by SUSAN MANN
Ontario dairy farmers paid about $2 a hectolitre during the last six months of 2015 for its marketing board to jettison 31 million litres of skim milk, an unwanted yet inevitable byproduct of an industry aimed at meeting butterfat demand.
The surplus exists because Ontario and Canada lack adequate skim milk processing facilities to handle the skim milk associated with butter manufacturing, and the situation is reaching a crisis point, indicate various reports where the numbers were detailed and Dairy Farmers of Ontario spokespeople.
The reports have been released as part of Dairy Farmers of Ontario’s annual policy conference being held this week in Alliston.
Butterfat demand in Canada has been growing by about four per cent annually for the past few years due to the acknowledgement by health officials that fat in milk isn’t bad for people’s health as was once thought. People have returned to consuming milk products with fat, including higher fat milks and yogurts along with cream and butter.
“Despite the fact we have surplus skim, we still don’t have enough milk in the system to supply our market,” says Dairy Farmers board chair Ralph Dietrich.
To “maximize butter making capacity” Dairy Farmers got some processors to separate whole milk into cream and skim milk, with the cream being used to fill the butterfat demand, the reports said. The remaining fluid is “skim milk sent to animal feed (markets) in liquid form with minimal financial recovery” or it’s trucked to bio-digesters. As a last resort, some of the skim milk is chucked into on-farm manure pits. Neither of the latter options generates any cash.
The cost of skim milk disposal in Ontario for the last half of 2015 was shared among the provinces participating in the Eastern Canadian milk pooling agreement, known as the P5. They are: Ontario, Quebec, Prince Edward Island, New Brunswick and Nova Scotia.
Peter Gould, CEO and general manager of Dairy Farmers of Ontario, says Ontario farmers paid 40 to 50 per cent of the total disposal costs of $4.42/hl or $1.4 million.
Gould doesn’t have numbers on how much skim milk went to animal feed compared to going into bio-digesters or in on-farm manure pits. The revenue of $65,557 earned from diverting the skim milk into animal feed was included in the calculations of the total costs.
For this year, the marketing board has been disposing of about two million litres of skim milk a week since Christmas, and that’s projected to continue to the end of May. However, the amount could also increase during the summer “when milk orders for fluid milk decrease,” the reports say.
The Dairy Farmers reports say skim milk disposal costs (based on dollars per hectolitre) are projected to increase this year as processors who weren’t charging a processing fee to separate the milk “are now requesting compensation.”
Gould says drying skim milk into powder is not an option for the surplus because the industry doesn’t have any more capacity.
In the meantime, Dairy Farmers officials are looking for ways to increase skim milk usage. Since the start of this year, officials had 500,000 litres of skim milk moved to liquid hog feed “as a means of increasing plant capacity and decreasing the amount of skim milk being disposed of in bio-digesters and liquid manure tanks,” the reports say.
“The more that can be done to increase skim milk use, the more likely it is that production can be increased to meet some of the growth of butterfat demand from domestically-produced milk,” the reports say.
Gould says there are limited uses for the skim milk. “I don’t want to create the impression that there’s some sort of magic bullet out there.”
Officials are working on finding ways to channel “more of the skim milk into animal feed versus being put into a manure pit,” he explains.
The lack of skim milk processing facilities and milk disposal options further compound the problem by imposing limits on how much milk can be separated.
“We’re not too far from reaching that limit either,” Gould notes.
It is projected to take processors three to four years before deciding on whether to increase skim milk processing capacity. Construction of new plants will take even longer.
“There’s a fairly long horizon before you actually have a physical plant that can receive milk,” Gould says.
Gould says Ontario farmers aren’t happy and want to ensure the board has a plan. “The plan is the ingredient strategy,” which is scheduled for implementation April 1, he says. “Its whole purpose is to take the industry from where it is now to a sustainable state and to provide for growth now and into the future.”
The meetings held this week in Alliston included a panel of representatives from the P5 quota committee answering questions. The panel considered the question of cutting milk production given that if production is too high it makes it hard to manage surplus skim milk disposal.
“The decision was to not reduce quota at this time,” Gould says. BF
Comments
The "denial of reality" antics on the part of the Dairy Farmers of Ontario in an attempt to defend the failures of supply management are evocative of the antics in Soviet Russia where, as the story goes, a men's suit factory was rewarded on the number of suits produced - the factory produced oodles of high-quality suits, but they didn't fit men, they fit large chimpanzees.
Stephen Thompson, Clinton ON
These clowns couldn't come up with a solution if it beat them over the head.
I seem to recall a certain yogurt maker who dangled the solution right in front of their nose. "Chobani is willing to buy skim milk for yogurt making at Ontario prices"
When it comes to marketing boards, hands down this group is the lamest-duck of lame-ducks.
