Tribunal stops dairy farmers Senn and Suter from moving newly-purchased quota

ST-BERNARDIN — Dairy farmers are cheering a decision that will force two Eastern Ontario dairy farmers to bring newly-purchased quota back to the original farm or else be forced to sell the quota.

In October 2012, Andy Senn and his brother-in-law and farm partner Franz Suter bought the Gauthier family’s dairy farm and its 187 kilograms of quota and 80 acres at St-Bernardin, near Ottawa for $6.55 million. The sale included a 50-year-old tie-stall barn, and a 10-year-old freestall barn, which the original listing said could easily convert to a milking barn. But Senn and Suter knew it was a much bigger job.

The Dairy Farmers of Ontario (DFO) gave them permission to move the quota to their home farm for one year while they renovated the Gauthier barn. Senn and Suter received several quotes, and even went to British Columbia and Western Ontario to look at different robot operations. But they only wanted to spend about $700,000 to renovate the barn.

A year after buying the Gauthier farm, Senn and Suter requested an exemption from quota policy to transfer the quota to their sons and to build a new barn at the home farm. Senn and Suter also requested to be allowed to transfer quota to the home farm to make use of their biodigester. DFO rules state that quota can’t be transferred to a child or to a home farm within five years after purchase.

But Senn argued it didn’t make sense to renovate the Gauthier barn at a high cost and then move the quota anyway. Senn and Suter say the Gauthier barn isn’t usable and the price to renovate it and add two robots would be about $1 million.

The DFO allowed the transfer of quota to the sons, but wouldn’t allow the transfer of quota to the home farm. The DFO extended the shared facilities agreement for three months based on the belief that renovations to the Gauthier tie-stall barn could be done in two weeks after receiving the construction material. The DFO board added a clause that there would be a 20 per cent reduction in salable quota if milk was not shipped from the Gauthier farm by Feb. 1, 2014.

Senn and Suter unsuccessfully appealed the decision to the DFO board, so the two farmers then appealed to the Agriculture, Food and Rural Affairs Appeal Tribunal, which heard the case in Ottawa last October. The tribunal ruled in favour of the DFO on Feb. 12.

“The arguments put forward in the request for exemption and reconsideration did not reflect the true intentions of Senn and Suter, apart from the desire to provide a second dairy facility for the next generation,” the ruling says. “It was clear from Mr. Senn’s evidence they did not intend to renovate the tie-stall barn . . . Senn and Suter were aware prior to closing, they would have to spend a considerable amount of money renovating at least one of the barns on the Gauthier property.”

The tribunal made two key rulings in the case:

1. The Gauthier herd shall be returned and milked at the Gauthier farm commencing no later than May 15, 2015 and continuing until May 14, 2019; and

2. If Senn and Suter don’t begin milking the Gauthier herd at the Gauthier farm as directed, they will be ordered to sell the Gauthier quota on the quota exchange, less a 10 per cent reduction of saleable quota.

The DFO’s 20 per cent quota penalty was reduced to 10 per cent by the tribunal because of Senn and Suter’s track record as dairy farmers, with no previous history of trying to work outside the rules.

“As long as the penalty and 10 per cent can be a reasonable deterrent, then we’re satisfied,” said DFO communications director and general counsel Graham Lloyd. Lloyd said the feedback from Ontario dairy farmers had been positive, as the decision ensured everyone could be on a level playing field.

“It’s important for the everyday farmer to have the confidence that the board is the recognized authority making policy in a democratic and involved process,” he said.

Senn’s lawyer, Anne Tardif, of CazaSaikaley law firm in Ottawa, argued that DFO policy to limit transfer of newly-purchased quota exceeded its jurisdiction and was unlawful. Senn and Suter argued it would take about 39 years to acquire the 187 kilograms of quota for their home farm through the quota exchange.

Many dairy farmers agreed with the tribunal decision. Osgoode dairy farmer Steve Velthuis said he didn’t mind that Senn and Suter wanted to transfer the quota to their own farm. It’s the way they went about it that irked him.

“The general consensus would be support for DFO in making this decision, because if it didn’t, we’d all be running out and buying up little farms and doing the same thing,” Velthuis said. “It’s a dangerous precedent to allow this. There’s many producers who have bought a second farm in hopes of eventually moving the quota to the home farm. And if they’re allowed, I want the policy to say it, and it doesn’t. So I don’t think these people should be buying these barns in anticipation of that becoming policy.”

Glengarry County dairy farmer Don McCrimmon said if Senn were successful, it would have created too big a gap between rich and poor farmers as there wouldn’t be any milk on the exchange.

“Whether (Senn and Suter) move back to the Gauthiers’, if a guy’s going to go around and buy quota like that, there’s not going to be anything left on the exchange,” he said. “The poor farmer can’t go out and buy 40 kilos in one crack, let alone 187. It’s a rich man’s game for sure if it doesn’t go through the exchange.

“That’s what it comes down to. There weren’t very many farmers I met that said ‘Ya, I like what Andy Senn is doing.'”