was developed to address a 25-year low in the farm-level price of milk in this country. A higher participation target and assessment amount had been considered originally for CWT this spring, but the recent upward trend in dairy prices, as well as a desire to make the program as broadly popular as possible, led the NMPF Board to propose the scaled-back program at the 70% participation level.

“We created Cooperatives Working Together because our members told us they wanted to take control of the economics of their market,” said Jerry Kozak, NMPF President and CEO. “Low milk prices are every dairy farmer’s problem, regardless of size or location. Every farmer needs to be part of the solution.”

“The revised CWT program will still offer a 400% return on investment,” Kozak said, indicating that the nickel contribution will raise all-milk prices an average of 23 cents per cwt., even when factoring in the cost of the assessment and lower government MILC payments.

Though led by NMPF, the CWT program has also received the backing of other dairy cooperatives not part of the NMPF membership, and from individual dairy producers not affiliated with a dairy cooperative.

“We’ve spent the past several months talking to dairy farmers about effective ways to address the price challenges facing our industry,” Kozak said. “Producers everywhere are eager for positive change. For the CWT program to be effective, however, we need a level of participation we have not quite reached. We hope that may change over the next week.”

The National Milk Producers Federation, headquartered in Arlington, VA, develops and carries out policies that advance the well-being of U.S. dairy producers and the cooperatives they collectively own. The members of NMPF’s 34 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of 60,000 dairy producers on Capitol Hill and with government agencies.

For more on NMPF’s activities, visit our Website at www.nmpf.org.

IDFA REACTION: When asked for processor reaction, an International Dairy Foods Association press release stated that efforts by NMPF to find ways to prop up farm milk prices show "Broad agreement that current federal dairy programs are not working." IDFA added that, in many cases instead of helping dairy farmers, such programs stifle farm prices and impede market recovery.

IDFA said "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."

"We do not favor supply management," IDFA concluded, "Because it contracts the industry rather than helping it grow. In the long term, prosperity for the U.S. dairy industry will depend on growing markets rather than restricting supplies."

18 CENTS IS THE MAXIMUM LEVEL ASSESSMENT
(June 26, 2003) A crucial vote will happen June 30 by National Milk’s board of directors on whether to proceed with its proposed voluntary "CWT" supply management program. NMPF’s Chris Galen addressed one of the questions that he and NMPF staff recently encountered from producers concerned about the size of the assessment that will be required to pay for the program.

"I wish all the questions were as easily answered as that one," Galen said. 17.9 cents per hundredweight is the amount to be collected for the 12-month duration, both for individual producers as well as those who belong to a participating coop. The bylaws allow the assessment to be changed in the future, he said, to facilitate a reduction or elimination of the assessment.

"Assuming that we have the success that we expect to have over the next year," Galen said, "We can then come back in the summer of 2004 and reevaluate whether we need to do something like this in the future on a much smaller scale."

One of the opinions Galen has heard the past couple months from producers is that they are not interested in this type of program if it’s only for the short term. He said that we have to give ourselves the option of continuing some form of CWT in the future but in terms of the immediate program its a12-month program, the assessment is 17.9 cents, and both are specified in the CWT contracts.

Is the 17.9 cents an absolute maximum, I asked. "I think it’s a maximum," Galen replied, "Both for economic reasons, in that I don’t think we really need that much more from producers, but I also think, politically speaking, it’s a maximum because I don’t think you can ask farmers to contribute more than that."

Some believe that 17.9 cents is too much, he said, but "We’re trying to get the right amount of money out there for the milk reduction program, the herd retirement program, and the export assistance. 17.9 cents is "Definitely the most we can ask people to contribute," he concluded.

CWT IS NEAR
(June 16, 2003) As the campaign to promote National Milk Producers Federation's Cooperatives Working Together (CWT) program entered its final stages, dairy producers and the editors of DairyBusiness Communications had some questions.

Midwest DairyBusiness: Supply management has always been met with skepticism in the U.S. dairy industry. What makes you think it will be accepted now?

National Milk Producers Federation: Actually, there's always been a large degree of support for supply management in principle. The reason it has failed in the past is that the actual programs proposed have been unworkable for many in the industry. By contrast, the CWT programs are simple, basic and effective. That's not to say they are perfect. But we can't let perfect be the enemy of good, and the reaction we've gotten from most people is general agreement that these three elements will trim dairy supplies.

MDB: When you created the blueprint for the program, did you model it after any other agricultural commodity programs?
NMPF: No, it's basically a unique combination of three programs. Each of these has been used in the past, i.e. the whole-herd buyout and diversion programs of the 80's, but never simultaneously, and of course, never as
voluntary programs done by industry as opposed to government. Other commodity programs that have used supply management, such as the acreage set asides of past farm programs, have been government run.

MDB: Has there been any analysis comparing the projected results of the CWT program with the pros and cons of letting natural market forces work?
NMPF: Our whole program is designed to improve on the returns producers would otherwise get from the marketplace. A quick glance at the futures market for the remainder of 2003 will show little significant price response in store. Our projections call for pruning milk supplies by 2.7% over the next year, with a gross return in the all-milk price of $1.30/cwt. That's above whatever the market level of the all-milk price would otherwise be which, right now, is forecast to be the lowest since 1978.

