by SUSAN MANN
A stable dairy market coupled with high production this fall means Ontario’s dairy farmers will be hit with a 1.5 per cent quota decrease starting Jan. 1, 2013.
Patrice Dube, Dairy Farmers of Ontario economist, says the reason “we are reducing quota is not because the market has dropped. The market is stable. It’s just that the production level is very strong and we need to bring that production level back in line with the market.”
Parkhill-area dairy farmer Chris Vander Vloet, who milks 160 cows on his organic dairy farm, says “they (Dairy Farmers of Ontario) have to do what they have to do.” He adds that he has “a lot of faith and trust in the DFO.”
Vander Vloet notes while it would be nice to have quota increases all the time, he supports the supply management system and “this is what has to be done to keep everything in balance.”
Dairy Farmers announced the quota decrease on its website this morning. The decrease will be applied entirely to farmers’ non-saleable quota. Non-saleable quota was introduced in August 2009 as part of harmonized quota policies among the five provinces involved in the eastern milk pool. Whenever there is a quota increase that applies to all farmers, that amount becomes the non-saleable portion. The last quota adjustment was in December 2011, when a two per cent quota increase was implemented to stimulate additional production.
The provinces in the eastern milk or P5 pool are: Ontario, Quebec, Nova Scotia, New Brunswick and Prince Edward Island. They share revenue from industrial and fluid milk markets and work cooperatively on other matters of mutual interest.
Dube says all Ontario farmers have enough non-saleable quota to cover off the decrease. “Before the cut, we were at 5.3 per cent non-saleable and then after the cut we will be at 3.8 per cent.”
The P5 quota committee recommended the decrease and the Ontario board along with the boards in the other provinces approved it. A third reason the P5 quota committee recommended the quota cut was that there is a surplus of available production credits that can potentially be filled by farmers.
After analyzing the P5 market, milk production levels, and the amount of quota issued, the committee found that the P5 provinces would likely be over their quota early in 2013.
Dube says the forecast before the reduction was implemented was the P5 would be over its quota by 2.6 million kilograms of butterfat or about one per cent. BF