US co-op to introduce a new quota system

Published 10 February 16

US dairy co-op Land O’Lakes is to introduce a supply management program for milk produced in its Midwest dairy region. Under this arrangement producers will be assigned a base, based on their historical production, with the program expected to commence in 2017. Suppliers can continue to produce as much as they wish, however, where markets cannot be found for the increased production, suppliers will have to carry the cost of displacing this extra milk. Members who do not deliver 90% of their base in the prior year can be eligible for reallocation, which would see base quantities transferred to other members or retained by the co-op.

The co-op predominantly collects milk from five different states in the Midwest, which accounts for about 22% of US production and has attributed this latest development to an increase in milk production, pushing its plants to capacity in this region. In November 2015, Land O’Lakes announced a similar scheme in its eastern dairy region, beginning 1 January 2016, where the co-op has struggled to manage oversupply for some time.