MDB: Why don't we just lower the legal limit for SCC and require slaughter of all Johne's positive cows? We'd get rid of the poorest quality milk and cows, and producers, processors and consumers would all win?
NMPF: Altering SCC levels would require government intervention, and we've tried to steer clear of that. Also, it would be an indiscriminate way of addressing milk output, with no benefit at all to consumers. The same is largely true of focusing on Johne's cows, plus there would be added burdens of testing, which test to use, how many times to be tested, etc. Allowing producers to sell their herds or reduce their milk output voluntarily is the simplest approach.

MDB: From what I've read, producers can sell their cows and restock by buying another herd. Why aren't you asking them to stay out of business for a minimum amount of time?
NMPF: Farmers don't generate milk, cows do. We are focused on reducing milk output, not retiring farmers. We don't want to force farmers out of business. But I suspect many of those bidding to sell their herds are looking at this as a permanent solution for them individually.

MDB: If I live in a milk deficit area, why should I participate? My bid probably won¹t be accepted, so why should I send my money to someone else?
NMPF: The thing to keep in mind is that the benefit of participation is not being able to sell your herd or reduce milk output (although you will have to "pay to play" in those arenas). The main benefit is by having as many as possible participate, we create a program that raises everyone's milk price. CWT is a rising tide that lifts everyone, regardless of region.

MDB: During the first four months of 2003, we've had 980,00 cows culled, 124,000 more than the same period a year ago, and the milk price hasn't gone up? Will the sale of another 125,00 make a difference?
NMPF: Remember that those are cull cows, whose production presumably is marginal at best that's why they're going to slaughter. CWT is planning to pull out whole herds, which includes all adult cows, and not just the worst of the bunch. That will have a bigger impact on milk output than just 125,000 cull cows.

MDB: Questions have been raised over wording in the CWT bylaws that leave assessment levels open ended. Doesn¹t the wording leave open the possibility
that the CWT checkoff could be extended or raised arbitrarily?
NMPF: In order to establish the CWT Program as an organized entity within NMPF, it has been necessary to revise the Federation's bylaws to accommodate this organizational restructuring. Changes to NMPF bylaws require approval by two-thirds of NMPF's Voting Delegates (a body of approximately 150 individuals elected from NMPF member cooperatives). The pertinent section of the bylaws that will govern the assessment provisions of the CWT Program upon its commencement states, "Each CWT member shall be required to pay to the Federation a monthly assessment in the amount of $0.0179 per hundredweight of milk marketed by such CWT member during the preceding month, or such other amount as may be established by the CWT Committee. Such assessments shall be used by the Federation and the CWT Committee in connection with the CWT Program and the general overhead and expenses of or arising out of the CWT Program, including the payment of insurance premiums, administrative and legal fees."

While there is no mandate to operate the CWT program beyond 12 months, many producers have advocated that the program should be allowed to continue, if the producers supporting it so desire. This position stems from a belief that the CWT Program could serve a longer term function by helping to balance supply with demand in the future, if needed. To allow for this possibility, the bylaws governing the CWT Program have been drafted to permit continued operation of CWT if the producers funding the program wish for it to continue. The bylaw provision cited above specifically puts the ability to determine the proper CWT assessment squarely in the hands of the producer representatives (both cooperative and independent producers) who will serve on the CWT Committee (the body overseeing the CWT Program).

This provision allows the CWT Committee the necessary flexibility to both increase or, perhaps, more importantly, decrease the rate, depending on future funding needs of the program if it were to be continued. If this particular provision was not in place, it would not be possible for the CWT Committee to lower the rate, even if less funding was necessary to operate the program. Without it, the only way to decrease the rate would be to call for another change to the bylaws through the formal and lengthy two-thirds
majority process.

It is critical for all producers to note that even if there would be a desire to continue the CWT Program beyond the first 12 months, CWT membership would still need to be renewed annually by every supporting cooperative and independent producer at the rate of assessment determined to be appropriate for the new 12-month membership period. The document that effectively guarantees the producer's (or cooperative's) support of the CWT Program is the CWT membership application. The application clearly specifies the effective dues assessment for the 12-month program period.

MDB: Describe how CWT board representation will be determined.
NMPF: There will be three categories of membership. These include: the NMPF member cooperatives supporting the program, cooperatives supporting the program who are not members of NMPF, and independent producers supporting the program. NMPF wishes to include as much representation as possible on the CWT Committee from all membership categories, including one seat for each supporting cooperative. Consequently, NMPF members will be represented by the NMPF board of directors. The reason why the entire NMPF board of directors has been included is largely a technical one.

Since NMPF is incorporated in the state of Illinois, the Illinois state law governing nonprofit organizations (like NMPF) requires that a majority of any standing committee be composed of the organization's directors. Consequently, in order to allow for maximum representation from the other two categories of CWT membership, and to satisfy the legal "majority" requirement, it has been necessary to include the entire NMPF board of directors on the CWT Committee. Independent producers from the five CWT regions will be represented on the basis of one representative per 1.5 billion pounds of milk marketed by independent producers in each region. Individuals representing independent interests will be elected by the independent producers supporting the CWT Program.

