by SUSAN MANN
Ontario dairy farmers’ ability to expand production would be seriously limited if a proposal to cap quota holdings at 250 kilograms per farm was adopted, says Ben Loewith, chair of Progressive Dairy Operators.
“These larger producers have economies of scale and they’re generally very efficient producers. They’re producing, on average, higher quality milk than smaller producers,” the Lynden-area farmer explains. Progressive Dairy Operators has 390 members. It’s dedicated to introducing innovative dairy technology and contributing a larger, commercial viewpoint to industry dialogue.
Loewith milks 340 cows and holds more than 250 kgs of quota.
The Renfrew Dairy Producer Committee has proposed quota be capped at a maximum of 250 kgs per farm. The proposal will be considered at the Dairy Farmers of Ontario annual fall policy conference in October. The conference, held in Alliston, is for Dairy Farmers board members and Dairy Producer Committee delegates.
Lloyd Robinson, chair of the Renfrew Committee, says the resolution “is still a work in progress.”
Robinson says he hasn’t worked on the resolution and the farmer who proposed the idea didn’t want to discuss it before it’s presented at the fall policy conference.
“It’s basically going to be an in-house discussion as to the future of the dairy industry in Ontario,” he explains.
Most of Ontario’s 4,200 licensed milk producers hold about 60 kgs of quota. About 2.1 per cent hold 250 kgs or more of quota, according to Dairy Farmers’ 2009 annual report.
Currently there isn’t a cap on quota holdings but producers must get approval from Dairy Farmers before exceeding 150 kgs and again before going over each subsequent 100 kg level.
At the other end of the scale, producers must hold at least 10 kgs to ship milk, while farmers in the New Entrant Quota Assistance program must hold at least 12 kgs of their own quota at all times to continue in that program.
Phil Cairns, Dairy Farmers senior policy adviser, says if the resolution is passed at the conference it’s sent to the board for consideration. The board reviews resolutions from the conference but it’s not required to adopt them.
Loewith says he was told the logic behind the resolution is installing a cap will keep more farms in business. To maintain the dairy industry’s political clout there can’t be a continued decrease in farm numbers.
Loewith says he doesn’t think the cap would be effective in reducing the number of farmers leaving the industry. “They’re thinking that if there’s a cap the smaller farms would be able to buy more quota because the large farms would be unable to bid on the quota and that would make more available for the small farms.”
Loewith says even when quota was around $19,000 or $20,000 a kg there were still a large number of farmers exiting the industry.
If the proposed policy was adopted and the change lowered the quota price by $5,000 to $6,000 a kilogram, “I don’t think they (Renfrew Committee members) are necessarily going to achieve their goal of keeping more farms in business,” he says. But Loewith questions whether the measure would lower the quota price.
The quota price, part of common quota policies shared by Ontario, Quebec, Nova Scotia, New Brunswick and Prince Edward Island producers, is capped at $25,000 a kg. BF
Comments
The absolutely easiest thing to circumvent, is size caps of this sort, or any sort. For example, separate companies can easily be set up with different ownership structures, and nobody, except the lawyers and accountants, will be any the wiser.
The entire debate is too dumb to be real.
The biggest block to expansion in the dairy industry, is quota itself
The dairy market in canada is basically a mature market,with very little room for growth,partly because of price and partly because of a changing consumer.
exports
Why would anyone want to go down that road again. Ontario decided against exports,,remember.
The decision to ban exports was supported by a dairy industry which was completely embarrassed by the the prices dairy farmers, and their bankers, were willing to sell milk. More to the point, the difference between the farm gate price of export milk, and the farm gate price of milk produced by the so-called Cost of Production formula, made it imperative that exports be banned before Canadian consumers found out just how badly they are being fleeced by supply management.
THE QUOTA LIMIT SHOUD BE REDUCED TO 100KG NOT RAISED!,IF SUPLYMANAGEMENT IS TO SURVIVE. THIS IS CANADA WITH 38,000,000 PEPOLE NOT THE U.S. WITH 480,000,000 PEPOLE. WE DONT NEED ANY MORE FACTORY FARMS;WHICH THE GENERAL PUPLIC DONT WANT EITHER.
Unfortunately, mandating a much-smaller industry will guarantee the end of supply management, rather than save it. This is because a 100 kg quota cap will mean, by definition, a higher cost of production because there won't be any big herds to provide economies of scale in the COP formula. A higher COP will, again by definition, result in higher consumer prices, and reduce consumption even further, resulting in an even higher COP, and so on, and so forth until consumers get completely fed up with being played like fools by dairy farmers.
Therefore, anyone who wants to see the end of supply management would completely agree with 100 kg quota caps because the dairy industry would simply implode.
Supply management was meant to enable family farms to retain a good standard of living,while operating viable operations.If large scale farms can pay 25000 dollars/cow for the right to expand,then they are being overpaid for the product.The consumer is subsidizing their expansion and dont dare deny it. Too many producers view expanding as an ego trip.Ontario does not need 1000 cow herds.The few people that want them should move to Wisconsin,you cant have it both ways.
The consumer is subsidizing everything about supply management, thereby making the entire industry an ego trip for everybody in it.
they make a great profit from milking cows you don,t see any poor dairy farmes out there. they can buy anything or do want..
Just when you think they can't possibly think of anything more to stifle innovation and entrench the status quo more firmly, they do.
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