Ontario dairy farmers push for greater control of national marketing dollars

Thursday, October 30, 2014

by SUSAN MANN

Ontario dairy farmers want more control and better results from the considerable chunk of money they fork over to Dairy Farmers of Canada for product promotion and marketing.

Farmers pay a fee of $1.50 per hectolitre for market expansion and for the 2013 fiscal year Dairy Farmers of Ontario collected $36.5 million from farmers on behalf of Dairy Farmers of Canada (DFC) and remitted that money to the national organization. For this year, that amount increased to more than $38 million due to added milk production in the province, says Peter Gould, Dairy Farmers general manager.

Dairy Farmers of Ontario pays the biggest share of the DFC promotion budget, according to the promotion accountability section of the Dairy Farmers of Ontario operations report released at the fall regional meetings earlier this month. The meetings were held Oct. 6 to 10 across Ontario for dairy producer committee delegates.

“What producers are telling us is they don’t have any ability to hold DFC accountable; what they have the ability to do is to hold DFO accountable,” Gould says. The Ontario board agreed and noted “that the only way we can be accountable to them (Ontario farmers) is by making DFC accountable to us.”

Dairy Farmers of Canada is responsible for the national promotion of Canadian products made from milk, such as yogurt and cheese. It also handles fluid milk and cream promotions in Ontario and the Maritimes and works with other provinces across Canada to develop national initiatives and explore market expansion opportunities. Some provinces, such as Quebec, handle its own promotions but forward some money to DFC for nutrition marketing.

DFC’s annual budget for national promotion is $70.6 million, collected from all dairy farms across Canada, says DFC spokesperson Thérése Beaulieu. A national promotion committee plus the board oversee Dairy Farmers of Canada’s activities. Dairy Farmers of Ontario board members participate in both the DFC committee and the board.

The Dairy Farmers of Ontario report says the Ontario organization needs to have a contract with DFC to outline detailed expectations and obligations DFC has to meet. If the national organization fails to meet those, there will be consequences, the Dairy Farmers of Ontario report says. But the report didn’t spell out what those consequences would be.

Gould says the contract won’t be prescriptive but will clarify what “the primary objective is, what the deliverables are and be able to have enough information to hold them accountable.” He says they don’t have any consequences in mind yet. “In some ways it’s not necessarily anything different but it’s formalizing it.”

Beaulieu says she can’t comment on the Ontario report and Ontario’s call for a contract between it and DFC for promotion because she doesn’t know anything about it and hasn’t seen the Ontario report.

For promotion, DFC identifies priorities, reviews results of past promotion initiatives and looks at “ways to take advantage of opportunities in the marketplace along with the changes and trends in the food market. Then we decide on the marketing mix and everything is brought to the promotion committee (a committee of the DFC board) and then it’s submitted to the (DFC) general council in July every year, which approves it,” she notes.

The Ontario report says “the main theme is that DFO expects growth, measured in concrete terms, such as quota, to be the overriding objective and expected outcome” and promotional activities should be geared towards achieving that outcome.

Gould notes the Ontario board’s position is an increase in Ontario’s total quota of two per cent annually.

The report says Dairy Farmers of Ontario expects the national organization to leverage producer dollars to the greatest extent possible and work with the industry’s supply chain partners. That may mean “less generic advertising and less focus on producer image,” the report says.

The Ontario organization is also calling for a review of the 100 per cent Canadian milk logo that includes a full consultation with processors “to develop a strategy that works better,” the report says.

Gould says the logo needs to be used more widely. “There are a number of processors choosing not to use the 100 per cent Canadian logo.” He says they don’t have a good handle on how many processors aren’t using it but several major dairy manufacturers are, such as Chapman’s Ice Cream and Nestlé.

Dairy farmer representatives want to talk to processors and others in the supply chain about the value of the logo, which stands for quality milk, local and Canadian. “We want to understand what we can do to make it even better for the industry so that it’s uptake will be increased,” he says.

Dairy Farmers of Ontario says there have been initial discussions with DFC at the staff level on promotion accountability but it’s too late to launch meaningful change for 2015. “That plan is already in place,” the Ontario report says. DFC “will have to do a number of things” to be ready to enter into a contract for 2016.

Dairy Farmers of Ontario is committed to ensuring farmers get value for their investment in promotion, the report says. BF