Dairy Planet - Milk, Cheese and the Canadian Whey

Mootropolis, Canada

Quotes from the Field

Support for Dairy Planet's Three-Point Plan to Ensure the Long Term Viability of Canada's Dairy Industry

Point #1: Increase domestic dairy consumption

"Dairy farmers at a regional meeting here (London, ON) voted 100 per cent in favour of dropping milk prices to maintain their market share..The next day at Belmore, producers from Huron, Perth, Bruce and Grey counties were almost unanimous in favour of the same question."

'The milk market grew about seven per cent in the last 10 years, but (Dairy Farmers of Ontario director) Palmer said, 'in the last six months we've had erosion of half that amount.'

'There's no question that we have priced ourselves out of certain markets,' (DFO director Craig) Connell said "

Price cut gains support; advocates say producers are recognizing that something has to be done to maintain market share, Ontario Farmer article, March 28, 2006

"The February price increase, 'has had an impact on demand,' said Gould, (general manager of Dairy Farmers of Ontario). Not only has there been less demand for fluid milk, ice cream, cheese and butter, 'but we've seen the decrease sustain itself longer than in the past.'"

Economist feels quota reduction is inevitable; the industry is at the point where any increase in the support price is met by demand resistance; Ontario Farmer article, Sept. 27, 2005

"The price of milk has risen to the point that we are losing markets each time there is an increase. Consideration should be given to freezing or even reducing the price of milk."

Open Letter to the Dairy Industry from Chair of Ontario Large Herd Operators, 2006

"Butter sales dropped dramatically following last February's (price) increase and there's currently a large surplus (12,800 tonnes as of Dec. 16/05) despite Christmas demand."

Support price increase falls short of industry expectations, Ontario Farmer article, Dec. 20, 2005

"Oxford County dairy farmers are calling for a reduction in the price of milk, if it helps increase the volume of milk sold and net income on the farm."

Oxford petitions for lower milk price, Ontario Farmer article, March 21, 2006

"To compensate farmers for declines in sales and for cuts in quota, the commission has raised prices paid by consumers to farmers in the last two years by 14 per cent. (Calculated at the checkout counter, the price increases are probably 20 per cent or higher.) Perhaps this is not the first time in the history of commerce that an industry has hiked prices to increase sales but it's hard to think of many precedents, especially in the marketing of discretionary goods."

The writing is on the wall for supply-management agriculture in Canada, New Brunswick Telegraph-Journal column by Neil Reynolds, July 1, 2006

"'Even if the CDC chose to continue the policy of pricing to cover costs of 50 per cent of producers, no industrial milk price increase would be warranted,' he (DFO senior policy advisor Phil Cairns) says."

No room seen for butter price hike, MilkPRODUCER article, Oct. 2006

"Figures prepared by (DFO senior policy advisor) Cairns, based on information available in September, show that the world price and the Canadian dollar's exchange rate have severely eroded the protection provided by the 299 per cent tariff.

The landed cost of imported butter, after transportation costs and the tariff were paid, would have been just two cents per kilogram higher than the domestic price."

No room seen for butter price hike, MilkPRODUCER article, Oct. 2006

"Far greater effort and deployment of resources (by dairy marketing boards) are put into restricting of commerce and trade in milk, than into increasing market consumption. Canada has lost over 38,000 dairy farms since 1980."

Finding profits on Canadian farms, discussion paper by Ontario Landowners' Association, March, 2006

POINT #2: Implement a responsible transition
to open markets

"The supply management system is a closed shop for the 22,000 quota holders who fall under its protection. It's a bad deal for 30 million consumers, and a worse one for the 250,000 farmers who aren't in that select club of privileged producers."

This farm system doesn't serve the consumer, Vancouver Sun column by Don Cayo, Nov. 18, 2005.

"The provincial supply management systems in dairy may not have a high budgetary cost, but the consumer pays dearly and efficient resource allocation is compromised.

Benchmarking Canada's Economic Performance; Jean-Phillipe Cotis, OECD Chief Economist, Nov. 2006

"This is obsolete, Soviet-style economics at its best, with Big Brother in Ottawa having full control of how much domestic milk is produced, the prices we pay for it and the extremely high tariffs of more than 200 per cent to keep out competitive imports of butter, milk, cheese, etc. beyond authorized limits.

Economists call it 'supply management' but in the real world where families shop at Safeway or Save On Foods, it's called gouging."

It's time to get Big Brother out of the dairy industry, Vancouver Province article by Brian Lewis, Dec. 4, 2005

"Clearly supply management has been beneficial to those who hold quota. But there is a disturbing lack of discussion about the potential benefits of more market access and reduced subsidies in other countries for the larger number of farmers who don't own quota."

Beyond the Wayne Easter Report: Framing a Comprehensive Canadian Agri-Food Policy; Larry Martin, Al Mussell, and Martin Gooch of the George Morris Centre, Feb. 2006

"Originally given out for free by the government in the 1960s, quotas are now traded on a special exchange, garnering some $27,000 per cow. An average herd of 50 cows is worth $1.35 million. The country's 16,300 dairy farmers own quota estimated at $20 billion."

