US Dairy Cow Herd Faces Further Liquidation

US - Last week a US voluntary producer-funded dairy group, Cooperatives Working Together (CWT), announced it will conduct another round of dairy herd retirement – an incentive programme designed to reduce milk production in order to stabilise dairy prices.
calendar icon 8 April 2009
clock icon 1 minute read
Meat & Livestock Australia

This is the seventh herd retirement round since CWT began operations in 2003, says Meat and Livestock Australia.

The US dairy industry has experienced a dramatic downturn in dairy prices over the past six months, due to falling demand overseas for US dairy products and increased on-farm dairy cow production. According to the latest quarterly American Farm Bureau Federation Marketbasket Survey, retail food prices have dropped for the second consecutive quarter. Recording the largest retail price declines of all the food items surveyed were shredded cheddar cheese and milk, dropping 70US¢ and 67US¢ respectively, to US$4.24/lb and US$3.15/gallon.

The latest CWT herd retirement round aims to cushion the price fall farmers are currently facing, and speed up the time of financial recovery. Analysts are predicting this latest herd retirement could boost US cow slaughter by as much as 15,000 dairy cows per week during the summer months (June to August). Historically, US dairy cow slaughter tends to weaken during this period, while lean manufacturing beef prices peak. The forecasted boost in cow slaughter over coming months could put a cap on large prices inclines in manufacturing beef prices.

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