LITTLE CURRENT—The Ontario dairy industry has been battered by a series of recent challenges that have left many producers struggling to chart a path forward.
Local dairy farmers attended the Manitoulin-West Sudbury Dairy Producers’ Annual Meeting held Thursday, February 22 at the Little Current United Church hall where they received an update on the latest developments on provincial, national and international markets and were able to give their feedback and suggestions on how the Dairy Farmers of Ontario (DFO) and Dairy Farmers of Canada (DFC) plan to tweak the quota system in order to better manage the dairy market.
Among the challenges facing dairy producers this past year, aside from the usual vagaries of running a dairy farm full of large animals and heavy machinery, were the trade agreements that opened up increasing amounts of the Canadian dairy market to foreign producers—and from the producers’ point of view, it is mostly the domestic producers, like those on Manitoulin, who will carry the burden.
Both the Comprehensive Economic and Trade Agreement (CETA) with the EU and the new NAFTA agreement between Canada, the US and Mexico (the United States-Mexico-Canada Agreement aka USMCA, CAUSM or MUSCA depending on your viewpoint), as well as the earlier Comprehensive Progressive Agreement for Trans-Pacific Partnership (CPATPP) have added to the quotas of dairy products that can be imported into Canada’s managed supply system tariff free, which in turn is subtracted from the volume for domestically produced milk and leaving dairy producers with a substantially smaller market.
According to a DFC assessment of the impacts of the final implementation of CETA, CUSMA and the and the CPTPP “the overall imports coming into Canada will equate to 18 percent of Canada’s milk production.”
Although the federal government has publically committed to supporting supply management and has promised full and fair compensation for the impacts, the DFO and Canadian dairy farmers are “very disappointed with the final agreements,” said Mr. Runnalls, the Dairy Farmers of Ontario board member giving the presentation. “DFO is continuing to work with DFC, other provincial marketing boards and processors to ensure dairy farmers are protected and compensated.”
So far, some of that compensation is falling far short of its billing. A first come, first served first round of funding was aimed at underpinning new infrastructure investments by producers rather than compensating the domestic producer for the lost market. The DFO and DFC are continuing to request meetings with MPs and MPPs to lobby for full and fair compensation; to express their disappointment; that the process needs to be fair for all impacted producers; to call for special consideration on front of package labelling; and to press for better border and standards enforcement.
Then on January 22 this year, heaping insult on injury, the federal government updated the Canada Food Guide, pulling dairy from the recommended dietary mix and potential labelling requirements that threaten to put warnings on some dairy products without a sound scientific basis.
“There is strong evidence that vegetables and fruits are good for you,” said Mr. Runnalls. “But there is no scientific evidence to reduce dairy. We are simply asking that they look at all of the evidence before they make these sweeping changes.”
Key elements of concern with the new Canada Food Guide include: dairy as a category of food was removed; dairy is recognized in the protein section of the food guide with emphasis on consuming vegetable and grain-based proteins rather than animal-based proteins; and that the Food Guide recommends Canadians to consume low-fat dairy products.
The DFO is working to educate the public and politicians about the health benefits of diary, but they also do not want to be seen as simply a self-interested lobby group, rather focussing on the science—the organization is firm that there is simply no scientific basis upon which to recommend the reduction of dairy in Canadian diets.
“The new food guide makes recommendations to Canadians that go against conclusive scientific evidence,” said Mr. Runnalls, “including Health Canada’s own 2015 Evidence Review on Dietary Guidance and the public position of thousands of North American doctors.”
“It’s really hard not to come across as bitter when you are trying to explain how these things are impacting your livelihood,” said Tehkummah dairy producer Alex Anstice.
For farmers like Mr. Anstice and his father Jim Anstice who have been planning an expansion of their award-winning Island operation, Oshadenah Holsteins, but are finding that the reality of the quota available for purchase in the upcoming years is falling short of what they had originally projected.
The only way to make a large jump in production capacity these days seems to be purchasing another dairy farm with its quota, agreed Jean Guy Seguin, field services representative with the DFO.
Quota, the amount of raw milk that a dairy farmer is allowed to produce under Canada’s supply management system, was a major topic of conversation during the presentations last week and the DFC/DFO changes are aimed at bringing supply and demand into closer alignment.
Just before December last year the appetite for products like butter was in such high demand that the domestic market could not keep up with demand and had to purchase product from off-shore, explained Mr. Runnalls, but by December, thanks to a number of changes in the system aimed at fixing that surplus milk supply deficit, a plethora of surplus milk was flowing into the system. Essentially that flood of supply came after the demand for butter had peaked.
Among the producer area board (P5) decisions for March 2019 were an increase in production quota for Quebec and the Maritime provinces; a relaxation of the production credit day usage limit from one day to two days per month (in Ontario only); and elimination of the $20 per hectolitre over-quota penalty.
The reduction of the over-quota penalty was of considerable concern to Island producers who cited the concern that there would be little incentive for those over—producers to stay within their bounds.
Mr. Runnalls noted that those over-producing would still be facing a considerable overhead in transportation and administration costs while not receiving any income from the excess milk, in effect a self-induced penalty that hits their bottom line.
Conversation centred on the “sleeve,” or the number of days a producer could fall below or above their purchased quota. The proposed formula would see those days reduced from 30 under quota to 15 and over quota to 10, from the previous 10 days over and 30 days under sleeve with full implementation to take place by August 2021. The producing areas would also consider a provincial credit exchange as an avenue to accomplish implementation. A consultation period for producers was set for between January and March.
“The reasons for reducing the sleeve are: that it would be easier to manage production to meet, but not exceed, market requirements; that it should narrow the gap of average credit days among P5 provinces, further supporting common policy development and implementations; that it narrows the gap between producer flexibility at 6.8 percent and pool flexibility of 3.25 percent; that the implementation over a long time should not disrupt individual farm milk production plans while bringing forward a manageable volume as producers fill underproduction credits below minus 15 days; that considering a vehicle to transfer credits between provinces will also assist with moving into and staying within a total range of 25 days; that it could minimize situations of excessive over-issuance at the producer level; that some provinces already manage their production within a sleeve that is almost half of the P5 sleeve (-15/+5 days is 5.5 percent); and for producers at minus 30 days, that the required production should increase in order to be within the zero and minus 15 days (for example minus 7.5 days) and would be at six percent over two years,” explained Mr. Runnalls.
Attendees at the meeting were asked for their input on the proposed changes.
Following the discussions on the changes, Mr. Seguin presented this year’s quality certificates to Manitoulin producers Jim and Alex Anstice of Oshadenah Holsteins in Tehkummah and Bud and Brad Wilkin of Little Current, who were recognized for the high quality of their products.
