The amount of milk quota for sale takes a giant leap on Ontario's dairy exchange

Friday, October 23, 2015

by SUSAN MANN

Uncertainty around trade agreements and new policy changes are among the factors at play in a recent flood of milk quota on Dairy Farmers of Ontario’s monthly exchange.

A report released during the organization’s regional meetings earlier this month indicates dairy farmers looking to buy quota on the monthly exchange in August saw an increase of 135 per cent in the kilograms available for sale, an increase to 900 kilograms compared to the 383 kg available in August 2014. In September, there was 1,250 kg available for sale — 285 per cent more than was offered in September 2014.

George MacNaughton, production and regulatory compliance director, says Dairy Farmers had introduced policy changes in August to increase the amount of quota on the exchange but didn’t have a goal in mind for how much more it wanted to be available. “We just wanted to remove any barriers” to producers offering their quota for sale on the exchange, he says.

“We’re pleased with this outcome,” he adds. However, he acknowledges that there are several more issues at play than policy change.

Some of the quota available came from farmers exiting the industry and putting their entire quota up for sale. Planned retirements, health and labour, the uncertainty of recent trade agreements’ effects on supply management, and financial matters — specifically the declining blend price — are among the factors precipitating decisions to bow out, MacNaughton says.

He notes there was an almost 12 per cent decrease in quota demand from August to October this year compared to the same months in 2014. Some of the reasons for that include increased quota in the system, the incentive days and uncertainty around the trade agreements.

Dairy Farmers introduced several quota policy changes after doing an extensive review of its policies with farmers in Ontario and officials in the other Eastern Canadian provinces participating in the milk pooling agreement. They are Quebec, Nova Scotia, New Brunswick and Prince Edward Island. The five provinces share revenues from fluid and industrial milk markets and work co-operatively on other matters.

The changes included converting all non-saleable quota to saleable, dropping the capped quota price to 24,000 per kilogram from 25,000 per kilogram, requiring farmers selling on-going dairy operations to put 10 per cent of their quota on the exchange for sale there and enabling farmers to establish linked facilities. BF