Dairy producers balk at proposed fee hike

Monday, October 25, 2010

by SUSAN MANN

Delegates at the annual Dairy Farmers of Ontario fall policy conference question whether they’re getting sufficient return on their product promotion fee investment to warrant a proposed 11.5 per cent increase.

Bill Mitchell, Dairy Farmers assistant communications director, says “there was a significant amount of concern” expressed by delegates.

At the conference earlier this month in Alliston, the delegates were discussing a proposal from Dairy Farmers of Canada’s board to increase the production promotion fee (which is called the market expansion deduction on producer milk cheques) by 15 cents a hectolitre to $1.45 from $1.30. The DFC proposal calls for provinces to discuss and approve the increase effective January 1, 2011.

Ian MacDonald, DFC’s national director of marketing and nutrition, says if provinces haven’t finished their discussions by then the increase would be delayed. The provinces all have representatives on the DFC board.

Mitchell says delegates’ concern didn’t have to do with the promotion program’s return on investment. Program numbers, based on annual retail sales, indicate the return on investment is $3.25 per dollar invested.

Instead, they wanted to see more market growth that would translate into more quota being available, he says. Delegates also said if the increase is approved they’d prefer to see it phased in over two or three years.

MacDonald says so far no provinces have made a decision on the proposal. Some are talking about a phased-in increase. BF