Dairy: Provinces struggle to agree on renewal of dairy innovation program

Thursday, June 10, 2010

For 20 years, this national program has helped producers develop new products. But Alberta and other provinces are balking at some of its provisions and agreement is proving elusive

by SUSAN MANN

Ontario dairy officials are concerned a highly successful program that has boosted milk demand here by 23 million litres a year may be in jeopardy because provinces can't agree where the milk for it should be produced.

The Domestic Dairy Product Innovation program is up for its five-year renewal this year.

Ontario, with 52 active program projects and another 14 awaiting approval, has been particularly successful in using the program.

During the year ending July 31, 2009, companies in Ontario, Quebec, Alberta, British Columbia and Prince Edward Island used 42 million litres of milk under the program, according to the Canadian Dairy Commission. That's up by 8.7 million litres from the 2007/08 dairy year.

Ontario supports the program because "it works," says Peter Gould, general manager of Dairy Farmers of Ontario (DFO). It has used the innovation program to help processors launch new products for previously unserved markets. For example, traditional cheese products are being made for Ontario consumers who came to Canada from the Middle East, India, China, Southeast Asia and the Caribbean.

Gould says the program's provisions allow the milk to be produced in the province where the product is made. But that's the rub. Alberta Milk won't support the current form of the program, and general manager Mike Southwood says other provinces disagree with it, too.

Alberta's 610 dairy farmers say "it was meant to be a national program and we feel it should be fully national," Southwood says. "The quota that's allocated should be shared nationally."

The program's goal is to boost overall milk demand. It doesn't affect existing provincial milk plant supply allocation or product markets already in place. Each approved project gets a specific quantity of milk for five years. Program users pay the prevailing provincial price for the milk or milk components.

The Canadian Milk Supply Management Committee, a permanent body created by the provincial signatories to the national milk marketing plan, is responsible for determining policy and supervising provisions of the plan. There has to be consensus from all 10 provinces for the program to be renewed.

To be approved, the proposed product must be wholly or partially made with milk and have new or innovative features, even packaging or a new marketing channel, says Gould.

The program has been in place for almost 20 years. Before, processors had to use milk from their existing quota supplies for new initiatives. Typically, they questioned why they'd do that, Gould says. "There was a lot of frustration voiced by processors about their inability to get additional milk to service new opportunities."

The program's review committee hasn't yet been able to develop a common recommendation, says Chantal Paul, spokesperson for the Canadian Dairy Commission, which chairs meetings of the Milk Supply Management Committee. No decision was reached in April. The review committee will continue meeting and report back in July.

To ensure the program is renewed, DFO is talking to the other provinces, particularly Alberta, "in trying to understand what the issues are and making sure we can provide good responses," Gould says.

If the program isn't renewed, any ongoing projects or ones approved before July 31 will be honoured under the existing rules, Gould says. BF