Commentary by Angela Dorie
Most likely the email inboxes at the Dairy Farmers of Ontario were filled with questions from farmers that seemed to all begin with: “What the hell…?”
It was Friday, May 13, bad luck Friday, the day the Dairy Farmers of Ontario released the online copy of our ‘Final’ milk statement for April shipments and a cursory glance revealed a problem. Well over $1,000 was missing! Back to the DFO website to discover an open letter proclaiming “Successful Implementation of the Dairy Ingredients Program” by way of explanation.
For countless years, cheaper American milk and milk components have flooded into Canada, an unaddressed issue and a thorn in the side of Canadian dairy farmers. Whole milk, components and derivatives pouring into Canadian plants, dancing blue cows on consumer products be damned!
Every federal government regularly appeases farmers by announcing support for all of Canada’s supply-managed agriculture but does nothing to slow the increasing flood of U.S. dairy. The federal government trades off access to the industry with deals in Europe and the Pacific Rim. Promises of “compensation” for quota cuts to accommodate even more dairy imports is laughable. Most politicians, including our present prime minister, have at least once referred to “rich” farmers.
To the rescue is the Dairy Ingredients Program (DIP), an attempt to get Canadian processors to replace U.S. imports with Canadian product by creating new lower pricing for a new category of milk: Class 6 Processing Ingredients: protein and skim milk solids. While demand for domestic butterfat is increasing, domestic demand for proteins and skim milk solids has gone in the opposite direction as capacity to process both is maxed out on aging machines, making imports even more attractive.
So here we stand, the producer, with over $1,000 short in our milk cheque this month and we will be short every month now. Prices have been slowly dropping for years, a few cents here, a few there, but never like this. The DFO letter announces a total reduction of $4.44 per hectolitre in the price of ‘average milk’ in Ontario, $2.27/hl due to the DIP and $2.17/hl due to “normal” fluctuations. Ontario milk of average composition paid net $67.66/hl. No specific prior warning, no ‘heads up!’
Our farm is relatively small as far as dairy farms go. Milking Jerseys, our net price fell from $86.21/hl for March milk to $79.16/hl for April shipments. If we are out that much, what are the big guys short this month? $3,000? $4,000? $5,000? More?
The DFO is asking Ottawa for money to help the processors upgrade. They have never asked for funding to help dairy farmers do the same. If processors start now, it will take three years to open the new plants. Then, with even more demand for lower price Class 6 milk, our income will fall even more.
The one thing all farms have in common is bills: Mortgage, operating and equipment loans, feed, bedding, vet, hydro, insurance, telephone, Internet, property taxes, semen, repairs, parts, seed, fertilizer, diesel, replacement animals, etc. There’s upgrades or maintenance plus most have hired help and pesticides too. We all have our family’s living costs.
So, the question now becomes who don’t you pay? Or do you slice a bit off everyone and include a copy of the DFO letter by way of explanation? What happens next month? And the next? Buy more quota to help put the income back? Where will the money come from to pay the loan? And most importantly, will we see further price decreases?
Obviously the intent is that Canadian processors will invest and increase their plants’ capacities, creating a rise in milk demand with corresponding quota increases as they buy domestic product. The income we are out now might eventually be replaced by the ability to ship more in quota milk but it costs to ship milk. How much new quota will be required to put us back to where we were in March 2016?
Farmers are good at tightening their belts but we can only do that so many times. And what about producers new to the industry under the ‘New Entrant” programs? The five-year financial plans they were required to submit are now out the door with debt to the eyebrows.
Meanwhile the DFO has made no mention of reduced salaries in Mississauga nor of staff reductions. New programs and the people to run them are on the horizon, plus wacky promotional gimmicks, all designed to cost producers more time and money based on a DFO whim. The milk organizations in Canada have lost touch with the grassroots industry. Other provinces are planning their own DIP programs.
Our organizations have become like the dog that bites the hand that feeds it.
Angela Dorie is an agricultural writer and a Jersey farmer near Cornwall.