News and Press

CWT Export Assistance Update – Fall 2012

Making a difference in every producer’s milk check

By assisting member cooperatives in selling dairy products overseas, CWT is having a significant impact on every dairy farmers milk check. Analysis of CWT activity by Dr. Scott Brown, University of Missouri, indicates that CWT-assisted shipments of American cheese and butter as of September 30, 2012, have added an average of 43 cents per hundredweight of milk to the payments received by dairy farmers from first handlers.

68% of American cheese exports

Through the end of October 2012, CWT has assisted 10 member cooperatives in selling 106.3 million pounds of Cheddar, Monterey Jack, and Gouda cheese and 61.4 million pounds of butter and AMF to 36 different destinations. By providing assistance on basic commodities, the dollars dairy farmers representing 70% of U.S. milk production are investing are having the most direct, positive impact on farm-level milk prices as Dr. Brown’s analysis shows.

The graph to the left shows the distribution of the cheese CWT has assisted members in selling through the October 2012. Asia accounts for 42.5% of the cheese sold with sales to Japan 65% of that total. The Middle East ranks second at 23.8% of CWT-assisted cheese sales and Saudi Arabia makes up 36% of those sales.

94% of the cheese CWT has helped members sell through October 2012 is scheduled to be shipped and delivered before the end of the year.

63% of butter exports

Since CWT added butter and anhydrous milk fat (AMF) to the active list of products CWT is assisting members in selling overseas, 165 sales to 25 countries totaling 61.3 million pounds have been made. Considering that there is a reported world surplus of butterfat, CWT support of these sales has been a key factor in achieving this level of sales activity.

As the graph on the right shows, where CWT-assisted butter has been sold is very different from CWT-assisted cheese sales. The Middle East accounts for almost 73% of all butter sales while sales in Asia were 8.7% of the total. North Africa makes up 14.2% of all sales.

Of the 44.1 million pounds of butter sold in the Middle East, 28.8% has gone or will go to Saudi Arabia. Egypt’s 13% share is equal to 5.7 million pounds of the butter sales to that region.

In North Africa, Morocco makes up 90% of the 8.5 million pounds of CWT-assisted sales to that region.

CWT: A major factor in keeping supply in line with demand

Through the end of July, the 60.7 million pounds of CWT-assisted cheese shipped made up 68.4% of U.S. American cheese exports and 16.9% of all U.S. cheese exports. During the same period, the 47.1 million pounds of CWT-assisted butter shipped made up 62.6% of U.S. butter exports. And, essentially all of that butter is at the world standard of 82% butterfat content.

Through September, U.S. milk production is running 3.6 billion pounds ahead of last year, a 2.5% increase in production. In an industry where a one percent increase can cause milk prices to fall, this year’s level of growth could have resulted in even more dairy farmer economic stress.

Fortunately, CWT-assisted export sales of cheese, butter, AMF and whole milk powder through the end of October is the equivalent of 2.3 billion pounds of milk (on a milkfat basis) that has or will be going into foreign markets. So instead of an additional 3.6 billion pounds of milk coming onto the domestic market, thanks to CWT, that number is much more manageable.

Even after a new farm bill is passed and goes into effect, CWT will continue to play a critical role in helping to grow the stake that U.S. dairy farmers have made in the developing markets of Asia, the Middle East and North Africa.

Every member should get a member

Being an effective and consistent player in the world dairy market is critical to every dairy farmer and every dairy cooperative in the United States. Whether a cooperative exports products or not, the positive impact CWT has on sales of U.S. dairy products overseas has a positive impact on the domestic price for the products every cooperative sells.

In addition to cooperatives encouraging other cooperatives to join CWT, dairy farmers need to encourage other dairy farmers to pitch in. Chances are that if your neighbor is shipping his or her milk to a proprietary plan, they aren’t in CWT. Please take the time to ask them to join in.