NFO offers Cooperative Marketing Initiative

By Carol Stender
cstender@agrinews.com

Date Modified: 03/25/2010 9:18 AM

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The National Farmers Organization wants farmers to take control of their dairy industry and build a program that offers a sustainable price.

The NFO's plan is the Cooperative Marketing Initiative, which builds on the success of Cooperatives Working Together's program.

NFO supports CWT's efforts, said NFO National dairy director Brad Rach. CWT's combination of herd retirements and export enhancements has returned profits to farmers. Since CWT was founded, the dairy industry and general economy have changed. CMI addresses those changes and would become an additional program.

Cooperative Marketing Initiative would be administered by the National Milk Producers Federation under the CWT board's direction, Rach said.

The program would set a national production level consistent with milk use, Rach said. It would assign each cooperative with a base level consistent with its share of national production and set target prices at levels enabling members to profitability produce milk.

The NMPF would determine how much milk should be marketed to maintain the target price, Rach said. The amount of milk would be expressed as a percentage of base called the Cooperative Full Value Production Level for each cooperative.

Each cooperative would assign a Full Value Production Level to each of its members with the total equaling the Cooperative Full Value Production Level. Each cooperative would then agree to pay members the target price minus marketing expenses on all marketings up to the member's Full Value Production Level.

Milk marketed above the member's Full Value Production Level would also be accepted by the cooperative and paid the target price, but a yet-to-be-determined penalty would be assigned for each unit sold over the production level.

Penalties collected would cover any losses incurred by the cooperative and the remaining funds would be pro-rated and returned to those who don't produce above their marketing base.

Individual cooperatives would handle production level adjustments needed due to changes in dairy operation size, as producers come into the industry or leave it, he said. Disputes would be settled by NMPF.

When cooperatives seek to change their base level or as new cooperatives seek to join, CWT would approve or disallow base assignments.

When Rach introduced CMI at the Minnesota NFO convention in December, he stressed that the proposal is meant to be a "general direction we can discuss and is not a "detailed plan we should implement without further consideration," he said.

NFO and other dairy and farm organizations with similar plans have gathered to discuss them

"Everyone is starting to come together and realize that something needs to be done," he said. "If you are going to accept anything, you have to be able to compromise some. People are beginning to understand that you can't all be for "my way..." There has to be some meeting place in the middle that best suits the dairy producer."

NFO has been trying to get industry support for a pricing program since 2005, Rach said.

"I have always thought that dairy producers can do this on their own," Rach said. "They don't need a government mandate."