The milk of human avarice: the industry fixes dairy prices at more than double the global price; Canada's dairy industry has fought tooth and nail against agricultural free trade, and it's costing Canadians plenty, Maclean's article, Jan. 16, 2006

"According to critics, the system not only gouges consumers, but threatens the viability of the Canadian food industry - to the long-term detriment of the farmers themselves. While supply-managed dairy farmers claim they need to charge 65 cents a litre to make a living, Chris Birch, who doesn't own quota and therefore operates outside of the Canadian system, is profitably selling his milk to Americans for 40 to 45 cents, under an export license issued by the U.S."

"How would you react if a monopoly utility set your annual electricity rates arbitrarily after meeting behind closed doors with no transparent public-hearing process where outside experts could crunch the numbers? Of course, you'd be outraged - yet this is precisely what happens every year with our national dairy industry."

Dairy Commission due for serious milk-shaking, Vancouver Province column by Brian Lewis, Jan. 22, 2006

"The collapse of the Doha round does not exempt supply management from market-driven reform. The price of these protected foods will keep rising. Consumer demand for them will keep falling. Production will be further restricted. More farmers will fold, their licences ("quota") auctioned to the highest-bidding survivor. This increase in costs will cause prices to rise further. And so on."

Canada could make unilateral declaration of free trade, New Brunswick Telegraph-Journal column by Neil Reynolds, Aug. 5, 2006.

"We need transition strategies for those still trapped in the old, highly regulated, highly politicized agriculture of the past, to allow consumers everywhere to speak more directly to our farmers and entrepreneurs. We may need to look, for example, to Australia for a strategy to buy out dairy quota and release that industry from a cost of quota (including financing) of about $5 per day per cow..The only way the industry can survive in its current form is by sheltering behind huge tariffs that cost Canadian consumers big money."

Agriculture must compete, Moncton Times & Transcript column by Brian Lee Crowley, president of the Atlantic Institute for Market Studies, June 28, 2006

"The argument heard most often from defenders of supply management is that, even if prices go down at the farm gate, this reduction would penalize dairy producers without benefiting consumers because processors and retailers would increase their margins. This fear is unfounded," said Valentin Petkantchin, research director at the Montreal Economic Institute.

Following the Australian reform, retail prices for fluid milk dropped considerably. According to estimates from the Australian Competition and Consumer Commission, savings to Australian consumers on milk purchased in supermarkets are Aus $118 million annually.

Montreal Economic Institute, news release, Jan. 27, 2006

"Canadian officials should recognize that existing regulations limiting farmer marketing options undermine the ability of the food sector to evolve, says a draft policy prepared by the Guelph-based George Morris Centre. "

"The draft said existing marketing regulations in supply managed sectors and the prairie grains industry are the subject of growing tensions and challenges.

'Increasingly, there is evidence that Canadian market regulations stifle innovation,' says the report."

Marketing rules limit innovation, says report, Western Producer article, Aug. 31, 2006

Point #3: Grow the export market

"World demand growth of dairy products up to 2010 is expected to grow at 2.5% p.a. with the EU accounting for 13% of growth, compared to 52% in Asia and 18% in Latin America and the Caribbean."

Desktop Study into demand for dairy products, Agra CEAS consulting, Sept. 23, 2005

"The U.S. dairy industry has managed to increase exports by 56 per cent over the past two years, a new report shows. Dairy exports reached a record-high $1.66 (US) billion last year, according to figures released by the U.S. Dairy Export Council. Growing markets include Asia, Russia, Mexico and the Middle East."

U.S. dairy farmers profit from exports, Ontario Farmer article, April 4, 2006

"Canada has the highest ratio of arable land to human population among developed countries. With the limitations of our population, the major opportunity for growth for many regions and products is exports."

Beyond the Wayne Easter Report: Framing a Comprehensive Canadian Agri-Food Policy; Larry Martin, Al Mussell, and Martin Gooch of the George Morris Centre, Feb. 2006

"The inability to grow an export industry is inherent in supply management, and it's the opposite for other major agricultural producers in Canada. So the system stunts the potential growth of both dairy and poultry farming, keeping the industry to probably about half the size it would be if entrepreneurialism and innovation were rewarded in the normal way."

This farm system doesn't serve the consumer, Vancouver Sun column by Don Cayo, Nov. 18, 2005.

"Canada's exports, especially of consumer ready products, rose dramatically to the US and the rest of the world after tariff reductions in CUSTA and the Uruguay Round of the WTO. If Canadian exports rose dramatically when tariffs were reduced a small amount after the Uruguay Round, it seems logical that they would increase even more after a relatively large reduction."

Beyond the Wayne Easter Report: Framing a Comprehensive Canadian Agri-Food Policy; Larry Martin, Al Mussell, and Martin Gooch of the George Morris Centre, Feb. 2006

"Freer trade in agriculture has been good for Canada. Contrary to fears that big American farmers will overpower Canadians, we're selling more to the U.S. consumer than ever before. Over the last 20 years, our food exports to them quadrupled to $16-billion and we went from a trade deficit to a surplus of some $2-billion."

Agriculture must compete, Moncton Times & Transcript column by Brian Lee Crowley, president of the Atlantic Institute for Market Studies, June 28, 2006