Dairy: Coming soon - A lottery for new dairy quota
Thursday, June 4, 2009
Starting this fall, prospective new dairy farmers in Ontario, Quebec and the Maritimes will be able to apply for assistance in obtaining quota. But the number of winning applicants will not be large
by SUSAN MANN
Dairy goat farmer Fred Vos will fulfil a life-long dream to milk cows if he's picked for a new entrant quota assistance program that debuts this fall in Ontario and four other eastern Canadian provinces.
"I just really feel that's my calling," says the 40-year-old Hagersville-area farmer, who has wanted to milk cows since he was 10 or 11 years old.
Vos thinks he has a shot at reaching his goal through the new entrant quota assistance program being introduced Aug. 1 by Dairy Farmers of Ontario. It's part of a package of quota changes designed to bring in common policies across the P5 provinces (Ontario, Quebec, Nova Scotia, New Brunswick and Prince Edward Island).
In Ontario, quota assistance can be given to 10 new entrants a year. Quebec will get 12 new entrants and there will be one in each of the three Maritime provinces.
Successful applicants are loaned 12 kilograms of daily butterfat production for five years.
They must acquire at least another 12 kilograms either by buying it on the exchange, as a donation from parents or elsewhere, and/or buying an existing dairy farm with quota.
Quota is repaid at the rate of one kilogram each year, starting in the sixth year of production for farmers getting the maximum 12 kilograms of assistance. But farmers starting with less quota assistance keep it longer, says George MacNaughton, production and regulatory compliance division director for Dairy Farmers of Ontario (DFO). The assistance quota is also reduced if the new entrant's quota exceeds 35 kilograms.
The program will allow new producers without enough capital to enter the business, MacNaughton says.
The income generated from the 24 kilograms of quota (12 kilograms in assistance plus 12 kilograms acquired by the farmer) is about $150,000 to $160,000 a year in milk revenue, depending on milk protein composition, MacNaughton says.
Being picked as a successful applicant is a little like winning a lottery.
An independent third party, likely an accounting firm that hadn't been selected by press time, will review the applications. The successful ones are then compiled and 10 names are drawn if there are more than that number.
Applicants must be at least 18 years of age, have a financial business plan verified by a certified accountant and a letter from a lender willing to finance the operation outlined in the plan. Farmers who have previously held a milk production license in Canada aren't eligible.
Applications must be submitted between Aug.1 to Nov. 30 each year, starting this August. MacNaughton expects far more applications than available spaces in the first few years.
Fred Vos, who currently milks 100 goats and drives a feed delivery truck, says that if his application isn't successful this year, he'll re-apply. Getting into the dairy business is tough because of high quota prices, says Vos, who has milked goats for 14 years.
One of the quota changes coming in Aug. 1 is a price cap of $25,000 per kilogram. In Ontario, the price cap starts at $25,500 on Aug. 1 and is reduced by $100 each month until the $25,000 level is reached.
Even with help from this program, Vos says it isn't going to be easy for him to get into dairying. But it's an opportunity to get started, he explains. "If I have to work off the farm for four or five years to make it happen, then so be it."
Vos plans to start milking 24 cows, an equal mix of Jerseys and Holsteins, and eventually build up to 40 cows.
His current farm was a hog operation before he bought it a year ago, and a cow dairy before that. Converting the barn to milking cows is no big deal, he says.
Applications are to be available in the July issue of the Milk Producer magazine, on the DFO web site (www.milk.org) during the application period or by calling the DFO office (905) 821-8970. BF