 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
|
|
|
|
|
|
|
|
 |
 |
|
|||||
 |
 |
 |
 |
 |
 |
 |
|
VOLUNTARY HERD RETIREMENT
This program reduces the milk supply by retiring whole herds (to avoid producers picking their most unproductive cows for sale).
How it works:
CWT issues a call for bids, on a per hundredweight basis, for the buyout
of whole herds. Producers submit bids, including a year’s production
and herd records. The bids are evaluated according to criteria established
by CWT, based on the cost-effectiveness of the sale to furthering the
ends of the program. These would include cost recovery for the buying
process. In addition, early priority could be given to larger herds, in
order to accelerate the impact of the program.
Large herds would be fully audited before purchase, including the placement
of an auditor on the farm for 3 days, to verify that the current herd
and its milk production are consistent with the submitted records. In
the case of smaller herds, all would be partially audited, based on 7
days production records from their cooperative or handler, but subject
to full audit, as necessary.
Once the elements of the bid are verified, CWT takes immediate possession
of all animals, and the animals are committed to slaughter. This would
tend to target retiring producers, who would be induced to sell their
herds into slaughter, rather than into another herd. The objective is
to shut down the greatest volume of production at the lowest possible
price. A call for bids could be announced as soon as CWT was organized;
herd purchases could begin soon thereafter.
Herd Retirement Program Target: Remove 125,300 head, equivalent to a reduction of 2.07 billion pounds of milk over the 12-month program period.
Cost per unit: Estimated $895 net cost per cow (purchase minus slaughter value), or approximately $4.74 per hundredweight. The costs would be higher or lower per hundredweight if the volume was changed.
Cost for target: $112 million, at estimated average $4.74 per hundredweight.
Contribution rate for this program: $0.094/cwt. over 12 months, assuming participation by producers representing 70% of U.S. milk production.
Additional impacts: In addition to meeting short-run supply reduction targets, retiring whole herds will have a continuing impact for 1 to 4 years beyond the last purchase, due to the actual elimination of part of the national milking herd.
Program Considerations:
- The program will target producing cows by buying whole herds only.
- Buying animals directly and moving them to slaughter reduces the complexity of transaction, and reduces the opportunities for cheating.
- There is no commitment to keep the farm or the farmer out of dairy production, since the purpose of CWT is to focus on getting productive cows out of production, not farms or farmers.
- Cooperatives should stay at arm’s length; providing technical assistance as requested, but remaining disengaged from the program transactions.
- CWT should take full responsibility for the program, including hiring purchasing agents and taking ownership of the cows.
- Export of cows will not be allowed, since they will generate competing milk supplies abroad, in the best case, and return to the U.S., in the worst case.
- CWT should explore a method of managing the release of beef into the market, if this is cost-effective.
- Deferred payment options may be made available, as long as they are consistent with the objectives of the program.
- The retirement of herds should be implemented as soon as possible.
- Regional limits should be established on herd reduction programs to ensure that no one region suffers a disproportionate loss of production capacity.
Back to main CWT article