Dairy Farmers of Ontario dumps skim milk surplus

Thursday, June 18, 2015

by SUSAN MANN

Dairy Farmers of Ontario has dumped about 800,000 litres of skim milk into lagoons and manure pits since late May as provincial processors have hit their capacity to dry the product into skim milk powder.

Graham Lloyd, Dairy Farmers general counsel and communications director, says the plants capable of drying skim milk into skim milk powder are full “but there’s still demand for butterfat.” There are three plants in Ontario that can dry skim milk into powder.

Butter sales and demand for butter are at all-time highs while processors’ stocks are at all-time lows, he notes, adding butter sales have increased by four per cent during the past eight months.  

During the past month, about 5.8 million litres of milk processed for its butterfat resulted in 5.4 million litres of skim milk, valued at about $500,000, that was produced. “The value of the butterfat that was sold for producers was $1.85 million,” Lloyd says, adding there have been markets found for all of the butterfat produced. “There has been no dumped butterfat.”

Lloyd says skim milk is “typically condensed and when we couldn’t find markets for it, it was directed to animal feed, namely veal and pig, biodigesters and some may have gone to manure pits or lagoons,” he notes.

Duty-free milk protein concentrates and isolates imports from the United States are displacing Canadian skim milk protein and “that doesn’t help the matter but it certainly isn’t the cause of the current” excess of skim milk, he says.  

The organization is doing “everything it can to get maximum value for the milk,” says Dairy Farmers chair Ralph Dietrich in a June 12 letter to producers posted on the organization’s website.

Milk that’s not marketed would reduce the producer blend price, Lloyd says. He did not have numbers on how much the dumped skim milk is projected to reduce the blend price. He explained the blend price is “impacted by so many other things as well.”

However, the news isn’t all bad for farmers, Lloyd says. “While the blend price may decrease, the overall sales are still $1.8 million more than would have been this month. Farmers are getting more revenue even through the blend price has dropped because there are more incremental sales.”

Dietrich says in his letter total demand for milk and dairy has been strong for the past two years. Most of the growth has been in high butterfat products, particularly butter and fluid creams. There’s also steady growth in other dairy products, such as cheese and yogurt.

The dairy market growth has resulted in “an unprecedented growth in quota and the issuance of incentive days” for farmers, he says. Quota has increased by 6.5 per cent in just over a year.

Lloyd says Dairy Farmers has experienced a time previously when it had to redirect milk or delay milk deliveries to plants to accommodate available dryer capacity but “not for as long a period as this has been.”

Dietrich says in his letter there isn’t an obvious end in sight to the situation unless the normal seasonal production trend kicks in or there is a prolonged hot spell. Lloyd says hot weather decreases cows’ milk production. BF