Raube Beuerman
Everything about the Dairy Farmers of Ontario reeks of the intense desire to preserve quota values and then doing it in the most-obtuse and most-bizarre possible way.
Watching DFO is like watching clowns come out of a clown car but instead of wondering how so many clowns can come out of the car, it's wondering how so many lame excuses can be offered, by people with a straight face, to defend the wretched excesses and staggering incompetence of agricultural socialism.
To paraphrase Statler and Waldorf, the curmudgeons in the balcony of the Muppet Show - "You know, supply management isn't half bad" to which the obligatory retort is, of course, - "You're right, it's all bad."
Stephen Thompson, Clinton ON
People who read the above story and who aren't familiar with the bizarre policies of supply management might be forgiven for thinking that developing policy at the Dairy Farmers of Ontario (DFO) is like dealing with the side-effects of cancer treatments or playing "twister", the parlor game in which every move forces contestants to attempt increasingly-impossible contortions until all the contestants collapse on the floor.
With cancer treatment, chemotherapy wouldn't be so bad except that it sometimes causes nausea. Therefore a medication is prescribed to combat nausea but which causes constipation. Therefore another medication is prescribed to combat constipation, but at the risk of causing more nausea, to the point where a good number of medications being taken at any one time are, just like with DFO policies, to combat the side-effects of other medications and/or policies.
Any cancer survivor can easily see that, at the moment, DFO is trying to deal with the "constipation" of skim milk (it's probably actually more like the "diarrhea" of skim milk surpluses) in an attempt to avoid dealing with the reality that supply management is the 50 years of smoking that caused the today's inevitable dairy policy "cancer" in the first place.
The "twister" example is self-explanatory, especially for those people lucky enough to have avoided dealing with cancer.
In the same way that cigarette smokers refuse to see the connection between smoking and cancer, DFO steadfastly refuses to see the connection between supply management's bizarre policies and a seemingly-uncontrollable surplus of skim milk.
Stephen Thompson, Clinton ON
The problem with the system that nobody wants to reference is pretty simple- millions and millions of litres of super cheap MPC imports dumped into Canada! Our U.S. neighbours are subsidizing milk for export to the point that these MPC's are basically free and Canadian processors are using a loophole in the system to use it in the production of cheese and yogurt. When this process started a number of years ago, the DFO should have taken action immediately on price and worked with processors to continue to use domestic milk. However, much like the unfortunate situation with ice cream a few years back, sowed the seeds of the challenges they face today.
Editor: Anonymous comment modified in accordance with our guidelines.
I FIND YOUR STATEMENT INCORRECT,THE FACT IS DFO AND DFC DID NOT WANT ANYTHING TO DO WITH THIS LOWER PRICED MARKET. THEY TRIED EVERY WAY TO FORCE PROCESSORS AND FURTHER PROCESSORS TO PAY THEM THE HIGH PRICE FOR THEIR NEEDS. THAT IS WHAT HAS BROUGHT THIS WHOLE ISSUE TO LIGHT ,EVEN NOW INSTEAD OF SUPPLING SMP TO THE CANADIAN PROCESSING INDUSTRY ,THEY DUMP IT IN SHIT PITS TO GET RID OF IT! REAL SMART AND THEN THINK AT A LATER DATE THE PROCESSING COMMUNITY WILL BUY FROM YHEM ,HELL THE BIGGEST IMPORTER OF THSES PRODUCTS ARE AGRIPOUR AND GEA LEY! IF OR WHEN THE DFO TRY TO STOP THESE LEGAL IMPORTS THEY WILL CAUSE THE NEW LIBERAL GOVERNMENT THE BIGGEST TRADE WAR THEY HAVE EVERY HAD TO DEAL WITH. IF TRUMP BECOMES PRESIDENT LOOK OUT ,HE WOULD CLOSE THE BORDER IN A SECOND TO CANADIAN TRADE. TRADE WAR BREWING AND THE CANADIAN DAIRY INDUSTRY WILL GET SWASHED LIKE A BUG!BRING IT ON DFO! BILL DENBY ,IMPORTER ,INTERNATIONAL DAIRY DIRECT
Blame can't be laid entirely at the feet of the DFO - processors have exacerbated the problem by importing millions of litres of MPC's. Every day dozens and dozens of loads of MPC's or MPI's are flooding into Ontario and Quebec to be mixed with Canadian milk thereby displacing skim milk(for which there is no value)and thus forcing DFO to dispose of this skim however they can. Cows will produce cream and SNF no matter which side of the border they're on, so allowing unfettered access through our border of these MPC's is inevitably going to lead to the current predicament of not having a market for Canadian skim. Obviously these MPC's are subsidized through U.S. export programmes - how else can you justify trucking MPC's thousands of kilometers(e.g.- from Grassland Wis. to Winchester) to displace fresh locally produced skim milk. Nice carbon footprint! Who benefits from this practice? Not consumers with lower prices or top quality products. Not the local economy or local producers. Some far off shareholder of stock in a multinational!
