Supply Management Tools
Desperate to eliminate a milk surplus of nearly 4%, dairy farmers now recognize their lack of control over the market and face reality with only two options, either produce milk or go out of business.
Dairymen operating well below their cost of production recognize the current surplus has cut their milk check in half. Three months ago the dairy industry questioned national acceptance of a supply management program, today dairymen expect one.
During these past months, dairy farmers nationwide have searched for a management plan to effectively shock the system and provide an exit from this crisis. There are few tools available which appear to have enough control over supply to move the industry forward. The CWT Program is recognized as operational and reasonably efficient yet it lacks in participation by a full 1/3 of U.S. dairymen who object to its nature.
The CWT Whole Herd Buyout Program is only part of the management tool we need, it does not recognize the loss of valuable animals or genetics, it leaves nothing intact to support farm infrastructure, and it reduces the number of operating dairy farms nationwide. Create a powerful management tool; enhance CWT by implementing a Milk Diversion Program to operate alongside the Whole Herd Buyout Program. Circumstances for dairymen appear similar from a distance yet the audience consists of individual needs. The nature of operating both programs simultaneously allows dairymen the opportunity to choose a level of participation that addresses their needs, which results in control over milk production sensitive to market demand.
Historically, supply management has cost the CWT Program $6.25/100. Under a new program to reduce production, pay dairymen $7.00/100 not to produce anywhere from 10% -30% of their annual production, they choose the amount, and they choose the method. The contract period is for one year unless milk hits a trigger price of $17.00/100 for two consecutive months, which then fulfills the obligation.
The concept of allowing dairymen to participate in supply management while retaining their herd, maintaining their infrastructure and not confining them to a restrictive contract offers the industry great opportunity. Under certain circumstances, an individual may prefer the Whole Herd Buyout, their choice.
Finally, since the CWT Program belongs to dairy producers, the producers' voice should be heard through an advisory panel to represent the better interests of the dairy industry, which includes the dairy farmer.
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