Dairy producers weigh in on quota deliberations

Dairy Farmers of Ontario Product Relations Specialist Alex Hamilton facilitated the group discussions on proposed changes being considered by the All Milk Pool (P5) supervisory body during the Manitoulin West Sudbury Dairy Producers committee meeting held February 19 at the Little Current United Church hall. photo by Michael Erskine

LITTLE CURRENT—Members of the Manitoulin/West Sudbury Dairy Producers committee gathered at the Little Current United Church Hall on February 19 to learn about developments and trends in their industry, get updates on the current discussions at their provincial board and to debate proposed changes to harmonize the supply management system across provinces and ways in which to improve the efficacy of the milk quota exchange system. The group also elected their executive committee for 2015 during the meeting.

The members elected to the 2015 executive committee included John Mooney, Larry Noland, Jim Anstice, Alex Anstice, Alan Emery and Keith Emery. The elections were overseen by Jean Guy Seguin, field service representative and transportation officer for the Dairy Farmers of Ontario (DFO).

Mr. Seguin also distributed the certificates of general excellence to the members present, including Jim and Alex Anstice of Oshadenah Holsteins, Larry Noland of Nolanda Farms, Faye and Denis Jonella and John Mooney and family in Massey. Little Current dairymen Bud and Brad Wilkin were recognized with a gold certificate for their outstanding quality production.

“I have seen an impressive improvement in the quality of production here in the region over the past several years,” said Mr. Seguin. “This region is the highest in the province in terms of quality.’

DFO board member for Northeastern Ontario Steve Runnalls agreed wholeheartedly with Mr. Seguin’s assessment. “There are 129 producers in the Northeast region,” he said. “Of those 51 received general certificates, that is the highest percentage in the province, while 14 received gold certificates. The provincial average is 10.9. When you combine both numbers, 54 percent of our members have received recognition, the provincial average is 53 percent.”

The group received an update on activities at the board from Mr. Runnalls, who noted that although there has been a decrease in the price of industrial milk south of the border, the low Canadian dollar is currently providing some shelter from the impact of those numbers.

Positive market indicators include the recent revelations that claims that ‘butter is bad for you’ have been proven to be false. “There has been a lot of media exposure for that research,” noted Mr. Runnalls, who pointed out that even the redoubtable diva of daytime television Oprah Winfrey has featured that finding on her show. “Butter is often being used as a lost leader in grocery stores,” he added, but with the caveat that the big chains are putting heavy pricing pressure on producers as a result.

On the milk side there are declines in fluid sales, which Mr. Runnalls attributed to heavy competition from other fluids, such as pop and juices, as well as a change in eating habits which are seeing some consumers switch to yogurt on their morning cereal. This decline is not just taking place in Canada, but is a more global trend.

As it stands, the increase in production entering the market is just keeping pace with population growth.

Although a higher import quota has been touted with the federal government’s recent free trade negotiation with the European Union, the Comprehensive Economic and Trade Agreement (CETA), breaking into the European market for cheese is proving to be a challenge for the Canadian cheese industry. Many of those challenges are coming in the form of non-tariff barriers, such as being barred from participating in European trade shows.

Other challenges facing the industry are coming from loopholes in the additives that are being allowed to supplant dairy in restaurant industry food supplies. A lot of those additives are coming in from the US into the Canadian market.

The CETA deal will take at least to years to be fully ratified by the European Union and it will be phased in over five years, noted Mr. Runnalls. “So there will be some time to absorb the impact of that agreement,” he said, pointing out that there will be a two percent loss of growth in the industry because of the deal.

A significant portion of the afternoon was taken up with a debate on changes being proposed by the P5 commission to the quota system in order to improve the quota exchange whereby new farmers or farmers wishing to expand or downsize their operations can buy or sell their milk quota.

According to the Canadian Dairy Council, the Canadian dairy industry operates within a supply management system, whereby the supply of raw milk from dairy farmers is controlled in order to match the domestic market needs of dairy processors. The system was introduced in the early 1970s and is applicable to industrial milk only (i.e. milk used in the manufacture of yogurt, ice cream, cheeses, butter, powders). Each dairy farmer in Canada has a production quota (Market Sharing Quota) that has been established through the National Milk Marketing Plan, which is an agreement between the federal and provincial governments providing for the provincial shares of MSQ. The national plan has been signed by the government and dairy farmer organization in each of the 10 provinces.

The Canadian Dairy Commission (CDC), a Crown corporation, “provides leadership and coordination with the provinces for the supply management system in the country. The Canadian Milk Supply Management Committee (CMSMC) administers the national plan and is comprised of producer, government and processor members in each province. The CMSMC develops national policy for the dairy industry and is chaired by the CDC. It reviews production, economic and marketing factors at its regularly scheduled meetings to determine if supply and demand are being met.”

According to the CDC, “supply management not only controls the domestic production allowed within the country but also limits the amount of imported dairy products through tariff rate quotas permitted by the World Trade Organization agreement on international trade. The third aspect of supply management is the price setting authority of provincially mandated marketing agencies and the federal government support for the target price.”

There are three pooling agreements that have been negotiated and agreed to in order to accommodate the changing markets within Canada. The Special Class Pooling Agreement provides for the pooling of market returns from the special classes and is shared by all dairy farmers across the country. The All Milk Pool (P5) is administered by a supervisory body and covers the provinces of Ontario, Quebec, PEI, New Brunswick and Nova Scotia. This agreement not only pools dairy farmer returns from the special classes but also for the returns in the fluid milk and industrial milk markets. The Western Milk Pool includes the provinces of BC, Alberta, Saskatchewan and Manitoba in much the same way as the P5 does.

In Ontario, the Farm Products Marketing Commission of the Ministry of Agriculture, Food and Rural Affairs, oversees the entire dairy industry. It and Dairy Farmers of Ontario, the organization representing the interests of dairy producers, are the signatories to the national and regional pooling agreements.