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NFO director: Dairy producers get good return on investment with CWT
You know that a project has come of age when university economists begin to study it. The Cooperatives Working Together (CWT) program can now claim such a study, and the results are encouraging.

According to Dr. Scott Brown of the University of Missouri, for every nickel dairy farmers put into the program, they got back 40 cents. Getting an eight-fold return on investment is a big deal anytime, but especially in todayís sagging dairy economy. Dairy farmers should be proud of their accomplishment.

There is more to the accomplishment than dollars and cents, however. CWT has shown that farmers can work together without any government assistance to better their prices. That, in the long run, might be the biggest accomplishment for CWT to claim.

During the early meetings that led to CWT, it was only natural we would focus on supply management methods that have worked in the past. Not surprisingly, herd retirements and export assistance have become the tools CWT uses. These are tools that have worked well as government programs in the past, so why not use them now?

Most dairy farmers reading this will have stories to tell about the herd buyout program of the 1980s. They also know that commodity programs have often featured land set-asides as another way to manage supply. Export enhancement programs, too, have been featured in various government programs for as long as I can remember.

All of these government programs were cooked up in the good old pre-WTO days when there werenít so many legal challenges to ways the government might help farmers. And as agribusiness grows more powerful by the day, more and more farmers donít trust USDA to work in their best interests. CWT addressed both of these problems head-on by taking government out of the picture altogether.

WTO is very clear that it will not bother private initiatives. After all, globalization is largely a move by multinationals to line their corporate pockets, so why restrict that in any way? Along comes CWT and, because it is privately administered, gets around WTO rules altogether. And whether farmers trust USDA or not becomes a moot point when farmers take the bull by the horns and administer their own program.

So here we are, with a clear demonstration that dairy farmers can work together in profitable ways without help from the government. Now itís time to turn our attention to ďWhatís next?Ē Forty cents for every nickel looks great, but many farmers need dollars, not dimes, to return to profitability. Not so long ago, the market showed us it can pay $20 for milk. Why settle for so much less now?

That will be the big challenge, I think, for CWT in the months ahead. Farmers have shown they can use government program ideas in ways that do not involve government support. Now its time to develop some ideas that the government hasnít tried and see how far we can push the idea of farmers working together.

Pricing milk is the new frontier. This is an exciting time, and I truly look forward to seeing what dairy farmers and CWT will do next to show farmers of all types, and in all countries, what is possible when the combined market power of many is harnessed into one big, powerful, private venture that has one goal, and only one goal: Keeping dairy farming profitable.

-Bradley Rach is National Dairy Director for the National Farmers Organization.

This farm news was published in the Nov. 15, 2006 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.