Dairy Farmers of Ontario ends fiscal year with a surplus

Wednesday, January 13, 2016

by SUSAN MANN

Ontario dairy farmers’ administrative licence fee is going up to 63.5 cents a hectolitre on Feb. 1, a one-cent-per-hl increase over last year, delegates at the Dairy Farmers of Ontario annual meeting were told Wednesday.

The fee information was contained in the Dairy Farmers budget for the 2015/16 fiscal year, which started on Nov. 1, 2015. The Dairy Farmers board approved the budget in October. The organization projects to raise $17.1 million from licence fees and have total income of $19 million this year with expenses of $19.2 million and a deficit of $237,336.

Despite projecting a $241,923 deficit for the 2014/15 fiscal year, Dairy Farmers actually finished the year with a $386,988 surplus, according to the 2015/16 budget documents released at the meeting. Revenue of $18.3 million was higher than projected last year (the document listed budgeted revenue at $18.27 million) mainly due to higher milk production. Meanwhile, expenses at $17.9 million were lower than the $18.5 million projected for last year due to lower training costs, higher quality penalty revenues and various expense savings.

The two-cent-per-hl fee dairy farmers pay for the on-farm milk quality program, the CanWest DHI levy of six cents per hl, the market expansion fee of $1.50 per hl and the five-cents-per-hl deduction for research all remain unchanged this year from last year. Total deductions, excluding transportation costs which are charged at actual rates, will be $2.265 this year compared to $2.255 last year.

Dairy Farmers is projecting a 3.19 per cent increase in milk production volumes this year compared to last year to 2.7 billion litres from 2.6 billion litres in 2014/15 and a 0.6 per cent increase in butterfat composition.

For 2015/16, overall revenue is projected to be up by 4.8 per cent or $730,409, while expenses will be up by $725,802 or four per cent due to higher drug residue testing costs and higher processor participation in veterinary drug residue testing along with increased farmer training costs for the dairy industry’s proaction program.

The proaction program encompasses standards for farmers to meet on milk quality, animal care, environmental stewardship, traceability, food safety and biosecurity. It’s in various stages of development and implementation across Canada.

Dairy Farmers Operations and Regulatory Compliance Director George MacNaughton says in an interview what has led to greater participation in drug residue testing and its higher costs is a new drug-testing kit that has been used in Ontario since April. The kit tests for three classes of drugs in a single test - beta lactams, sulfa and tetracycline.

Before April, processors tested each load for beta lactams, and 40 per cent tested each load for tetracycline and/or sulfa drugs. The new kit tests for all three drug classes and is much more efficient for processing plants, he says.

Now, “most of the milk in Ontario is being tested for all three classes of drugs,” MacNaughton notes. “That raises the cost from an average of $5 per testing compartment to $9 per compartment.”

Some other numbers in the annual report are:

• The number of dairy farmers in Ontario declined by three per cent to 3,780 in the 2014/15 fiscal year from 3,896 the previous fiscal year.
• Dairy Farmers marketed 2.6 billion litres of milk in 2014/15with a farm gate value of $2.1 billion. The milk went to 53 processors at 72 plants.
• The number of loads rejected due to quality increased to 33 in the 2014/15 fiscal year compared to 17 the previous fiscal year. Most loads in 2014/15, 11, were rejected for having black specks in the milk. Dairy Farmers says in its annual report the increase may seem high but is statistically insignificant “considering the total number of loads marketed.”
• As of Oct. 2015, almost all dairy producers were registered under the dairy industry’s on-farm food safety program, Canadian Quality Milk (CQM). The 0.2 per cent of producers that did not register in the program have been paying a CQM penalty since their assigned validation month. BF