by SUSAN MANN
Dairy farmers will be getting a formal response next week from processors on proposed policy reforms designed to ensure the industry’s future profitability and stability.
Peter Gould, Dairy Farmers of Ontario general manager, said during an interview at Wednesday’s Dairy Farmers annual meeting in Toronto, producers across Canada developed the plan, called the Ingredients Strategy, and shared it with processors across the country last year. The plan comprises eight policy elements designed to act as a strategy to increase markets for dairy products and ingredients. The Ontario board had a special meeting with the Ontario Dairy Council board in March 2014 to discuss the details of the plan’s elements.
“We’re waiting their formal response and we were advised yesterday (Tuesday) that would be forthcoming next week in Ottawa at the Canadian Milk Supply Management Committee meeting,” Gould said.
Negotiations between farmers and processors, which haven’t started yet, will take some time to complete. In the meantime, the Ontario and Quebec dairy boards have devised a five-element plan as a way to bridge “from where we are now until the Ingredients Strategy is put in place,” Gould says. He noted he couldn’t say how long negotiations on the Ingredients Strategy would take but it would definitely be longer than two to three months.
The five-point plan includes:
- Expanding the Cheese for Fresh Pizzas program to other varieties besides mozzarella, including cheddar, brick, colby, Muenster and other named varieties, plus removing the not-for-retail-sale labelling requirement that has irritated processors and distributors.
- Providing promotional incentives to companies that choose to only use Canadian milk to make their cheese.
- Capping Canadian Dairy Commission purchases of skim milk powder.
- Moving forward with operational rules for cream transfers under the Skim Milk Redirection program.
- Increasing the growth allowance to two per cent from one per cent of national MSQ (Market Sharing Quota) to ensure domestic market opportunities are met.
“If we can agree on an Ingredients Strategy it will supersede the five points,” Gould said.
The five-point plan doesn’t fully address what the Ingredients Strategy will “but it will be helpful,” he noted. The plan will be reviewed at next week’s Canadian Milk Supply Management Committee meeting in Ottawa.
Dairy Farmers of Ontario’s position is it would like to see the five-point plan implemented next week, he said.
Another major project Dairy Farmers launched last year was to develop a formal, written agreement with Dairy Farmers of Canada to outline DFC’s responsibilities concerning product promotion. Farmers across Canada pay a $1.50 per hectolitre fee for product promotion. During the 2013/14 fiscal year, Dairy Farmers of Ontario collected $38 million from Ontario farmers and remitted that to the DFC.
Gould said the agreement will include elements of accountability, transparency (including a break down of how all the money is spent) and specific objectives as well as “how they’re going to undertake their activities, measure them and report to us.”
So far Dairy Farmers has had two meetings with DFC to discuss a draft document. “That discussion is progressing extremely well,” and there will be a broader discussion at DFC’s policy conference in February.
DFC’s promotion plans are in place for this year, and Dairy Farmers of Ontario isn’t pushing for changes right away. “We accept it’s going to take time to work through a formal agreement,” Gould says. The agreement is projected to be in place for January 2016.
During his report at the annual meeting Wednesday, Gould told delegates DFC has already agreed to the principle of a written agreement. DFC also plans to have a written agreement between itself and each of the provinces.
Gould said the goal of product promotion has to be growth “measured in kilograms of butterfat at the farm level. We will know they’ve succeeded when your quota grows as a result of these (promotional) activities.”
As part of its agreement with DFC, Dairy Farmers of Ontario wants a description of each promotional activity DCF does, how it’s going to be executed, the expected outcome, how the results will be measured and an evaluation of how things worked. Gould said his thought is if a promotional activity can’t be measured, “don’t do it.”
One of the three expectations Dairy Farmers of Ontario has leading up to the written agreement’ finalization is it wants an unbiased, comprehensive assessment of branded compared to generic advertising. “As producers we have been wed to a generic approach for a long time.”
Another one is Dairy Farmers of Ontario has requested a review of the blue cow 100 per cent Canadian milk logo. In an earlier interview, Gould said a number of processors aren’t using the logo and it needs to be used more widely.
photo: Wally Smith
Wally Smith, president of Dairy Farmers of Canada, said at the annual meeting Canada’s three largest processors aren’t using the logo. Gould said lots of processors aren’t using it but the industry needs to talk to both users and non-users to find out “what we can do to create value and position the logo as something that more people want to use.”
