Herd Retirements Raise Concern Over Cull Cow Prices

US - Dairy herd buyouts, or retirements are increasing across the US, courtesy of Cooperatives Working Together (CWT), a voluntary, producer-funded national programme developed by the National Milk Producer Federation (NMPF) to balance milk supply with demand, says Stephanie Johnson, for Minnesota Farm Guide.

26 November 2009

2 minute read

North America

Participating producers can submit bids during the bidding period and, if accepted, CWT will pay to have their herd taken to slaughter.

Allen Merrill and his father, Bob, have not participated in a CWT buyout, but they know others who have.

“We know dairy farmers that have went in, and they were happy to be in,” Allen said. “I haven't heard any regrets from anybody who has bid with CWT.”

“Talking to neighbours that went, they felt that it worked for them,” Mr Merrill added. “It gave them the opportunity to get out at a time when they wanted to. I haven't heard any regrets from anybody who has bid with CWT.”

Not everyone is happy with CWT's herd retirements, however. With extra dairy cows headed to slaughter, some beef producers are worried about a sharp drop in cull cow prices.

While CWT's latest herd retirement that finished in October will bring more dairy cull cows to slaughter, the overall cull cow market will probably see only a small negative impact, most experts say.

For October's herd retirement, CWT has tentatively accepted 154 bids, which represent 26,412 cows and 517 million pounds of milk. Until this year, the programme had paid for about 275,000 dairy cows to be slaughtered. In the last 12 months, however, CWT has retired 252,000 cows and five billion potential pounds of milk.

Fall is traditionally culling season for cow/calf producers - after weaning calves, they sort off and sell any open or undesirable cows, which swamps the cull cow market each year. The fall cull cow run usually means a dip in prices, said Iowa State University Extension livestock economist John Lawrence.

Mr Lawrence said dairy cows from CWT buyouts going to slaughter over the next few months would likely not affect cull cow prices. Commercial cattle slaughter in the United States during 2008 totaled 34.4 million head, according to the National Agriculture Statistics Service (NASS). Dairy cows comprised 7.7 per cent of the total, compared to steers at 50.1 per cent, heifers at 29.9 per cent, other cows at 10.6 per cent and bulls at 1.8 per cent.

That means about three million cattle go to slaughter each month, according to NASS. The CWT cows will be slaughtered from November to January, said Chris Galen, CWT senior vice president of communications.

“We're talking about 26,000 over six or eight weeks,” Mr Lawrence said. “It's just a blip.”