MDB: How does CWT plan to make the movement of money transparent so all producers can see what funds exist and where they go?
NMPF: We will post information on a web site: www.cwt.coop that tracks contributions and expenditures. That information will also be shared by the co-ops that participate.

MDB: Any estimate on administration costs to run CWT?
NMPF: We expect administrative overhead to run about 3% of our budget.

CWT Signs Up Additional Coop Participants
June 9, 2003, from NMPF Newsletter
Efforts to recruit additional participation in Cooperative Working Together (CWT) paid off big in Idaho two weeks ago, as an additional two billions pounds of milk production was pledged to the program.

NMPF President and CEO Jerry Kozak held a dozen meetings with producers and cooperatives across Idaho the week of May 26^th, efforts that were coordinated by Northwest Dairy Association, Dairy Farmers of America and the Idaho Dairymens Association. Given the large percentage of independent producers in Idaho, that state is a crucial area in order to meet CWT’s target of involving 80% of the nation’s milk production in the supply management program.

After the meetings, leaders of the Magic Valley and Snake River Cheese cooperatives agreed to contribute 17.9 cents per cwt. on their members’ milk production. Kozak also left the state with pledges from dozens of independent shippers to participate in CWT.

The IDA also will be coordinating other recruitment efforts in the coming weeks to spread the word about CWT and secure additional participation. Meanwhile, several other coops have also pledged to participate in CWT, including Security Milk Producers in California and Maverick Milk Producers in Arizona. Also, the National Farmers Organization has voted to assess all its members the CWT checkoff.

Kozak was in the Upper Midwest last week and this week to meet with farmers in Wisconsin and Minnesota, which is the other key recruitment area for CWT.

The NMPF Board of Directors, which voted to establish CWT a month ago to help align milk production with demand, will meet again by June 30^th to examine the level of participation in CWT, and to authorize the implementation of the program. ¨

IDAHO PRODUCERS ENTHUSED ABOUT CWT
Taken from Jim Tillison's Alliance of Western Milk Producers Weekly Update

There are two market areas where independent producers make up a major portion of the milk production - Idaho and Wisconsin. The past week in Idaho demonstrated how enthusiastic producers there are about CWT.

Producers sign up
At several meetings, Jerry Kozak, CEO of NMPF and Jim Tillison, presented
the why and how of Cooperatives Working Together (CWT) to several Idaho milk producers. Producers there (like producers every where) expressed concern about improving milk prices and stabilizing them. They also expressed the strong desire that CWT be more than a one year program.

By the end for the two-day whirl-wind tour, two cooperatives and a number independent producers had agreed to pay 17.9 cents per hundredweight (cwt.) on approximately two billion pounds of milk in support of the CWT program.

Like the idea of taking control
One thing that dairy farmers like about CWT is that they are taking control of there own destiny. For the first time, milk producers across the country realize that CWT is a chance, no, an opportunity, to determine what they will be paid for their milk. The first twelve months of the program is intended to have an
immediate positive impact on milk prices.

Two programs - milk production reduction and export assistance - will have the most immediate impact. Both the amount of milk available and the amount of cheese and butterfat available will immediately be reduced by these program.
The longer term impact on milk production will be provided by the herd retirement program. It will take 2.1 billion pounds of milk production out over a four month period by permanently removing milking and dry cows from the national dairy herd.

Getting and keeping better prices
While some refer to CWT as a supply management program, it is really a price management program. Yes, managing milk production will impact price, but managing milk production and product availability domestically over the longer term will manage milk price levels.

Exactly how that will be done will be the primary purpose of the CWT Program Committee. This committee, made up of all cooperatives supporting the CWT program as well as representatives of independent shippers, will evaluate the first phase of the CWT program to determine what actions CWT must take in future years to maintain milk prices.

Every producer get a producer
Every dairy farmer knows at least one independent shipper. If every producer would make an effort to sign a fellow producer up to financially support the CWT program, it will shoot right past its goal of 80% of the nation's milk production contributing to the program.

With more than 80% of milk production supporting the program, the goal of increasing and maintaining an all milk price increase of $1.30 will be easily achieved.

To receive sign up information call, e-mail or fax the Alliance at 916-447-9941, milkjet@aol.com, or 916-447-9942

6/23/03 - Support Mixed for NMPF's CWT Plan

CWT Program details available at DFA website
Milwaukee Cooperative Milk Producer members letter
Manitowoc Milk Producers Cooperative letter

        NMPF CEO's Corner:   Making Progress by Jerry Kozak
        NMPF Board Decides to Establish Self-Help Dairy Program
        NMPF: CWT Talking Points

6/02/03- CWT program stirs controversy...Ken Baily

Tuesday, October 14, 2003

What's New - CWT Update

News from the Market

Meet CWT Administrator, Shahnna Williams