Cheese wedges.
September 12, 2018

CWT Export Assistance Tops 1 Billion Pounds of Milk Already This Year

 |  By: Jim Dickrell

Cooperatives Working Together (CWT) announced this week that it has assisted more than one billion pounds  of milk (milkfat equivalent) of export sales already this year.


That represents half of the overall rise in 2018 U.S. milk production through August. “With milk production rising around the world, as well as in the United States, CWT helps maintain and build market share for our products as we tap into growing consumer demand across the globe for made-in-America dairy products,” says Jim Mulhern, president and CEO of the National Milk Producers Federation (NMPF). NMPF administers the CWT program.


The U.S. has been exporting 15 to 16% of its annual production in recent years, roughly 32 to 35 billion lb of milk in various products annually (the estimate will vary somewhat depending on how you calculate the milk equivalency based on milkfat or milk solids). So the 1 billion lb of exported-assisted sales this year represents perhaps 3% of the total. Still, as Mulhern notes, it’s a significant amount of milk compared to the increase in milk production. If these products were not exported, they would likely go into inventory and further depress prices.


Assisted by CWT-bonus sales, U.S. export sales surged through the first half of the year, accounting for 16.8% of U.S. milk production on milk solids basis. They slowed in July, likely due to tariffs imposed by Mexico and China.


CWT has not been used to offset Mexican tariffs on U.S. dairy products, says Maddy Berner, NMPF spokesperson. “U.S. dairy exports to Mexico receive no assistance from CWT. CWT-assisted exports to China are subject to the same review process as exports to other locations,” she says.


While U.S. prices had been competitive on world markets for much of the first half of the year, new sales often needed a boost to seal contracts. “The bottom line is that most if not all of the [CWT-assisted] sales needed CWT’s assistance in order to be competitive, which is why members submitted bids for CWT bonuses,” says Chris Galen, NMPF spokesperson.


CWT was founded in 2002. Export assisted sales from 2003 through 2017 topped 11 billion pounds of milk, or just under 800 million lb. per year. If 2018 sales continue at their current pace, CWT-assisted sales could approach 1.5 billion lb. of milk.


Note: CWT does not publicly release the number of dollars it raises nor how much is given out in export bonuses. According to the CWT website, however, “CWT is supported by dairy farmers producing a majority of the nation’s milk.” Since the CWT assessment is 4¢/cwt, that suggests CWT is raising at least $43 million annually. CWT is a voluntary program funded by 24 dairy co-ops and independent farmers in nearly all 50 states.


To date, CWT assisted sales of roughly 50 million lb of American-type cheese, 13 million lb of butter and 46 million lb. of whole milk powder to 34 countries on five continents. This past week, nine offers of export assistance from CWT have been accepted for 963,420 lb of Cheddar and Monterey Jack cheeses and 4.3 million lb whole milk powder. The product is scheduled for delivery between September 2018 and February 2019 to Asia, the Middle East and South America.


The recent activity reflects CWT’s new strategic plan that was approved in March to institute higher volume limits, lengthen the delivery period for cheese and add whole milk powder to the list of eligible products, says Berner.


Adding whole milk powder to the list of eligible products is notable since U.S. whole milk powder often trades well above world market prices. Only a few plants in the United States produce whole milk powder, but those plants are located in areas of growing milk production.