by SUSAN MANN
A drop in Chinese milk imports coupled with the Russian embargo on American and European goods is contributing to a decline in Ontario dairy farmers’ incomes.
Those two events in other regions of the world have led to the substantial reduction in world milk prices this year, Dairy Farmers of Ontario says in a document released at its fall regional meetings held across Ontario the first week of October. World dairy prices directly impact Canadian special class milk prices and ultimately the blend price Ontario dairy farmers get paid for their milk.
Special classes account for about 11 per cent of national butterfat production and 20 per cent of national solids-non-fat production, the document says.
Raw milk sold to processors in Canada is classified and priced according to its end use. The classes range from fluid milks (Class 1) to planned exports (Class 5d). The price processors pay for milk in the special classes (Classes 5a to 5d) is based on world prices except for the confectionary class. A national dairy industry committee and confectionary manufacturers negotiate prices in that class.
As part of national and regional agreements, Ontario milk revenues are pooled with the revenues of other provinces before being paid to Ontario farmers, according to an Ontario agriculture ministry factsheet. Each farmer gets a blended price that reflects fluid and industrial milk sales.
The drop in world prices was very evident in Ontario this spring and summer when the monthly blend price for Ontario dairy farmers declined by $3 to $8 a hectolitre compared to the same period a year ago, the Dairy Farmers document says. Only about 82 cents per hectolitre of the price drop is due to the domestic price decreases the dairy industry implemented in the spring.
“The balance is attributed to lower world prices and to a lesser extent the increasing volumes of skim milk that are being marketed into animal feed or being disposed of,” the Dairy Farmers document says.
For the 12 months ending in July, the producer within quota blend price before deductions was $79.30 a hectolitre for milk at average Ontario composition. That’s a 2.8 per cent decrease in the price compared to the previous dairy year.
Dairy Famers chair Ralph Dietrich says the world price drop is out of Ontario farmers’ and the marketing board’s control.
He notes it’s difficult for farmers to cope with the lower blend price. “Every farmer notices it.”
The blend price did rebound slightly in September, he adds.
Phil Cairns, Dairy Farmers senior policy adviser, says there’s some good news in the blend price story. “The blend price decline would be worse if our dollar was still on par with the U.S. dollar,” he notes. “If you’re selling in U.S. dollars, we add at least 30 per cent to it to get it to the Canadian dollar, and that has certainly taken the really deep sting out.”
As for what’s on the horizon, Cairns predicts the low world dairy prices to prevail for another year.
He notes Dairy Farmers officials have been alerting farmers about the situation since the spring. “We’ve been telling farmers that 20 per cent of their skim milk is marketed at world prices.” If world prices decline, farmers’ “returns on that 20 per cent will come down accordingly.” BF
Comments
All together now - "Awwwwwwwww!"
The price should have dropped over $20.00 per hl to compare to World prices & US price ,this is an insult to Canadian Consumers! Everyone forgets how fast the dairy farmers increase their price the second they can. The TPP will impact there price much faster ,pushing it down to a little over world price in just a few years as the Canadian dollar strengthens. The reality is the Canadian Dairy farmer is headed towards WORLD PRICES & they have no power to stop the process! It can't happen fast enough for consumers who have been RIPPED OFF for years by them! How does it feel to have NO POLITICAL POWER Dairy farmers in Canada ,The WORLD and US set your prices NOW and FOREVER! It is a WIN,WIN for consumers and Importers in CANADA! Bill Denby /Importer /Exporter ,Thank You
In his column in today's Globe and Mail, Barrie McKenna's headline was - "Dairy farmers can't stop leaky tariff wall". McKenna notes - "Imports of milk protein, mainly used to make cheese and yogurt, are up about 60 per cent in volume terms through June of this year." and are "displacing at least 10 per cent of Canadian milk consumption".
McKenna also claims - "What officials did not make clear is Canada is also eliminating tariffs on milk protein concentrates as soon as the (TPP) agreement comes into force. This means TPP members Australia and New Zealand will join the United States in being able to ship virtually unlimited quantities of these ingredients into Canada, once the deal comes into force."
McKenna's article also noted something the above article didn't - last week DFO "applied to provincial regulators to create a new, and lower, "world" price for much of the surplus milk that's been accumulating in the system."
What this seems to mean that the vast increases in what gets imported at the world price produces an equal need to dispose of our newly-created surpluses of domestic production at world prices - why, therefore, continue the farce of trying to protect supply management when, thanks to rapidly increasing duty-free imports, import protection, and therefore the dairy aristocracy itself, can't be sustained?
Stephen Thompson, Clinton ON
Sadly the real news is that SM despite your best efforts is still protected . Guess you came up short once again !
SM producers will get paid for free alotted quota through compensation because they will claim they paid for it . While still making a profit ( over the world price ) on all of their other production . Double dipping and screw the consumer comes to mind .
The Federal Government ,rather PC or Liberals will never pay one cent to dairy farmers in CANADA because most if all will get further access though the TPP on other products they grow! That is a fact ,most SMP farmers are cash cropper ,beef ,pork ,etc. ,how would they even think they deserve one cent! O, I forgot they think they should get special treatment over other farmers in Canada, Really ! All the parties running in the Federal Election are only giving them lip service ,Do you really think that dairy farmers are going to be paid BILLIONS of Dollars for something by law they do not own! Wake up SM Farmers the ride is over ,the train has left the station and you are all on your own! How easy is it for government to promise something they never intend to deliver ON during a election ! Bill Denby , Importer/ Exporter
If Government pays Sm they should pay federal RMP at least they get our premium. Lots of new chicken and dairy barns going up SM IS NOT WORRIED
it will take 10 years for them to hand out our money but when it comes to neonics shoot and ask questions later and on that issue if we lose 50 % of our yield government going to pay the cash cropper
With all the hype about SM getting paid out under a new TPP deal one has to wonder just how many SM producers are banking on getting paid for free allotments of quota that were gifted and then sold . Free allotments should not qualify even if they were sold to another producer .
How will the SM payout affect other ag sector support dollars ? Will it be like Ontario and divide what once was a pot for one sector into a pot for all sectors with no increase in dollars ? OFA screwed that up big time with their not being able to protect ag from the perfect storm OASC push with limited support dollars .
What is the limit on Ag support dollars under Free Trade and will SM payout dollars be added to or part of ?
Will payout dollars be split 60/40 like other programs ?
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