Contrary to the nonsensical claim made by the above poster, dairy processors haven't exacerbated any so-called "problem" because they, like everyone else in the marketing channel of dairy products from the farm gate to the consumer, are victims of the farm gate price-gouging put into effect by DFO, and are merely doing what any rational person/organization would do when being gouged on price.
Why do supply management supporters always blame the victims of supply management instead of the actual culprits, quota owners?
In addition, I suggest the author of the above posting needs provide evidence to support his/her claim "Obviously these MPC's are subsidized through U.S. export programs" or it will be just another in the plethora of anonymous, dubious and unsupportable claims continually being made on this site.
As for trucking and carbon footprint, we have rutabaga and tomato growers in Huron County who export as far as Florida and Texas - why does carbon footprint not matter to supply management supporters when we're exporting food, but be so-critically important when we're importing it?
While blaming invisible multinationals for somehow contributing to this, that or the other agricultural problem is the stock-in-trade of the NFU and supply management supporters, it ignores the fact that a good many Canadian pension funds invest in multi-nationals who are growing and prospering by taking advantage of the obstructionist policies put in place by supply management
Or in other words, if supply management wasn't so-restrictive, so-sluggish and so anti-growth, these pension funds would be investing in Canadian processors - instead, they're simply going where the growth is, and thanks to supply management, it sure isn't in Canada.
Finally, to look at it in a way supply management supporters refuse to do, Canadian pension funds need to be making money for their clients any way they can, including investing in multi-national food companies, so that their clients can afford the food produced by supply management.
Stephen Thompson, Clinton ON
If you want to talk nonsense- lets look at the current "superior" milk marketing regime in the United States. Here's a scenario:
- over produce like crazy to the point that price plummets and markets are exhausted
- try to solve this problem, not by cutting production, but by using export programs to dump the problem on your northern neighbour, thereby creating a glut of skim milk in their system
- whatever excess production can't be dumped through export programs will simply be dumped in manure pits by the millions of pounds
- some farms simply won't have buyers for their milk
Your comparison of trucking seasonal fruits and vegetables to this completely unnecessary trucking is simply laughable. Again, your argument would have some merit if consumers were to see any benefit from these practices. Much like during the BSE crisis, we haven't seen any price relief to the consumer - just more profits to multinationals who close plants and put people out of work.
You're correct - better buy up that Saputo stock!
The above poster, like every supply management supporter, is so-unable to defend supply management that he/she resorts to the only argument supply management can muster, and that is to proffer the "I took only two cookies, he took three" argument used by a pre-schooler in order to try to weasel out of being punished for being found with a hand in the cookie jar.
More to the point, supply management supporters appear to be pathologically unable to understand that claiming to have identified a bigger crime and the supposed "criminals" behind it, does not absolve them of their own.
Stephen Thompson, Clinton ON
I don't see any coherent argument against my claims, other than your obvious blind abhorrence of anything to do with supply management. My point is that this is a totally unnecessary crisis brought upon Canadian dairy farmers by sneaky, underhanded processors and US exporters. I find it just plain madness to haul MPC's thousands of kilometers into Ontario and Quebec, displacing domestic skim milk. This domestic skim milk that is being dumped is already delivered to the plants F.O.B!! Ontario and Quebec milk boards now have to get the plants to skim the milk and then pay to have it trucked away and disposed of while the plants use US MPC's. These processors have been very profitable in Canada otherwise they wouldn't have kept expanding and are quite free to leave the market if its so unprofitable .The whole process is just crazy- there has to be common ground to end this nonsense.
I would also add that Batavia and Buffalo NY as well as Grassland Wis. are not especially close to Winchester ON or Victoriaville Qc
The carbon footprint "crying towel" proffered by the above poster rings rather-hollow, and, in particular, the isolated example of trucking milk from Wisconsin to eastern Ontario ignores reality.
For example, even a cursory examination of a map of Eastern Ontario shows that dairy farms in upstate New York, including the one owned by long-time supply management critic, Ian Cumming, are oodles closer to the dairy processing plants in both Winchester and St. Eugene than would be dairy farms in the upper Ottawa valley.
Therefore, as is always the case, the "fresh locally-produced skim milk" that supply management supporters want to deny to Canadian processors and consumers, is the milk produced on local farms in upstate New York.
That's why the sea-food preferred by supply management supporters appears to be red herring.
Stephen Thompson, Clinton ON
Millions of liters of good skim milk are disposed as sewage, rather than selling or gifting for the needy.