The third expectation is Dairy Farmers of Ontario wants a review of the industry’s approach to nutrition. “Promoting low-fat and no-fat dairy products does not grow the industry,” Gould said.
The dairy logo got a bit of a boost Wednesday as David Clanachan, president and COO of Tim Hortons, announced at the meeting the chain would be using the logo on some of its products featuring Canadian milk and cream. BF
Comments
DFO gives every impression they are a group of blind men trying to describe an elephant by what they feel - one feels the trunk, one feels an ear, one feels a leg, another feels the torso, and so on.
For example, while there is nary a peep from these "blind men" that price may be of any hindrance to consumers whatsoever, they seem to fall all over themselves to give general impression that the image of a blue cow on dairy products will somehow be the "magic bullet" to increase sales of dairy products.
What's worse is that while the DFO "blind men" bemoan the fact that Canada's three largest dairy processors don't use the blue cow logo, they never once entertain the strong possibility that the processors don't use it because they know it doesn't increase sales.
In addition, while DFO studiously micro-manages the finer points of generic advertising versus branded advertising, they also studiously ignore the obvious point that no advertising is going to influence the steadily-increasing number of consumers who regularly flee to the US to buy on price, to come back to Canada to shop.
However, the "Darwin award" for the comment most-likely to demonstrate that the evolutionary process has stopped, or is even going in reverse, goes to Peter Gould for noting - "Promoting low-fat and no-fat dairy products does not grow the industry" while at the same time studiously ignoring the dictum that price will "grow the industry".
Stephen Thompson, Clinton ON
Media didn't cover the price decrease paid to farmers announced last week.
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I TAKE IT BILL HAS SOMETHING HE WOULD LIKE TO SAY OR YELL !!
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The media did .
Do you consider this site or BF media ? If so you are in trouble .
With the consolidation that has been happening in SM the last number of years , the growing size of SM operations it is high time that the price comes down . After all bigger is to be able to produce cheaper .
The SM guys live in a vacuum,keep your heads in the sand boys .It's a global market place, you guys haven't realized it yet.
Only 7 % of global milk production is traded.
Half of that is EU and US subsidized surplus.
Half is from NZ and Oz and only developed because they are propped up by tariff-created price returns guaranteed by preferential WTO access. NZ produces about 3 per cent of the world's milk, but has a tiny domestic market.
All while the US has highest effective tariff rate protection allowing the world's lowest milk import access of barely over 2 per cent.
Yes, some heads are indeed firmly in the sand.
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You fail to mention the US price for milk goes up and down as all free market systems.The milk in Canada would never go to the US as it is too expensive under the SM system.My friend in Wisconsin milks a 1000 cows his price moves from year to year depending on demand and world conditions. Stop talking about tariffs in the US under our system it is not a market you guys would want to access if prices were low on the world stage unless it is to dump excess product
No one suggested Canadian imports, the point was US has highest effective tariff rate protection which permanently means they allow the world's lowest milk import access of barely over 2 per cent. Canada imports 7 % of total milk and about 15 % of cheese. Much more than most countries.
Two per cent into US is WTO mandated access - NOTHING else can get in over the US tariff wall.
Everyone admits Canada's tariff wall, why not admit US has the same? Effective tariff rate (protection provided against world price) is actually higher into US.
Your argument is nonsensical, why would any US processor and/or consumer want to import dairy or chicken into their country. The prices are much more a result of the market, which does not exist here.
When Americans consumers start crossing the border to buy Canadian dairy products you may have a point.
Until then-you don't.
Raube Beuerman
Finally you have to say that you too agree that things do just cost more in Canada . About ding dang time it sunk in !
No, just dairy and poultry.
Try to focus.
Raube Beuerman
Yes Yes Yes , Focus , Focus , Focus . Sad to say there are some rather narrow minded thinkers on here . No one said dairy and poultry were excluded !
Some of us try to focus on the whole bigger picture .
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