Dairy: New entrant assistance program in the works for dairy

Tuesday, June 3, 2008

With such programs already in place in Quebec, New Brunswick and PEI, Ontario is looking to shape a similar plan to help unattached individuals get into the industry

by Don Stoneman

Dairy Farmers of Ontario (DFO) is contemplating a new entrant assistance program for dairy farmers. But at this point the shape of it is very much up in the air, and there is no guess as to when it might start.

DFO chair Bruce Saunders says harmonization of quota polices across the P5 – Ontario, Quebec, Nova Scotia, New Brunswick and Prince Edward Island – is in the works and a new entrants program would be part of that harmonization.

Quebec, New Brunswick and Prince Edward Island already have new entrants programs; Nova Scotia is developing a program and waiting to see what Ontario does.

The concept of a new entrants program is somewhat controversial, Saunders admits.  "A fairly slim major-ity" of dairy committee members attending spring regional meetings in March favoured such a program.

Saunders says that gives DFO a mandate to go ahead. "There is a fair segment (of dairy committee members) who question whether there is a need for a new entrants program in the first place," Saunders says.

Meetings of many commodity groups are a sea of gray heads. By contrast, at dairy meetings, "there are a lot of young people in the room," Saunders says. But the young dairy farmers are mostly family members taking over or joining the operation with their parents. In a few cases, he says, young people get in because of their relationship with an existing producer.

"I don't think there is any question that it's a difficult industry to get into for an absolutely unattached individual – unless they got a pot of money from someplace else," Saunders says, while pointing out that "it's no more difficult than for a viable cash cropper who wants to own all his land or to become a McDonald's franchise."

Is there political pressure for DFO to make an effort to let in new entrants? Saunders says no, with a caveat. "There is no pressure, but I think there is political interest and maybe the industry puts itself in a better political light if it is seen to be entertaining it."

Saunders says Ontario has no preference at this point as to which province's program is adopted.

DFO is waiting for discussions on other quota policies "to catch up," before spending more time on the new entrants program and such details as who will be eligible and a schedule for paying the quota back to the board.

The first criterion is that the participant must have a chance of succeeding, Saunders says.

The papers for the spring regional meetings said that the quota "will come from all existing producers collectively," perhaps from assessments on quota transfers that are normally re-allocated to existing producers.

Another question involves how much quota a producer requires to get started. One option might be 25 kilograms of quota. At current milk returns and average milk composition, a kilogram produces roughly $6,000 in income. So the annual revenue would be $150,000 from milk sales. DFO might provide part of that quota, perhaps 10 kgs.

That begs the question of who would be eligible. The spring regional papers said a new entrant should be able to finance half of quota requirements and other assets before being eligible for DFO's help. But if the entrant has financial means to purchase or hold more than 35 kilograms of quota, they won't be eligible for help either. Some provinces have top up programs for what is termed "relatively new" producers with small quota holdings.

Quebec allocates three per cent of its quota to new holders. If Ontario provided 10 kilograms to each of 40 new entrants annually, that would account for almost 1.5 per cent of provincial quota.

Successful applicants might be chosen by lottery or by using an "expert panel" using pre-established criteria. Almost certainly, the debate over how to shape a new entrant policy will be lively. BF