Seasonal factors at play in fluid milk sales decline

Tuesday, September 1, 2015

by SUSAN MANN

Ontario dairy farmers’ quota levels are secure for now despite the release of troubling statistics showing a drop in fluid milk sales across Canada.

“Quota cuts are really not based on fluid milk,” explains Dairy Farmers of Ontario chair Ralph Dietrich. “Quota is based on butterfat consumption and production. Our quota is distributed in kilograms of butterfat.”

And butterfat demand “in our market is growing and continues to grow,” he notes.

On the fluid milk side, Statistics Canada says in an Aug. 26 report Canadian consumers purchased 231,567 kilolitres of fluid milk and cream in June, down three per cent compared to June 2014.

Dietrich says the decline was two per cent among the P5 provinces (Ontario, Quebec, New Brunswick, Nova Scotia and Prince Edward Island), which share revenue from industrial and fluid milk markets; Ontario’s decline was 1.75 per cent.

Dietrich says dairy farmers are concerned about the milk sales decrease. “We don’t like a falling number. We work at it and we try to build that up.”

At the same time, he notes, “we don’t see a concern at all with respect to quota cuts based on this decline.” However, the fluid sales decline “does affect our bottom line.”

Some of reasons for the decrease in milk consumption include Canada’s aging population and new immigrants who do not drink milk, he says.

Another big reason is children are out of school for the summer and away from their regular routines.

Fluid milk sales generally pick up in September, he notes. “Our numbers right now for September show orders for fluid milk have increased dramatically and that’s because companies are ramping up and building up for kids being back at school and drinking more milk.”

The drop in Canadian milk sales generated criticisms of Dairy Farmers of Canada’s efforts to increase domestic demand through advertising and questions about whether Canada’s supply management system can help shift the industry to gain a better understanding of consumers.

In an Aug. 31 opinion piece published in the Globe and Mail, Sylvain Charlebois, University of Guelph business and economics associate dean and professor, called Dairy Farmers of Canada’s advertising campaign to sell more milk “simply silly.”

Charlebois says the national organization spends almost $100 million in advertising annually to remind people they need to drink milk while per capita milk consumption continues to slide.

He writes in his article that people are gradually finding other ways to get protein, calcium and other nutrients found in milk and are opting for alternative beverages, such as almond, soy- or rice-milk products.

“Unless the dairy sector gets more creative, this trend will likely continue,” he notes.

Dietrich defends the national organization’s advertising expenditure, financed through a $1.50 per hectolitre check-off fee that all Canadian dairy farmers must pay, as necessary. “I know the advertising dollars for a lot of these alternative beverages (and other beverages like Coke and energy drinks) are just incredibly high.”  

Yves Leduc, DFC director, international trade, says the money raised from the check-off fee isn’t just spent on generic fluid milk advertising. The fee also finances nutrition research and promotions for butter, cheese and yogurt.

“It’s not simply $100 million trying to promote fluid milk here,” he says. “It’s $100 million to support promotion and marketing activities” for a variety of dairy products.

In a letter to the editor responding to an Aug. 27 Globe and Mail article on the milk consumption decrease, Wally Smith, DFC president, says other developed countries, such as the United States, also have a declining fluid milk consumption among their populations.

Smith notes the declining fluid milk consumption in Canada is “more than offset” by increases in consumption of other products, such as cream, cheese and yogurt.

Leduc says Canadians “are just consuming milk in different forms.” Older Canadians consume less fluid milk but eat more cheese and yogurt. “That is a trend that we have been witnessing for quite some years now.” BF