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Mootropolis, Canada
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The high price of Canadian milk, butter, cheese and ice cream means consumers have been putting fewer dairy products in their grocery carts. The trend is intensifying because of Canada's aging, ethnically diverse population, and the growing array of affordable options to dairy, such as soy beverages and calcium-fortified juice. Over the past 25 years, fluid milk consumption has fallen by more than 18 per cent 02, and it's expected to drop another 12 per cent by 2020 03. Canadians are buying nearly 30 per cent less butter than they did 25 years ago, and 24 per cent less ice cream. Cheddar cheese consumption has moved up by less than 2 per cent since 1980 04. Dairy herds are on the decline - down from over 1.4 million head to just over 1 million since the early 1990s -- while beef and sow herds continue to expand 05. While this is partly due to increased efficiencies, the drop in demand for dairy products in Canada is largely to blame. Conversely, global demand for dairy products is growing by leaps and bounds, as incomes improve in many developing countries. Between 1995 and 2004, world fluid milk consumption grew by 7 per cent. In that same ten-year period, consumption of manufactured dairy products such as cheese and butter grew by 21 per cent. The trends are expected to continue: world milk consumption is forecast to rise almost 12 per cent through 2015 and cheese consumption over 14 per cent. China, Argentina, Mexico, Brazil, Columbia, India and Ukraine are all expected to see double-digit gains in demand for milk 06. But these international markets are out of reach for Canadian dairy producers. The dairy industry has opted to forego a world of export opportunities in favour of a protected and declining domestic market. Import tariffs of up to 300 per cent keep most foreign dairy products out of Canada, and allow the dairy industry to set prices well above world levels. In return, Canadian dairy producers cannot export to other countries. Faced with a shrinking domestic market, resistance to further price increases, and inability to access new markets, the outlook for the dairy industry is bleak. The growing crisis in the dairy industry is of particular concern to Canada's restaurant and foodservices industry because we rely on fresh, high-quality Canadian dairy products. We want to work with the dairy industry to grow the market and ensure Canada has a competitive, vibrant dairy industry that can thrive in a global marketplace. We believe in its ability to be world leaders and world beaters. After all, Canada is an exporting nation. More than 80 per cent of Canadian agriculture is export-oriented -- and they want to do more. But other farmers are paying the price for the stubborn resistance of dairy producers. Access to world markets for beef, grain, oilseed and other farmers is being denied because Canada doesn't allow dairy imports. How is this fair? From within the dairy industry and among its customers, there is growing pressure to reform the system. The following three-point plan outlines what must happen to revitalize Canada's dairy industry and ensure its long-term viability:  1) Increase domestic dairy consumption  Despite millions and millions of dollars being spent each year to promote dairy products, sales are falling. Dairy prices have hit a wall and consumers are buying fewer dairy products, at grocery stores and at restaurants. The dairy industry's own figures show there is room for a significant reduction in price. At $71.64 per hectolitre (100 litres of milk) industrial milk prices have reached a level far beyond what is required to meet the cost of producing milk ($59.56/hl) 07. This cost of production is based on an industry calculation that already includes a fair return on investment. Dairy prices have increased by 53 per cent over the past 12 years, or nearly double the rate of inflation. As a first step, the dairy industry should close the gap between artificially high milk prices and the cost of production, and provide consumers with some price relief to increase domestic consumption. |
2) Implement a responsible transition to |
We believe Canada's dairy
industry can leap tall
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