By Brandy Harrison
AYLMER — A flood of dairy quota on the exchange has 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, it 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 Aylmer dairy farmer and DFO board member Paul Vis.
In 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. It had an immediate impact, says Vis. “I think producers were sitting on non-saleable quota and weren’t producing and they saw an opportunity.”
Farmers were also uncertain about what would be sacrificed in TPP negotiations, with rumours flying that the Americans were pushing for as much as 15 per cent market access, says Vis. “When it was still unknown, there were a few people that were still scared. There were a fair number of producers that got out of the business,” he says, adding lower blend prices may also have had a role. The number of farmers selling their entire holdings jumped from 10 to 22 in August.
But the signing of the TPP and the implementation of a long-overdue ingredient strategy boosted optimism and stopped the glut of quota, Vis says.
“While we gave up some access, it was not as much as we thought. There is optimism out there that the dairy industry is going to be alright.”