Dairy farmer can transfer some, but not all of his quota

Wednesday, June 29, 2011

by SUSAN MANN

A Mitchell-area dairy farmer can transfer a small portion of his quota back to his father’s farm but not his entire holdings, an agricultural tribunal has decided.

In a June 17 written decision, the Agriculture, Food and Rural Affairs Appeal Tribunal says it will grant a portion of Steven Baes’ request and allow him to transfer about four kilograms back to his father, Leon Baes, a shareholder in the farming corporation Baeverdale Farms Ltd. The other shareholders are Leon’s wife, Bernadette, and their son, Michael, and his wife, Melissa.

The board of Dairy Farmers of Ontario (DFO) decided to accept the tribunal’s decision and that means it won’t launch an appeal, says communications director Wes Lane. The board discussed the matter at its regular meeting Wednesday.

Steven Baes couldn’t be reached for comment.

In its written decision, the tribunal says Steven was in the process of returning quota his father transferred to him in 1994. At that time, Leon transferred 11 kgs of quota to give Steven a start in dairy farming. Their verbal arrangement was if anything changes in Steven’s circumstances the quota would be returned to Leon for his own dairy farm, now Baeverdale.

Starting in 2003, Steven transferred about seven of the original 11 kgs of quota back to his father. In addition to the quota his father transferred to him, Steven bought quota and had a total of 30.84 kgs at the time of the tribunal hearing in Guelph on May 11. Only four kgs of Baes entire quota holdings were considered by the tribunal to be to be part of original inter-family transfer. The rest of the quota, 26.84 kgs, wasn’t.

Steven Baes requested an exemption to the DFO policy to allow him to transfer his entire quota holding to Baeverdale Farms and enable the quota to be merged under one license. “The situation developed due to Steven’s financial difficulties,” it says in the tribunal’s decision.

Baes’ farm and Baeverdale shared land, equipment and labour. The two operations were so integrated Baes, his father and brother told the tribunal hearing that “prohibiting the transfer and merger of the quota would tear their operation apart,” it says in the tribunal’s decision. Allowing the transfer would mean that three families would be able to make a living from Baeverdale with Steven as a hired hand.

DFO denied Baes’ request for an exemption to its quota policies both at an original hearing before the board and at the hearing for reconsideration.

At the tribunal hearing, George MacNaughton, DFO production division director, said Steven’s request to transfer quota isn’t permitted under the organization’s present policy. This type of transfer hasn’t been allowed since 2006.

MacNaughton told the tribunal DFO’s current quota policies were designed to stop the escalation of the quota price, make quota more equitably available to those wanting it instead of moving it within families, provide opportunities for new entrants in the dairy industry to buy quota on the exchange and “dispel the image that the dairy industry is a closed shop,” it says in the tribunal’s decision.

Baes and his family had other options if they wanted to transfer quota, MacNaughton testified at the hearing.

The tribunal agreed with MacNaughton that the integration of land, equipment and labour between family members is not unusual in dairy farming nor is it an exceptional reason for an exemption.

What the tribunal did find unique in this case was it involved a verbal agreement between the father and son that happened 12 years before the DFO’s current policy prohibiting this type of quota transfer. Since 2003, Steven was in the process of transferring back the original 11 kgs of quota his father gave him and that was interrupted by DFO’s policy change in 2006.

This type of transfer back of quota “would have been allowed under policies before 2006 and Steven and his father anticipated this policy would continue,” it says in the tribunal’s decision.

The tribunal decided that the original agreement between Steven and Leon should be completed and he could transfer the remaining four kgs of quota back. But since 26.84 kgs of quota in Steven’s holdings weren’t part of that original agreement, the tribunal says there’s no reason to amend DFO’s decision as it applies to that portion of the quota and it dismissed the appeal relating to it. BF