New Brunswick balks at quota caps

Friday, March 13, 2009

© AgMedia Inc.

by SUSAN MANN

How fast Ontario plans to bring in a $25,000 per kilogram cap on quota prices and what steps it will use to get there are among the points Dairy Farmers of Ontario’s board will hash out later this month.

The P5 provinces, Ontario, Quebec, Nova Scotia, New Brunswick and Prince Edward Island have initially accepted a common quota policy that would apply to all dairy farmers in those provinces. Now they have to implement it and one sticking point may be quota caps.

Bill Mitchell, DFO assistant communications director, says New Brunswick may not accept the policy on capping quota prices at $25,000 per kilogram as part of the package. The New Brunswick organization is still expected to go ahead with the other elements and will decide on the cap at its board meeting this month.

Early indications from spring regional meetings underway this week “are that Ontario farmers want the board to proceed with most or all of the elements of the harmonization,” Mitchell says.

Implementation of most policies begins August. But some policies, such as the quota cap, could be phased in over time. All are expected to be in place by 2011.

The policy covers quota sales and purchases, over and under production credits, over-quota production, non-saleable quota, transfers, a new entrant program, and over utilization.

At the Ontario organization’s board meeting this month will make decisions on how quickly some of policies, such as the quota price cap, would come into effect and what steps are needed during the next two years, Mitchell says.

Why is the proposal to cap the quota price at $25,000 per kilogram? Mitchell says it’s because that amount is already being used in some provinces and Quebec has been working towards that cap for some time.

If quota demand exceeds supply in any month the available quota is pro-rated. Each province can decide for itself how it will pro-rate the quota.

Phil Cairns, DFO senior policy adviser, says the policy doesn’t include any provisions for farmers in the five provinces to buy and sell quota on one exchange. The exchanges in each province will continue to operate.

One disadvantage to quota caps is it may take some farmers who are expanding their operations longer to get the entire quota they need. But on the other hand the goal of the cap is to keep the price “related to the productive value of the quota and not any speculative value,” Mitchell says.

Ontario farmers’ over production credits would be cut under the new policy to 10 days from 20 days. The 30 days of under production credits would stay the same. The changes come into effect in 2011.

For more than 10 years, Ontario has been part of the P5 pool to share markets and revenues. It has been a long-term goal of the P5 provinces to become a governing-type of body that makes policy decisions. As a first step, representatives from the P5 provinces decided to go ahead with harmonizing quota policies. BF