Canadian Milk Supply Management Committee raises growth allowance of national market sharing quota

Wednesday, January 28, 2015

by SUSAN MANN

A national committee of provincial dairy representatives agreed to increase the permanent growth allowance to two per cent of national market sharing quota from one per cent effective Feb. 1, says Gilles Froment, chief operating officer for the Canadian Dairy Commission.

It’s the first time the allowance has been adjusted since it was introduced in 2012.

The decision was made at the Jan. 21-22 meeting in Ottawa of the Canadian Milk Supply Management Committee, the national body for policy development and discussions. The committee chaired by the Commission and includes representatives from provincial dairy groups, governments and non-voting members from processor and consumer groups.

Market sharing quota is the national production target for milk used to make products, such yogurt, cheese and ice cream. It’s measured in kilograms of butterfat. The demand is the quantity of butterfat required to fill the domestic market and any planned exports of dairy products.

The Commission monitors trends in demand monthly, and adjustments to market sharing quota are made every two months.

“When we’re in a growing market we believe that we need to put a little more quota in the system and that little more quota we call a growth allowance,” Froment says. “It’s a sleeve of milk that will be there to make sure that the growth is well supplied in our market.”

The Commission said in its 2013/14 annual report that from Aug. 1, 2013 to July 31, 2014 demand increased by 3.1 per cent from the previous year. It reached 321.7 million kilograms of butterfat. During that same time milk production was 313.7 million kilograms of butterfat. “Even though production was below demand overall, adequate stocks allowed the supply of all markets throughout the year,” the report said.

Froment says the growth allowance was increased to two per cent because butter stocks are low now and consumption forecasts are “pretty good.” The growth allowance “is to be directed to the classes that are growing,” he says.

For example, if cheese is growing faster than other classes, the milk should be directed mostly to cheese, he notes.

Milk sold to processors in Canada is classified according to its end use. The classes range from fluid milks, Class 1, to planned exports, Class 5 (d). The price processors pay for milk varies by class.

According to the annual report, the committee had introduced the growth allowance to increase the flexibility of milk supplies. The growth allowance ensures that growing markets, such as the markets for yogurt and fine cheese, are adequately supplied, the report says. BF