A Wisconsin dairy cooperative is offering an incentive program for its members to leave dairy farming, along with giving notification that the current milk-market situation might require members to dump milk.
The cooperative joins many dairy processing companies around the state who’ve either notified patrons that milk-dumping could be possible because of coronavirus-related market issues; some milk dumping already has been occurring.
Ellsworth Cooperative Creamery on April 1 sent a letter to members telling them that dairy markets and customers’ cancellations for the co-op’s products have resulted in the notification, which includes a buy-out program for members willing to leave dairy farming. The letter urges the members to reduce their milk output by 7 percent.
“Suggestion of selling cows, drying cows early and reducing the feed ration are three methods to reduce milk volume being shipped,” the letter says.
It also says the cooperative’s board has approved an incentive program for members to quit dairy farming by offering payments of full equity for 2010 to 2019. The incentive program’s rules include:
— It took effect April 2;
— The program only is available for reducing the cooperative’s first 100,000 pounds of milk per day;
— The equity payout will be 100 percent through 2019;
— Participating members must not sell their cows to another cooperative member;
— Proof of where the participating members’ cows went must be made to the co-op’s board;
— Participants’ cows must be sold by April 15;
— Participants will not be allowed to again ship milk to the cooperative without the co-op board’s approval; and
— The cooperative’s manager must approve a member’s participation.
The letter says one customer during the past month cancelled 15 loads of the co-op’s products; during the past week another customer cancelled eight loads of milk per day, creating a backlog of milk at the co-op’s facilities.
“To counter this, we are still processing milk for cheese as best we can for long-term storage,” the letter said.
The letter also said the mailbox price for milk will be $12 per hundredweight – including premiums – for the next two months; if the price falls more, the co-op will ask for milk to be dumped, which the letter said will reduce the price by another 60 cents to $1.20 per hundredweight.
Cooperative board member Marty Hallock, a Buffalo County dairy farmer, said the cooperative will stand behind members who might be asked to dump milk, if that should occur.
“Ellsworth is going to stick with the true cooperative model,” Hallock said. “We’re not going to have one loser and 300 winners. We’re going to stick together.”
Hallock said milk-processing plants weren’t prepared for what he called “a life-changing event”
“We weren’t set up for that,” Hallock said.
He said the dairy industry especially hasn’t been prepared for the loss of sales that went to the food-service industry.
“The food retail side dropped 65 percent, but they’ve recouped 25 percent on curd sales – but the curd sales still are down by 65 percent,” Hallock said.
He said the cooperative is processing cheese seven days a week, but that running the facility continuously for on a seven-day schedule isn’t sustainable.
If the co-op doesn’t reduce production enough, there’s a possibility for setting up some sort of production limits, Hallock said.
— Scott Schultz
Hallock talked with WAXX 104.5 farm director Bob Bosold.
deborah hawkinson says
I’ve been told that there are stores in MN that have no whole milk. Cosco and 1 other grocer in Brainerd. I don’t know who your buyers are, but there are shortages. If you could get the word out I’m sure the people out here would give it their best to buy more milk products to help the farmers.