This is a clear sign just how broken Canada's Supply Management System has become.
Health Canada reports that more that 7% of Canadian families can't afford the food they need to feed themselves.
75% of pre-school children in Nunavut don't eat on any particular day because there is no food in the house. Why can't they benefit from this fluid skim milk?
Families in Rankine Inlet are regularly forced to "go grocery shopping" at the municipal garbage dump, bringing home half rotten food to eat because they can't afford the food sold in the grocery stores.
The United Nations Special Envoy for Aboriginal Persons has reported that Canada's First Nations people have the worst poverty and malnutrition of any people on the planet.
Canada has the 11th biggest economy in the world, yet we have this disconnect between the multi-millionaire Dairy Farmers and those who need affordable dairy products.
Canada's Food Banks have more that 850,000 persons seeking food assistance each month. However, they will be denied the opportunity for this excess skim milk, because DFO feels it is better destroyed and wasted than to supply it to those who need it.
In this wanting world, millionaire Dairy Farmers are chronically dumping perfectly good skim milk so as to protect their monopoly and profit margins.
How do we explain these cold hearted, dispicable actions of the DFO?
What is the cure for DFO's blind and deaf pretense?
Let us not be remiss, for the actions of DFO are not much worse than all the other fat cats in all the other Supply Management bureaucracies of egg, chicken, and turkey.
Supply Management, as a whole, is a grand evil on the backs of Canadians.
Now is the time for Supply Management to be reformed, or terminated!
Glenn Black
Small Flock Poultry Farmers of Canada
Last month, federal Ag Minister, Laurence Macaulay, made a speech, barred to reporters, at the Dairy Farmers of Canada conference in Quebec, wherein he promised to stop the imports of duty-free milk protein replacements.
If the feds had any intention of doing any such thing, they would have insisted on inviting the immediate world to hear Macaulay make that speech, instead of agreeing to allow Macaulay to make that announcement during a presentation that reporters were forbidden to attend.
Why is it that when government makes an announcement meant to appease supply management, they appear to be so-ashamed of what they are doing that they go out of their way to keep anyone from knowing about it?
Or was Macaulay simply an empty suit sent to shill empty promises to the empty-minded?
Stephen Thompson, Clinton ON
360,000 people in Ontario used the food banks every month in 2015 and at the same time 115,000 public sector employees made the sunshine list, earning over $100,000/yr.If our Government was really concerned about the needs of the poor and the hunger there would be a great place to start!
Canada is not alone in the dumping of surplus skim milk.The US Northeast dumped 31 million pounds of milk in the first five months of 2015, including 7.9 million in May, which was 67 percent more than the same month in 2014. Some European dairy farmers are dumping milk just in protest of poor prices.
Are these Country's dairy industries broken or cracked because these are the systems you seem to want Canada to adopt and at the same time cope with a glut of milk on the world market.
In the most-recent edition of the Country Guide, editor, Tom Button, finally goes where nobody except those of us on the outside and/or the Globe and Mail and National Post has dared ever venture - straight to the issue that supply management pits farmers against one another.
In Button's editorial, he writes:
"Much more troubling, I believe, is the boards' failure to deal in any responsible way with the complaint that their farmers use government-backed incomes and assets to outcompete grains and livestock farmers for land and resources. Their deafness on this issue is shocking. Maybe it should even be fatal."
Congratulations to Mr. Button - but why did it take over two decades for the agricultural media to wake up to, and admit, what every non-supply managed farmer, particularly in Oxford, Perth and Huron counties has long-since known and long-since endured?
Stephen Thompson, Clinton ON
"Why does the farmer down the road have a bigger tractor than l do" ?..oh lets blame the Government! and when there is a contaminated water outbreak..the Government's fault!..Listeria outbreak..the Government!
Blaming the Government support for Supply Management has become nothing but a crutch for some Non-SM farmers.It wasn't that long ago that the Pork boys were the ones on the block with the big Liquid manure tanks and shiny new tractors.
Mr.Button only points out something that has been around agriculture for way longer than 2 decades..envy of our seemly prosperous neighbor!
Many changes are needed at a board level one export market that is open is Cuba as trade . Many homeless shelters and food banks could work with DFO. and the current goverment to come with a better solution.
Editor: This anonymous comment will be published if resubmitted and signed.
Almost 2,000 years ago, Roman satiric poet, Juvenal, coined the term "panem et circenses" (bread and circuses) to describe what the Roman government was doing to divert the attention of its citizens away from the fact that the empire was crumbling.
Ever since then, the term has been used to describe any born-to-fail government policy based on simple-minded populism instead of sound economic principles - supply management, in 2016, amply meets that definition, and then some.
Sigh!
Stephen Thompson, Clinton ON
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