Processor wants say in new DFO organic milk policy

Friday, May 29, 2015

by SUSAN MANN

Organic Meadow officials are eager to get a peek at Dairy Farmers of Ontario’s new draft allocation policy for organic milk.

But so far officials with the farmer-owed co-op based in Guelph haven’t seen the draft policy, says marketing manager Michelle Schmidt. “We would welcome the opportunity to review it (the draft policy) and have input into it.”

In fact, the first time Organic Meadow officials heard Dairy Farmers had completed the new draft policy was when they were contacted for comment by Better Farming.

“We want to work with them (Dairy Farmers of Ontario) to find a solution that at the end of the day grows the organic dairy pool in Ontario,” Schmidt says.

Graham Lloyd, Dairy Farmers general counsel and communications director, says the proposed policy will be reviewed with processors through their organization, the Ontario Dairy Council. There are joint meetings scheduled between staff members from both Dairy Farmers and the council.

The draft policy hasn’t yet been approved by the Dairy Farmers board, Lloyd says, noting it will likely go before the board for consideration this summer or fall. “The intention is to get this done as soon as possible but not to rush it for the sake of getting it done.”

Lloyd says the draft policy “is designed to treat all processors of organic products equitably and address the market needs.”

The Organic Meadow co-op and its two related companies sought protection from creditors April 2 so they can restructure their operations. MNP Ltd. was appointed as trustee.

Organic Meadow officials have expressed concerns the milk processing section of the company doesn’t have access to the organic milk produced by its own co-op’s members.

CEO Don Rees said in an April 24 affidavit the co-op’s member farmers produce 70 per cent of Ontario’s organic milk supply but must sell their milk to Dairy Farmers of Ontario, which in turn pools it and sells it to processors. Milk is available on demand for processors making drinkable milk, while any left over after that demand has been met is sold to processors manufacturing other products, such as yogurt, cream cheese, cheese and butter.

This past fall and winter, Organic Meadow didn’t get enough milk to make its cultured products. The company lost $800,000 in revenues and saw sales decline by 20 per cent because of inadequate milk supplies, Rees noted.

In previous interviews, Dairy Farmers’ Lloyd has denied the marketing board is responsible for Organic Meadow’s financial problems.

Schmidt notes the milk shortage for Organic Meadow hasn’t been fully resolved yet but “the situation is improving week over week. A lot of it is driven by the fact that with the warmer weather the cows are out to pasture and what we historically see is the milk production tends to go up during the summer months.” In addition, demand isn’t as great in the summer because “people are out of their normal schedules and they’re not drinking as much in a habitual fashion.”

To deal with the milk shortage situation, Organic Meadow has had to work with “our different partners to find ways to make a baseline minimum volume of cultured offerings,” she says. “Definitely our ability to produce what we need to satisfy the market is improving. We’re feeling encouraged by that.”

As for the work the Organic Meadow and its related companies are doing to develop a proposal for creditors, Schmidt says the restructuring process is continuing.

Documents filed in court showed the companies owed various creditors, including several farmers who had provided loans, more than $20 million. Organic Meadow recently applied to the court for and received an extension to June 16 to file its proposal.

“We are actively working towards that deadline,” she says. BF