Board cancels dairy production incentive days

Tuesday, March 3, 2009

© AgMedia Inc.

by SUSAN MANN

Is the current economic recession causing a weakening demand for dairy products?

That’s what Dairy Farmers of Ontario’s board wants to know. At last month’s meeting the board learned that butter stock levels jumped 5,600 tonnes from Dec. 31, 2008 to Jan. 31. DFO senior policy adviser Phil Cairns describes it as “one of the largest changes” in a single month in butter stock levels that he has seen.

“It’s not abnormal for stocks to start to accumulate in January,” Cairns days. “It’s just that they seem to be accumulating at an abnormally fast rate.”   
 
One reason for the increased stock levels may be that the demand for dairy products is weakening. But there are other reasons, such as falling world prices and changes in the Canadian Dairy Commission’s offer-to-purchase program. If that’s the case the jump will just be a short-term blip, Cairns notes.

The dramatic increase in the butter stock levels in one month means Ontario’s dairy farmers won’t be getting any extra room to produce more milk starting this month as previously thought.

But the board did approve incentive days for the fall period when production is traditionally low and demand starts to build for the Christmas season. This fall, farmers will get two incentive days a month in each of August, September, October and November.

Staff are still analyzing why the stocks increased so much in one month. The board plans to review the need for milk production incentive days starting this spring at their meeting later in the month. BF