The U.S. industry funded organisation has announced an increase in the membership fees which are levied on milk production. The funds collected are used in "export assistance" programs which are paid to dairy companies that sell products into the global markets. The CWT program aims to assist all dairy farmers in the U.S. by helping to keep the market balanced. It does this by assisting exporters to sell excess produce into the global markets which reduces supply in the domestic market and therefore helps to keep commodity prices at reasonable levels. This in turn assists the price of milk at the farmgate level.
The volumes of dairy products exported out of the U.S. has steadily been increasing. The US Dairy Export Council (USDEC) has calculated that exports from January to April 2013 accounted for 13.7% of the total milk produced in the US. Exports of dairy products returned U.S. producers more than US$5 billion in 2012.
“With the export market growing at a rate five to eight times faster than the U.S. market, the vote by CWT’s member cooperatives today will ensure the U.S. is a consistent and competitive supplier of dairy products in the world’s growing dairy markets,” said Kozak.
U.S. dairy exports are gaining a foothold into many global markets. A lack of supply in recent months from traditional sources such as New Zealand, Australia, and European producers has provided an opportunity for U.S. dairy products to fill this void. An increase in funding will help more U.S. exporters price their product below that of their competitors.
CWT is not a government-mandated program which is why it is apply to subsidise the export of dairy products. A government-mandated program would not be able to assist member cooperatives in expanding overseas markets for U.S. dairy products because of trade agreement restrictions.