PEI producers stick with quota leases

Wednesday, September 1, 2010

by SUSAN MANN

Eastern Canada’s dairy industry is moving to being a pool of dairy producers rather than a group of provincial organizations, now that Prince Edward Island agreed to implement common quota policies shared by four other provinces, says a Dairy Farmers of Ontario spokesman.

The island province implemented most of the common policies on Sept. 1 that Ontario, Quebec and Nova Scotia brought in during 2009 and that New Brunswick introduced earlier this summer. PEI is to implement the same producer flexibility days as the other provinces by August 2011.

The provinces share revenue from industrial and fluid milk markets and work cooperatively on other areas of mutual interest as part of an agreement called P5 All Milk Pooling.

Phil Cairns, Dairy Farmers of Ontario senior policy adviser, says PEI’s implementing the common quota policies means the rules determining over-quota production on farmer statements “are essentially harmonized.” It doesn’t matter where a farmer lives in the five Eastern Canadian provinces, the same conditions will apply to determining if that producer is over quota. The provinces have also moved a lot closer to applying the same payment process and quota credit opportunities to their combined membership of 12,000 producers.

Now that PEI implemented the common policies, including the quota price cap, the region is “starting to function more as a true pool,” Cairns says.

One of the main sticking points for island farmers was having to take a 0.5 per cent quota reduction in exchange for retaining quota leasing. It’s a tool that lets farmers temporarily transfer unused quota to another farmer for a fee. The two other Maritime provinces, Nova Scotia and New Brunswick, agreed to take the quota reduction to keep quota leasing and now PEI has agreed to the same condition. Ontario and Quebec don’t have quota leasing programs.

Another area of concern has to do with milk movement.  Cairns says when there’s low production in PEI but not in the other provinces the small province doesn’t have the flexibility to install extra production incentive days to encourage more milk from farmers. As part of the common quota policies, decisions about incentive days are made by the pool quota committee for all the farmers in the five provinces.

The pool quota committee recognized that in very unique circumstances it may permit some local variation to the incentive days, he says. But there likely wouldn’t be a need for exceptions to a pool-wide decision on incentive days for Ontario and Quebec.

An exception might be considered if a province’s ability to fill its market is two per cent lower than the P5 average. It would never apply in Ontario and Quebec because those two provinces produce a large volume of milk. “They are the P5 average,” Cairns says. If production was down in those two provinces, the pool quota committee would likely decide to issue more incentive days for the entire pool.  BF