By Brandy Harrison
SOUTH MOUNTAIN — A flood of dairy quota on the exchange since August may have been slowed to a trickle by farmer optimism in the wake of a Trans-Pacific Partnership (TPP) deal, suggests a Dairy Farmers of Ontario (DFO) board member.
Quota sold on the exchange more than doubled between July and August, holding steady at an average of 1,074 kg for three months — nearly a 150 per cent increase over the average of 430 kg in the first seven months of 2015.
But on the November exchange, quota sales dropped like a stone, landing at just 261 kg.
The upsurge was likely a combination of new quota policies and anxiety around a then-unsigned TPP agreement, says South Mountain farmer and DFO board member Nick Thurler.
In mid-July, the DFO announced that non-saleable quota — past increases amounting to about 10 per cent of holdings — would become saleable on the August exchange. Between April 2014 and last March alone, there was a 6.5 per cent increase, says Thurler.
“That put a bunch of quota in farmers’ hands. Some barns were full and farmers were not planning to expand. That’s just money sitting there. They might as well cash it in,” he says, adding that lower blend prices may also have spurred partial sales.
Uncertainty over the future of supply management amid TPP negotiations may also have lit a fire under farmers who were already considering calling it quits, says Thurler. Total selloffs jumped from 10 to 22 between the July and August exchanges.
“If I’m a guy who’s 65 years old with no one to take over and probably planning on selling in the next couple of years, it may have sped up the decision,” he says.
DFO surveyed producers who sold their entire holdings and most were planned retirements due to health and age, says George MacNaughton, DFO director of operations. It’s been a trend for years to see more total sales in the fall and spring, either to avoid storing feed or when inventory is fed out, he says, adding that TPP negotiations may have sped up timelines.
But farmers have renewed optimism: The signing of the TPP left supply management intact and a new ingredient strategy will help the industry compete with protein imports and grow markets, says Thurler.
Both the strategy and TPP commitments will drive modernization of processing capacity to put the solid non-fat surplus in a more competitively-priced, usable form and further support butter industry growth, adds MacNaughton.
Without much quota to go around, farmers are hanging onto what they have, says Thurler.
“The TPP was the last thing hanging over our heads. There’s nothing in the works to challenge our system for the next while. You can’t find another place in the world where farmers are still getting well paid for their milk and the consumer still gets good value for the dollar.”